This is curious: "Investors rotate into retail stocks"

[Mike 03]

From Reuters:

"Retailers were a standout in an otherwise flat market on Thursday as a bigger-than-expected rise in sales at U.S. chain stores helped dispel some of the concern about the U.S. consumer.

The Morgan Stanley retail index .MVR rose 2.3 percent, driven higher by companies such as Sears Holdings Corp (SHLD.O) and Ross Stores Inc (ROST.O), which both rose over 6 percent.

U.S. chain store sales climbed 4.8 percent in January, according to the International Council of Shopping Centers. A sharp fall in claims for jobless benefits and a surging services sector were further signs of economic strength..."

Link: http://www.reuters.com/article/2011/02/03/us-markets-stocks-idUSTRE70U2DI20110203

This concerns me because there is not really a rational reason to shift into retail stocks right now. Savings in the U.S. are rising; people are postponing most purchases...unless they fear inflation is coming.

People who fear inflation tend to overpurchase consumer staples or what they consider to be necessities, for good reason.

Is this an omen that people fear inflation in the near future?

I know that I have been stocking up a bit on what I consider to be the basics.

Opinions?

[elleng]

1. Pent-up demand?

[leveymg]

2. People have a bunch of worn-out stuff they have to replace or repair.

If you have two cents to rub together, eventually you'll have to buy a couple new pennies.

That's all there is to it.

[Newest Reality]

3. Numbers!

No matter how poor we become, we still find ourselves depending on the mass-distribution and production of corporations for just about every necessity, not just the fluff and sparkle. Though many are attempting to shift over to more local and sustainable models, there is still a killing, (literally?) to be made off of the masses. You just have to shift your product and scope and provide a different spectrum of outlets to accommodate the transition and economic strata involved.

Anything that is profitable can be exploited and the new model will, in my opinion, be those items we require to survive when it comes to the masses. Stratification will cater to the smaller numbers who have disposable income and the smaller, elite segment that can consume luxurious items. The system seems flexible and geared towards this now, which blows our ideas about the consumer society and its importance in the cycle out of the water, (when you generalize about it). There are other, growing Global models to exploit, as well and the new "middle classes" have less teeth to bite back and come with lower requirements and demands.

Yes, inflation looms ahead for the necessities, but the investor class is a part of the equation, (along with environmental and resource factors) and will find great profits to mine from our survival needs. In that sense, when the market does well, it no longer means we are ... in fact, it could be an indicator of our demise, as well.

[Statistical]

4. Investors aren't buying stocks out of inflation fear. The article said why

"bigger-than-expected rise in sales at U.S. chain stores"

Retail numbers were better than expected hence money flowed into retail stocks.


"there is not really a rational reason to shift into retail stocks right now"
Prices were based on projections/estimates which were too low. Stores performed better than expected hence the derived value of the companies rise. If you feel this is a short term aberration then you should sell. If you think this trend will continue then you should buy.

[cbdo2007]

5. sears holdings went on the same pattern last year at this time - up 35% starting

in February before the bottom fell out and it lost 48% starting in April.

No big deal. Retail services are known to rise and fall quickly.

Of course I'm happy though as I'm up 5%+ today thanks to this.