Being an equity bear has been brutal for, oh, nearly eight years now. With the S&P up about 250% since bottoming in March 2009, equities have been, on the whole, raging higher, with some sectors in particular benefiting tremendously from the Trumpgasm. One area, though, seems to be recognizing a bitterly cold chill of reality, and that is retail.
Not everything retail is weak, of course, Amazon has had an astonishing run (and we’ll see if it holds together when they report next week), and some stocks such as Autozone (AZO) and O’Reilly Auto Parts (ORLY) have cranked out multi-hundred percent gains for years now. But many retail companies, particularly those having to do with clothing, have been getting whacked. Take, for instance, Abercrombie & Fitch, which I’ve picked on endlessly: it is actually lower than it was at the greatest depths of the financial crisis. For how many stocks could you make that statement?
CBL & Associates is my best money-maker, and it’s following its analog beautifully. I never bothered learning what they do until just now, which apparently is real estate for shopping malls. Yeah, now I can understand why they’re doomed.
I just noticed something which, for the one or two equity bears that might be left out there, should be worrisome. First, here is an idealized example of a flag:
Even as a little kid in the 1970s, I thought the Archie comics were really low-brow. I never actually bought any of them, but I’d thumb through them on the magazine rack, and they all seemed so hare-brained. The characters themselves were completely one-dimensional:
- Archie, the good son, honest, popular, but an innocent dork;
- Betty, the hot blonde who was inexplicably attracted to Archie. She seemed more wholesome and sweet-natured than……
- Veronica, the hot brunette, who likewise was attracted to Archie (even in my prepubescent years, I think the vague notion of menage-a-trois was planted in my head, and I’m surely not the only one)
- Jughead, the not-that-bright friend of Archie’s with a bizarre eating disorder in which he was ravenous and yet stayed rail-thin;
- Reggie, who was kind of a prick and, even though more rugged-looking, always seemed like the second choice for the aforementioned hot babes
There were other characters, of course, like the token ugly girl, Big Ethel, and Mr. Weatherby, the bald, fat principal, and so on.