Seems like the retailers are getting hammered - how would you play this?
Answers
117 points
JohnLansing answered 11 months ago …
We prefer buying put options on consumer retail ETFs to gain exposure to many floundering names at once, but don't make the mistake of choosing the wrong one.
For example, most people gravitate toward a short-side play via put options in the Retail HOLDRs (RTH), but that ETF is highly-weighted with relative out-performer Wal-Mart (WMT). That's hardly the way to make downside profits.
Instead, we suggest looking at puts for the SPDR S&P Retail ETF (XRT), which is more equally weighted with some of the true retail dogs.
3963 points
MNSL answered 11 months ago …
From USA, UK, to Australia retailers will struggle in the next 18 months. Some retailers will go out of business sooner than later. There will be wave of closures in retail stores
Consumer purchasing power and spending power is most powerful weapon in the world. Now global consumers have reduced spending on technology products, cars, clothes, jewellery, leather and tyres etc. They have taught lesson to the manufactures, retailers and some manipulators this time. They have realised that we should not spend on unnecessary items and also we should not over spend on those items.
In a way they are right. They have over paid for them. So far consumers’ especially American consumers have over spent and have taken more credit to make others rich. In addition they will not get caught to debt trap in the future. They will understand gravity of debt once credit card market collapse.
I think in the future they will spend carefully and will spend in selected items including most essential items. These sectors will have advantage in the next decade. The changing demographic in the world also will lead to less demand for some products and assets. Some asset prices will fall rapidly in the next 10 years.
However some discount retailers will have advantage over others. By this time we should have excluded retailers in our portfolios except few discount retailers.
122 points
userjam5987 answered 11 months ago …
There's a wave of small retailer bankruptcies coming. It could be as many as 200,000 stores across the country. While this news has been widely reported, I suspect that stock prices haven't been adjusted to account for the weak retail numbers and rising unemployment after small companies go belly up.
Some put options on the Retail SPDR (XRT) might be a good idea here. I like the XRT because it doesn't weight Wal-Mart higher than other stocks. The XRT currently trades around $21, with a 52-week low at $14.81.
Or if you prefer to avoid the risk of options, the ProShares Ultrashort Consumer Goods (SZK) ETF might be a better alternative. This leveraged ETF is designed to rise twice as much the Dow Jones U.S. Consumer Goods index falls. It closed Wednesday at $72.66 and has a 52-week high at $125.49.
