Consumer Stock Investing: As Good as It Gets
By Adam Lass
In this article
We're already seeing record high heat warnings across the northern hemisphere.
Consumers were three times as likely to report hearing negative rather than positive news on the economy.
The shame of it all is that there really are opportunities amidst the gloom…
Consumer Stock Investing: As Good as It Gets
This is it, folks. This is the bottom of the trough. Heating costs are slowly fading from public consciousness. (At least so far as speculators are concerned. My wife is still running about brandishing last month's bills like they are some kind of personal affront.)
Travel and electric costs are still low, as we await the summer travel and cooling seasons. (For now, anyway: already we are seeing record-high heat warnings across the northern hemisphere. And the Baltimore Sun assures me that traffic in my home state is increasing geometrically.)
And what does the bottom look like? What is this remarkable low price for crude oil that we are supposed to be celebrating? $56.91/barrel for front- month contracts in New York.
Wasn't it supposed to be the new era by now? You know, ethanol power was supposed to have replaced gasoline, and hydrogen fuel cells were supposed to have replaced ethanol? And wasn't all of this supposed to push oil down below $30?
Consumer Stock Investing: But Wait, It Gets Worse…
Instead, we are calling for $56 a barrel and $2.75/gallon a low, and bracing ourselves for the next wave of demand spikes that will drive those figures up to $66 and $3.25 respectively.
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And how are the masses celebrating this short-lived interval of prosperity? Why, they are not celebrating at all!
As per the Reuters/University of Michigan Surveys of Consumers, the preliminary figures on March consumer sentiment looks like they may have slipped to 88.8, down from 91.3 in February.
But wait: it gets worse. Current conditions are the lowest in six months, down from last month's 106.7 to 103.6, while expectations came in at 79.3 down from 81.5.
Apparently these ingrates were three times as likely to report hearing negative rather than positive news on the economy, citing paltry circumstances like job losses, declines in stock and home prices, and higher mortgage delinquencies as excuses for their down-in-the-mouth attitudes.
Consumer Stock Investing: The Shame of It All
In fact, the current mood is so morbid, the pollsters felt compelled to add the following note: “What has changed is consumers' overall evaluation of the economy, as consumers are now more likely to report bad rather than good times in the economy as a whole.”
And this, as I have pointed out, is as good as it gets! Can you imagine what the mid-summer poll will look like?
The shame of it all is that there really are opportunities amidst the gloom, if you are not above taking advantage of a rather depressed investoriate. Simply short discretionary consumer stocks such as Wal-Mart (WMT:NYSE) and Time Warner (TWX:NYSE) now, and place the money on select oil companies such as Chevron (CVX:NYSE) and Exxon Mobil (XOM:NYSE).
And then watch as things get much, much better, at least for you, anyway.
***
Adam Lass is the founder and manager of the WaveStrength Group and a contributing editor for Taipan Financial News. As the creator of WaveStrength's proprietary analysis system, Adam's expertise has shaped a franchise of successful investment newsletters and services, including WaveStrength Options Weekly and WaveStrength Apex.
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Related Resources
Traffic: More cars than ever. - The Baltimore Sun
Crude Oil: Oil prices hit their “low.” - NYMEX
Surveys of Consumers: Whining consumers setting an ugly trend. - University of Michigan (requires email address submission)