Angry and Defensive

 | Jun 08, 2012 | 2:20 PM EDT
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I'm getting tired of being defensive about my defensive posture of buying domestic winners in a lower commodity cost environment. I think that some of the problem is that we have these "risk on, risk off" people who don't know anything about companies -- they don't even profess to -- and they are obscuring reality.

That's because the stocks that are doing great here do not lend themselves to such a moronic rubric. I prefer to deal with stocks of companies than baskets of stocks, and if you look at what's working it is precisely stocks like Ross Stores (ROST), Bed Bath & Beyond (BBBY), PetSmart (PETM), Dollar General (DG), Costco (COST) and Wal-Mart (WMT).

These are not needles in a haystack. These terrific retailers are gigantic beneficiaries of a consumer with money to spend, and getting a little more money to spend because of declining commodity costs.

What gets me angry is that when I mention that these companies are worth buying, people look at me like I am a joker because don't I see the employment numbers and didn't I listen to the reports on Spain or the worries about China.

Again, this shoehorning of the micro into the macro has to do with homework. The people who do "risk on" don't know stocks. Those who trade "vol" or the futures don't know the difference between Bed Bath & Beyond and Best Buy (BBY). They are intellectually lazy people who don't want to do the extra work needed to actually know the difference. I don't blame them one bit. I spend way too much time working. They don't. They probably go out more than I do and have a better time!

Take Dollar General. Here's a company that sold 30 million shares at $46.75 a few days ago. Now it is around $50.42. Was that some risk-off trade? No, it was a trade on Dollar General and the strength of the dollar store cohort.

This is the kind of story that, lately, I have detected an aversion to because of Spain or China or Germany, and I am urging people to think of DG as a function of management, price point, growth rate, balance sheet, demand and execution. These things mean nothing to the "vol" crowd and the future bandits.

But it is how money is made. It's time to accept that money can be made buying domestically oriented stocks. After all, when you take the Dollar General gains to the bank, they don't ask if it was a risk-on or risk-off trade, they just take the money.

Random Musings: Did you buy McDonald's (MCD) at the bottom today, as we advised on Action Alerts PLUS? Talk about an against-the-grain recommendation!

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