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business newsEnroll Now in Education Stocks
DeVry, Corinthian Colleges, and Strayer Education are all down about 10% today, but some smart options choices could lead to a profit.
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Don’t be surprised if the government ends up providing some measure of secured student loans (think Sallie Mae) as part of a jobs/invest in America program heading into this fall's election season. There's nothing like the threat of shutting a business down in order to gain leverage in defining the terms of its operation. And while I don’t agree with this tactic, the recent results such as GM and AIG haven't been terrible for those that invested after the existing shareholders were put through the wood chipper.
These stocks did very well during 2009 on the thesis that the increase in unemployment would actually benefit these companies as laid off/fired workers would look to gain higher degrees and new skill sets to help transition to new and improved careers. As it turns out, education, especially those that emphasize left-brain activity that are based in liberal arts degrees and lead to traditional white collar jobs, might not be worth the cost of admission. Even more focused areas such as law, medicine, and accounting have lost cache and the ability to generate cash. The only area that seems to enjoy growth of income and prestige is computer programming in terms of IT, programming, and creating new apps.
I Can Do This
Otherwise real job security is in definable and measurable fields, such as engineering and manual manipulation of the physical world to build, fix, repair, and tweak that which makes the world go round. To that end we may be seeing a swing in the cycle that as information jobs get outsourced overseas and politics put up obstacles to importing the best brains and hands, the US will need to go back to being self-sufficient. The debt market, both government and corporate, may be able to rely on the kindness of strangers to finance our profligate state of living but we may soon need to go back to doing our own heavy lifting, or least gardening and trimming of hedges. The trend or cost effectiveness of getting an online education that provides a measurable skill set will only increase in time. The fact that the government is going to make sure the benefits are in line with the costs, and students aren't saddled with undue debt, will only lead to a shift from an aspiration of middle class of going to college to securing a job.
DeVry is the stock I’m enrolling into right here by purchasing November $45 calls at $1.50 a contract. This will provide enough time for the government to define its stance, which may end up being supplemental to offering secured loans, and get some clarity on enrollment numbers.
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