No doubt gasoline in the United States is going to cruise aroundÂ $ 3.00 a gallon while the average wage earner’s income is going to be at best moderately increased. The result will be that the same amount of money will now have to go further for median man. The upper crust will prosper as never before for the most part until they have to set up philanthropies, pay the government a share before the family dilutes the wealth or lose it in the competition of future markets.
The result for median man will be where money is made once again. Which way that dollar will be newly split is key. I see some winners.
Let’s try housing first. Assuming that we do not modify the Uniform Building Code substantially to a lesser standard and that we insist on the same level of service in our communities, the winner will be the builder who can bring the most exciting small area floor plans to infill locations. This builder is going to be faced with higher financing costs and standards as well as possibly higher labor and material costs. The idea of smaller is both grander and less expensive to occupy, so the challenge is special. The unknown may be key here as the possibilities of nanotechnology and other fledgling areas of science emerge. This sounds to me like a business that requires large organizations to compete. Pick your current top ten builder and make a case for its development superiority if you wish to invest here. It does seem clear to me that we won’t be able to sustain housing costs of more than 1/3 of the gross income of the buyers as opposed to the ratios now in most markets. The challenge if so is clear. There are definitely antiquities and inefficiencies in the structure of the housing business. Builders will be faced with new management challenges as construction issues will not be the key driver.
The hospitality business will trend toward recreational pursuits in the United States or on the continent as the weak dollar and median man’s budget rule. That may bring sports and other purpose trips more to the fore than in previous generations. Travel for sight seeing purposes may not be as wide spread, investment in esoteric sports may be even more profitable. Calculating whether there is growth in NASCAR or Bass Fishing or another mass event may be your key to riches. Will Tennis come back? Is there a revolution in Baseball to come ? It appears for sure that sedentary is not the future, so your investment might be keyed to that thought.
The remainder of median-man’s budget now stretches through a big education bill for his heirs and the need for electronic gear in abundance. Mix that in with new clothing standards, a need for say 1/3 less calories in most diets, food purity issues and healthcare costs. Your car now probably costs you as much annually as your house does if you’re average. Your efforts in finding the efficient low cost distributor in these areas might be good for your investment funds. Watch for retail closings and difficulties in the coming period.
Throw in China’s interest rate raises and currency moves. Now we see that China is going to buy a big part of Blackstone and become a big international private equity and hedge fund player. That country is terminally dirty now and its citizens are increasingly getting sick, so their investment needs for infrastructure, education and healthcare are going to take away from their ability and willingness to subsidize our consumerism. Between China and India, the two have about 40 % of the world’s populations within their borders. If you pay attention here and you are early in spotting the results, you will prosper.