I recently eulogized the stampeding bull market of March 2009 to April 2010, even if I did so with the caveat that it may be premature. That said, the latest housing stats are nothing short of fugly and I’m feeling increasingly confident that I was not, in fact, early in doing so.
In hindsight, I didn’t make the most of that rally. Neither did you, keep it real.
I committed one very specific misstep during the recovery rally that still eats me alive: In my aversion to all things consumer spending-related I ignored the footwear group. In hindsight, these were layup trades.
In hindsight, I should’ve been all over the athletic footwear sector. Human beings have an inextricable fight or flight instinct that manifests itself in recreational jogging every time there is adversity in the economy. Each time the US has come up against economic hardship over the last few decades, people have gone out to buy running shoes and have hit the trails. Forrest Gump‘s late 70’s – early 80’s episode as a jogging messiah exemplifies the running craze that swept the nation in that difficult era. We did the same thing this time around and Nike ($NKE) should’ve been a core position for my accounts. Foot Locker ($FL) was also a steal in the single digits, it’s a teenager now..
In hindsight, I should’ve been all over the casual footwear sector as well. Sketchers ($SKX) and Deckers Outdoor ($DECK) were two of the most unlikely winners of the last 12 to 18 months imaginable. The former created a brand new category of footwear out of thin air with their Shape-Ups and the latter can’t seem to make those furry Ugg’s fast enough for the Hannah Montana set. What I forgot was that casual footwear purchases are exactly the type of affordable luxuries that people turn to when they can’t travel or buy new cars. Buying and wearing a new pair of shoes makes people feel better, there’s really not much else like it. These stocks were major home runs.
Here’s a look at these four footwear names off the March 2009 bottom – all ridiculous winners:
But no more hindsight flagellation for me. Should the new leg down in housing (that seems more certain with every data point) spill over into a double dip, I will not forget to do some shoe-gazing this time around.