Unemployment Numbers Take a Big Jump Up
Posted on January 4, 2008
Filed Under Equity Markets, Interest Rates, Investing, Real Estate Investing, Stock Market |
The unemployment number for December jumped to 5% from 4.7% in November. Non-farm payroll increased by only 18,000 jobs which is essentially a wash. Meaning about as many jobs were lost as added in December. Remember, these are lagging indicator meaning, the fundamentals in the economy caused the drop in jobs growth, the drop in growth is not predicting an economic downturn. The downturn has already happened and is continuing.
What does this mean for you as an investor?
It means the economy is soft and getting softer.
For the stock value investor it means you should be heavy in cash right now. It also means you will be able to buy some great equities on sale over the coming weeks and months.
It also means bargains in real estate are going to be abundant and at deep discounts for the well positioned investor.
On the residential side, rents are going up as more people choose or are forced out of ownership and rent. As the economy continues to adjust and populations move around in response to it rental demand will increase, especially in apartments. On the price side, it will continue sideways to down. Meaning, many who are upside down on their mortgages are going to be in even more trouble. It does not mean short sales will be easier but they will be more profitable.
On the commercial side, rents are leveling off. But, as inventory is absorbed it is unlikely we will see a big drop in commercial rent rates. These are usually long term leases and as long as your holdings are rented to well capitalized companies there is no reason to worry. Even if your commercial tenant wants to close an office or retail location they are still paying the rent through the term of the lease.
What all of this really means is more speculators are going to be shaken out of the market and investors, real investors, are going to see opportunity where others see unacceptable risk. Just as it should be.
So, in 2008 will you be an investor?
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