Courtesy of Doug Short
Note from dshort: Marv is a CFP® in San Jose California who sent me the email reproduced below.
In your periodic update on the Consumer Metrics Institute (CMI), you quote Rick Davis, founder and CEO of the CMI, as saying: “By the third quarter we began to understand that the demographics of the consumers most likely to buy on-line were the same as those households most severely impacted by the recession.” [Download Rick’s PDF commentary]
I believe that Rick’s observation leaves out an important dimension of the situation. My query to you is whether there is a way to study the data and tease out a more accurate conclusion.
Briefly, my thinking is that the people who are buying on-line are the same folk who are reading the on-line blogs about the economy, recession and market. As I suspect you will agree, these blogs’ opinions about the cause of the recession and the state of the economy differ radically from the main stream media.
Blog readers are likely aware that nothing has *substantially* changed since the recession’s onset. They know that Federal spending and masking of bank insolvency have not led to a sustainable recovery. I believe that blog readers are therefore better informed about the reality of our current situation.
Now my leap-of-faith speculation: I assume that many well-informed individuals will have reduced their spending and curtailed their investing activity in anticipation that things will likely get worse before they get better.
For whatever it’s worth, I was not nearly as severely impacted as, say, the typical homeowner. My mortgage is paid off and I exited the market to mostly cash in December 07 and January 08. (Yeah, I missed the rally starting in March 2009. Oh, well.) But I shop on-line less now than I used to. Indeed, I shop less. Period. And my conceit is that it is because I am better informed, not because I was hit harder.
dshort response: Marv, Thanks for your thoughtful perspective and giving me permission to share with my readers. Unfortunately, I don’t have a method or means to substantiate your hypothesis. But I’m persuaded that it has a profound element of truth. I would also call attention to the general pessimism in consumer sentiment (see the latest Michigan survey) as a coincident indicator.
