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February 10, 2012
Lisa M. Krieger: Man with defibrillator demands access to his own heart's information
David G. Savage: Why activists may not be in a hurry to have High Court rule on alternative marriage
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Laura McMullen: 10 Least Expensive Public Schools for Out-of-State Students
Kimberly Palmer: How to actually enjoy -- relaxing, financially -- your vacation
February 8, 2012
Warren Richey: Why momentous Prop. 8 ruling might not satisfy gay-rights groups
Menachem Wecker: Though Controversial, LL.M.'s Can Lead to Specialized Legal Jobs
The Kosher Gourmet byDana Velden: Going to the bother of making soup? You know it better be good. This CREAM OF TOMATO SOUP certainly is! And it's a cinch to make, too (Includes techinques and serving secrets)
February 7, 2012
Frank J. Gaffney, Jr.: Caught off-guard? President's Super Bowl interview with Matt Lauer gives those who need a reason not to vote for him, a darn good one
Suzanne Bohan: Leaping lizards! Tiny reptiles advancing robot design
February 6, 2012
Jonathan Tobin: Iran Threatens Israel With Destruction, But the New York Times Doesn't Hear It
Jeffrey Fleishman: In newly democratic Egypt, tens of democracy activists jailed, to stand trial; their groups are 'threatening the stability of the homeland'
Julie Deardorff : Researchers say antioxidants may not be that effective and could do more harm than good
Mark Clayton: How did Anonymous hackers eavesdrop on FBI and Scotland Yard?
February 3, 2012
Edmund Sanders : Israeli official says Iran is creating missile that could reach East Coast of US
Victoria Kim: Immigrant-smuggling ring used black drivers to avoid racial profiling
February 2, 2012
Jim Carney: Wrong number call may have saved her life
Reza Kahlili : Ex-CIA spy in Iran's Revolutionary Guard: What Obama doesn't grasp about striking deals with Tehran
Tina Susman: For woodchuck rescuer, every day is Groundhog Day
February 1, 2012
Brian Bennett: US officials see increasing threat of domestic attack from Iran
Emily Brandon: How to Take Advantage of New 401(k) Fee Disclosures
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January 30, 2012
Paul Richter and Ramin Mostaghim: Misreading Teheran's limits -- deadly and economically devastating as they may be -- is a risk administration, Europe seem willing to take
Suzanne Bohan: Warning: Nap-deprived tots missing more than sleep, study finds
Meg Handley: Banks Revamping Rewards Programs to Woo Customers
January 27, 2012
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Katy Hopkins: New budget rules may affect how much money you get for college
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Jeannine Stein: Mental illness struck one in five U.S. adults in 2010: Report
January 25, 2012
Richard Simon: House passes two bills endorsing the use of religious symbols at military memorials
Fred Weir: Putin: Multiethnic Russia cannot survive as a US-style 'melting pot'; must find its own way
Susan Johnston: 5 Sneaky Coupon Strategies Consumers Should Watch Out For
January 24, 2012
Carol Clark: The price of your soul: How your brain decides whether to 'sell out'
Caroline B. Glick: America lost most in 'Arab Spring'. Sadly, many voters still don't grasp the extent
Warren Richey: Drug criminal scores win in GPS ruling from conservative-leaning high court
Erika Bolstad: Black conservatives gather to talk about gaining strength
January 23, 2012
Melissa Dribben: Jewish voters to play a key role in Florida's Republican primary
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Ali Safi: U.S. envoy gives Taliban terms for peace talks
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January 17, 2012
Frank J. Gaffney Jr.: No-kidding red lines: U.S. response to an Iranian nuke may be bluster, but Israel's won't be
David G. Savage: They sued their principals after slandering them online --- now the cases are headed to the Supreme Court
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January 13, 2012
Ben Lynfield: Israeli lawmakers move to annex Jewish Judea, one museum at a time
Alexia Elejalde-Ruiz: Thriving through touch: Gentle massage helps older people with low mobility improve in mind and body
January 12, 2012
Warren Richey: Landmark Supreme Court ruling a 'resounding win' for religious groups
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John Fauber : Statins found to raise diabetes risk in postmenopausal women
Katy Hopkins : Consider This Before You Pay for an Online Degree
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Tom Hussain: Pakistan -- recipient of more than $21 billion in civilian and military aid -- speeds pursuit of Iranian pipeline, defying US
David G. Savage: High court signals it won't be loosening TV's 'indecency' rules
Stephen Ceasar: Oklahoma's Islamic law amendment can't go into effect, court rules
January 10, 2012
Reza Kahlili: From an ex-CIA spy: US must exploit new split in Iran's Revolutionary Guard
Karen Kaplan: Study: Nicotine replacement products ineffective when used in real-life situations
January 9, 2012
Michael Doyle: Put through legal hell over dream home, couple fought back hard --- all the way to Supreme Court
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Jewish World Review
August 26, 2008
/ 25 Menachem-Av 5768
Retail stocks may not be best fit for investors
By
Gail Marks Jarvis
http://www.JewishWorldReview.com | (MCT)
When should you head to the clearance rack of retail stocks?
