Black Fri-yay or Nay?
Black Friday, one of the biggest shopping days of the US year, ironically comes just a day after the entire country stops to give thanks for what they already have.
But what do crazed crowds of consumers have to do with the share markets? Well, a lot actually. Consumer spending makes up about 70% of the entire US economy, and spending habits say a lot about how well people think it’s doing. Black Friday symbolises the beginning of the holiday shopping period and sets the scene for what investors can expect from the consumer goods sector overall, and which companies are poised to come out on top.
Fun fact: The boring story behind Black Friday is that it’s the day retailers expect to be ‘in the black’ for the year, but rumour has it, the name Black Friday was coined by the police because of the mayhem caused by shoppers. Since 2010, 12 people have died on Black Friday and 117 have had shopping-related injuries.
The numbers are legit impressive
In 2018, 165 million people in the US shopped in the days between Black Friday and Cyber Monday. That’s 33 times the population of NZ (bags not venturing out to Westfield in that scenario). About half of them shopped in-store and online, and the other half chose one path to consumer nirvana. In 2019, shoppers are expected to do about the same.
Investors also shop till they drop
Share market activity tends to rise in the days before Thanksgiving. The phenomenon, known as the holiday effect, suggests that humans may sometimes be as irrational about investing as they are about buying stuff they don’t need, just because it’s on sale. And when other people behave irrationally, smart investors find opportunities.
December also often means an increase in the S&P 500 (in 3 out of every 4 Decembers since the end of WWII, the share markets have gone up). The average boost for the month is 1.6%, which is also about the same as the average annual returns on a savings account in this low-interest economy.
Shopping for retail shares made easy
While many Americans try to keep up with the Jones’ at Thanksgiving, investors try to profit off them. We’ve rounded up some retail exchange-traded funds to investigate this Black Friday:
S&P Retail SPDR ETF (XRT)
An easy way to spread your investment dollars over the 85 retail companies in the S&P Total Market Index. This ETF has an expense ratio of 0.35% and their top holdings are Hibbett Sports, Murphy USA, Tiffany & Co, Sally Beauty Holdings and Lithia Motors.Consumer staples Vanguard ETF (VDC)
This ETF has a 0.1% expense ratio and invests in companies that sell things consumers absolutely need. By investing in this ETF, your money is spread across 89 consumer staple companies, with the top five being Procter & Gamble, Coca Cola, PepsiCo, Walmart and Costco.Amplify Online Retail ETF (IBUY)
With over $230 million funds under management and 0.65% expense ratio, IBUY is an easy and relatively low-cost way to invest in 47 companies that get 70% or more of their revenue from online sales. Their top holdings are Peloton, GrubHub, Carvana, Uber and Copart.
20 most traded consumer goods brands on Hatch
There are a few familiar faces in the 20 most traded consumer goods brands on Hatch, check the full list available on Hatch.
Prep for a potential Santa Rally with our Black Friday FX sale
The share markets may be closed on Thursday and half of Friday this week, but there are still good deals to be had when shopping for shares on Hatch! We’re getting in on Black Friday deals and will be dropping our FX fees on all deposits made between Black Friday and Cyber Monday. If you make a deposit between the 29th November and 2 December, our FX fee will be reduced from 0.5% to 0.4%.