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Holidays’ Big Work-Out

November 6th, 2006 at 08:05 pm


As I have told you many times in the past few months, I knew that the stocks that I owned were going down. A lot of my portfolio relies on the consumer action for it to see stock prices soar. I have retail store holdings (like Best Buy & Circuit City) that usually only see profits in the non-business markets. Today a story in Wall Street Journal directly pointed out what I was saying in the past (I can’t link to the article I am referring to because you need a subscription. Sorry!)

“Forecasters are more divided than usual over what kind of holiday shopping season retailers will see this year, with predicted gains for overall sales ranging from a 2.5% hiccup to a gangbusters 7.5% advance.” I’m more on the optimistic side of the argument. A lot of those retail giants receive over 50% of their yearly revenue in less than two months of selling.

“Depending on who is counting and how they do the tallying, shoppers are expected to spend anywhere from about $250 billion to $786.6 billion.” That’s a lot of money to be made during just a few months. Last year a huge change happened in the retail market. Increase of sales happened without products moving off the shelf.

Who’s to blame for that phenomenon? Gift cards! Gift Cards stole a huge amount of revenue from products. This really doesn’t change the profits of large companies; it just changes their selling strategy. “Thirty-eight percent of the value of gift cards purchased in the 2005 holiday shopping period were redeemed in January 2006.”

What does this mean to you? If you have extra month laying around after your holiday budget is done, buy some stock so you can actually MAKE money while shopping.

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