It is the highest since October 2004, reflected an expansion of the workforce, led by teenagers. The increase in the rate was the biggest since February 1986.
A loss of jobs is one of the criteria used by the National Bureau of Economic Research to determine when recessions begin and end. The group, the official arbiter in the U.S., defines contractions as a "significant'' decrease in activity over a sustained period of time. In addition to payrolls, changes in sales, incomes, production and gross domestic product are also considered.
Payrolls shrank by 324,000 workers in the first five months of the year. In 2007, the economy generated 91,000 new jobs a month on average.
"We've never seen a run of negative payroll numbers like this without the economy being in a recession,'' Avery Shenfeld, senior economist at CIBC World Markets in Toronto, said before the report.
"We are in a mild recession. We expect to see a few months of declines that are worse than this.''
Factory payrolls fell 26,000 after declining 49,000 in April. Economists had forecast a drop of 40,000. The decrease included a drop of 7,500 computer and electronics manufacturing jobs. Auto factories added 4,400 workers.
The protracted housing slump and resulting collapse in subprime lending were also reflected in today's report. Payrolls at builders fell 34,000 after decreasing 52,000. Financial firms decreased payrolls by 1,000, after a gain of 1,000 the prior month.
-- Bloomberg
Tuesday, June 10, 2008
Monday, June 9, 2008
Networth
Americans saw their net worth decline by $1.7 trillion in the first quarter, as declines in home values and the stock market ravaged their holdings.
The net worth of U.S. households fell 3% to $56 trillion at the end of March, according to the Federal Reserve's flow of funds report, which was released Thursday.
The drop marks the second straight decline in net worth, which fell by more than $500 billion in the fourth quarter of 2007. Until then, net worth had risen steadily since 2003, climbing nearly 31% over those five years. During the bear market of 2000 through 2002, household's net worth dropped 6.2%.
The net worth of U.S. households fell 3% to $56 trillion at the end of March, according to the Federal Reserve's flow of funds report, which was released Thursday.
The drop marks the second straight decline in net worth, which fell by more than $500 billion in the fourth quarter of 2007. Until then, net worth had risen steadily since 2003, climbing nearly 31% over those five years. During the bear market of 2000 through 2002, household's net worth dropped 6.2%.
Saturday, June 7, 2008
ExxonMobil
When it comes to a measuring a company's health, little can compare with overall profits. The more profitable a company is, the better. And no company in the world is more profitable than ExxonMobil (XOM). For anyone who drives a car and pays $4/gallon for gas, this should come as no surprise.
In 2008, the petroleum industry is where you want to be. And while few of us can avoid buying gas, we can at least make back a little of what we're spending by investing in ExxonMobil. The stock was around $70/share at the beginning of 2007, and recently closed at around $94/ share, a 34 percent increase.
Keep in mind that you need to go into any investment - even a seemingly great one like oil - with your eyes open. As Rick Pendergraft mentioned recently, the economy can't sustain the gas price crunch on consumers for long. And as Andrew Gordon pointed out in an article about the future of gas prices, new technologies are on the horizon that will "upend the demand side of oil" and "make inroads on increasing the supply side." Those technologies are still a few years away. In the meantime, if you're cautious, there is no reason you can't profit from Exxon's stock movements.
For the short term, oil is a good investment. Americans still drive everywhere, often with no one else in the car. And while a trend toward smaller cars has begun, gas-guzzling SUVs still dominate our highways. So, like it or not, ExxonMobil and its counterparts will continue to cash in on high gas prices for the near future.
Add ExxonMobil to your portfolio to help offset rising prices at the pump. But keep your eyes peeled for the inevitable reversal - and be prepared to jump ship as soon as gas prices start to slip. Protect yourself by setting a 25 percent stop-loss point. That way, you'll get out with 75 percent of your profits intact.
