The Holidays this year bring the joy of the season, with the woes of recession. Many want a “job” to make their futures brighter. Unemployment is hovering above 9%, our congress is stuck in limbo, and household incomes are sliding down the chimney.
When people are busy with “occupying Wall Street” rather than singing carols and enjoying the holiday season, how could anyone expect unemployment to drop? When people aren’t working they end up with too much time on their hands, giving them time to picket, march and cause all sorts of chaos. You don’t see these problems in a society which is fully employed.
There is an old saying on Wall Street; “buy them when there is blood in the street” which simply means to buy stocks when nobody else will due to extreme economic fear and a severe Wall Street selloff. While that is easily said, it takes a lot of nerve and a certain amount of self confidence to pull the trigger and buy when nobody else is doing so.
This Holiday Season is expected to be a buyer’s market. Will that translate into a buying opportunity for investors looking to buy stocks? We will try to introduce some ideas to inspire you to do your own research helping you negotiate this rocky terrain and find stocks that make sense to you. Part of our goal is to guide you to the trends that could help you pick stocks which could benefit from this year’s Holiday shopping season.
In the last couple of years a trend has developed. As shoppers pile on the goodies, many have been taking a more frugal and prudent approach to shopping. Many are motivated by deals and will be making their first stop at the discount retailer, buying things they need rather than things they can live without.
No one is ready to deprive a child from the joys of the Holidays. Children are always the recipients of something nice. That said, the gifts may be smaller and perhaps something that the children need for school or something that would have been bought anyway.
However recent reports have stated that spending is expected to be greater at the high end luxury retailer’s as surveys show that the rich will spend more this year than last year. Using data from the American Affluence Research Center, the Wall Street Journal reports that the richest 10% of Americans will spend 2.3% more than last year on holiday gifts. That translates to $ 2,270 in gifts versus $ 518 for everyone else.
In an economy like ours it is quite typical for the high end retailers as well as the low end discounter to prosper, and this most likely is not limited to the holiday season.
Despite the recession and its lingering aftershocks, high-end retailers favored by the rich such as Tiffany’s, Coach, and Estee Lauder are experiencing far stronger sales than retailers aimed at the masses, including Target, Kohl’s, and Gap. By no coincidence, lower-end retailers beloved by bargain hunters such as Costco, and various dollar stores have also seen an uptick in sales.
As explained by Mr. Kurtz from the American Affluence Research Center “the wealthy are perhaps trying to brighten their lives by buying nice things to offset the gloomy environment. This is not an unusual psychological reaction.” It may also be noted that the many of the wealthy have cut back on their spending in the previous years, when they feared their jobs were threatened, and today feel more comfortable in their positions.
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