So when you ask for specific names from me - its simple - what can you do without? What would you give up first, second, and third as your budget closes in on you? What will you sacrifice to pay for food, gasoline, heating, and air conditioning? Whatever you will skip on - short that stock each time the "early cycle" proponents run them up for a 5-7 day cycle, on wishful thinking.
We're heading into a long, drawn out recession... I've said it since last summer and as each month/week/quarter passes more denial will turn into acceptance and more earning cuts will have to happen across the board. The people in denial rely on government reports, which are for the most part another pile of fiction work.
Ironically, I looked very foolish writing that because during periods of July - August 2008 (although it was a correct thesis in fall of 07 when those consumer stocks first fell off a cliff) as those were among the "hottest stocks" during that "summer 08" period as gasoline prices fell 50 cents and that was of course ALL that was ailing the US consumer. At least to hedge fund computers. In a touch of irony, NOW
we see the alarm over retail in this country. Again - this is what makes running a portfolio difficult - even if you are correct in the end, you need to have to survive the running herd moving a stock in completely the opposite direction on an ill fated thesis - as anyone who was short some of these retail stocks when they were being run up 30,40,50% this summer. Being "early" on a thesis in the stock market can be a very dangerous thing... I picked Macy's as one of countless examples from this week in retail as previous month sales were reported - it was a bloodbath pretty much across the board (
Buckle (BKE) and
BJ's Wholesale (BJ) two of our former holdings did well by the way)
- U.S. department store operator Macy's Inc (M) slashed its full-year forecast on Friday, warning that its sales could fall sharply in the back half of its fiscal year as shoppers stick to buying necessities.
- For months, U.S. consumers have avoided shopping at department stores as rising food and fuel prices pressure household budgets also hurt by the housing market slump, job losses and a credit crunch. Shoppers cut spending even more in September, as a global financial crisis took a turn for the worse. Department stores such as mid-tier J.C. Penney Co Inc (JCP) and more upscale Saks Inc (SKS) said this week that their same-store sales languished, forcing some to slash profit and sales forecasts. (again - these were among the hottest stocks this summer and a great part of the reason we lagged the indexes week after week - we didn't own this stuff)
- Some analysts are concerned that Macy's, which also operates the Bloomingdale's chain, could face weak sales into the beginning of 2009 given the general shock to U.S. consumer sentiment. "We expect 2008 and early 2009 to be difficult periods for the US consumer, and are reluctant to recommend a stock that is so dependent on (comparable store sales) for growth," wrote Merrill Lynch retail analyst Lorraine Maikis in a note.
What is the true shame is those same folks who screamed at us from the TVs (and websites) about the 2nd half 2008 recovery, and that once gasoline comes down 50 cents the US consumer will be "back" (along with housing sales recovering this past spring) still have their reporting posts and "cache", and still are the people we rely on as "experts" to tell us why things are bad today, and "assure" us when things will be better. Their track record is abysmal - why keep trotting them out? Credibility = shot.
