As we march ahead into the Holiday Season, with Black Friday
and Cyber Monday now past, I sit back and ponder some thought. Although Black Friday Sales are said to be
down for most retailers, while showing an overall increase in sales for the
entire weekend of about 9%, and some reports of 30% increases for Cyber Monday
from retailers across the United States,
What is causing poor stock performance?
Every month I track 29 stocks which consist of a wide
variety of retailers and various product categories. In addition, I also track Sweet Crude Oil to
see if stocks are being directly affected by oil prices. This week as I tracked the stocks, I was
pleasantly surprised to see that of the 29 stocks, 24 had a decrease in stock
value from last month.
Although I would have speculated with the perception that an
increase in sales would add some reassurance for potential shareholders, I am
surprised to see the opposite response in stock values. As I looked at the value of oil per barrel,
it has fallen $7 a barrel since October which should increase consumer confidence
and loosen the grip of some hard earned dollars for goods and services. In addition, as I look at oil prices, they
are actually the lowest they have been since June. While there still is some global turmoil,
with little chance of needing American military intervention, that should have
little affect on the immediate stock values as well.
As I narrow down what could be causing many of these stocks
to deflate in value from last month, I have also concluded that upper executive
management decisions or marketing changes are not the cause.
Since people are spending, unemployment is falling, and home
sales are on a rise, the only other reason I can conclude for the stocks
falling is due to future projections beginning in 2013. Although it appears sales are going to power
through the end of the year finishing retail numbers out stronger than 2011,
with some uncertainty of the near future, stocks are not mirroring sales. With a slew of new taxes to be imposed in
January, with both personal and corporate pocketbooks to be affected, one can
only conclude that this is the cause for the immediate stock value
decreases. In prior months, it is likely
that people purchased stocks which drove the increase in stock value due to
Presidential Election Projections, which likely is not the outcome they had
wished for.
Despite the outcome of the election, I feel confident this
is likely the cause for investor uncertainty and for the stock value decreases. Since there is much instability for what
impact these imposed taxes could have on the economy, I believe people are
holding steady until things are presented more clearly.
So what is causing the increase in poor stock
performance? It is most likely the
outcome of the election and investor uncertainty for what could begin in
2013. Although it should be of no
surprise, once people are impacted by the imposed taxes, it could have an
affect on expendable income and consumer confidence, which directly relates to
corporate spending on capital improvements and profit sharing. With many unknowns for what 2013 holds, the
safest investment option is holding onto and preserving what you have until a
better educated decision is available.
Since we can narrow all of the other reasons for the stocks falling in
value, this would be the best explanation I can conclude for its cause, and
hope that the future flourishes with economic growth.