Cheer up -- and start thinking 2010

Although your desk calendar might have a big, fat "2009" at the top, for many investors and business owners it's already time to act as if it were 2010.

That may sound odd, but success during a period of great uncertainty like this is all about looking forward and taking appropriate risk that's based on research, experience, intuition and guts. The next six months might loom for you like a rickety rope ladder strung across a windblown canyon. Yet to the folks who will end up as big winners next year, it looks like the opportunity of a lifetime.

The difference in positive, negative and hide-under-cover outlooks depends in great measure on two concepts, one a little ethereal and the other more practical. The first is an idea that investors call "location." It means that if you can buy something at the right price, or location, then a lot of good things can happen down the road. The second is a forecast of U.S. employment: If the number of jobs stops shrinking or even -- don't laugh -- starts growing, then many good things will happen.

I've got good arguments for you on both today, skewed toward some crazy, lopsided optimism to help you think 2010.

Screaming deals await

So imagine you are the owner of a Greek shipping line focused on hauling dry bulk goods -- iron ore, coal and grain -- from Brazil and Australia to China. Day rental rates were staggeringly high last year at this time, encouraging many of your competitors to buy more boats to feed the demand. But you were smart and didn't buy into the hype. You had a multiyear outlook, informed by centuries of salt water in your blood, that said there would be a better time to add to your fleet.

You waited -- and a 95% crash in day rates wiped out some rivals. Now their boats have been foreclosed upon by banks, and many of those banks themselves have gone under. Sweet bliss: You smell a good location.

That set of steps led Navios Maritime (NM, news, msgs) to announce the purchase this week of four gigantic ships out of foreclosure. They're being built in South Korean boatyards and are due for delivery in 2010 and 2011.

The deal was financed with some convertible preferred debt issued to the shipyard at prices considered "a coup" by veteran industry analyst Urs Dur at Lazard Capital. He expects more of the same type of screaming deals to come on foreclosed ships in the next few months as fleet owners look over the abyss to business improvements next year.

Shares of Navios Maritime traded for a little more than $1 last winter and are going for more than $4 now. If the company made the right bet, then figure shares can get to $7 next year.

Feasting on the weak

Multiply the cunning of Navios management by smart companies around the world, and you'll see that managers are not standing still even as business looks bleak. They are thinking 2010 by trying to feast on the carrion of their fallen rivals, turning job cuts into profit-margin gains, buying real estate on the cheap and, most importantly, pouring money into research and development. The last is critical because if they can't persuade customers to buy more things this year, at least they can buy loyalty cheaply for '10 -- and obtain inexpensive marketing via the media -- by persuading customers to purchase new and improved versions of their favorite old things.

For a great example, look no further than the sales geniuses at Apple (AAPL, news, msgs). They know everyone who really wants an iPhone already has one. So to ramp up business in these difficult times and wrest market share from BlackBerry maker Research In Motion (RIMM, news, msgs), they have had to look past 2009 parsimony and find an inexpensive way to provide an improved wireless device that has a better screen, more memory, a video camera and more speed. Voilà, the kinda-new iPhone 3G S, released last week.

Retaining old customers and obtaining customers at a low cost in trying times are just another reason Apple continues to be a buy on any dip to the $110- to $120-a-share area -- yep, a good location -- that may surface over summer.

Now, to lock arms with Navios and Apple in optimism over the potential to make next year a real 10 requires some hopefulness about employment. Jobs, after all, are the bedrock of the economy. People who work buy things, and that allows manufacturers the opportunity to make things, retailers to sell things and banks to finance things.

Some hiring ahead?

Lately, the employment news has continued to improve, at least in the context of getting less worse. The latest good news: ISI Group analysts, who have been right on this topic for the past several years, report that unemployment claims' four-week average declined by 43,000 this week. In the past, they say, a decline of 40,000 from a peak has marked the end of recessions. That fits with the Philadelphia Federal Reserve Bank's report showing that its regional manufacturers' purchasing managers index has increased to 45%, which is well above the 41% recession level. Housing starts have risen 12% in the past four months, which is a 41% annualized rate, and vehicle sales are up 8.8% over the past three months.

Draw out the focus a little wider, and analyst Stan Shipley says his data show that payroll employment will post a decline of 275,000 jobs in June. That's terrible if you're one of the quarter-million who just lost their livelihoods, but the big picture shows a vast improvement from the 741,000 jobs lost in January. If this pace of improvement were to persist for an additional three months -- it probably won't, but just do the exercise with me -- payroll employment would post a small increase in September. If you don't believe that, consider that layoff announcements outside the auto industry have declined from 43,617 a week in the spring to 14,966 a week now.

ISI observes that the correlation between the pace of economic recovery and the pace of employment growth in the first year of a recovery is 97%, so a 3.5% rise in real gross domestic product would result in a 0.6% increase in employment, once you run it through all the formulas.

V for victory

I know that sounds insanely optimistic now, but the key here for thinking 2010 is not to get too focused on the average "jobless" recovery of the past two recessions because both of those setbacks were very mild. GDP growth picks up much faster off the worst recessions, which is that famous V shape that most people figure could never happen. Just to give you an idea from another country: Japan's machine tool orders, which basically means the expansion of factories, plummeted 85% last year, which is obviously hellacious, but it has shown a V-shaped recovery recently, with a 29.3% pop back in the last two months, according to ISI data.

How would a V-shaped recovery look here? Well, housing starts were up 17% month over month in May from a very low level, and lumber prices today are up 55% from their low.