Should we short retailers (I'm expecting a weak x-mas shopping season)?
Answers
381 points
SirCrashton answered one year ago …
Unemployment and the cost of basic necessities (food, fuel, utilities) are rising Moreover, the budgets of some families are stretched by mortgage payments that comprise up to half of their net income. I think this will be a weak Christmas shopping season and that shorting retailers would be a profitable staregy.
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4085 points
EthanR answered one year ago …
While I agree with Sir Crashton, remember that the markets look ahead and many of the stocks could already be discounted in advance of a weak Christmas season. With lowered expectations already in place, the numbers could still be bad and the stocks rally. I have seen this happen many times before. A stock's earnings are way down from the previous year and yet the stock goes up 10% because it beat analyst's expectations.
So I would be careful to short only the weakest of the retailers. You can run performance charts of various retailers against each other at www.stockcharts.com to see which ones are inferior.
731 points
thinker70 answered one year ago …
In a word, YES, BUT be sure you have an expert option advisor to pick the right company and at the right time and strike price for the reasons already given by EthanR. Most people are late to the party, i.e. react AFTER a trend has already been established and priced into the market!
That being said, my prediction is that the most money will be made in the markets over the next 6 months in a wide range of puts as markets continue to sell off but you can easily get trapped by surprise bear market rallies as HOPE is temporarily restored by various highly touted government interventions and Wall Street propaganda. Proceed with great caution, this problem is BIGGER and more intractable than most yet realize and may well drag on for years, with violent swings up and down that CAN make well timed puts and calls highly profitable.
474 points
spider348 answered one year ago …
EthanR has a great point - markets are priced ahead. So timing your shorts is critical. The earnings numbers won't be out for a while yet so we are at the mercy
of the media and the 'hype'. Plus elections coming up...that could greatly impact the direction of many indexes.
I agree this will be a dismal shopping season but all it takes is for a key index
company to press release a report that "sales of their new widget is exceeding holiday expectations" and boom - off to the races, short squeeze city. I think the markets will be looking for any excuse to rally. We can only absorb so much doom and gloom.
307 points
CG answered one year ago …
Shorting select retailers and restaurants? Yes.
We've started doing so again. The weakness will last well beyond one or two seasons, we believe.
