Adam Lass says the vast majority of retailers are ripe for shorting as a new era of thrift grips the US. Aside from bargain stores like Wal-Mart (NYSE:WMT) and the 99 Cents Only Store (NYSE:NDN), Adam says investors should buy put options on retail firms. And the best time to do this is when they talk of “better times to come”…

This from Taipan Publishing:

’Tis the season of too damn many cocktail parties. I simply don’t have the stamina for so much small talk and gossip, and don’t much care for finger food – or weak drinks.

But this time of year they are simply unavoidable (i.e., my wife makes me go). And so, all too often, I am forced to put down my tumbler of 12-year old single malt and my dog-eared edition of Gibbon’s Decline and Fall, abandon my armchair, and trade the comfortable sweater and slippers of the misanthrope for the sport jacket and slacks of the supposedly social.

Fortunately, human beings are unable to recall the sensation of pain (it’s true: look it up). And so most of these events are immediately forgotten. However, I attended such an odd gathering the other night that is has stuck in my mind.

It wasn’t exactly seasonal per se. Nor was it another of those “buying parties” wherein we are feted with Vienna sausage and crab dip while a dowager of indistinct age pitches time shares in Boca, jewelry or Tupperware party bowls. (I’m told that one such get together saw the demonstration of a line of risqué undergarments. However, I was not invited to that one. And it’s probably just as well.)

Getting Rid of Excess Baggage

In many ways, in fact, it was the harbinger either of a new age or perhaps the return to an older age. You see, the ladies were there not to buy, but rather to sell stuff. Specifically, excess gold jewelry.

Please keep in mind that I do not live in a poorer quarter. Our town’s historical Main Street has no pawnshops nestled amongst its antique dealers. (It does have a rather nice used bookstore, though, where I recently stumbled upon a lovely 1930 edition of Voltaire’sCandide.)

And yet, our hostess had invited an assessor of used gold items – a man prepared to dole out cash (checks really) for broken chains, undersized rings and mismatched earrings.

Having nothing to offer the gentleman beyond my wedding ring (and I am not that greedy – or stupid), I abandoned the living room to the ladies and joined the other spouses around the downstairs wet bar.

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The New “Rich”

Even here, I witnessed a marked shift in the conversation. Gone was the usual bragging about the size of one’s new house. So too, the crowing of recent market gains. (No shock there!) The horsepower of this year’s offering from Cadillac? Fuggeddaboudit!

Instead, the hot subject was the new frugality. One gent was touting how he could up his Honda’s gas mileage by coasting to stop lights. Another was alerting everyone to a large discount on driveway macadam from a building supplier in the next county.

A third fellow was all full of vinegar as to how he had just dressed down his teenaged daughter about her grades: “She won’t qualify for a college grant if she gets another B in economics.”

Even more disorienting: Suddenly, my hoary old scold (meant solely to discourage further financial inquisition) that “the best gain the average investor could hope to achieve could be had by paying off his credit cards” was the talk of the room!

Can it be that “cheap” is the new “rich?”

The American Wallet Snaps Shut

Certainly my neighbors are not unique. Gob-smacked by years of rising prices, the American wallet has finally snapped shut. Consumer spending in September fell some 0.3%, the largest single month drop in the past four years. Add in July and August, and you have the “worst” quarter in 28 years.

I have put quotes around worst, because the true historical value of this sea change has yet to be determined. We may be witnessing the demise of our great consumer culture.

This is disastrous news for those who are tied closely to the many endeavors that depend desperately on the American need for new crap.

Which companies might tumble when pointless spending falls from grace? Certainly the direct purveyors of chromed junk are already suffering mightily.

Detroit Still Can’t Buy a Clue

GM (NYSE:GM) and Chrysler are attempting to figure out which one has enough loose cash left to buy out the other. Borrowing for the deal in this ultra-tight credit market is simply out of the question.

Meanwhile, poor old Ford (NYSE:F) is still banking on selling one more generation of humongous pickup trucks to commuters and construction workers who aren’t even sure if they have a job to commute to.

And speaking of borrowing, GM’s once mighty (indeed sole) profit center, GMAC, is trying to redefine itself as a bank holding company so as to qualify for a piece of Washington’s trillion-dollar largesse.

The Only Profits in This Vast Empty Space

It appears that various other sellers of overpriced bric-a-brac and gewgaws are in the soup as well. The only players in the retail “space” who have shown any strength at all during this “season of saving” are Wal-Mart (NYSE:WMT) and the 99 Cents Only Store (NYSE:NDN).

The rest, from high to low, Nordstrom (NYSE:JWN) to Kohl’s (NYSE:KSS), are hemorrhaging red ink all over the New York trading floor.

Looking to the near term, most of American retail still looks like viable short candidates. My recommendation: Buy puts every time these guys poke their heads out of their little rat holes to spin their little tales of “better times coming in January.”

A Change in Values?

However, any old veteran of tighter times and previous ideas as to the value of thrift, might very well view the sudden decrease in spending, increase in wages, and spike in actual savings (Real savings! Remember them?) as a sign of better times to come.

Can you imagine a time when bankers were the type of men you could actually trust with your savings? Or how about a market that valued companies that actually made profits by providing genuinely valuable goods and services?

Goodness. The cherishing of True Value could even mean the end of shallow Technical Analysis!

Naaah: Never gonna happen.

Source: The Return of Real American Value?