Not sure if that is how dreck is spelled.
I remember in decades past retailers were gold (remember how much Peter Lynch used to write and talk about the group?) but for a while now they have been dreck, longer it seems than for how long the bear market has been unfolding.
I was on CNBC last week and in the pre interview I was talking about a bear market rally and that I'd be looking to see where leadership was coming from to help determine bear market rally or new bull (old leaders bear market rally, new leaders bull market). The producer asked would that include retailers as past leaders? I think there might be a fascination with these stocks that is unwarranted.
I would not minimize the importance of consumer spending trends but the manner in which people shop might have been changing over the last few years. The last pair of jeans I bought were from Costco and I went very cheap. My dress shirts (I wear a couple of times a year only) all come from Ross. My wife considers bargain shopping as a sport. The only thing I don't go cheap on is footwear but there is a catalog we get where I can get my $110 hiking shoes for $60 without fail.
Maybe this is typical or maybe we are an island but I don't think so. If we are not an island then there is an implication for retail stocks.
What say you?
Proud Member Of
Random Roger
© 2009 | Gadget Theme Blogger Template
Original WPtheme By Blogger Template | Converted By Gadget Lover
| Distributed by eFree Blogger Help
Original WPtheme By Blogger Template | Converted By Gadget Lover
| Distributed by eFree Blogger Help
29 comments:
Roger-thanks for your blogs, I appreciate your daily insight and humor. We live in Tempe and find bargains on most everything. It has become a "sport", seldom going to high priced retail leaders and the trend seems typical of our friends(early retired 60's) bargain tee times, economy dining, etc. BTW relatives down for the winter comment that their private country club membership rosters have dropped dramatically recently. K. K. Bell
You're not an island, you're an anomaly. That rare breed which lives well below its means.
Others, though, are starting to get the message. Including me. We now have fun trying to reduce our grocery bill through coupons, stocking up on sales, shopping in more than one store, etc.
Truly, if we didn't enjoy spending our money as much as we did over the years, we would have a second place in Hawaii as well. At Mauna Lani.
thanks KK Bell. Country club is an interesting concept. How many other people out there have never thought about joining one? I assume they are beyond my means by a mile but I've never even thought about it.
anon, I'm sorry I do not know Mauna Lani but no matter, saving elsewhere to make a second place possible is probably way more than worth it. It is for us. I think our next plane tickets will be free (frequent flier)!
I guess we've been cut from a similar cloth. I hang on to jeans as long as possible and my shirts are usually in the single digits ... some are even from garage sales :O. My friends get a kick out of how cheap I am. Yup, always good for a laugh, I was. Now I'm the one chuckling a bit.
I heard a commercial last night from a big bank. The theme was that keeping up with the Joneses was all the rage, but now that goal is silly and it's time to grow up and save money ... so bank at our bank and save some money. Even though they're the most fee laden bank that I've ever dealt with.
I'm starting to see signs that money and risk are getting the long overdue respect they deserve. I'm still very skeptical that it will stick.
the great depression forever altered the mind set of a generation. this event is not as bad as that but might be enough, IMO, to alter the mind set of a portion of this generation. we'll see?
Shopping is sport for many people. Some buy high end some buy a lot of cheaper stuff. Either way they find a way to spend it all.
I am like you, I try to save for a rainy day. At the margin, which is what matters, I think more people will be spending less. They either have seen the light, lost their jobs, or had their credit lines cut. Whether forced or planned I think we will see people borrowing less or saving more which leads to the same results for retailers.
All that said I continue to see the market rallying from these levels (but maybe not today or tomorrow)
Hey Roger:
Keep doing what you do it's great! I haven't been in a department store for years. I do all my shopping online and search for bargains. I have a new cashmere over coat I bought on Ebay for 65 dollars including shipping. I has tags on it from Sax for over a 1000 dollars. I shop for the cheapest prices online. The only bricks and mortar store I go to is the grocery.
Cynthia
Haven't you heard, Roger, we'll do all our shopping online, as well as work and play online in the near future? Brand loyalty has always been a winner amongst consumers, but this time the loyalty will be to online retailers and delivery companies.
I agree this downturn will produce a new consumer craze or three; a cross between the Rubik's Cube and Hula Hoop for the techno-savvy, health and budget-conscious (twenty) teens.
I have always been a LYBM person but the DW comes from the other side of the tracks. She has now been contaminated enough from 10 years with me that I can proudly say that "deal hunting" is now the norm in this household.
DE
PS - As a lifelong (low handicap) golfer, one of my splurges has always been a country club membership (the cheap club for middle managers, not the posh place, HA!). We resigned in December and the resignations have been so pronounced that they have now begun allowing public play = it's semi-private now. Not too much incentive to stay a member when I can play there for $40 a pop versus paying thousands per year!!
So far, our club has lost 14 members. Probably more to come. To walk into the door every year is $8,800. Then add cart fees, food, bar, pro-shop spending, tips, etc. and it's $12,000/yr.
I'm one of the 14.
Roger-
I have been trying to locate any comments that you may have made on this in the past and have been unsuccessful in locating any past blog comments so here goes the question:
It is my understanding that part of your strategy is to take portfolio protection once the 200 DMA drops below its average however this strategy does not protect against sudden massive drops in stock prices and was wondering why not use stop loss orders instead? For example, 200 MA saves you from some market drops (including 2008 ). However, a major natural or terrorist disaster could cause the market to drop 20% or more before the circuit breakers hit. Even if you have stop loss orders in place, the market can shoot right below them without them clearing.
There is no way to get equity returns and avoid the risk of big drops. 200 MA lets you avoid certain big drops, in exchange for tracking error, missing some climbs, and lots of arbitrary-feeling trading?
