Smart Investing

 

July 27, 2012

October 4, 2013


Looking past the doom and gloom

In investing, emotions are the biggest and hardest obstacle to overcome.

From time to time, I point out and dispel many things that investors worry about that just aren’t true. Human nature tricks us into thinking that if we see it on TV, it must be real.

I’ve heard from many people who think that here in the United States there are many poor people and that this class is growing. It might make them feel bad that things are not going well in our country.

When I think of a poor person, I think of someone who is homeless, starving and can’t provide for their family. A bad image appeared in my mind until I read a report at projectworldawareness.com called “Understanding Poverty in the United States: Surprising Facts About America’s Poor."

I was shocked when I read some of the facts and what “poor” in the United States really means. I’m curious how many people will be as shocked by this as I was. The Census Bureau states that there are currently 46 million poor people in the United States — sounds terrible, right?

Here are some stats for you: 80 percent of the poor have air conditioning. Almost 75 percent have a car or truck; 31 percent have two or more cars or trucks. Around 66 percent have either cable or satellite TV; 50 percent own a computer; one in seven have two or more computers in their home; 49.5 percent of the poor live in a single-family home; 41 percent live in an apartment; and only 9.5 percent live in a mobile home.

In those homes, more than 50 percent have a gaming system like an Xbox or PlayStation. If there are boys in the home, the percent of gaming systems in the home increases; 33 percent have a wide-screen plasma or LCD TV to play those gaming systems on.

Apparently, a big misunderstanding is how many of these “poor” people are starving or going hungry. I remember when I was little, my grandmother said to me, “Clean your plate because there are people in China who are starving.”

As I got older, I wondered how eating all the food on my plate would help the poor, starving kids in China — I couldn’t send them what I didn't eat.

The U.S. Department of Agriculture collects data on topics such as these in what’s known as a household food security survey. The most recent survey was from 2009, the bottom of the last recession. It found that 96 percent of poor parents said their children were never hungry because they could afford to buy food; 83 percent of poor families reported having enough food to eat.

For the last couple of years we couldn't get away from how bad things are in Europe, but comparing the housing situation of the poor in the United States, they are living better than the Europeans when it comes to average living space.

In the United Sates, poor households average 515 square feet per person — compare that with the European average of 363 square feet per person. We know Germany is currently doing the best in Europe when compared with other countries, yet the average square footage of living space for a German citizen is only 462 square feet, 53 less than a poor person in the United States. Looking at the United Kingdom, the average square foot per person there is only 474 — 41 square feet less.

This week, the Dow Jones once again crossed over the 13,000 mark, yet many people still fear investing. Why?

The average person is bombarded by the bad side of the news. If it’s not bad and shocking, then many times it won’t make the evening news. We tend to think if we see something bad, like how many poor people we have in the United States, everything is bad. That simply isn’t true, and investors must do their own research to verify that the economy is doing OK and that the companies they own in their portfolios are making money, no matter what the stock price is doing.

To end on a couple of bright spots, Panera Bread Co. (Nasdaq: PNRA) saw its revenue climb 18 percent to $531 million, and it also increased its EPS target for 2012 to $5.72 to $5.78 — a 26 to 27 percent increase over fiscal year 2011.

Panera Bread is not a discount sandwich shop. Its products, while priced reasonably, are above average.

High-end grocery chain Whole Foods (Nasdaq: WFM) saw its fiscal third-quarter earnings increase 32 percent as shoppers spent more. This was on revenue growth of 14 percent to $2.73 billion for the quarter. I’m not recommending you go out and buy these companies, but all is not bad. One just has to look a little harder. Follow me in my columns and on Facebook, LinkedIn and Twitter, and I’ll share with you what I’m digging up.

Have a question or a company you'd like me to take a look at? Email me at brent@wilseyassetmanagement.com.



Wilsey is president of Wilsey Asset Management and can be heard every Saturday at 8 a.m. on KFMB AM760. Information is provided by Reuters.


 

July 27, 2012

October 4, 2013


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