Stay Away from the Retail Sector Until Christmas
Aug 28th, 2008 | By Rick Pendergraft | Category: Stock Market InvestingDespite falling commodity prices, producer and consumer inflation are rising. Add to this low consumer confidence and you get bad news for the retail sector, says Rick Pendergraft in Investor’s Daily Edge. Rick recommends steering well clear of retailers right now…
Commodity prices had been soaring since last November, and producers couldn’t raise the prices of their end products fast enough to keep up. So you can understand if they are hesitant to freeze prices or lower them now that commodity prices are falling.
Combined with inflation running high and consumer confidence running low, this means the retail sector will struggle in the coming months. Most of the companies in the sector have already reported second-quarter earnings. And most were able to meet or beat expectations. However, a number of them have lowered expectations for the third quarter.
Unfortunately, there isn’t an ETF that makes money when the retail sector goes down. However, staying away from the retail sector can benefit your portfolio. Should the economy turn around in the fourth quarter, retailers will benefit at Christmas time. By then, their earnings expectations could be extremely low and easy to surpass. So stay away from the retail sector for now… but look at it again come the holiday season.
P.S. Making money these days is as much about knowing what NOT to buy as it is about buying right. Investment analyst Rick Pendergraft can show you simple system he uses to make investing decisions. Learn the details here.]
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Rick is currently the Editor-in-Chief of The ETF Options Trader and the Triple Wave Investor. At the age of 23, on the third options trade he had ever placed, Rick turned $1,800 into $22,000 in less than a week, when the company he bought became the target of a takeover. He admits it was a stroke of luck, but it was a memorable education as to the leverage that options can provide. He lives near Delray Beach, FL with his wife and three children.
