<![CDATA[How to Explain a Recession - Gawker Comments]]> <![CDATA[How to Explain a Recession - Gawker Comments]]> <![CDATA[How to Explain a Recession]]> that's a bargain compared to if they factor in your share of the national debt > $30945.33 + bagel = $30,946.63. yum!

meechybee

]]> <![CDATA[How to Explain a Recession]]> @Nard38: Consequently, I'm seriously considering pulling my account from my broker, Fourteen Inch Rectumstretcher & Sons.

Screen Name

]]> <![CDATA[How to Explain a Recession]]> Actually, it turns out I was wrong. Regular publications are allowed two uses of the term "evergreen" per month. Anything more than that and you officially become an arboreal publication.

Wait, aren't magazines inherently arboreal?

Hipp

]]> <![CDATA[How to Explain a Recession]]> @ADismalScience: Isn't there also a hierarchy with respect to quality of advice from economists at banks based on how well the name of the bank translates into a gay porn star name (i.e., "Goldman Sachs" > "JP Morgan" > "Bear Stearns")?

Nard

]]> <![CDATA[How to Explain a Recession]]> @ADismalScience: That's because American beer tastes like skunk pee.

Colonel Mustard

]]> <![CDATA[How to Explain a Recession]]> @bittergreen:

It's all about being creative and finding the thread - if you know coke is out and H is in, buy up methadone manufacturers and producers of syringes. Don't just restrict yourself to a quickie long/short! Find more alpha in that information!

ADismalScience

]]> <![CDATA[How to Explain a Recession]]> @ADismalScience: I've taken a short position in cocaine futures, and I'm really bullish on opium poppies.

bittergreen

]]> <![CDATA[How to Explain a Recession]]> A rise in the price of cheeseburgers I can handle. At that first sign of a drop-off in productivity of the number of lolcats on icanhascheezburger.com, and I'm heading straight to the bank and putting all of my euros and yen in my mattress.

bittergreen

]]> <![CDATA[How to Explain a Recession]]> @The Real JR:

Right. Most economic goods have "substitutes" - products that meet the same or a similar need in the economy. "Substitution" effects flow both ways, in that you can typically spot trends in either direction. The trend has been toward downward substitution in most retail sectors, which has helped low-end retailers like Wal*Mart (sales are way up!) and hurt high-end stores like Coach.

This has implications for portfolio construction in investing. Let's pretend the retail sector of the stock market is made up of three retailers: Target, Macy's, and Lord & Taylor, and that they represent the low substitutes, middle substitutes, and high substitutes respectively. Each of these will correlate to the performance of broad-based stock indexes in ways that indicate their expected performance at various phases of the economic cycle. Target does well in downturns, Macy's is closely correlated to the S&P 500 generally, and Lord & Taylor tends to outperform in bull markets.

So to diversify, you would want a certain amount of each stock adjusted to your understanding of overall economic health. Portfolio managers often adjust their weights in positions that scale against general market performance in specific ways - they'll go "overweight" in a low-end position if they expect a downturn or their general strategy is to create a long-term recession hedge product.

Then there are other macro trends! It used to be you bought beer stocks in a recession and liquor in good times because people would stop buying pricey liquor during a recession. But from a macro perspective, American consumers are making a broad-based shift toward liquor irrespective of price and independent of the economy's performance. Weird!

ADismalScience

]]> <![CDATA[How to Explain a Recession]]> @Hipp: And the article in which it occurred was much more fun. It had vidyas!

Pareene, do you have any footage of Mad Money dude eating a bagel?

Gayyker

]]> <![CDATA[How to Explain a Recession]]> Nolan already used up Gawker's "evergreen" quota for the day.

Hipp

]]> <![CDATA[How to Explain a Recession]]> @SeaBassTian: Also look at the amount of dirt cheap consumables like store-bought Mac n Cheese as an indicator of how the economy is doing and what regular folks are buying to keep food on their tables.

The Real JR

]]> <![CDATA[How to Explain a Recession]]> I recall reading a trend piece linking the economy to the price of a slice of pizza. Now bagels and cheeseburgers. It is like our Fed Chairman is Ronald McDonald!

SeaBassTian

]]> <![CDATA[How to Explain a Recession]]> If New York is worried about a recession , it's out of fear that the cost of maids and nannies will do up.

Mike_Jahn

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