LilBob

Christmas Comes Early: Key Retailer CDS / Equity Relationships

If this article had focused on specialty discount stores such as Dollar Tree, Dollar General, Hills, TJ Maxx, etc., I would agree 100%, but GAP and Best Buy? You've got to be kidding me. These people really think it's a good idea to bet on a retailer of over-priced plastic box gadgets that a growing number of people have stopped bothering to replace and a retailer of over-priced tee shirts this holiday season?

Some more realistic advice, and personal observations lately seem to be bearing out this prediction: focus on discount retailers-such as those I've named above-that get a lot of their stock from other retailers' closeouts. The quality of items in these stores is surprisingly good this season because with so many retailers going out of business they've been able to pick up enormous quantities of high quality stock. Those companies that are positioned to profit from the wreckage of others' failed business plans are the ones to watch right now.

The Future of U.S. Consumer Spending: It's a Generational Thing

I agree with you wholeheartedly that one needs to examine one's primary demographic group and aim advertising and product lines accordingly, but I question your list of businesses as you appear to have half of the list spot on and the other half dead wrong.

4 of the 8 businesses you mention are purveyors of goods and or services that are either of poor quality, or in outrageously competitive markets. Aeropostale doesn't have a chance in an age when more consumers are looking for the "Made in America" tag and quality of products is a growing issue. Chipotle Mexican Grill-that's just a big loser right there, the food in their stores is just plain awful (and I do know food, I was a prep cook in some pretty nice restaurants during my college years). Boston Beer Company-a lot of people do like Sam Addams but there's tremendous competition in Micro-Brews and Sam Addams has lost some of it's microbrew credibility by becoming too omnipresent. Pac Sun-they had stores in the malls near where I live, both of those stores are closed now. The items they carried were very highly priced, and suited to the fashion sense of a suburbanite hip-hop fan with significantly less than average intelligence.

After trashing half of your list I'll do a mitzvah by naming a sector to watch: craft goods suppliers. Gen-Y-for some strange reason I don't really understand-seems to be full of young people who love to do crafts: knitting, scrap-booking, watercolors, etc. Stores like Michael's and Joann Fabrics are likely to enjoy growing sales as the buying power of Gen-Y increases.

5 Company Results Underscore Corporate Boom, Real Economy Bust

It's a double edged sword. Money is going into the market because people are trying to save up more money-I'd like to see figures on the average percentage the typical retail investor is putting away into retirement now. But with sales declining you have people pumping money into shares that have skyrocketing PE ratios, which does not bode well for the futures of these companies. You end up with a Mexican standoff where the one whose best at riding it to the top, then first to pull the trigger and duck is the winner while everyone else gets shafted.

Recent gains in the market keep reminding me of Irving Fisher's famous quote-the one that permanently marred his career from right before the great Crash of '29 (and which, I admit, has been repeated ad nauseum of late)-"Stocks have reached a permanently high plateau."