In 2008, the petroleum industry is where you want to be. And while few of us can avoid buying gas, we can at least make back a little of what we're spending by investing in ExxonMobil. The stock was around $70/share at the beginning of 2007, and recently closed at around $94/ share, a 34 percent increase.
Keep in mind that you need to go into any investment - even a seemingly great one like oil - with your eyes open. As Rick Pendergraft mentioned recently, the economy can't sustain the gas price crunch on consumers for long. And as Andrew Gordon pointed out in an article about the future of gas prices, new technologies are on the horizon that will "upend the demand side of oil" and "make inroads on increasing the supply side." Those technologies are still a few years away. In the meantime, if you're cautious, there is no reason you can't profit from Exxon's stock movements.
For the short term, oil is a good investment. Americans still drive everywhere, often with no one else in the car. And while a trend toward smaller cars has begun, gas-guzzling SUVs still dominate our highways. So, like it or not, ExxonMobil and its counterparts will continue to cash in on high gas prices for the near future.
Add ExxonMobil to your portfolio to help offset rising prices at the pump. But keep your eyes peeled for the inevitable reversal - and be prepared to jump ship as soon as gas prices start to slip. Protect yourself by setting a 25 percent stop-loss point. That way, you'll get out with 75 percent of your profits intact.
Thursday, June 5, 2008
Investor
1. Modesty. You don't need to be the best and most successful investor in the world. If you set modest objectives - 10 percent to 15 percent - you will have a good chance of reaching them.
2. Humility. You don't know enough to predict the future. Admit it by setting stop-loss points and sticking to them.
3. Consistency. Umpteen studies have shown that the most important factor in stock market success is the consistent application of a rational system. Which system you follow is not as important as your consistency in adhering to it.
A 10 percent to 15 percent return on your investment may not make you wealthy overnight. But if you stick to these three virtues - and don't abandon them when you hear an irresistible story about a "can't lose" stock - chances are you will do much better than your friends and colleagues.
2. Humility. You don't know enough to predict the future. Admit it by setting stop-loss points and sticking to them.
3. Consistency. Umpteen studies have shown that the most important factor in stock market success is the consistent application of a rational system. Which system you follow is not as important as your consistency in adhering to it.
A 10 percent to 15 percent return on your investment may not make you wealthy overnight. But if you stick to these three virtues - and don't abandon them when you hear an irresistible story about a "can't lose" stock - chances are you will do much better than your friends and colleagues.
Wednesday, June 4, 2008
The S&P Homebuilders Spyder (XHB) has...
...bounced back from its January low. The stock has recently moved above its 100- and 200-day moving averages. I find this to be encouraging for a long-term investment.
I am normally a short-term trader, but I know a long-term opportunity when I see it. The XHB is a great one. I would look to buy shares up to the $23.50 level and hold them for a year or more.
I am normally a short-term trader, but I know a long-term opportunity when I see it. The XHB is a great one. I would look to buy shares up to the $23.50 level and hold them for a year or more.
Tuesday, June 3, 2008
Although OPEC's excess capacity ...
...has rebounded from its 2005 low, the gains are largely in heavy crude oils that can only be processed in specialized refineries. Those facilities are running full bore, so the added supplies aren't relieving a tight market. The latest evidence also suggests OPEC is now restraining its output.
While some warn that oil production has peaked-or will soon-most industry experts contend that oil resources are plentiful; it just takes time and money to get them out of the ground and into the market.
Higher prices have done what economics would predict-stimulated efforts to increase supply. Companies have expanded their exploration budgets. Oil-producing nations have announced new projects. Drilling activity is at a high level, both offshore and on land. Wages and oilfield services costs are being bid up, while shortages persist for some key skills and equipment.
So far, new supplies haven't materialized quickly enough to keep up with growth in world demand, largely because various hurdles have slowed their development. Oil resources, for example, are concentrated in countries with state-run oil companies or little economic freedom. Where market signals aren't allowed to work, incentives to boost production may be muted.
