The Economy, The Stock Market, & Your Personal Finances

The stock market fell big today. Not only in the U.S. but in Asia and Europe. Much of the blame was placed on the dismal retail sales in the U.S. for October. They were really, really bad.
My question for you is this. The holiday season is coming up. Last year, you might have spent $X.00. What do you intend to do this year?

I'm still sitting around, waiting for the stock market match my low opinion of the economy. Lately, I've been having doubts about China. If you trust their accounting*, they've got great growth, but not near enough to match the young, and largely male population moving into the labor pool.

* I don't trust their accounting any more than I trust their cat food and milk.

Here are some retail stats for October:
Wal-Mart: + 2.5% (necessities @ low prices)
Costco: -1%
Target: -4.5% (they are somewhat more geared to clothing)
Macy's: -6.3%
American Eagle: -12% (I gather a young audience)
Abercrombie & Fitch: -20%

re. retail stats for october .
as usual watched CNBC for a while this morning .
several commentators were pretty cheerful : "look at how well walmart is doing ! " . finally someone poured on some cold water by saying : "ye, walmart still looks good , but that's not enough to keep the whole retail sector going ... " and he gave some of the names of the other retailers whose stock is down - some way down .

speaking about the canadian stock market , it's down somewhere around
30 % from the highs . some stocks have been really knocked down . i'm glad most of our money comes from various government and private pensions - hoping they'll stay liquid !!!

we never spent lavishly on christmas presents . we buy throughout the year as we need things - and we keep an eye on the prices .
it'll be no different this year .

we still spent money on vacations but can easily cut out vacation spending .
btw noticed that CARNIVAL cruiselines stock is about 50 % down . since carnival owns not only carnival cruise line but also cunard , holland-america , costa , princess and others , it's a sure sign that the cruise line business is in trouble .
we are being bombarded with all kinds of "best" offers but will be sitting tight at least until next summer .
hbg

One final thought, Hamburger, on retail sales. They could be, possibly even worse then they look. Here is why.
Suppose that a retailer buys something at $5 and hopes to sell it at $10. But sales are looking bad for the month, so they cut the price to $6. They sell two of them rather than one. Sales of $12. But their margin, the difference between cost and selling price, is next to nothing, probably not even coving the light bill.
You won't find out about that impact until they report their profits, if any, for the quarter.

Tomorrow there will be more numbers about jobs. There have been a couple of reports this week. A myriad of stuff this week. Anyone want to explain that?

rjb wrote :



unfortunately , sometimes the liquidator moves in before the quarter is up !

again from CNBC : earlier this week a spokesperson for one of the "real" discount stores selling "distressed" merchandise appeared . "business is just booming " , he claimed . though i do like a bargain , that comment made me shiver !
i don't think everything can be sold and bought at 50 % off . someone will have to pay the piper , i believe .
i usually don't tend to be a pessimist , but think that there cannot be a quick recovery - governments , corporations and citizens will have to pay several outstanding bills first .
i understand that the "credit crunch" is a real drag on the economy . financing of long-term projects and major purchases will likely be delayed .
hbg

Zero last year, zero this year - not including food items. About a decade ago my immediate family decided the whole holiday gift thing was annoying and we were going cold turkey on the shopping. We all admitted we did not enjoy the pressure of finding gifts and we rarely received something we wanted or needed. We do get together for a big dinner and everyone contributes in the form of food and labor. Children in the family still get gifts, but mainly from their parents. I don't know of any adults in my clan who exchange anything other than a few homemade breads or cookies. Gift giving does still happen in my family, but it tends to be because someone found "the perfect thing" for someone else and not because of a designated gift giving day. However, I will checking out the local store for any juicy sales that might be happening for my own needs.

I recently bought some stock I had been watching for a few years and decided now the price was right. I don't watch it on a daily basis, as I do not expect to need the money in the near future. I still consider my best investment to be paying off my house years ago and having no debt.

We only buy for the kids. I've always thought it's ridiculous for adults to be buying for each other. There's really nothing that myself and the other adults in my family really need or want. I've got my wife and my daughter. That's plenty for me.

It seems to me more people are buying things online than ever before. If so, then retailers are bound to be going down even in a relatively normal economy, (not that this is a normal economy).

from about 1990 to 2000 we used to spend the month of november in myrtle beach . christmas shopping seemed to be the thing that kept m.b. going during the off-season . the factory malls and the (to us) large discount shopping centres were full of people buying , buying , buying - and that included us . even with our low canadian dollar , we were astounded by many of the bargains .
we've been back only once in about 20o5 and the stores just didn't seem as busy .

we noticed that the large discount shopping centres were now about 15 miles to the west of m.b. and had been turned from large indoor malls to outdoor malls .
even in m.b. the shopping is a more enjoyable experience inside than outside .
i assume that those outdoor malls are less expensive to construct , but do they draw the same crowds when it's raining and windy ?

