Another Chart Reflecting Job Losses

I would like to present an interesting chart on job losses. My last chart concerning job losses was posted on September 10. The commentary I presented there is still highly applicable to the latest unemployment numbers.

This chart is from http://www.calculatedriskblog.com/ from October 2. I like this chart as it presents a depiction of the relative severity of our current period of economic weakness vs. that of prior periods from both a "duration" and "extent" perspective:



click on chart to expand

There should be no doubt that this unemployment situation is severe, especially in light of the fact that other employment/income options like starting one's own business in this economic climate would be (very) difficult.

For those who haven't yet read it, I wrote a blog series titled "Why Aren't Companies Hiring?"


SPX at 1031.47 as this post is written

FHA

On Tuesday The Wall Street Journal published an editorial on the FHA (Federal Housing Administration). I found it to be a good overview of the situation there. The editorial can be found at this link:

http://online.wsj.com/article/SB10001424052970204488304574428970233151130.html

I find this FHA situation highly disconcerting, especially in light of how similar situations have played out, and are playing out, elsewhere. This situation is, of course, exacerbated by ongoing weakness in the residential real estate market, which I have commented on extensively. (those blog posts can be found under the "Real Estate" category listed on the right-hand side of the page)



SPX at 1029.21 as this post is written

"Garbage" Securities

Just a quick note. I think it is important to remember that there is a tremendous amount of what I refer to as "garbage" securities currently in existence. It is easy to forget this fact given that we don't hear much about them anymore. This is due to many reasons, including: various credit spreads have been narrowing; their true value has been obscurred due to the removal of "mark to market" accounting; and various asset "guarantees" have, at least for now, greatly muted their impact.

However, "garbage" is "garbage" so to speak, and it is important to remember that they are either fundamentally worthless or very close to worthless.



SPX at 1048.68 as this post is written

Phenomenal Investment Opportunities

It is my belief that there will be many phenomenal investment opportunities arising in the near and intermediate future. Many more than during an average time period.

However, I am also of the belief that they will be harder to "realize" for a variety of reasons. Of course, the main prerequisite is having sufficient funds available at the optimal time in order to make such investments.

I define "phenomenal investments" as those that multiply, often many times, in value relative to their holding (time) periods. Those investments that can provide such returns over short periods are, of course, preferable, but usually demand even greater skill.

Phenomenal investments are elusive for many reasons.



SPX at 1049.26 as this post is written

The Changing Investment Climate

Here is a link to an interesting White Paper from Guy Haselmann of Gregoire Capital, dated August 2009:

http://www.gregoirecapital.com/HF%20Outlook%208-09.pdf

I found it interesting because it discusses a variety of very important concepts such as investment flexibility, market dislocations, inflation vs. deflation, diversification, hedge fund operating risk, etc.



SPX at 1063.22 as this post is written

The "Buy and Hold" Philosophy

Here is a story from CNBC.com on September 23: "Buy-and-Hold Investing Makes A Return After Turbulent Year"

http://www.cnbc.com/id/32970487

I am not a fan of the "Buy and Hold" philosophy, although I will concede that it worked (very) well, generally speaking, during the 20th Century.

As far as the present and future is concerned, I wrote an article titled "Does Warren Buffett's Market Metric Still Apply?" that discusses various factors that are highly relevant to the "Buy and Hold" investment strategy.


SPX at 1044.38 as this post is written

Gold Below $1000

With Gold now below $1000, I would like to call attention to a post of September 4 titled "Gold and Implications."

I think that Gold below $1000, after having failed to hold above this level, is very significant.

Also significant is the number of people who have been predicting a Gold price considerably higher than $1000, many saying Gold will reach $2000 to $5000/oz.

I like Gold's properties. However, I don't believe that the economic factors now in existence support a strong Gold price, from an "all things considered" basis.

Gold's price is particularly hard to predict, because there is always a "fear factor premium" that may assert itself. While this "fear factor premium" seems to have diminished over the last couple of decades, it can always reassert itself in times of panic. However, I think it was very significant that during the Financial Crisis of the second half of 2008 (especially July - October), Gold faired poorly, which in my mind does not bode well for Gold's "fear factor premium" at least in the near term.

SPX at 1050.78 as this post is written

An Interesting Poll

Here is a September 17 story detailing a Bloomberg News poll:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDhCOltOR1RY

I found various aspects of this story to be interesting, but one facet really stood out:

"Respondents were divided over whether the economy will get better or stay the same in the next six months; only 1 in 6 said things will get worse."

1 in 6 seems very low to me on an "all things considered" basis, especially with the unemployment situation.

SPX at 1056.36 as this post is written