The Sign We All Want to See

It doesn’t matter whether we’re in a recession or an economic slowdown (which falls just short of a recession). The main point is, the economy is hurting.

So, what’s the cure? I posed that question in ETR a few weeks ago. But of all the possibilities I suggested, only one makes sense to me: We should look for the end of what got us into this. The housing mess. It needs to straighten out. When housing prices begin to pop up again, we’ll start spending again. It’s that simple.

The one thing you cannot do is depend on the National Association of Realtors (NAR) for reliable information. It’s been saying a bottom is just around the corner for about a year now. It is a biased industry shill. It is not to be trusted.

Instead, look for housing inventories and foreclosures to drop. And listen to what home builders are saying. They’re the first ones to know what’s going on, and right now they’re saying the market looks brutal. They don’t want to raise expectations prematurely and unnecessarily disappoint shareholders. When they start to change their tune, you’ll know the bottom really is near and the economy is rebounding.

And how do you invest in a rebounding economy? Transport will start shipping more things months before you see it in the stores. Basic material companies should also pick up with manufacturing recovering. That’ll get you started.

[Ed. Note: It’s easy to spot where there’s big money to be made – especially if you have expert advice. Andrew Gordon, ETR’s Investment Director, has spent the past 25 years evaluating companies and appraising investments. Help him help YOU make a lot of money.]