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Chris DeMuth Jr. is the founder of Rangeley Capital LLC. Rangeley is an investment firm that focuses on event driven, value-oriented investment opportunities. Rangeley Capital and his value investing forum, Sifting the World (StW), search the world for misplaced bets. Rangeley exploits them for... More
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  • Black Friday Is Stupid. 6 comments
    Nov 29, 2013 12:37 PM

    I love discounts. So, my disgust at the spectacle of Black Friday has nothing to do with turning my nose up at sales. It is simply that Black Friday, in which retailers jack up nominal prices and then cut them back to market prices while shoppers are told to artificially crowd into the demand side of the market, is not a discounted market. This phony sale has as much to do with a real discount as most casino gambling has to do with value investing - it is a contrived environment manipulated to gouge retail consumers who think that they are accomplishing something that they are not.

    Key parts of retail inventories are not unusually cheap on Black Friday. Non-discounted (compared to average) products include toys (better post-holidays), winter apparel (better offseason), tablet computers, bed linens, as well as luxury goods (luxury retailers always try to maintain a brave face and avoid sales). With sales expected to be soft, even nominal sales will be matched or surpassed in December. The lowest prices can be paid when a buyer takes advantage of price discrimination or inventory pressure; neither force comes into play today. One needs to wait out inventory pressure so that the tables are turned… your greatest leverage comes only after the inventory that was bought for today begins to age on the shelves.

    In terms of bargain hunting for Christmas presents, if you must - get some sleep on New Year's Eve and then show up with cash when shops open on the morning of New Year's Day. There will be zero crowds, so you won't create any precedent when you ask for the manager, pull out 60-70% of the retail price in cash and ask whether they want the money or the inventory gathering dust in their shops. You will hardly break your stride between the moment you walk into a shop and the moment you leave with something someone actually needs or wants, having paid an actually discounted price. In addition, New Year's Day is a perfect time for purchasing discounted gift cards. The discounts fluctuate seasonally and are at their widest post-holidays. Today, I will read a book, go for a long run, and avoid the stores.

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Comments (6)
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  • Perkins Cove
    , contributor
    Comments (637) | Send Message
    Hear, Hear....well said !
    29 Nov 2013, 01:05 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11442) | Send Message
    Author’s reply » November 2013: Thanksgiving fight at Walmart --
    29 Nov 2013, 02:25 PM Reply Like
  • Perkins Cove
    , contributor
    Comments (637) | Send Message
    OMG !


    Well, Mrs Perkins did NOT just have to fight her way through the local Ace Hardware store to get bird feeder. No one else in the store...except for the employees of course.


    And yesterday, at about noon, we met with no traffic on our way to Hartland, Vt for Thanksgiving dinner. (My Packers did get totally butt whipped by the Lions. Congrats Lions)


    Point being....we all have choices. We can join the herd (as per your link) or we can choose a different way. We can make the Holidays a time for money (which many don't have) or we can make it a time for family. And for those without family...take heart...somebody cares.


    I like your way of thinking Chris Demuth Jr. And thanks for sharing and contributing. You make a difference...way beyond money.


    Perkins Cove
    (.....I could tell you my real name, but then I'd have know....)
    29 Nov 2013, 02:48 PM Reply Like
  • jbzw
    , contributor
    Comments (1147) | Send Message
    A coal stock in the stockings? Yes, indeed. My own stock(ing) also includes WLT, but in the form of its December 2020 9.875% bond (Cusip 93317QAH8) yielding over 10%. Coal may no longer be king, but it is still the most used souce to power the generation of electricity to power the new fad electric vehicles. I figure that the government will at least let the coal companies service and pay their bonds, even though the shareholders may not be greatly rewarded. For me, the best discount today was to load up on the Forever stamps before the 6% plus increase by the Post Office in January next year!
    29 Nov 2013, 10:12 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11442) | Send Message
    Author’s reply » That bond makes a lot more sense. Good thought. And I love Forever stamps. I mention them here: These are my favorite ones:
    30 Nov 2013, 06:32 AM Reply Like
  • KJP712
    , contributor
    Comments (472) | Send Message
    The bar scene from Star Wars with better lighting and the inability to form a line.Watch the faces in the crowd,they contain a lot of anger and appear to be confused.Half of the participants appear to be drunk while the other half searches for a camera phone to pose for.No wonder people wanted to be home with their families instead of working.
    29 Nov 2013, 10:28 PM Reply Like
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