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  1. #1
    Join Date
    Feb 2006
    Location
    Pittsburgh, PA
    Posts
    3,361

    Exclamation Bad Economy Opportunities

    With the economy going towards a major adjustment, if not a recession, if not a borderline depression, what opportunities might there be for business?

    For one, I like pawn shops because of the spread that they get on their merchandise. Say that Jimbo was once a successful person. Making enough money that he could afford some pleasures of wealth, he bought items like gold watches and chains, fancy electric guitars that he couldn't play well, exotic weapons, memorabilia, etc., etc. On top of that, Jimbo also thought he would try his hand at flipping houses with all his wealth; leveraging his own buying power. Well, guess what... as a bad economy rolls in, Jimbo is highly leveraged with all the things that made him feel wealthy in a good economy, and he in unprepared for financial stress. (sound familiar?) He needs to liquidate his most valuable things just so that he ensures his own financial security, and to avoid filing bankruptcy. So, what goes? All the pleasures of wealth, and the house...

    Jimbo needs to liquidate tangible goods; the pawn shop, eBay, and the classifieds are the only markets for this. But let's look at the pawn shops... They buy their merchanidise at scrap value or lower. The equivalent amount of pure gold in Jimbo's chains is purchased at 50-60% off the spot gold price, or about 5-10% of retail value for the jewerly. The guitars go for $25-$50, and the list goes on. The pawn shop gives Jimbo the money... about a maximum of 25% of what was paid, gives him his ticket to repurchase at a higher price, and then puts the price tag on it for someone else to buy from the storefront.

    Do you see the margins here? The pawn shops are providing liquidity to the public in exchange for 100% to 500% profit on the merchandise. The costs are minimal... storefront, security, low labor rates, and insurance. And the best part is that pawn shops will perform better in poor economy!

    This is the list of publicly traded companies associated with this seemingly seedy industry of pawn shops: EZPW CSH FCFS.

    After a little reflection, maybe looking into this post as more than just a post on pawn shops may shed some light on what the US government and FED are currently doing. hint: they are the pawn shop, and we are Jimbo
    Hide not your talents.
    They for use were made.
    What's a sundial in the shade?

    - Benjamin Franklin

  2. #2
    Join Date
    Nov 2003
    Location
    SacTown
    Posts
    14,938

    Default

    Quote Originally Posted by peanuts View Post
    With the economy going towards a major adjustment, if not a recession, if not a borderline depression, what opportunities might there be for business?

    For one, I like pawn shops because of the spread that they get on their merchandise. Say that Jimbo was once a successful person. Making enough money that he could afford some pleasures of wealth, he bought items like gold watches and chains, fancy electric guitars that he couldn't play well, exotic weapons, memorabilia, etc., etc. On top of that, Jimbo also thought he would try his hand at flipping houses with all his wealth; leveraging his own buying power. Well, guess what... as a bad economy rolls in, Jimbo is highly leveraged with all the things that made him feel wealthy in a good economy, and he in unprepared for financial stress. (sound familiar?) He needs to liquidate his most valuable things just so that he ensures his own financial security, and to avoid filing bankruptcy. So, what goes? All the pleasures of wealth, and the house...

    Jimbo needs to liquidate tangible goods; the pawn shop, eBay, and the classifieds are the only markets for this. But let's look at the pawn shops... They buy their merchanidise at scrap value or lower. The equivalent amount of pure gold in Jimbo's chains is purchased at 50-60% off the spot gold price, or about 5-10% of retail value for the jewerly. The guitars go for $25-$50, and the list goes on. The pawn shop gives Jimbo the money... about a maximum of 25% of what was paid, gives him his ticket to repurchase at a higher price, and then puts the price tag on it for someone else to buy from the storefront.

    Do you see the margins here? The pawn shops are providing liquidity to the public in exchange for 100% to 500% profit on the merchandise. The costs are minimal... storefront, security, low labor rates, and insurance. And the best part is that pawn shops will perform better in poor economy!

    This is the list of publicly traded companies associated with this seemingly seedy industry of pawn shops: EZPW CSH FCFS.

