Retail Rolls In, Liberty Day, and Thanksgiving Arrives!

Be thankful for what you have; you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough.
Oprah Winfrey

Retail Rolls In, Liberty Day, and Thanksgiving Arrives! 1

If you live in the United States, on Thursday you will probably celebrate Thanksgiving. It is a unique American tradition, one very few people can find a way to not enjoy. You get to be with your family and friends, eat delicious food, and generally relax and enjoy the day. Not much is required, unless you are hard at work cooking the scrumptious fares for feasting. Many people like that activity, me not so much, but to each his own, right? Regardless if you are a preparer or a consumer, it should be a good time. With such pleasantry, it is easy to forget there are plenty of individuals, both in the United States and globally, who live in circumstances where they are not able to enjoy this wonderful holiday. Let’s hope they are able to have a nice time on Thursday.

Retail Rolls In, Liberty Day, and Thanksgiving Arrives! 2

Sticking with the idea of thanks, capital market investors should be pretty content with the way the year has turned out, in both fixed income and equity markets. With domestic stocks up twenty percent (or more) in most broader markets, all of the losses in the last quarter of 2018 have been made up. Interest rates remain very low, and energy prices are agreeable for consumers. With the consumers remaining the backbone of the economy, Black Friday imminent, and the holiday shopping season here, from a risk reward standpoint, its probably a good bet we see a pretty solid fourth quarter.

Last week we traveled to New York for the once a year annual rights of passage known as Liberty Media day. It’s always a tough ticket, and you have to get there early. You get one day a year to hear Mr. Malone and Mr. Maffei opine on the capital markets and all things related. More importantly, you get reports from their controlled entities, fabulous companies all. Interestingly, not all were inherited in that condition. You see, getting control of a solid business is just the start for Liberty. Growing the business, making it more efficient, being smart with capital, taking advantage of mispricings in the capital markets, and using other peoples misperceptions for their own benefit are all hallmarks of Liberty. You don’t create over 200 billion of market value by being dull instruments, far from it. When you talk about the sharpest tool in the shed, that’s Liberty. It is a long journey to get there, but you usually wind up learning plenty, and that makes it well worth putting up with the joy at the airports. Here are a few videos if you are interested in seeing what the Liberty guys have to say.

In the market last week, the retail sector was in focus as companies all across the sector reported earnings. In the housing space, Home Depot missed and guided down while the opposite took place with it’s biggest competitor Lowe’s. Home Depot is the clear leader in this area, and has been for a long time. Target blew out their numbers, and again shows why it is always a good idea to stick with companies which have a long track record of evolving and adapting to new business trends. The CEO has done an excellent job of reshaping the company to better compete in the new retail landscape of heavy on line competition. Another company with a similar history is Williams Sonoma, a leader in the high end of the home furnishings area, along with Restoration Hardware (a recent addition to the portfolio by Berkshire Hathaway), reported a good quarter as well. Macy’s slumped with a poor result, but I still think you can put them in the Target and Williams Sonoma camp, although the business is certainly tougher and not as efficient. L Brands (owner of Victoria Secret and Bed, Bath and Body Works) missed again and canceled the Victoria Secret TV show. They also have a strong track record of success. Another excellent company, Medtronic (health related), put up solid numbers, as did Copart, also high quality. The biggest news of the week came at the end when it was reported that Charles Schwab is in talks to buy TD Ameritrade. If it wound up getting done, it would create a massive competitor in the online brokerage space. I think there will be regulatory issues there as Fidelity, E trade, and Interactive Brokers are going to have something to say to the government about potential market power. JP Morgan Chase and other large money center banks may weigh in as well.

Retail Rolls In, Liberty Day, and Thanksgiving Arrives! 3

Finally, I hope all clients, friends, readers, and interested observers have a wonderful Thanksgiving. If you cannot have a good time with turkey, stuffing, cranberry sauce, pumpkin or sweet potato pie, and maybe a good football game, well, I am sure you will.

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Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one’s overall financial situation.  The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantee performance better than market indexes.

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