Unloved Bull Markets

Chapter 7Unemployment

One of the biggest concerns that kept investors on the sidelines, missing the bull market, was that they did not think unemployment was improving fast enough. Stock market television focused in on every Friday's release of the jobs report as though it was extremely important for investing. Here is an example in the Wall Street Journal on June 30, 2010. Kevin Mahn, portfolio manager at Hennion & Walsh's SmartGrowth Funds, said the ADP report didn't bode well for the government's report or for consumer spending. “With an unemployment rate near 10% … we're not going to see consumers spending when they're out of work or worried about their job situation. That's where my concern lies and that's where consumer confidence is now starting to read that as well.”

The concern about unemployment was based on the belief that consumer spending was a function of employment. Some economist reasoned that if unemployment didn't drop quickly, the consumer would not spend.

Believing the focus on unemployment was wrong and contributing to investors missing out on the bull market we wrote a report in July 2010 titled “Unemployment Statistics Don't Tell You How to Invest.”

Unemployment Statistics Don't Tell You How to Invest

July 16, 2010

It seems unemployment is the number one concern for investors who ponder the economy. They worry that jobs are not being created and, therefore, do not find the stock market attractive. The following data will show that they are worried ...