WASHINGTON, December 1, 2013 — Even as we finish writing this column today, millions of Americans are returning home in a mad crush, having concluded traditional family get-togethers during this year’s Thanksgiving holiday weekend.
Before getting back in their cars or queuing up at rail and bus stations and busy airports across the country, however, many families evidently found plenty of time to indulge in Black Friday shopping festivities. Apparently, quite a few shoppers also took advantage of the numerous Scrooge-like retailers that chose to open on Thanksgiving Day itself.
More than a dozen major chains opened on Thanksgiving Day and planned to keep their doors open through Friday, the traditional start to the holiday shopping season. Crowds formed early and often throughout the two days.
According to a Reuters report via CNBC, “U.S. online sales rose a total of 17.3 percent on Thanksgiving and Black Friday, the unofficial kick-off to the holiday spending season.”
Clearly the retail Gordon Gekkos of the world are alive, well, and doing far better financially than most of us today—and eager as well to do even better by helping themselves to more of our money earlier in the Christmas shopping season than ever. We hope that at least some shoppers will drop a few coins in those Salvation Army kettles on their way in or out of those stores that still allow the Army’s bell ringers on the premises. Much of the country will badly need their help this winter.
As for U.S. markets, stocks tended to melt upward last week in extraordinarily light trading. Averages managed to fizzle at virtually every closing bell, however, indicating that someone somewhere is quietly but substantially selling into each close, taking care to snag the best prices of the day as they slowly exit this latest bout of irrational exuberance on Wall Street.
All this may change Monday as traders get back into the action on Cyber Monday in force.
During Friday’s shortened trading session, the Standard & Poor’s 500 index ended down one point, or 0.1 percent, to 1,805.81. The Dow Jones industrial average slipped 10 points, or 0.1 percent, to 16,086.41. Yet even though the S&P 500 eased Friday, it still rose for an eighth straight week, its longest stretch of weekly advances in a decade.
Investors watched for early trends in holiday sales as the busiest shopping day of the year, Black Friday, got underway. Retailers were one of two industry groups in the S&P 500 to rise.
Stocks overall have surged this year as the economy maintains a slow but steady recovery and corporations keep earnings growing. Demand for stocks also has been bolstered by Federal Reserve policies that have held down interest rates, making bonds less attractive investments than stocks.
Sadly, this policy is relentlessly eroding the fixed income returns of conservative retirees. But nobody seems to care just as long as liberal politicians and their wealthy faux-socialist corporate and banking backers keep rolling in dough.
It’s not unusual for Monday markets to open with a selloff, which may provide investors with opportunities to do a bit of bargain hunting. That’s because, at least for now, November’s Santa Claus rally is likely to continue.
Bears who try to short this market have been repeatedly hammered this fall as the Fed’s constant money printing efforts make holiday mincemeat out of traditional stock valuation metrics.
Most investing systems are failing these days—to the upside, oddly—as more and more money rushes into the system via the Fed’s relentless bond-buying efforts. If the Fed pulls the punchbowl away by actually “tapering” this program, markets could crash again as they did earlier this summer.
On the other hand, if they don’t, this party will end anyway when someone, somewhere realizes that stock prices are being manipulated by the Fed’s massive giveaways of essentially phony money.
As long as headlines keep shouting “stock market bubble,” however, a market swan dive is unlikely to happen. The Maven’s longtime adage, “’Everybody’ is always wrong,” applies in this instance. As long as we have a media consensus that the market will crash, it won’t. But when you stop reading “bubble” headlines as they’re replaced by headlines that proclaim, “This time is different,” that’s when we should all head for the hills.
For that reason, we’d slowly, surely start becoming net sellers this week, taking decent profits if we have them and going gradually into cash. The only exceptions? Short term year-end trades based on unfairly crushed stocks that are likely to “bounce back” during the first few trading days of January.
We’ll have more suggestions on these in another column. But for now, we’re looking at the decimated REIT and utility sectors. Investors in these stocks were obliterated this summer after the Fed “taper” caper. Many have likely been dumping these stocks to take year-end tax losses, and they could very well be among the best bounceback candidates come January 2014.
Stay tuned. And start raising cash. If nothing else, you can use it to pay those holiday shopping-laden credit cards off early.
BTW, Happy Cyber Monday. If Macy’s didn’t get you, Amazon.com will.
—AP contributed to this reportClick here for reuse options!
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