No Santa For Retail, But Hope For E-Commerce

Did this look like your mall this past week? Well, probably not quite, but I definitely noticed a lot thinner crowd circling the stores these last couple of days. Retailers were hoping for a miracle coming into this last week before Christmas as sales continued to be sluggish week after week leading up to the holiday. Well, it seems as if that didn't happen. It's funny, media and analysts won't call it what it is. It must be the weather that prevented people from shopping this year, or everyone is waiting for the week after Christmas, for the sales. Come on, can we just face the fact that we are heading into one of the worst financial crisis of the century, and many folks aren't going out and buying that extra computer or coat that they did last year. The more they try and cover it up, the more they become vulnerable to devastation. Either way, as the magic 8 ball would say regarding retail for 2009, "Outlook Not So Good."

Early reports from MasterCard are showing retail sales down for November and December anywhere from 5.5% to 8%. They contribute a large portion of this to the 40% decline in gasoline prices, saying that in reality, the number is closer to 2%-4%. Do keep in mind that this is still with the fact of huge discounted prices we saw this year, which will cause profit margins to be slashed. So, when calculating actual net income, the number has to be pretty scary.

Whatever it may be, people just weren't shopping that much. Not only were they not shopping as much, but when they were, they were not going to malls. Amazon is claiming to have its best holiday season yet. As people are becoming more discount aware, they are flocking to the online discounts. I am looking for companies like amazon to make a big push the next couple of years. The biggest barrier to E-commerce was the lack of comfort many people (mostly older) had from buying from online vendors. Well, people are now biting the bullet, putting their prejudices aside, and going where the discount is. I had to people in my immediate family who had never even thought of shopping online before, get most of their gifts this year from online retailers. I'll be keeping my eye on more e-commerce companies like Amazon and Overstock for potential buys for my portfolio. We could see a strong push for these companies in 2009 and 2010.

Overall, the day as a whole was pretty boring and lethargic. I assume most people won't be back at their computers trading until at least Monday, if not after New Year's. The Dow finished up another moderate .56% with the trading volume at about 86.6M, extremely low. At any rate, I don't see any big moves being made until the volume comes back.

It is not good to see these early signs of suffering from the retailers as it should only get worse in 2009. I expect this to directly affect SRS, as vacancy, in my opinion, for commercial retail will surely bounce anywhere from 15-30% depending on the market, which should lead to a lot of defaults on these conduit loans that come due this next year and in 2010. This is why I chose SRS as my number 1 pick for 2009, despite the few negative articles which have been written on the inverse etfs. I feel very comfortable with it.

Well, we all have a lot of things to discuss in the near future as we begin to tackle this beast called 2009. I appreciate the input from all of you. There are a lot of smart investors out there that can bring some great concepts to this forum. Please feel free to contribute and share your own successes. Also, several of the readers of this site have joined up with Lending Club, the p2p lending site we discussed last week. I would also like to hear from those that have and any successes or frustrations you have had from them. As I have heard from few, it has been a great source for some serious returns(anywhere from 6-15%), which may seem impossible in this market, which is also why I would like to hear from you that have been involved. Please comment below and let us know of your experience, and if you're interested in joining, see Lending Club for more information.

I hope everyone had a great holiday. There should be some serious discounts at the malls this week, as retailers will be desperate to liquidate some of this year end inventory to pay for their new inventory purchases. So get out and get some goods. Happy Trading.


  1. Anonymous Says:

    this blog is a must read for me! thanks for all the work you do! are you still buying srs to avg down ? im long at $104 and sitting still for now. any thoughts would be great. thanks!

  2. Anonymous Says:

    My experience with Lending Club is great so far: I invested $3K in about 110 loans at 13% average rate. After almost a year, 5 of those loans are defaulted, and 6 more are late. I've noticed that half of the late typically go back to good, but the other half, no luck. Overall, my 13% goes down to about 9-10% after losses (typically 2-3% annually) and a service fee of 1% LC charges. Good investment, but you have to: 1) keep reinvesting what you get back and 2) pick loans carefully. All in all, better bet than stock or options I think.

  3. Unknown Says:

    FYI: I tried to sign up as a lender, but am not able to because I live in Ohio. Lending Club responded as follows: "We are sorry to inform you, because of your state regulation; you will be unable to invest on both the Lending Club and Foliofn trading platforms. We have completed the federal registration process with the SEC, and have simultaneously filed in all 50 States. We are currently awaiting a decision from your State's securities authorities. Until and unless we complete the registration process in your State (Ohio), you cannot buy Notes from Lending Club or Foliofn websites."
    I guess the powers that be in Ohio only want the very rich to be able to make money from lending. I'll be contacting my State Rep with a nastygram.

  4. Anonymous Says:

    Good post again, FF.

    I just wish you, or your minions, would be a little more genuine with the spam for your site that is plastered on the google boards. Admittedly, I would have not discovered you without it, but now I feel embarrassed to value your site when there are all those quick ‘one liners’ followed by your link.

    Someone new might think that I am bashing you, but I am not. I check you everyday, and respect your insights. It’s just that the spammy post degrade from your true value. You don’t see Mon-Stat doing that, and he is high on my list, too.

    Sorry to sound like a turncoat here, but I will be back for more counsel. It's just the spam...


  5. Finance Fanatic Says:

    I apologize for the posts. I signed up for a site advertising service to increase page views when I first started this site. Recently it was brought to my attention that much of what they do is hit the message boards, I am working at disableing the service. Thanks for reading.

  6. Anonymous Says:

    Apology Accepted, FF.

    Thank You for responding honestly. You could have easily just deleted my rant.

    Since I have sort of come to know you a little, I would (at this point) even promote your blog myself. I would love to see a bunch of people sharing their opinions on your site. So, maybe, you don’t shoot that service in the head - just tell them to expand their comments so that they seem more pragmatic??? Probably not realistic, huh?

    I recognize the potential advertising revenue, and I have no problem with that. Good luck, and I hope I have made a friend here.


  7. Peterson Says:

    This is really great! I enjoyed reading the article and the comments are wonderful. So many information to learn. Thank you!

  8. JohnRico Says:

    I am amazed and interested in the e-commerce and I also hope that there will be. Thanks!