Consumer Confidence – What It Means For Your Investments?

| February 7, 2011 | 0 Comments

They say confidence is everything in life.

Just look at most professional sports.  The act of winning often leads to… more winning.  It’s why hot streaks (and cold streaks) are so noticeable.

It’s why shooters get a “hot hand” in basketball.

It’s why golfers fear the “yips”.

Think of Tiger Woods.  Yes, his skills are amazing.  But golf is also a mental game.  Tiger has supreme confidence in his abilities.  When he steps onto the course, he expects to win.  It’s one reason why he can come from behind to win.  He can make the tough shots.  Tiger’s confidence plays a big role in his victories.

Another example is the Super Bowl.

Tens of millions watched the Green Bay Packers defeat the Pittsburgh Steelers in the Super Bowl yesterday.  The confidence of the winning team was apparent.  When they took the field, the entire team was prepared.

They had confidence in their skills, in their coach, and in their leaders.

Green Bay quarterback Aaron Rogers confidently marched his team to victory…

Now, don’t get me wrong.  I’m not saying the Steelers didn’t have confidence… It’s just Green Bay had more!

And more confidence is a good thing… especially for the economy and your money.

Let me explain.

The US economy is driven primarily by the American consumer.  Our everyday actions of buying goods and services make up over 70% of all economic activity in the country.  So, as you can imagine, the confidence of the American consumer is very important.

It’s so important that a number of groups try to quantify and track confidence levels.

ABC News has started a poll to track consumer confidence… and last week that reading was negative 41.  The University of Michigan also publishes a consumer confidence reading.  Two weeks ago they reported confidence was at 74.2.  A group called The Conference Board also puts out a consumer confidence number… In late January, their number was 60.6.

What does all this mean?

If you ask me, it’s crazy.  Each group asks consumers different questions.  Each group monitors their responses differently.  Each group has a complex way of crunching the numbers… and the results are all over the map.

Is one more right than the other?

I don’t think so.  And that’s why I IGNORE the numbers.  You heard me.  I ignore all of these numbers.  It’s way too confusing to figure out what a one point or quarter point move means.

Instead, I look for trends.  I look to see the general direction the numbers are moving.

A year ago this time, all of these numbers were lower… considerably lower.

ABC reported confidence at negative 48.  The University of Michigan reported a 72.5 consumer confidence reading.  And the Conference board had a reading of 55.9!

The point is, all of these indicators are improving.  The numbers are getting better.

And, it means consumer confidence is returning.  Economic activity is starting to accelerate.  Want more proof?  Just look at Ford (F).  A few years ago, the company couldn’t give away the cars and trucks they were building.  Sales were so slow, dealerships were being shuttered.

Now, Ford is running full steam ahead.

Over the weekend, the company announced plans to increase production by 13%.  Plants are running overtime and they are considering adding more shifts.  WHY?

To keep up with customer demand!

It doesn’t take a rocket scientist to see the change in attitude slowly rolling over the economy.  Consumer confidence is up.  And consumers are cracking open their wallets.  Economic activity is starting to take root.

And that’s great for the American economy, the American worker, and the 9% of workers unemployed and looking for jobs!

It’s also great news for your money.

It means spending is starting up again and many industries will benefit. Where should you invest?  Take a few minutes and think of all the areas you cut back on during the recession.

Many people stopped taking vacations or going to the casinos.  Many stopped traveling all together.

Others stopped buying cars and trucks.  Some stopped buying high end designer clothes.  New furniture for the house… that purchase was put on hold during the recession.  So was the fifth wheel travel-trailer and motor home.

Any company with a consumer-facing product or service is sure to see business pick up speed in the next year… and now’s the time to invest. You want to get on board before the company starts announcing quarter after quarter of amazing results.

Move quick before others see the same thing and drive stock prices higher.  Find a few of these stocks and snap up a few shares.  You won’t be disappointed!

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Category: Stocks

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The Dynamic Wealth Report works with a number of staff writers and guest experts who specialize in everything from penny stocks to ETFs to options trading. These guest analysts post under the 'staff writer' moniker for ease of use.

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