the same trend to outdoor malls is taking place here in canada and one certainly does not see customers walking around in leisure checking out the store displays in either the cold winters or the hot summers . now we decide which store to visit in advance - we drive to the store - do our shopping quickly and leave .

from a retailer's point of view , how attractive are outdoor malls ?
hbg

First of all, Blickers, welcome to A2K. I hope you will enjoy discovering some of the interesting discussions.
You are certainly correct about on-line sales. It is big and will probably only get bigger as some the demographics of our population change. By that I mean that folks, say 55 or over, are probably less inclined to shop on-line than folks 35 or younger. Something like that.
I wrote a piece about on-line shopping and the ramifications it is having on me as a retailer. Fairly recently. I won't repeat all that again.
I would suggest that most if not all of the retailers mentioned above probably have an on-line option. So I would submit that the sales declines are attributable to the economy. RJB

MALLS That is an interesting subject, Hamburger, and I really can't offer any rational that I can source. The enclosed malls certainly seem to make sense in climates like yours. But...many of them were built a couple of decades ago. They were quite novel architecturally at the time, but now come across as quite sterile, with little natural light.
And then there were the economics. The typical enclosed mall is cross-shaped with four anchor stores (like Sears). They got a really good rental rate per sq ft. because they could bring in butts. The stores in the middle, between the anchors, pad a much higher rental rate under the assumption that they would prosper because of the foot traffic headed for the anchors. Worked for a goodly while. But no more. People who want to buy something want to go to the store that has what they want.
I go to our local mall so rarely that I always manage to park at the wrong end of the cross and have to walk the distance to where I want to end up. The common area is full of people but step into most of the shops, and they are virtually empty. Sure and the Mrs like to window shop, but that doesn't pay the rent. I've got more on the new trends in shopping center design, but I will stop...here.

rjb :

i guess it's giving away my age (as if everybody didn't know already) when i say : "have never shopped online ! " .
i like to see and feel , try on , before i buy (same for mrs h) . i've sometimes researched for an item and still bought in a store .
similarly when we book a holiday , i use the internet to do all the research and thereafter see our travel-agent and tell her : "that's what we want ! " .
have made hotel bookings through expedia , but have now found out that hotels will usually match and even beat the expedia price . last december we wanted to stay at a pretty fancy place ( the royal york hotel in toronto ) ; expedia was $229 , advertised hotel website price was over $300 per night . so i phoned the hotel directly :
1) matched the price ,
2) no booking fee ,
3) no immediate paymment ,
4) free cencellation up to 24 hours before arrival ,
5) free membership in the president's club (i always wanted to be a
president ) .
so from now on that's the way i handle it - thank you and sorry , expedia !

btw after we had a nice lunch at the local "rivermill restaurant " , we felt sufficiently strong to do some shopping . so we put about $150 into the canadian retail-business . even managed to pick up some well priced "canadian made " underwear - made by stanfield's in truro , nova scotia .
hbg

Summarizing today's employment releases: 240,000 people got pink slips in October, bringing the total to 1,200,000 since the 1st of the year. What is alarming: the rate is accelerating and it is spreading beyond construction into financial services and manufacturing into retail.
The listed unemployment rate rose to 6.4%. I am not a big fan of that statistic. I never have been.
A large portion of our consuming public have no money available for need-based spending, much less for discretionary spending. Things will probably get worse for a few more months.

rjb wrote :



do you have hope that things will at least start to stabilize in another nine to twelve months ?

i posted yesterday : "where is the bottom ? " , but haven't had a response from anyone .

http://able2know.org/topic/125318-1

this morning the stockmarket is still not doing well - haven't checked in the last two hours . since i am not an active investor , i just keep an eye on it more out of curiosity .

looking for a chair to sit at the computer (the kitchen chair is getting uncomfortable) , i went to STAPLES this morning . plenty of chairs on sale - computers too . so i bought a rather nice tilt chair with mesh-back for $69.99 - it was reduced from $139.99 - wouldn't have bought it at $139 , but $69 looked like a good price .
hbg

No, I don't see this as getting better or even stabilizing in 9-12 months. I am not normally a pessimist, Hamburger. Not at all a Chicken Little The Sky Is Falling kind of person. But this is bad and it seems every day gets us a new casualty.
Job losses, foreclosures, bankruptcies. I am getting at least one person a day coming in asking about part-time, seasonal work for the "holidays." We have nothing available.

American Express today had themselves reclassified as a bank in order to qualify for the bailout. AMEX, which used to give their cards, quite snotily, only to the most qualified, is having collection problems. Visa/MC/Discover are going to get hit very, very hard. That debt is held by banks.

So, no, I think this might take 3 or 4 years to work out. That will, I think, cast a long shadow on the Obama Presidency. He has been dealt a bad hand.

Me too, and I'll probably check out staples. Kitchen chair not only gets uncomfortable; it's too low for the keyboard.