Those in the housing trade since the earlier part of the year have been repeatedly rewarded, if they timed their entries and exits appropriately. I am not one to suggest an end of the housing disaster, rather I sit here advocating that things are not as bad as once suggested by the talking heads, making the housing play less risky. On weeks like these, when the global macro picture seems questionable yet again, betting on a U.S. recovery remains difficult. Though, as we look back at the worst of the recession, seeing the jobless claims sit in more comfortable territory, and see the home builders making investor money, it may be time to look at the housing derivative play- department stores.
At first you want to be skeptical, that was my initial reaction as well. Well aren’t department stores dying, isn’t everyone buying items online? One would think with the huge onset of technology that would be the case, but just look at your actions and see them tell a different story. Humans, in this case consumers, must feel and touch items. We as a species are inherently nosy. Merely seeing an item on a screen does not suffice our appetite of need and lust. Yes, once Americans whip out their wallets they will spend it with an online giant like Amazon, but when they are setting up to fill a home with goods, they will be spend all their money in the department stores.
The play is simple. One buys a new home, the must in turn fill this home. If someone buys a used home, they will also fill it with goods. Again and again the play stares you in the face. If housing continues makes big moves, the department stores will follow. How much stuff do we really need? The desire for more never ends when it comes to Americans. We buy new houses to fill these new homes with new items. Even if you cannot afford to furnish a new home you furnish it via credit. society has deemed it more acceptable to have an home furnished on credit than a home not furnished at all. Consumerism has fueled our economy for almost a century and our habits will not be changing anytime soon.
This derivative play may not be the move today or tomorrow, but as we see the housing sector continue to make leaps and bounds, department stores will be the play. Just look at the earlier part of the year as an indicator. When the United States was thought to make a full fledged recovery, the shippers doubled almost overnight. The economic situation may not be as picturesque as was first suggested many moons ago, but the movement exhibited by the housing sector suggests some profitable improvement. If this mediocre improvement is followed by continual improvement, department stores are the play.
Photo by thetorpedodog