A calculated lack of economic reporting

Howdy!

You may have noticed that I have dialed back my blogging regarding economic statistics. This is a calculated choice on my part. Because there is solid evidence of the economy stabilizing, the importance of economic data to investors has diminished. A year ago every report contained important information worth understanding. But now the plethora of important economic data has been replaced with a need to only track one statistic: the unemployment rate.

Ultimately, the unemployment rate is only interesting because of its relation to consumer confidence which directly ties to that BIGGEST of statistics: consumer spending. At 70% of United States GDP, consumer spending is, next to productivity and corporate profitability the most important economic statistic.

So my lack of economic reporting is a sign that I feel the economy has stabilized. It is also a sign that I feel it is unlikely that the U.S. economy will slip back into recession. The sole mitigating factor that I can identify is a new middle-eastern war – an event whose likelihood I have tracked for many months now. If you disagree with me that Israel, and to a much lesser degree, the U.S., is going to attack Iran, then it would behoove you to start evaluating U.S. companies for investment. Remember the biggest difference between a great business and a great investment, is price.

What price to pay? I would look first for great businesses and then those with P/E ratios less than 20, and with a preferred P/E of 10-15 x.

Good luck and good skill!

Jason