    After a little reflection, maybe looking into this post as more than just a post on pawn shops may shed some light on what the US government and FED are currently doing. hint: they are the pawn shop, and we are Jimbo
    EZPW is this weeks IIC 100 Chart of the Week posted last Saturday: http://sharptraders.com/_wsn/page5.html
    "Trade What Is Happening...Not What You Think Is Gonna Happen"

    Find Tomorrow's Winners At SharpTraders.com

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  3. #3
    Join Date
    Apr 2004
    Location
    Monroe, WI
    Posts
    6,091

    Default INTO the Blackness.

    Remember Black Monday, 1987? It was in October.
    Remember Black Tuesday, 1929? It was in October, too.
    How about Black Monday, 1929? October.
    And how about Black Thursday? October.
    Black Friday? October.

    What am I saying? It is earnings time, and no time to be long in this market--
    unless you are long a double short ETF.

  4. #4
    Join Date
    Dec 2004
    Posts
    524

    Default oversold

    personally, i think the market will bounce abit here...im still in the bear cave and the market is going lower but stocks are getting oversold and over done here and we will get a nice bounce to suck more money in so larger positions can get out..remember nothing goes straight down just like nothing goes straight up.

    cheers

  5. #5
    Join Date
    Apr 2004
    Location
    Monroe, WI
    Posts
    6,091

    Default

    Quote Originally Posted by ninner View Post
    personally, i think the market will bounce abit here...im still in the bear cave and the market is going lower but stocks are getting oversold and over done here and we will get a nice bounce to suck more money in so larger positions can get out..remember nothing goes straight down just like nothing goes straight up.

    cheers
    Yessiree, Mr. Ninner. In 1929 the initial collapse wiped out a lot of wealth. Jessie Livermore made $100 million over the weekend. The market fell from 381.7 to 198.6 from Sept 3 to Nov 13. But he reinvested in the market, and after the market peaked on 30 April 1930 at 294.0 there was a deeper collapse and it wiped him out completely. He lost everything. This second collapse was called the rich man's crash, because so many of the rich weren't wiped out with the first crash. The market fell all the way down to 41.22 on July 8, 1932.

    So I agree, it will go up before it goes down again. BTW, that crash, peak to trough, represented an 89% loss.

  6. #6
    Join Date
    Dec 2004
    Posts
    524

    Default gamble

    i sold my NSC jan 65 puts today and going on a limb and buying some 45 FMC calls right here and right now....looked back and with that volume it couldnt close that gap around 40 from 2007 ...to me that is a rejection and is going top side......i believe we could have a tradable bottom here!!! depending on how we come out of here.

  7. #7
    Join Date
    Dec 2004
    Posts
    524

    Default

    by tradable bottom i mean the general market.....volume wasnt that high on the indices and it held the lows.

  8. #8
    Join Date
    Jan 2004
    Location
    Blue Ridge Mts....
    Posts
    3,678

    Default

    Quote Originally Posted by New-born baby View Post
    ....... This second collapse was called the rich man's crash, because so many of the rich weren't wiped out with the first crash. The market fell all the way down to 41.22 on July 8, 1932.

    So I agree, it will go up before it goes down again. BTW, that crash, peak to trough, represented an 89% loss.
    So I guess I should be sure to load up my short positions right after the July 4th holiday in 2011.... I just put a sticky note on my CRT to remind me, my memory ain't what it used to be.
    BEEF!... it's whats for dinner!

  9. #9
    Join Date
    Apr 2004
    Posts
    5,539

    Default

    Quote Originally Posted by Lyehopper View Post
    So I guess I should be sure to load up my short positions right after the July 4th holiday in 2011.... I just put a sticky note on my CRT to remind me, my memory ain't what it used to be.
    Won't do you much good...The world will come to an end on March 23rd 2012.

  10. #10
    Join Date
    Jan 2004
    Location
    Blue Ridge Mts....
    Posts
    3,678

    Default

    Quote Originally Posted by Websman View Post
    Won't do you much good...The world will come to an end on March 23rd 2012.
    I just made a note of that too.... Thanks for the heads-up.
    BEEF!... it's whats for dinner!

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