From the Investment Services Department:
The holidays are here and I love it! I love everything about this season: spending time with friends and family, the lights and decorations, overindulging in holiday treats. I even love the frantic last minute shopping (which I participate in every year). Now, I know that the holidays are about much more than buying gifts and spending money, but this is a blog about investments, so let’s get to it.
Almost every survey or forecast points to a lackluster holiday shopping season. The November Gallup poll shows that U.S. consumers estimate they will spend $704 on Christmas gifts this year. This is down from the estimate of $786 made in October, and the $770 made last year. Gallup’s numbers suggest that overall Holiday spending may increase 1.7%to 2.4% over 2012 spending*. Nielson and ShopperTrak have similar numbers showing increases of 2%** and 2.4%***, respectively. Whichever forecast you look at, this would be the smallest increase since 2009.
Major retailers are generally reflecting these forecasts in their earnings reports. Both Walmart and Best Buy beat on their most recent quarters, but guided downward for the holiday season. Kohl’s missed their third quarter estimates by a nickel reporting earnings of 81 cents per share. And, for the holiday quarter, Apple is predicting only a single digit year over year sales gain (the first time since 2008). Some good news in retail, Macy’s soundly beat their estimate of 39 cents by reporting a solid 47 cents per share. And the retail sales number for October came in better than expected at a gain of 0.4%.
Some interesting things to watch this year are online purchases and Black Friday sales. According to the Nielsen poll, consumers across all income levels plan to spend more online. About 20% of consumer with incomes over $100,000 and 15% of those with incomes under $50,000 plan to increase their internet purchases.** Cyber Monday continues to be more and more relevant to all retailers.
“Black Friday” is turning into “Black Thanksgiving Week” as many stores are having sales all week long. Also, instead of waiting until the wee hours of Friday morning, some stores are starting their door buster sales on Thanksgiving Day. Walmart is opening at 6 pm on Thursday with headliners such as a 16 GB iPad mini for $299 and you get a $100 Walmart gift card. Target is not far behind, opening at 8:00 p.m. on Turkey Day, offering a 50” LED HDTV for $229. It will be interesting to see if these types of sales can drive earnings for the brick and mortar stores.
So, what does all this mean? As an advocate of long term investing, I do not recommend trading into or out of any individual stock based on one month of consumer spending. I believe that the best way to make money in the market is to set up an investment portfolio that is appropriate for your goals, time frame and risk tolerance. It does appear that this holiday season is confirming the condition of the overall economy. We are still seeing growth, but at a pretty slow rate. Consumers are spending cautiously as they deal with uncertain economic conditions. And while the recovery in the stock market has been fairly swift, the economy is still struggling along.
This time of year always seems to fly by for me. However you celebrate the season, I hope you have a great time. Happy Holidays!
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
Coming together to eat really does create strong bonds.
After a summer of "almost training" for this big hike - I was on my way up Mount Rainier.
I didn’t have normal butterflies fluttering around my stomach. I had butterflies on triple mochas bouncing around in complete disorder, trying to work their way up my esophagus.