August 17, 2018

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12 investments to sell or avoid

Here are some kinds of investment to avoid

Big Ticket Consumer Purchases

Big Ticket Consumer Purchases

The 12 categories on which he is negative are:

• Manufacturers and distributors of big-ticket consumer purchases such as cars, appliances, air travel, cruises, and leisure and hospitality providers. As consumers save more, they’ll curtail spending on expensive postponable items.

• Credit card and other lenders to consumers. They’ll be burdened for years by the new focus on saving, and horror stories about what personal debt can do to you.

• Conventional home builders and suppliers. Burdened by excess inventories from the past building boom and the evaporation of home-owner investment interest.

• Antiques, art and other tangibles. They need high inflation and upper-income people flush with cash to do well.

• Banks and similar financial institutions. Their executives are likely to act very conservatively for a generation, with a focus on lowering risk rather than boosting earnings.

• “Junk” (high-risk) securities. Deflation will be lethal because the borrowers will find it difficult if not impossible to service their bonds.

• Flailing companies. Below-average revenue growth, high fixed costs and big debts will be “a lethal combination in an era of slow growth.”

• Low- and old-tech capital equipment producers. In the advanced economies the focus will be on productivity-enhancing equipment rather than capacity expansion.

• Commercial real estate. Vacancies are rising, rental levels for new tenants have collapsed and prices are plunging.

• Commodities. Excess supply and muted demand will keep prices under pressure, but more important will be the collapse of investment/speculative demand.

• Developing country stocks and bonds. Emerging markets overwhelmingly depend for their growth on exports to the US, where there is going to be major retrenchment in demand.

• Japan – “a slow-train wreck.” An ageing and shrinking population, cautious consumers, huge government debt, failure of the money-printing policy.

CopyRight – OnTarget March 2011 by Martin Spring

This article followed on from – Prediction: unemployment to continue rising

and is followed by – Ten investments to buy

and is part of the series starting with – Survive and Prosper in the Grim Decade

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