This is great! One of my akamai (“smart” in Hawaiian) readers found this chart and posted a link in my comments section. It shows a strong correlation between grad school and unemployment rate. The coefficient correlation is .75583 which is very quite acceeptable. So, a recession does encourage career change.
Oh, and by the way, my education picks on fire today.
Great call Gio. Another bonus is CECO and DV are both Chicago/Obama stocks. Wonder if EDU and NED will play catchup. NED looks like a nice wedge on the daily.
Thanks Jeremy for the chart.
Gio,
Would you wait for a pullback in most of these names before entering?
Great call
@gamingthemarket …good point- these Obama related stocks (CECO) have steroids in them, no? I was short EDU until yesterday and today (fully covered this morning).
@jp …wait for a pullback. the entire sector is up on APOL’s #s.
“So, a recession does encourage career change.”
Perhaps. But I think an even bigger portion of grad school entrants are recent graduates who failed to place in the job market. I know many a friend how went to grad school for this one and only reason.
Were the universities not budgeting for a decrease in enrollment this semester? I dont know much about the online schools but why would their enrollment increase while regular schools are budgeting for a decrease in enrollment?
Hey Gio!!!
Get out your guns and ammo!!!
HOLX is at 10.70. What should I do?
zee
CECO at 19.9 short now, downside is CECO retests 20.8, but even with an earnings revision higher, I don’t think CECO can get there—20.2 looked like the HOD or even HOW–high of week
APOL, I told all of my membership clients not to short APOL at 81–it was headed to $90–I never posted that info in the public area’s.
What says the PPT about COCO.
Gio:
Your my “new best friend that helps make me money”. Or NBFTHMMM
What your email?
Thanks, Henry Fool
[email protected] …glad to be your NBFTHMMM. lol.
@Sia… I’ll get that for you once I finish watching Episode 2 of Heroes.
Gio:
As mentioned on yesterday’s blog response the enrollment at real universities is off the scale at the *undergraduate* level. Enrollment at the graduate level is a much different story. I’m in a College of Science, and a graduate faculty member on the admission committee. Not only are way fewer students getting qualifying scores on the GREs MCATs PCATs, LSATs [see the likes of REVU/Princeton Review; WPO/Kaplan; Sorry, no ETS!], etc. which reduces the probability of acceptance, but the stipends are being cut on a massive scale to the universities (funds which come from the states). Also, research grants are on the major decline from the Feds (NSF/NIH; which USED to provide lots of $s for graduate students; RAs). This is MUCH different as compared to other recessions. This leaves qualifying graduate students that can enter programs (e.g., Masters students) with their own support. That’s tough in recession times, and so, the number of graduate students (at real universities) really has not been increasing during this recessionary cycle. State and county funds for the schools are *lagging*, based on property taxes, by about 2 years. So, right now, even as we speak, the colleges and universities are being asked again to axe more money from budgets again, and they are circling the wagons in a big way. Guess where that comes from–Landscapers and Graduate TA/stipend money.
Now, online “bullshit” degrees that I talked about yesterday, are much different, and they are off the scale. This is because right now technical degrees are the pattern. This takes two years or less, and presummably puts a student on the market with a specialized skill (e.g., dental/xray/mri/ etc.) real quick (or, so they think…). Also, since fewer students can make decent scores on the entrance exams for real graduate training, they opt for an easier and quicker pathway, rather than wait on the short list at a real school. Makes sense to me…
So, this at least partly accounts for the 18% increase in what your seeing in APOL. You’re going to see this trend continue.
And BTW don’t buy that bullshit employment data that indicates increases in educational employment — That’s daycare teachers…There are widespread FREEZES in hiring at colleges and universities.
Back the truck up on the onliners boys and girls…
Also, think about the pin action from university contracts; Dell; Office Depot; Novel; Cisco; Thermofisher; Sigma/Aldrich; Microsoft; all biotech suppliers of antibodies and other molecular probes.
Aloha…
Great writeup, where is the original writeup?
@Jp This was an ongoing discussion from my January 8 (7 in Hawaii) post entitled “Shorting all health care, looking to get long education
” http://ibankcoin.com/gioblog/?p=2656
@ManuelStop:
Thanks for the contribution Manuel. i wish I had data on undergrad enrollment, but using APOL’s earnings as a gauge, they did have 18% increase in enrollment. I’m using a “when the tide rises all boats rise” kind of effect. Also, when you see stocks move up the IBD100 like CPLA and DV, then you can deduce that earnings is going up + strong numbers on the PPT for most education stocks = there is some kind of trend going on.
Online degrees are quite bogus, but they’re part of the tide. I do think specialized education is much more effective and therefore has a better market.
Gio,
$LEAP if you could please. I bought Feb 30 puts at Tues close. Broke through some resistance today but left me with a bit of a tail. Indicators say it has room to fall, but it’s getting caught up on the 10 day. I wonder what the infamous PPT has to say.
Curious, thanks!
Absolutely on all of your points:
Ride the edus for about 7-10 days…It’ll be asymptotic and over buy then; it will then lay fallow for months, like it has been.
I went long in APOL months ago for the very reasons we’ve discussed, mainly because of the Obama education stuff he initially promised, and the predicted education/recession play. (I’ve already took this and the so-called infrastructure plays off).
What I do think will happen in Obamaville is that there will be some sort of incentive for education (ala juicy tax credits and rebates/coupons/”educational food stamps” of some sort), and I think it will be rigged to get a HUGE number of people “educatated” with a “degree” FAST. This will drive them to the online and for-profit schools for the reasons we’ve discussed. In every stand up, Obama is saying that people are missing their “educational dreams and job aspirations.” Credits and rebates generated within the next 90 days will work fast for that purpose, because they will work at the online schools and for-profits.
Hell, why not stay home with your kids, watch CNBC, day trade while you’re taking exams for online classes–all of this while outfitted in your best underwear.
On a related note…It’s a pity that Educational Testing Service is private, because that would be an absolute gold mine because of the college entrance stuff AND the “no kids left behind” stuff. This standardized testing crap for PK-12 is already a built in state/fed scam, and will continue regardless of whether or not it works (as evidenced by the fact that students can’t get the minimal scores to get in as undergraduates or graduates).
If someone can figure out an angle for pin action in the testing services let us all know…