Do you have teens? I do. Have you ever, ever be able to figure what they want from minute to minute, let alone month to month.
Yet people keep thinking that they can be gamed. I am constantly being bombarded by people saying, "isn't this the month that Abercrombie & Fitch (ANF) will turn around? Or isn't True Religion (TRLG) down enough? Isn't this the moment for Aeropostale (ARO)?"
To which I say, "it is no more the moment than when my daughter says to me in the last week of May 'I hate what Hollister (that's Abercrombie) has in its stores,' one month after she asks me for a birthday present from there."
Obviously my 18-year-old knows best or is at least unknowable because the numbers for Aerospostale and Abercrombie & Fitch are amazingly bad and the stocks have been crushed. As they should be given how, like True Religion, they have missed the market. Of course Abercrombie and True Religion problems are complicated by the fact that they actually have a lot of Europe and in ANF's case, numbers are down more than 20%.
Meanwhile we know exactly what we can gauge and that's management that knows its customers and consistently offers product they want. That's why we should be gravitating to stocks like Macy's (M) and Gap (GPS), or Ross Stores (ROST) and Costco (COST), which have their customers down to a T, or even a T-shirt, and aren't dice rolling a fickle consumer from month to month.
You want higher risk with a higher reward you can go to Amazon (AMZN), which doesn't even need to know what investors want because it has no inventory to begin with.
Or, you can look at it another way. Not that long ago J.Crew went private in part because the company was never going to get credit from Wall Street for its fabulous innovation and its willingness to take risks. I don't blame them. Two years ago I told my daughter about how amazing Madewell, which has a ton of teen apparel, was doing and that she simply had to go in and see what they were doing. The next day she told me that it was hideous.
A few months later I asked her what she wanted for the holidays. Simple, she said, she wanted a gigantic gift certificate to Madewell because the stuff was so cool and everyone was wearing it. When I reminded her what she had said not that long ago about Madewell she looked at me like I was from Mars and told me I had no idea what I was talking about.
And you wonder why Mickey Drexler took the company private. Abercrombie & Fitch and Aeropostale are still publicly traded. It's just that they shouldn't be publicly traded by you. Some businesses are simply unknowable. Others are consistent and can be bought on any weakness.
Suffice it to say I have no idea if the weakness for ANF and ARO is going to continue or if this is the opportunity you have been looking for. The problem is, neither does management. So you can't fathom them either. Don't even bother to try.