{"id":475,"date":"2010-08-20T09:13:00","date_gmt":"2010-08-20T13:13:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=475"},"modified":"2018-08-17T15:43:33","modified_gmt":"2018-08-17T19:43:33","slug":"turning-the-corner-into-a-bad-neighborhood","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/08\/20\/turning-the-corner-into-a-bad-neighborhood\/","title":{"rendered":"Turning the corner into a bad neighborhood"},"content":{"rendered":"<p><span style=\"font-size: 16px;\">Last week U.S. jobless claims rose to levels not seen since November of last year.\u00a0 Specifically, the Department of Labor reported yesterday\u00a0that\u00a0folks newly filing for unemployment benefits rose by 12,000 last week to a level of 500,000.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">What about the four-week moving average?\u00a0 Jobless claims rose by 8,000 to 482,500, their highest level since December of last year.<\/span><\/p>\n<p><span style=\"font-size: 16px;\"><strong>Average:<\/strong> Clearly this is not the trend that anyone wants to see; except employers, obviously.\u00a0 The &#8220;game of chicken&#8221; I described awhile back continues unabated.\u00a0 Consumers won&#8217;t spend until employment improves, and businesses won&#8217;t hire until spending improves.\u00a0 So here we sit.\u00a0 Isn&#8217;t this fun?\u00a0 Unfortunately, consumer will power will break before business will power breaks.\u00a0 Barring an outside influence, like government stimulus, <strong>it looks like the economy is headed south again<\/strong>.\u00a0 So we have turned the corner&#8230;but into a bad neighborhood.\u00a0 One filled with fear and growing paranoia.\u00a0 Ouch!<\/span><\/p>\n<p><span style=\"font-size: 16px;\">The degree of the slowdown is going to be dictated by just how much of an emotional catharsis consumers feel they need to go through.\u00a0 The silver lining that I have been talking about for almost two years now is that folks <em>are<\/em> getting their financial houses in order.\u00a0 Yes, many people are declaring bankruptcy, or way behind on their mortgage payments.\u00a0 However, many of those folks were living at, or beyond, their means&#8230;and for years.\u00a0 American budgets resembled American waistlines&#8230;and for years.\u00a0 Unfortunately, just as an\u00a0overweight body\u00a0is an unstable vehicle for a healthy life, an overweight economy is an unstable vehicle for a nation.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">What to do as an equity investor?<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 16px;\">You can sell while things are still stable and sit in cash and wait for the storm to blow over.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 16px;\">You can sell your business interests (i.e. stocks) and find other places to deploy your cash.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 16px;\">An example would be in markets not in the first world, say Brasil or India.\u00a0 Both of these nations have growing economies that are not quite integrated with the first world apparatus.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Another example would be in real estate, where prices are very, very low and not likely to get much lower.\u00a0 Commercial real estate is probably a better bet at this point because businesses that have struggled have probably already gone under.\u00a0 Whereas if the employment situation\u00a0in the U.S. gets worse, then residential real estate prices are likely to go lower faster than commercial real estate.\u00a0 An ideal vehicle would be a real estate mutual fund focusing on commercial property.\u00a0 Dividends are often paid by these funds, too.\u00a0 Income is a good thing, especially when capital gains are tough to come by.<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 16px;\">You can\u00a0invest in businesses that are themselves invested in long-term trends whose force of momentum will not be swayed as much by gyrations in the economy.\u00a0 Examples of long-term trends\u00a0are cleaner energy (fossil fuels are becoming just that), cleaner water (my favorite long-term trend), consumer technology (iTechnologies), and health care (remember that aging population).<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 16px;\">This is actually my preferred place to be.\u00a0 I hate being in cash unless I feel businesses are massively overvalued.\u00a0 And I don&#8217;t feel that U.S. businesses are massively overvalued.\u00a0 If I were in cash and waited until there was a certainty of appreciation then it would be too late.\u00a0 My personal preference for a long time horizon means that I don&#8217;t look at my personal equity values very often.\u00a0 This keeps anxiety to a minimum.\u00a0 Instead I keep up with my companies and make sure that they are continuing to make intelligent business decisions.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">What should <strong>you<\/strong> do?\u00a0 Listen to your intuition or let your comfort guide you.\u00a0 If you are uncomfortable right now then find comfort.\u00a0 It&#8217;s that simple.<\/span><\/p>\n<p><span style=\"font-size: 16px;\"><strong>Importance grade:<\/strong> 10; there is no more important economic or investment number in the world than U.S. jobless claims right now.\u00a0 The employment situation in the U.S. is not getting better.\u00a0 That means that businesses are finally responding to the sphincter clench of the U.S. consumer.\u00a0 Here we go&#8230;to where I don&#8217;t know.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last week U.S. jobless claims rose to levels not seen since November of last year.\u00a0 Specifically, the Department of Labor reported yesterday\u00a0that\u00a0folks newly filing for unemployment benefits rose by 12,000 last week to a level of 500,000. What about the four-week moving average?\u00a0 Jobless claims rose by 8,000 to 482,500, their highest level since December [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-475","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/475","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=475"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/475\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=475"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=475"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=475"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}