Weekend Update: Market and Dollar Stage Comeback
Sunday, August 10, 2008
It wasn't such a terrible week in the market, stocks were up, the dollar was up, and oil was down. The world seems to be distracted by the Olympics, and not especially concerned with much else going on in the world. Investors Business Daily called the market in a "confirmed rally" a little over a week ago, and despite a few bumps, have been mostly right on the money.
Greenback Consulting Portfolio
Holdings: cash
Prior week trades: none
Top Three News Stories
1. Even the Best Isn't Good Enough - Nobody is surprised when they hear that Detroit's Big 3 are struggling; few even flinch when they hear that one or more of them may declare bankruptcy. On the other side of the world, Bloomberg reports that Toyota is facing their biggest slump in profits in the past five years. I recently blogged about cultural trends that you can use as the basis for investments. Yes, we are changing the type of cars we drive, and companies like Toyota should benefit the most; but we are also changing our driving behavior more broadly, driving less and buying fewer new cars less often, making auto-makers in general a relatively poor investment for the next few years.
2. Party is Over - For years we spent money on McMansions, SUVs, flat-screen TVs and other luxeries; in many cases, we couldn't afford them. US News & World Report claims that the US will enter a period of "new frugality" where saving money and living within our means will be culturally acceptable once again. Apparently, lving a simple lifestyle might actually be personally preferrable. Having an extra 10 hours per week that might have been spent driving a car can be spent taking art classes or playing kickball in the park. Spending less money on "stuff" for ourselves might give us more opportunities to spend money with friends. Who would have thought?
3. Back to School - Yet another anecdotal indicator that the economy is in trouble: business school applications are soaring and expected to increase again next year. The Economist makes an obvious point about business school, that the cost of attending is both the tuition paid and the salary forgone while attending. This leads some post-undergrads to skip the MBA and go straight into business. Last week's weekly update had a link to a new statistic that shows post-undergrads having the highest unemployment rate in the economy, so it really shouln't be surprising that some of them are using business school as a means to avoid unemployment.
Posted by Rob Pitingolo 3:31 PM
