As we’ve already discussed in recent blogs (in particular, visit Fed says: Recession Near End), retail sales appear to be up, but when you strip out the boost of auto sales from the cash for clunkers program, spending is actually weaker. The more frugal consumer as of recent hasn’t disappeared after all. During this rally, investors seem to believe that consumers who were trading down are now going to be trading up. However, unemployment is still rising and consumers are still heavily in debt. We believe the bargain hunting is far from over. So, while consumers remain reluctant to trade up in terms of retail goods – we sure are – well, that is, trading up in terms of higher quality stocks (see our blog from two days ago).
Disclaimer: The specific securities identified and discussed should not be considered a recommendation to purchase or sell any particular security. Rather, this commentary is presented solely for the purpose of illustrating YCG’s investment approach. These commentaries contain our views and opinions at the time such commentaries were written and are subject to change thereafter. The securities discussed do not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. These commentaries may include “forward looking statements” which may or may not be accurate in the long-term. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable. Past performance is no guarantee of future results.