Retail Stocks

[LaserEyeKiwi]

Weekly Update:

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[winner (n)]

Mortgage rates heading to 7.5% over the coming year

That won't help the cost of living crisis ..... subdued retail sales through 2022/2023


https://www.nzherald.co.nz/business/mortgage-rates-predicted-to-rise-to-between-6pc-to-75pc/757XFPKD7LEXSSF5Y6AOHRNZXQ/?ref=readmore

[BlackPeter]

Impossible to predict the future.

Oil prices won't stay high forever and neither will inflation or interest rates. While we don't know whether it is months or years until it all comes down again - eventually it will.

This is the problem with linear extrapolations. Always easy but as well (for longer periods) always wrong.

What we however do know is that people always will need food as well as basics. Good to know, that some things are predictable, unless we assume the world gets rid of people.

However - if it does, everything else does not matter anymore.

I recon retail stocks selling food and basics will be fine.

[winner (n)]

Impossible to predict the future BP keeps reminding us

Yogi Berra summed it up nicely 'the future ain't what it used to be'

[LaserEyeKiwi]

Do we have the critical mass on this forum now? I really don't want to participate in two different locations... 

[BlackPeter]

How do you measure critical mass for a forum? But anyway a bit early to decide.

I hear your sentiment, but from previous experience - better to have two forums which do work, than one forum which doesn't ...

[kasper]

I'd love to see some of the old hands who were banned from the other site post quality content on a regular basis.

Common guys,  its been so long since we heard from you.  How are you navigating this bear market, what's your strategy ?

And who decides and judges what is quality content? A forum by definition is simply an exchange of ideas and opinions with or without research and all have something to contribute whether big or small, every part of a human body is important even the parts you never consider or think are insignificant.

[Left Field]

I'd love to see some of the old hands who were banned from the other site post quality content on a regular basis.

Common guys,  its been so long since we heard from you.  How are you navigating this bear market, what's your strategy ?

This 'old hand' has a adopted a "once bitten - twice shy" approach - to posting that is. I've discovered a good life outside of the 'cancel culture' forum..... as such I'm unlikely to be posting much on this newer site.

In terms of retail investments - I have none as I have personal aversion to the sector. ( Call me crazy.)

In terms of general share investing, I'm still in the NZ market and although down from my heady highs I'm using the bear market to lower my DCA's on a more diversified range of stocks.

History tells us that Bear markets don't last forever and I consider I am 'well positioned' and still miles ahead of where I started investing in 2012.

[KW]

Two things make retail a bit of a crap place to be at present.  The first is the obvious sucking of billions of dollars in discretionary spending out of the economy courtesy of higher interest rates and a reduction in the wealth effect (feeling rich from watching your house price go up).  The second is the transition away from goods to services as economies open up and people start to get out more, which will fuel inflation in the services sector (labour shortages mean services supply cant gear up quickly) even while deflation may start in the goods sector. Only problem is that services is 65% of the economy compared to goods.  Inflation is a bit like a pig in a python, moving slowly through certain sectors as people en masse change their buying preferences and do so as an entire global herd.  So while the P in the P/E ratio has compressed, now its time to be looking hard at the E in the equation.

Don't assume food retailers will be immune to inflation induced reduction in demand. Being a consumer staple usually means you just don't fare as bad as other retailers, but you still suffer.  People stop buying that pack of Tim Tams at Countdown.  CKF in Australia just announced that they will be raising prices for KFC for the third time this year.  Today I noted that the price of a KFC box meal in NZ has gone from $11.50 in April 2019 to $16.40 today.  I don't eat at KFC much anymore, especially after paying $20 the last time I was there.

[Left Field]

Nice to see KW posting again.....your input has been missed.

At the risk of wandering off the 'retail' topic, I wonder in more general terms referencing your sign-off "don't buy shares in a downtrend" I wonder what your general strategy is in the current inflation/recession scared downtrend. What has changed for you ? Are you still holding? Have you increased your cash holdings? etc.

[KW]

Nice to see KW posting again.....your input has been missed.

At the risk of wandering off the 'retail' topic, I wonder in more general terms referencing your sign-off "don't buy shares in a downtrend" I wonder what your general strategy is in the current inflation/recession scared downtrend. What has changed for you ? Are you still holding? Have you increased your cash holdings? etc.

Sold most things as each stock broke down individually (moved below their 200 day MA). This exited me out of most of my holdings in Jan/Feb of this year.  I stupidly held on to a couple, which just served to remind me of how powerful TA really is and how I really should apply it to 100% of my portfolio and not 85% LOL

Just watching now to see if a good bear market rally can get traction, or if a bottom is forming.  It does not feel like the market is ready to bottom as there is not enough capitulation or despair around, so the psychological requirements for cycle inflection have not been met.

[Left Field]

Nice to see KW posting again.....your input has been missed.

At the risk of wandering off the 'retail' topic, I wonder in more general terms referencing your sign-off "don't buy shares in a downtrend" I wonder what your general strategy is in the current inflation/recession scared downtrend. What has changed for you ? Are you still holding? Have you increased your cash holdings? etc.

Sold most things as each stock broke down individually (moved below their 200 day MA). This exited me out of most of my holdings in Jan/Feb of this year.  I stupidly held on to a couple, which just served to remind me of how powerful TA really is and how I really should apply it to 100% of my portfolio and not 85% LOL.......

Thanks. Appreciated. FWIW I've probably held on to more than I should have... some free-held, and some still in profit. Have used DCA to improve my position in some key areas. We live in interesting times.

[LaserEyeKiwi]

Good news out of OZ:

In Australia, retail sales rose by +0.9% month-on-month in May to AU$34.2 bln, topping market forecasts and matching the April gain. This was also their fifth straight month of growth, as the Aussie economy recovered further from pandemic disruptions. The rise from a year ago exceeded +10%, handily beating inflation. Department stores had the largest month-on-month rise, up +5.1%, followed by cafes and restaurants. Given Australian consumer sentiment is low, this free-spending is a puzzle - not too dissimilar to the same track in the US. Makes you suspect "sentiment" is now hijacked as political, whereas the spending track tells the real economic story.

[winner (n)]

Good stuffin OZ  eh FM

Yes market commentary / sentiment doesn't seem to reflect reality

Chart shows total sales less food (proxy for discretionary spend) over the years

Might needto click on it to see it ...I'll suss posting charts one dayYou cannot view this attachment.

[BlackPeter]

interesting ... wondering, whether inflation might have some impact as well? Anyway - the price for the first chart published in stocktalk must go to you ...