Most new hiring, related to MEW, is retail and restaurants. These will be adversely affected first.

Then the cycle spreads to production/manufacturing. If Rubios orders fewer burrito wrappers, the paper production company has fewer sales.

Then the cycle spreads to capital spending.

Eventually, the stock market is down for retail, wholesale, producers. It’s a domino effect.

In difficult economic times, customers change where they shop – they trade down. The Rubios customer goes to McDonalds and the McD customer eats at home. So I sold my Rubio stocks. However, I may have made a mistake, because the restaurants have a way of overcoming this penny pinching: entice the customer with new menu items. Jack in the Box posted quarterly higher profit yesterday, despite higher gas prices, bec. of new menu items. Starbucks advertised its coconut beverage on the radio and the line was out ther door yesterday (this is according to my friend who is tracking Starbucks informally), after having been very slow for weeks. So while I thought the restaurants would go down, I do lack the knowledge of what can happen to delay the downturn.

Consider pawn shops (Cash America and others), consumer durables, but PEs are too high.

Has anyone checked the Rydex funds? They’ve got a bunch of inverse mutual funds.