The Most Pressing Reason Yet to Avoid Investing in Retail Stocks

Keith Fitz-Gerald

Here's the latest in a long line of reasons why every investor should think twice about holding retail stocks…

President Obama announced recently that he's directing the U.S. Department of Labor to mandate higher overtime pay for anybody making $50,400 or less per year. Coupled with rising minimum wage standards, that's given many people reason to cheer.

Yet this is absolutely the last thing you want to see as an investor.

To be clear, I think anybody who wants a job should have one, and it should pay well. So let's get that off the table right away.

What matters here is that the president's actions just doomed millions of hardworking Americans to the unemployment line and, at the same time, just made it harder for every retailer – large and small – to turn a profit.

The Government's Latest Rule by Fiat Targets 5 Million Workers

On Monday, June 29, President Obama announced via The Huffington Post that he's directing the Department of Labor to raise the standard for overtime pay to anyone making $50,400 or less per year.

What that means is that every salaried individual in that wage range will now receive 50% more pay each hour for every hour beyond 40 they work each week.

Currently, the bar for overtime pay for salaried workers is set at $23,600, targeting mainly workers who are receiving minimum wage or close to it.

Under the old rules, for example, someone making $15/hour on a 40-hour week would earn $30,000 a year, making them exempt from overtime pay. But if they work 55 hours a week like many store and restaurant managers do, they'll now be entitled to an additional $337.5/week, or a 56% pay raise.

It's been estimated that 5 million workers will receive a bigger paycheck as a result.

As always, though, there's a fly in the ointment…

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Keith Fitz-Gerald

About the Author

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Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean, and he's also the founding editor of Straight Line Profits, a service devoted to revealing the "dark side" of Wall Street... In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.

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