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Hurry Up, Damnit! I Need to Get to Work! Fast Food Investing

Thought: As people are ever-increasingly fearing for their jobs in the US, it strikes me that those still hanging on are now doing much more work (to take up the slack from the downsized positions), and spending more time in the office in general. Fear of getting the axe would do that to you, I’m told. (I don’t actually know. I’ve never really worked a “real job”.)

If they’re spending more time in the office or bringing their work home with them, that means less time for everything else… like cooking. I would expect that in tough times, cheap, fast food becomes more and more popular. Which makes fast food probably a sector to invest in that would outpace the market. I don’t think the sector would be a world-beating sort of play, but it should deliver good steady growth for some time to come. If everyone wants to stay on the Big Mac Express, no reason why I shouldn’t be getting a piece of the fares.

What Would the Effect of a Greek Default be on the Economy at Large?

None. Well, not really. Almost none.

The banks holding Greek debt have already taken a 70% loss on the value of their bonds, and are still functioning, albeit with the aid of the ECB (European Central Bank).

Since the lion’s share of the losses have already been eaten without the markets showing any real adverse effects, I would expect the last 30% to go down pretty easily, washed down with a few satisfying gulps of damn-near interest free money from the ECB, also.

Not to say there wouldn’t be a good week or two downswing on the markets, but as more time passes, the more banks and investors are getting themselves positioned in a way in which they can handle the hit.   If anything, I would think it would actually be a great point to do some buying, because the market will essentially be holding a sale.

Thinking Excercise: Age

Have a look at this graph:

US Demographic by Age

There has never been as many old people in the US as there is today, and that number is only going to get bigger. What determinations can you make from it? Women live longer than men, obviously. But go deeper. What other conclusions or questions can you come up with? Can you think of any opportunities? Stop reading now, and think.

How about:

1) Who’s paying the social security? (A: Not enough.) There obviously has to be changes to system to make it viable. (If you’re 20, what do you think the odds are that the retirement age is still 65 when you get grey?)

2) The US funeral business looks to be a growth industry for the next 30-40 years.

3) Before the baby boomers die off, most have to make the process from “middle age” to old to, “I have more wrinkles than a bulldog”. The demand for assisted living, (known as “old folks homes” to the younger set) is set to take off.

4) The amount of (legal) drugs consumed increases with age, doesn’t it? That’s a good tailwind for the pharmaceutical industry.

5) There’s more 45-50 year olds than 0-5. Presumably more people born 45-50 years ago have died than ones born less than 5 years ago. We can reasonably assume that the American population (minus immigration) is shrinking.

What do you have?

How long will it take for the American housing market to rebound?

Personally, I think you’ll be waiting a long time. There are many factors that contributed to the housing bubble in the United States in the first place, and most of those were temporary factors.

For example, interest rates are currently as low as they will go. The Federal Reserve has been on record as stating that they intend to keep these superlow interest rates around for at least a couple of years. But, even with the availability of all of this super cheap money, the housing market has failed to work its way back to where it was. At some point, interest rates are going to have to start to climb again. At which point, money will become more expensive to borrow.

Another factor in this equation is simple supply and demand. Back in the day when even a simple job like a customer service rep paid enough money to buy a house, there were many more people in the market. Demand was high. But now, most low-level information service, manufacturing, and most unskilled labor jobs that don’t require the work be done in the same country have been shipped overseas, where the price of labor is drastically lower.

Put yourself in the position of a business owner, but would you rather do? Would you rather pay 10 people in America $10 an hour plus benefits plus payroll tax to do a job that can be done in India by 13 people for one dollar an hour? So until America’s unskilled labor rates become competitive with the rest of the world, or transport costs skyrocket so much that it becomes more cost effective to hire locally, those jobs are never coming back. Realistically, can you envision a reality where Americans back a politician that wants to do away with the minimum wage that makes our unskilled labor market so uncompetitive?

On the other side, there may be a growing demand for housing away from oceans, as cities like New York and New Orleans find themselves in increasing danger of becoming Venice or even Atlantis down the road, and people start to move away from cities on faultlines like San Francisco, but we realistically have no idea when those issues will come to a head. On the time scale of 100 years down the road, real estate further inland will have a major driving force pushing up its prices as people move away from the coasts as water levels rise across the world.

But call me shortsighted, I don’t have a 100 year outlook on my investing.