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I'm a retired geologist. We have a lot of sayings about "hard times." One is that McDonalds is the largest employer of geologists. The one I like is that an unemployed geologist is called a consultant. For this reason I doubt the household survey and agree with Greenspan that the household survey is less reliable. Self employed is often a "face saving" term or wishful thinking.

brucedoe
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Most of the increase in payroll employment over the last few months has been in temp. and part-time work. Casual day labor through Labor Ready et al, or illegal day labor is probably counted in the household survey but not in the payroll survey. My self employment (securities arbitrage trading) would probably count in the household survey, but would not be in the payroll survey. I made more at my career job before I retired.

So a lot of the things unemployed people can do to survive after their unemployment compensation runs out, show up in the household survey only. Outperformance in the household survey could be interpreted as a rise in desperation, and a growing proportion of survival-level jobs to flourishing careers. Just as you would expect after a long period of lagging employment growth and outsourcing.

I think the administration is making an error in telling us how great things are. It encourages the unemployed or under-employed to vote Democrat, because the Republicans must seem to them to be either out of touch with reality or uncaring about their condition. This group now constitutes a voting bloc that is quite big enough to swing the election on its own, yet is not yet getting properly sucked up to by the republicans.

Ed.
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Could NOT agree with this more...

I like that phrase ......

"a rise in desperation".....

mind if I use it elsewhere?

KBM (cynics R us)

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"a rise in desperation".....

mind if I use it elsewhere?"

KBM,
Be my guest. I find it flattering to be quoted, with or without credit. On that score, it is fun to see my phrase "second derivative investing" first coined on this board, now being in general use. I get a real kick out of that.

Ed.
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Hi Ed;

I'm glad you brought it up, I can intuitively understand the desperation part, but "second derivative investing" escapes my meager understanding of Market terms or analogies.

Would you be so kind to explain the meaning of this?


Thanks,

~hildy
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Hi hildy!

The "second derivative investing" concept refers to the second derivative in calculus, which is the rate of change of the rate of change of a function. It is a way of describing a pretty simple concept.

Imagine a graph of, say, a security's 10-day moving average, moving up and down. You can look at whether the price of the security is above or below the average, and by how much. That gives you a static appraisal of the situation.

You can also look at the current direction (up or down) and steepness of the slope of the graph. Now you can see the rate of change in the price. The steeper the slope, the faster the price is changing. The rate of change is the first derivative. It shows what is happening in a dynamic sense, and shows the current price momentum.

To see the second derivative of the price movement, which is a more precise predictive measure of future action, you look at the curvature of the graph. Concave is positive, and convex is negative. The shorter the radius of curvature, the higher the value. This is the second derivative. Put another way, you are looking at which way the trend is trending, and how fast it is doing so. Is an upward trend gaining in power (concave curve), or is it starting to peter out(convex curve)?

The bottom line is of course that the best investing opportunities often occur when a long downward slope in the charts has progressively flattened into a curving bottom. That is, when the first half of a bowl-shaped bottom has been completed. Upward momentum has been demonstrated in a dynamic way, even though the price has no risen significantly yet. You have a chance to get in at the bottom.

Another interpretation is to say that a price chart showing an upward slope is not necessarily exciting by itself, but if the slope is increasing, then there is a higher probability that the upward movement will continue.

Putting the analysis another way entirely, you could say that momentum is a good thing, but rising momentum is even better.

Nothing new really; just a catch phrase of the sort that money managers and board posters like me like to use to sound knowledgable.

Good luck,

Ed.

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