Rodney Johnson | Friday, November 15, 2013 >>
We spend a lot of time pointing out the flaws in our economy, but we recognize that a lot of money continues to be made and spent. There’s no question that cash is flowing, it’s just not an even stream to all – or even most – participants.
Last month in our premium newsletter, the HS Dent Forecast, I pointed out the uneven flow of income based on age.
While younger households, in general, are failing to keep up with inflation, those headed by older Americans are surging ahead.
At the same time, when we divide the younger households by education and profession, we see that those focused on science, technology, engineering, and math (STEM) are at the top of the money charts.
All of this means that nerds, geeks, and grandpas are moving forward economically… and they like to spend money.
So it’s no surprise that industries focused on these groups are enjoying strong sales…
Companies that make recreational vehicles (RVs) and pontoon boats have done very well and are estimating higher earnings in the quarters ahead, and they’re not alone.
Luxury car manufacturers and high-end appliance makers are also in on the act.
Does it mean the recession or long slog of the economy is over?
No. Not by a long shot.
It simply means that we’re not dead.
Just because our overall economy is in the doldrums doesn’t mean there won’t be pockets of growth.
Frankly, people like to have fun. They like to have nice things.
If the world looks like it is coming to an end (remember February 2009?), then it makes sense that most people would hold off on every purchase beyond necessities. But it’s been almost five long years since then. People want a break, and they don’t want to feel bad about it. So, those who can afford it are stepping out and stepping up. They’re buying.
As mentioned above, this doesn’t mean that the all-clear bell is ringing for the economy. It simply means that those with income are pursuing their own wish lists.
As business owners and investors, our goals should include getting in front of these groups so we can benefit along the way.
RVs are an easy example because they’re so clearly geared toward empty nesters and retirees. As long as fuel remains at tolerable (notice I didn’t say reasonable) levels, then RV sales and related businesses like storage, cleaning, and repair should also stay busy. Along those same lines, companies like Winnebago should continue to benefit from the trend.
Nerds and geeks might be a bit harder to pin down, but the point remains the same. The market here is probably luxury cars and premium items, like $800 strollers, that appeal to young families. The vanity brands that are part of bringing up baby should also do well with this group.
So the next time you get frustrated with fiscal or monetary policy, or happen to see a statistic on how many people are working part time, just remember that there are groups who are doing quite well… then go out and find a way to profit from them!
It’ll make you feel better, and then you can spend more as well.
|Follow me on Twitter @RJHSDent|
Ahead of the Curve with Adam O’Dell
To Rodney’s point, even though the economy is a far cry from healed, many investors are still pouring money into the market… and pulling a lot of profits from it, as well.