The boomer generation bulge has always had an outsized effect on the economy. Entering their sixties, there should be a natural demographic shift from spending to saving by them. To use the old comparison, Retailers, Mall REITs, etc., may be out, Pharma, Health care may be in.
OG
i am not worried about fast declines like 1987, 1997 and 1998. Six week drops of 20% come back very quickly.
Stop orders would not have worked in 1987. Fills would have been way below the trigger price.
I am not a fan of across the board stop orders. Some stocks simply do not lend themselves to stop orders for being too volatile. I use stops occasionally but there are drawbacks galore for investors )as differentiated from traders).
I completed my thesis in American sociology 25 years ago and have updated changes on an annual basis. It appears we may finally be realizing our values may have been wrong. Americans have for a long time been convinced they were invincible. Maybe it was the power that went to our heads. We somehow believed that America, and it's associated businesses, could do no wrong...just as we always thought our sports teams were world leaders, ala, the World Series.
There was a small period when, indeed, America was looked to for guidance and growth, but that period has long passed. We are only now as a society realizing this. Our business leaders are no longer invincible, but many are liars and cheaters and will rape the system for profit.
The stock market over the last 10 years has signaled a shift in America's dominance. As Roger has indicated many times, the future lies with non-American exchanges. The key to future individual prosperity is to discover where in the world this will take place.
Roger
My retail bargain shopping has become a family tradition by going to Nordstroms every December 26. I purchase the highest quality shoes, Italian pants and dress shirts all 40 to 50% off. If the economy hits the fan I will be the best dressed bum.
Mitchelg
To OG
I like your comment. As one who is not far from retirement, and with no children as a benchmark, how do you see the next generation? Also spenders?
Roger,
TED spread is dropping
Baltic dry index looks like it has bottomed.
News is horrible
Seems like the future will be brighter to me.
Roger, you read my mind. Last time I bought a pair of jeans, also was from Costco. I don't wear dress shirts as much, haven't bought a dress shirt in probably 12 years. Recently I had to buy dress outfit for my son. What an experience. I ended up at Penney's were I bought a sportcoat and a pair of slacks, which I know I probably paid a little too much. Went to Kohl's to buy a dress shirt for him, unfortuntly they had a goofy promo of buy 2,get 1 free. I only neede one shirt, went to Ross. Shirt at Ross, $14.99. One hang up I have is shoes. I only buy Rockport, but I buy them only online. Thanks for story.
Roger- interesting site with articles by Tim Ord...
http://www.mysmp.com/blog/ord-oracle-1-6-2009.html
Good article by Sedacca...
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2009/01/07/setting-the-bull-trap.aspx
I'm with you, Roger. Going to Costco, Sam's Club and Wal-Mart is not only a money saver, but I don't have to contend with the excess marketing directed at the organic and green crowd-whom will diminish in proportion to the recession soon enough.
That alone is one benefit of the recession.
Costco, Sam's, Wal-Mart and no organic = probably XXL or fat... typical of what is happening to Americans. Oh, and yea it's so cheap - you can get a lot of it all to feel good that you're not doing without.
The snide remarks about shoppers at wholesale/discount establishments are typical of the effete snobs who prefer the $20 cheesecakes (organic, of course) at Whole Fools.
I like Aldi's!
that is a snide comment. if you want organic veggies and fruit, and I do, farmer's markets are the way to go. probably 1/3 the price of a gourmet grocery store.
Anon 9:32
The boomer generation's size alone is what causes them to shift the economy.
There is a book (but I can't remember the title) that I read about in the NYTimes book review, that discusses the four existing 20 year (or so) generations and their behavioral characteristics.
The WWII generation, now dying out, was tempered by war and the great depression and were into sacrifice. They spoiled their kids the boomers rotten, who demanded everything for themselves.
The next generation is (I believe) characterized by conservatism. exhibited perhaps by religious fundamentalism. Maybe a poster can come up with the book's name.
OG
Frugality is the new black. There is definitely a SECULAR change happening. The theory of "if we advertise it they will buy it" is being challenged. The American psyche about how & what they need, want, desire...consume is changing. The concept of ever growing prosperity & entitlement is has been replaced by a fear of having less & living at a lower 'standard'. The boomtimes have created a hugely overbuilt retail complex...from the manufacturing & supply chain to the marketing & store base...all of which will have to be 'downsized', some wiped out completely. The days of relying on the all mighty US consumer are over.
your thesis is born out by the fact that catalog retailers (which includes online retailers)
catalog retailers
are on the whole not doing much better than any others. for example, apparel
apparel retailers
As far as the bigger trend, I had an experience recently that brought it home to me. I was helping my mother clear out a storage unit and discovered that some 30 or 40 cubic feet of stuff in her storage unit has been replaced (in my life, not hers) with an iPhone.
Maybe it's a slight exaggeration but only slight. I no longer have a large desk or any of the stuff that used to go in it such as stationary and office supplies. Even my workhorse computer is a fairly small laptop that sits on a small half-table along the wall, and it's powerful enough to serve as a database server and to do some fairly hardcore work.
For years now I've been trying to de-accumulate. decumulate? And tools like the iPhone have helped me do it. It's possible now to live a much more lightweight life. Less clutter and more freedom.
The next move will be a smaller house.
Roger,
Yes, "Dreck" is spelled correctly. It's the German word for "dirt" for those that are not familiar with the term.
Ulli...
While retailers are clearly not out of the muck yet, they have been pummeled for over a year. At some point, investors will begin looking forward. Bad companies aren't always bad stocks.
Post a Comment