For years now, I've been writing here on Money Morning about America's consumers, our consumer-driven economy, and the impact of the Internet on brick-and-mortar stores and retail in general…
I've made a bunch of predictions, too.
Don't look now, but I've been right about almost every single one.
But being right is one thing; making money by looking into the future is something altogether different. If I dare say so myself, it's much better.
That's what I want to focus on today. Not about being right (well, maybe a little), but on how to make money on big trends.
If you've been following along here (or, even better, following my Zenith Trading Circle recommendations), you know exactly what I mean. Following my advice means you've cashed in on all those recommendations.
If you haven't, here's what's happening with retail and how to hit it out of the park…
Claire's Is a Perfect Example of Retail's Impending Doom
Almost every day there's an article about how brick-and-mortar retail stores are going out of business.
Last week, The Washington Post had the headline story "Claire's Is 'a Complete Train Wreck.'"
It's about how the once high-margin, super-profitable retailer of pre-teen and teen accessories was taken private in 2007 by Apollo Global Management LLC (NYSE: APO), which saddled the company with more than $2.17 billion in the process. Claire's is looking back at 11 straight quarters of declining sales and, as one of their sources states, "at one time was the most profitable chain in the business, [but] has become a complete train wreck."
That's not surprising. I've been writing here about leveraged buyouts for years (most recently about Neiman Marcus) and how some of these once high-margin, attractive retailers were loaded-up and leveraged with debt by their buyers. In Neiman's case, with $5 billion worth of debt, by buyers who either didn't see where retail was headed or didn't care.
In fact, I've recommended a couple of trades in Zenith to position ourselves to profit off the fortunes or demise of Nordstrom Inc. (NYSE: JWN), which is considering selling itself to a private equity buyer.
Nordstrom's stock could jump higher if a buyer steps up and makes an offer for the company, or its stock could collapse if the beating it's taken along with other retailers continues. Either way, we're set up to make a profit on the stock; sometimes you can have it both ways.
Here's a glimpse into a couple other trades that panned out well behind Zenith's closed doors.
We took a 300% gain in April out of GoPro Inc. (Nasdaq: GPRO), when talk of someone finding it attractive and buying it were just stupid rumors. I've followed the stock for a while, and when it took a tumble we scored on a trade we put on in January.
Then in May we cashed in on a 100% gain on a Fossil Group Inc. (Nasdaq: FOSL) trade, a 25% gain on an Avon Products Inc. (NYSE: AVP) trade, another 150% gain on AVP, and saw 100% and 116.67% gains on Chico's FAS Inc. (NYSE: CHS).
About the Author
Shah Gilani is Chief Financial Strategist for Money Map Press and boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker. The work he did laid the foundation for what would later become the Volatility Index (VIX) - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk and established that company's "listed" and OTC trading desks. Shah founded a second hedge fund in 1999, which he ran until 2003. Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see. On top of the free newsletter, as editor of The 10X Trader, Money Map Report and Straight Line Profits, Shah presents his legion of subscribers with the chance to earn ten times their money on trade after trade using a little-known strategy. Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on FOX Business' "Varney & Co."