Last year Cora and I waded through the market sectors offered through BUYandHOLD as a means to determine how we might diversify our portfolios. Although only three-hundred and sixty-five days have passed (more or less) since we previewed these opportunities, we found that a few sectors went through some major changes during this past year.

The transportation sector is one area where we might rethink how we invest, because the price of gas and oil and the cost of running transportation businesses go hand-in-hand. While we previously looked at automobiles and fuel possibilities, this year we'll take a look at public transportation and some alternatives. While some transport might give us the blues, other ideas might net us a few bling-blings.

First, Cora and I want to talk about two major forms of transportation that we won't invest in because 1) one is funded by the government and is unavailable for investments, and 2) another is an over-the-counter equity, and Cora and I avoid these investments because the risk is too high. The reason we want to talk about these two forms of transportation is because the way these two businesses operate might give us clues as to where to look for this year's transportation investment opportunities.

To begin, there's only one major passenger train service nationwide, and that's Amtrak. You won't find the ticker symbol for Amtrak, because this company is fueled by government dollars. However, you can view Amtrak financials by looking for "National Railroad Passenger Corporation" in your favorite search engine. Reuters calls Amtrak "financially troubled," because the company is under the gun to repay a 2002 U.S. government $100 million-dollar loan. Amtrak reported a cash loss of $635 million last year, despite record ticket sales of more than 25 million. Amtrak's cash crisis also accelerated Bush administration efforts to find ways to reduce federal support for Amtrak even if it means shrinking the railroad's operations. And, trust me, Amtrak is shrinking.

Why is this train service going under? Well, their tickets cost almost as much as a plane ticket and you arrive much later than you would if you fly. Additionally, if you decide you want a slow train to wherever, you might not arrive on a train when you purchase an Amtrak ticket. You might take a train to one stop and be forced to retrieve your luggage and hop on a Greyhound bus to your next stop. For many of us who follow transportation possibilities for our portfolios, we know that Greyhound is usually listed as competition to Amtrak. What's the scoop?

I'm not sure what the deal is with this trade-off between Amtrak and Greyhound, but I do know - from a personal holiday experience - that this deal is very recent and it's going to create a huge stink among train travelers within the next two months, if not sooner. This "buy an Amtrak ticket and ride Greyhound" scenario is so fresh that Greyhound bus drivers are just now viewing their first Amtrak bus tickets (my driver also wanted to view my receipt, because he thought I forged the ticket). Amtrak doesn't tell you that you will ride Greyhound, nor will they tell you that their tickets for this bus ride will cost more than a regular Greyhound bus ticket. In other words, if you find that your Amtrak destination includes a bus ride, just call Greyhound for a less expensive trip.

After you adjust your Amtrak schedule, think about all the many miles of railroad track that crisscross this country. Next, think about trains that don't carry passengers. Then, to speed matters along, go to Yahoo Finance to view some railroad companies and then go to BUYandHOLD and plug in the ticker symbols to see what's available. You'll find a few companies that are doing quite well, thank you very much, and Amtrak might learn a few lessons about how to operate a business from one or two of them.

What about other forms of people-carrying transportation? Bus lines offer slim pickings, and while some airlines seem to be flying high (although Cora wonders about pilot proficiency with one particular airline's new cost-efficient jets: "Mom, I don't think they've learned how to take off and land yet."), other airlines still struggle. Will we see airline mergers and undercutting on ticket prices? Perhaps we will, especially if some companies can't streamline as quickly as others.

Additionally, watch your back over future personnel problems within some airline companies. The baggage fiasco over the holidays is just one example of difficulties that may accelerate over the upcoming year. Consider airline delays during the first weekend of 2005 due to no-show stewards, stewardesses, and pilots. While these delays didn't make the news, Cora and I - along with a few thousand other travelers - experienced a full day of sit-and-wait with one airline in a major transportation hub because of this scenario. Ultimately, personnel problems mean deficits in the bottom line.

So what do we do if we want to diversify and add transportation to our portfolio this year? We believe that if we think outside the box we might have some luck. One extreme example might include the question whether cruise lines exist that use sails instead of fuel. Realistically, we might investigate whether car rental agencies are doing well and if they're available for investment opportunities. Alternately, how about transportation investments that don't involve ferrying people? For instance, how do successful online companies ship their merchandise?

The sky's the limit if we use our imaginations for this sector, even if it means that we stray into other sectors for investment ideas. For example, we might enter the retail sector as we ask about the best walking shoes (in case the bus doesn't show) or the most compact sleeping bags (in case we need to sleep in airports). In the meantime, if you plan to get from point A to point B without a car and a healthy gas budget, good luck.

Until Next Week,
Linda Goin