Dec

13

When the economy takes a turn for the worse, employment declines, right? Well, not all employment. Specifically, part-time employment tends to rise aggressively during economic downturns, somewhat concurrently with full-time employment declining. Because of that, one can play off the two types of employment and get decent broad brush investment timing decisions. The purpose here is to provide a general guideline to the "average Joe investor" (admittedly, a conundrum) to tell him when to be in and out of equities.

Quite simply, when the growth rate (annual rate-of-change) in part-time employment exceeds that of full-time employment, exit equities and only return when those numbers reverse. Doing so will enable an investor to avoid gut-wrenching declines. And of course the most valuable key to increasing wealth is to avoid getting behind.

The following chart illustrates what one's investment posture would have been. Employment differences should model the economy, something the stock market rarely agrees with. However in this case the employment differences seem to do a good job with the market. Again, this is not a trading plan, merely an illustration of what is possible.

Full time employed

Part time employed


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  1. Andre on December 16, 2016 7:08 pm

    Yes its so obvious in retrospect isn’t it? Two observations and some fake outs in there. Automation of jobs may lead to good performance and more temp jobs. On a different note one huge negative externality that exists in nyc is bad air quality and raises a a small red flag on ayn rands premisise although i agree her approach to life is better than the alternative. Also we are dealing with relativity and not absolute truth which doesnt exist. I can hear ayn in a raspy voice check your prem but is there really truth ayn rand or just choices?

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