Fox's 50, Maybe Not so Nifty

CNBC has one. The old Financial News Network had one, and so did CNNfn. And now, Fox Business News has one. Its very own stock index.

Fox Business News, which bills itself as the business channel for Main Street, launched the Fox 50 index in conjunction with its network debut on Monday. CNBC's index tracks 300 global stocks, while CNNfn's tracked internet stocks.

And Fox's? It's yours, America.

Each member of the Fox 50 is a consumer household name, and the index is meant to help America track its own behavior. "It may not be a perfect snapshot of industrial America like the Dow Jones Industrial Average, or be as broad as the S&P 500, but it's yours," writes Ray Hennessey, managing editor of the channel's website. The Dow Jones Industrial Average, it's worth noting, will soon be in the hands of Rupert Murdoch's News Corp., the same parent of Fox.

Hennessey introduces the index by explaining to readers that they are part of the financial market, even if they've never owned a share of stock. Fox wants you to think of the Fox 50 as "the stock index of your life."

"When you use your American Express card to buy a Deere riding mower at Home Depot, you've sent revenue to all three companies. They, in turn, filter that revenue through their companies, pay their expenses, and what's left over they report as profit. The better the profits, the healthier the stock."

So, you make a big purchase at Home Depot, and you help drive its stock, along with the index, up. Except that you always shopped at Lowe's before, and you just happened to find a cheaper price at Home Depot. The next thing you know, you're a loyal Home Depot customer and Lowe's has lost you for life.

It's too bad, because Lowe's is also in the Fox 50.

The same could be said for the following competitive combos in the index: Google-Yahoo, FedEx-UPS, WalMart-Target-Costco, Apple-Dell-Microsoft, Coca-Cola-PepsiCo, Procter & Gamble-Colgate Palmolive, and so on.

What's good for Coke is bad for Pepsi. You wanted simple, Main Street.

The Fox 50 isn't yet available for purchase in the form of an index fund or ETF. But with the number of investment products tracking just about everything imaginable, it's only a matter of time. Surely, investors will soon be able to buy the Fox 50 right after they return from Home Depot.

And when they do, they should be careful to note that much of the Fox 50 is comprised of non-cyclical stocks (companies that make Crest, Tylenol, Bud Light). These stocks tend to outperform the market during times of economic retraction. When times are bad, we still need toothpaste. So your index, America, might be best to buy when you're not feeling much like buying anything at all.

When a bull market is forming and the economy expanding, investors might be better off buying capital goods and transportation stocks. This explains why the Fox 50 has handily outperformed the S&P 500 Index for the last six months. Could there be a "capital goods Fox 30" index in the future?

And there's one more thing that Fox viewers might want to consider about the index. Fox's hand-picked list of the "brands you know," does not include Fox parent company, News Corp. In fact, we don't know why or how they picked the brands they included.

But evidently their methodology did give a nod to Fox Business News' primary competitor, CNBC. Its parent, General Electric, is helping to move the stock index of your life.

The FOX 50

* 3M
* Amazon.com
* American Express
* Anheuser-Busch
* Apple
* AT&T
* Bank of America
* Best Buy
* Boeing
* CBS
* Charles Schwab
* Chevron
* Citigroup
* Coca-Cola
* Colgate-Palmolive
* Comcast
* Costco
* Deere
* Dell
* eBay
* ExxonMobil
* FedEx
* General Electric
* General Mills
* Google
* Home Depot
* Intel
* IBM
* Johnson & Johnson
* Kraft Foods
* Lowe's
* McDonald's
* Merck
* Merrill Lynch
* Microsoft
* Nike
* PepsiCo
* Procter & Gamble
* Prudential Financial
* Sprint Nextel
* Starbucks
* Target
* Time Warner
* United Parcel Service
* Verizon
* Viacom
* Wal-Mart
* Walt Disney
* Yahoo!
* Yum! Brands

by Megan Barnett