Oil demand is inelastic in the short run-that is, it doesn't react quickly to changing prices. Consumers adjust their spending to maintain consumption as prices rise, even if they have to pay more for it. Most likely, this reflects businesses' commitment to keep up production and individuals' need to drive to work, run errands and heat homes.
When demand is inelastic, even modest tightening in markets translates into strong price movements. In recent years, this inelasticity has magnified tight markets' impact on prices.
-- Federal Reserve Bank of Dallas
While some warn that oil production has peaked-or will soon-most industry experts contend that oil resources are plentiful; it just takes time and money to get them out of the ground and into the market.
Higher prices have done what economics would predict-stimulated efforts to increase supply. Companies have expanded their exploration budgets. Oil-producing nations have announced new projects. Drilling activity is at a high level, both offshore and on land. Wages and oilfield services costs are being bid up, while shortages persist for some key skills and equipment.
So far, new supplies haven't materialized quickly enough to keep up with growth in world demand, largely because various hurdles have slowed their development. Oil resources, for example, are concentrated in countries with state-run oil companies or little economic freedom. Where market signals aren't allowed to work, incentives to boost production may be muted.
Oil demand is inelastic in the short run-that is, it doesn't react quickly to changing prices. Consumers adjust their spending to maintain consumption as prices rise, even if they have to pay more for it. Most likely, this reflects businesses' commitment to keep up production and individuals' need to drive to work, run errands and heat homes.
When demand is inelastic, even modest tightening in markets translates into strong price movements. In recent years, this inelasticity has magnified tight markets' impact on prices.
-- Federal Reserve Bank of Dallas
Saturday, May 31, 2008
Trumps the Tally
What's wrong with depending on the collective wisdom of the analysts who follow stocks day in and day out? If the majority of analysts say buy, shouldn't you buy? And when most say sell, shouldn't you sell (if you already hold the stock)... or at least not buy? If anybody knows whether a stock is good or not, they should, right?
All this makes so much sense. And it would be so easy to do. Which is why I hate to throw the idea to the dogs. But that's what it fully deserves. And I'll tell you why.
Analysts are incredibly biased. When they see a cup half-empty, they're known to shout "buy." Okay, that's forgivable. But not when they see a cup two-thirds empty. The frightful fact is this. About 40 percent of stocks go down in any given year. And the percentage of stocks that have "sells"? Only five percent. As recently as the 90s, it was two percent.
That means a lot of stocks go down with either a "hold" or "buy" rating.
There's a way for you to get around all the smoke and mirrors. Look at the trend, not at the tally. Are analysts liking a company more or less? If it's more, the company is worth a second look. Because as analysts improve their ratings from sell to hold or from hold to buy, they bring more buyers into the fold. And as investors do more buying, the share price goes up. As an investor, that's what you want to see.
The Reuters financial site shows how analysts have changed their opinion on specific stocks during the past year. You can find this information under "recommendations."
All this makes so much sense. And it would be so easy to do. Which is why I hate to throw the idea to the dogs. But that's what it fully deserves. And I'll tell you why.
Analysts are incredibly biased. When they see a cup half-empty, they're known to shout "buy." Okay, that's forgivable. But not when they see a cup two-thirds empty. The frightful fact is this. About 40 percent of stocks go down in any given year. And the percentage of stocks that have "sells"? Only five percent. As recently as the 90s, it was two percent.
That means a lot of stocks go down with either a "hold" or "buy" rating.
There's a way for you to get around all the smoke and mirrors. Look at the trend, not at the tally. Are analysts liking a company more or less? If it's more, the company is worth a second look. Because as analysts improve their ratings from sell to hold or from hold to buy, they bring more buyers into the fold. And as investors do more buying, the share price goes up. As an investor, that's what you want to see.
The Reuters financial site shows how analysts have changed their opinion on specific stocks during the past year. You can find this information under "recommendations."
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