To take any opinion below from observations of yesterday is a small sample size. Tiny. Minute. That's my-NOOT, not MIN-it. My teen daughters wanted nothing more than to hit up some Black Friday sales for the first time ever, on a Thursday no less, so after an afternoon of food and fun with friends, that's what we did.
We didn't go crazy, but found our way to Target ( TGT) , Best Buy ( BBY) , Old Navy (owned by The Gap ( GPS) ), and Ulta Beauty ( ULTA) . I figured that would give me a decent sampling on traffic and sales around this area. I also connected with several friends who were traveling outside our suburban bubbles. Ironically, I found more friends who were simply sitting it out and shopping online rather than dealing with the crowds. My response this morning is: What crowds?
Again, this comes with a huge grain of salt, but in Target, where there was a decent amount of traffic, we didn't have to wait to pay. In Best Buy, probably the most traffic, we stood behind two people. In Old Navy, the messy store helped cover up mediocre traffic, there was a wait behind two people, but only three cashiers were checking out people -- unlike Best Buy and Target, that had three times and five times that number of cashiers, respectively. Ulta was virtually a ghost town, although my wife said they did have a few good deals.
Your first thought might be to examine the SPDR S&P Retail ETF ( XRT) .
So, why don't I care about XRT?
The holdings.
It says retail, but when you examine the top 10 holdings, it doesn't scream retail representation of the consumer.
| NAME | WEIGHT | TOTAL MKT CAP (M) | SHARES HELD |
|---|---|---|---|
| Hibbett Sports Inc. | 1.92 % | $ 497.15 | 120,702 |
| GameStop Corp. Class A | 1.82 % | $ 574.41 | 508,257 |
| Tiffany & Co. | 1.71 % | $ 16,014.79 | 22,807 |
| Murphy USA Inc. | 1.67 % | $ 3,690.54 | 24,742 |
| Lithia Motors Inc. Class A | 1.61 % | $ 3,706.53 | 17,490 |
| Sally Beauty Holdings Inc. | 1.61 % | $ 2,163.67 | 153,628 |
| Best Buy Co. Inc. | 1.51 % | $ 21,280.90 | 33,186 |
| Rite Aid Corporation | 1.50 % | $ 510.34 | 286,994 |
| Group 1 Automotive Inc. | 1.50 % | $ 1,976.17 | 25,005 |
| Stamps.com Inc. | 1.49 % | $ 1,517.88 | 29,834 |
Roughly 18% of the fund is automotive retail. Tiffany ( TIF) is getting scooped up, so that portion of the fund is stuck in quicksand. I couldn't even tell you where the closest Hibbett Sports ( HIBB) is located. The COMBINED market cap of the top two positions barely breaks $1 billion. Stripping away Tiffany, the other top five holdings don't even total $11 billion in market cap.
Just like when you head out for your holiday shopping, do a little research so you know what you are buying first. XRT isn't going to provide any insight into Black Friday. Any moves from it won't be directly because of Black Friday outperformance or underperformance. It will be a correlation to how other big retail names do simply because it has retail in its name, but I would expect that to quickly correct.
If you want a Black Friday/Cyber Monday ETF, then the VanEck Vectors Retail ETF ( RTH) is probably your winner, although you'll be heavy on Amazon ( AMZN) , Home Depot ( WMT) , and Walmart ( WMT) . And let's face, those are names that are going to command a lot of the Black Friday/Cyber Monday money. That's the ETF I'll be watching on Monday, not XRT.
Know what you own, folks. The good news is it only takes a minute to find out. Spend the minute. I promise it's worth more than most of the sales today.
