Don't Let Retail's Flashing Lights Fool You
A good trading strategy would be to wait until next year!
Greetings from New York, where, if, as the Oracle of Omaha says, each price tick is a "pitch" from Mr. Market, I'm Eddie Gaedel, the 3-foot-7-inch pinch hitter for the St. Louis Browns who took four straight pitches in the Majors, got to first base, then never played again.
For what it's worth from a guy who just compared his home run potential to a guy who weighed 50 pounds, I don't see a heck of a lot of pressure to the downside. Anecdotally, I know a lot of folks who are leaning short (no pun intended) and just as many traders who are playing a lot of catch up with the year-end looming. Put it together and I end up with a slightly higher bias, no conviction and absolutely no illusions about the fundamental case for buying stocks for the long term.
So while I'm watching the ticker and the outstanding John Mack clip Todd-O pointed out earlier. Here's what else I'm mulling:
- Target (TGT) down on word that it expects a "promotional holiday season". Walmart (WMT), which kicked off the promotions for the 2009 holidays last week and does so every year, is higher based on Berkshire Hathaway (BRK.A) increasing its stake. See also Translating Buffett's Latest Bets. I'm not regarding the moves in either name as much more than bored stock jockeying. The holidays are going to be promotional. Make a note of it.
Saks (SKS) a bit higher on a squishy earnings beat, despite lower sales. The once high-end chain sees customers focused on value and is managing inventories tighter. I have a decent range of knowledge regarding the retail industry and can't think of a single one that isn't seeing value-focused customers and tightening inventory.
- Where do all these retail belt-tightenings end up? One store selling size large white T-shirts, one pair of size 10 shoes, and some draw-string pants. We will then have gone full circle, all the way back to Henry Ford's "any color as long as it's black" business model.
- Speaking of which, honk your Chinese-brand car if you're kicking yourself for not buying Ford (F). All the benefits of Government Motors stimulus with none of the politico managers.
- For what it's worth, and to end our chat on a positive note, I'm still long Disney (DIS), the USO ETF and Gold via the GLD. Also some Nordstrom (JWN), as I like to listen to a piano while buying my white T-shirt and toe-jamming size 10 shoes.
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