5 ETFs for a Jobless Recovery

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 |  Includes: DIA, GSP, HAP, IYM, JJC, MOO, QQQ, SPY
by: Gary Gordon

You may not want to quote me on this observation. However, I do recall the country adding hundreds of thousands of jobs nearly every month for many years after the dot-com recession.

Like previous recessions, the jobs that were lost (5 million) were eventually gained back. Moreover, the average unemployment rate for the previous Administration was lower than the average unemployment rate for the 70s, 80s or 90s. And yet, the mainstream media mercilessly pounded the Bush White House with the phrase, “jobless recovery.”

Flash forward to a “Great Recession” that officially ended in mid-2009. Here at the tail end of 2010, the unemployment rate remains near its 2009 highs. Meanwhile, job losses are as prevalent as job gains.

I am neither indicting the current Adminsitration, nor heaping praise on the previous one. The truth of the matter is that both recessions and both recoveries are functions of completely different sets of circumstances.

I am suggesting, however, that the previous recovery was neither jobless nor weak by historical standards. I am also suggesting that the current recovery is “jobless” in every sense of the word. Of course, the mainstream media is sidestepping this reality for fear of criticizing the party in power before the mid-term elections.

There’s a reason for bringing up the uniqueness of the respective recessions and their corresponding recoveries. Specifically, the investments that worked best the last time round are NOT NECESSARILY the ones that are working best in a real jobless recovery.

In the absence of vibrant hiring in the U.S., what types of assets are seeing the largest inflows? What about the most significant appreciation? The answer happens to be… “things that are real” and/or companies that deal with “things that are real.”

Do hard asset companies and hard assets themselves always benefit from economic uncertainty? No, if you get enough fear, all assets can get decimated the way they did in 2008. What we have in 2010, however, is the U.S. Fed devaluing a dollar. It’s dilution, by definition, increases the value of commodities and increases the profit margins for companies engaged in commodity-related businesses.

Granted, the devalued greenback can contribute to asset appreciation in stocks, higher-yielding bonds, foreign currencies and a wide array of market-based securities. Yet a world where emerging markets are growing rapidly and developed markets are muddling along provides enough certainty for investing in “stuff” and “stuff” corporations.

Here are 5 exchange-trade investments for your consideration:

5 ETFs For A Real Jobless Recovery
Approximate
Friday 10/8 1-Month
iPath GSCI Total Commodity Total Return (NYSEARCA:GSP) 3.3% 9.4%
Market Vectors Agribusiness (NYSEARCA:MOO) 3.2% 5.5%
iPath Copper (NYSEARCA:JJC) 2.9% 10.2%
iShares DJ Materials (NYSEARCA:IYM) 1.8% 10.2%
Market Vectors Hard Asset Producers (NYSEARCA:HAP) 1.7% 7.9%
S&P SPDR Trust (NYSEARCA:SPY) 0.6%
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Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.