Not yet, says Morgan Stanley retail analyst Gregory Melich. There are probably a series of markdowns yet to come.
Hints of the future were plentiful last week. Target Corp. stock fell when the company said consumers have been reluctant to buy clothes and have struggled with credit card bills. Home Depot Inc. dropped about 4 percent when it noted that customers were fixing what's broken around the house rather than taking on major redecorating projects. And Saks Inc., with its stock down more than 50 percent for the year, said even affluent customers are cutting back.
Melich warned investors in a report last week to be cautious about retail stocks overall, even though some shares have fallen so far they may look enticing.
Still, if you try to hold out for the final markdown on retail stocks, you could lose. Finding deals on the stocks isn't nearly as predictable as waiting until the day after Christmas to buy a sweater.
Investors who wait and see with retail stocks engage in a difficult game, said Bernstein Research analyst Uta Werner. The "swift and powerful" rally in retail stocks based simply on the pullback in oil prices during the last few of weeks demonstrates what can happen, she said.
"These stocks are highly anticipatory," Werner said. "An improving consumer backdrop will be embedded in valuations well in advance of their actualization, making the case for early accumulation."
Her top picks are Home Depot, Lowe's Cos., Target and J.C. Penney Co.
Melich agrees that investors need to buy retail stocks before the future is clear. But he thinks it's too early.
He said the effect of tax rebate checks will wear off this quarter, and "may actually have a pull-forward effect that could make conditions worse for retailers into 2009." And he adds that as consumers deal with unemployment, high gasoline prices and tighter credit conditions, the "slow-drip deceleration will continue into 2009."
Of course, keeping an eye out for an easing of those conditions is critical for an investor, he said. Typically retail stocks tend to start climbing before investors realize that the economy is on its way to improving. During the last recession in 2001, for example, the stocks were starting to recover while analysts were growing gloomier on prospects for all stocks, and cutting their profit estimates.
In retrospect, the signal of change was that analysts were lowering their expectations less for retailers than for stocks in other sectors.
Investors who want to spot the turning point for retailers can keep their eye on financial companies, said Vince Farrell, chief investment officer of Soleil Securities Group.
As financial company stocks rally, so do retailers, he said. But understanding when a retailer might see better days could be easier in this market than catching the bottom in financials. There have been numerous false starts in financial stock rallies as companies have shocked investors repeatedly with new write-downs - about $500 billion total so far.
In retail, Melich thinks investors saw a false start in July as the stocks rallied sharply off their lows before pulling back again. As a result of that rally, he said the stocks are not cheap. He thinks investors are expecting the companies to provide profits that will fall far short next year.
Analysts are estimating 2009 profit growth at 13 percent, about 5 percentage points too high, Melich said.
When companies disappoint investors by reporting profits that are lower than expected, investors often dump the stocks and their prices fall.
Werner said the key to retailers' profits in the near future will be the labor market, which is difficult to read.
Still, some analysts said that even without serious layoffs, the consumer is going to be hurt more than many experts anticipate.
Lenders, worried about overly indebted consumers, are cutting back access to home-equity loans, home-equity lines of credit and credit card lines of credit. Oppenheimer analyst Meredith Whitney said that consumers will have about $2 trillion less credit at their disposal by 2010.
Of course, that means cutting back on purchases, perhaps a painful experience for the economy.
Merrill Lynch economist David Rosenberg said that, with excessive debt, consumer spending has swelled to a record 71 percent of gross domestic product, while 65 percent was normal for the late 1980s and early 1990s. But he said a consumer spending bubble is already popping: "We are focusing less on buying more, and focusing more on either fixing up or upgrading the $4 trillion of consumer durable assets that Americans accumulated during the consumption boom of the past 20 years."
Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
Gail Marks Jarvis is a personal finance columnist for the Chicago Tribune and author of "Saving for Retirement without Living Like a Pauper or Winning the Lottery." Comment by clicking here.
Previously:
08/20/08: Rear-view mirror investing can be dangerous to a portfolio
07/01/08: What do we do? My daughter didn't get a scholarship
02/25/08: Before abandoning your mutual fund
02/14/08: Dirty little secret of some funds may be haunting
01/29/08: Sorting out the stock market
01/03/08: One word for 2008 crystal-ball gazers: Caution
12/11/07: Buy and hold isn't necessarily tried and true
11/26/07: Translating the falling dollar's implications for investors
11/13/07: Gradual retirement may not be key to happiness
11/05/07: Rate cut won't offer immunity to investors
10/29/07: Employers set to help workers save in 401(k) accounts
10/22/07: Playing bounce may be costly to stock investors
10/10/07: Investors find boring often can be fruitful
10/01/07: Make up lost time with swift, smart action
09/24/07: Balance is key for investing by retirees
09/18/07: Homeowners who wait see options fade
09/04/07: Easy matter to rate fund's performance
08/27/07: Mortgage mess could be good for savers
08/17/07: Small stocks are coming with large caveats
© 2007, Chicago Tribune Distributed by McClatchy-Tribune Information Services
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