{"id":104353,"date":"2017-04-04T10:46:39","date_gmt":"2017-04-04T14:46:39","guid":{"rendered":"http:\/\/countingpips.com\/?p=104353"},"modified":"2017-04-04T06:47:11","modified_gmt":"2017-04-04T10:47:11","slug":"how-to-amazon-proof-your-portfolio","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/04\/how-to-amazon-proof-your-portfolio\/","title":{"rendered":"How to \u201cAmazon-Proof\u201d Your Portfolio"},"content":{"rendered":"<div id=\"inves-227212913\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">April 4, 2017<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p>By <a href=\"http:\/\/WallStreetDaily.com\/\"><u>WallStreetDaily.com<\/u><\/a> <img loading=\"lazy\" decoding=\"async\" class=\"attachment-home-th size-home-th wp-post-image\" style=\"display: block; margin-bottom: 5px; clear: both;\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/04\/0417_mangun_feature.jpg\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" srcset=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/04\/0417_mangun_feature.jpg 580w, https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/04\/0417_mangun_feature-300x155.jpg 300w\" alt=\"How to \u201cAmazon-Proof\u201d Your Portfolio\" width=\"580\" height=\"300\" \/><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" style=\"float: left; max-width: 85px;\" src=\"https:\/\/duip7hn7nchpo.cloudfront.net\/editor-circle-louis-basenese.jpg\" alt=\"Louis Basenese\" width=\"85\" height=\"100\" \/>Amazon shares just hit another all-time high.<\/p>\n<p>If you\u2019re an original shareholder \u2014 congratulations on your 58,575% gain.<\/p>\n<p>But as historically impressive as Amazon\u2019s rise is \u2014 its market capitalization recently eclipsed $400 billion \u2014 it\u2019s only half the story.<\/p>\n<p>The more depressing storyline is Amazon\u2019s ruthless destruction of brick-and-mortar retailers.<\/p>\n<p>Business Insider reports that\u2026<\/p><div id=\"inves-3474601282\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<ul>\n<li>Amazon sold six times more online than the next eight largest retailers combined\u201d<\/li>\n<li>\u201cAmazon\u2019s growth in online sales volume was 10 times higher than the eight large retailers combined\u201d<\/li>\n<li>\u201cAmazon alone generated about 30% of U.S. retail sales growth.\u201d<\/li>\n<\/ul>\n<p>Boy, since Amazon seems primed to eradicate every weak retailer \u2014 I called an emergency meeting with my staff.<\/p>\n<p>My impromptu meeting sought to answer the following question\u2026<\/p>\n<p>Does the retail sector still deserve a 10% share of your portfolio\u2019s asset allocation?<\/p>\n<p>We ultimately decided that retail is still viable and worthy of representation in any well-balanced portfolio.<\/p>\n<p>But with Amazon looming over the industry like a mob boss, you have to be strategic.<\/p>\n<p>I asked my senior analyst, Martin Hutchinson, to help our readers \u201cAmazon-proof\u201d their portfolios.<\/p>\n<p>Hutch shows you exactly how to cancel out Amazon in his analysis below.<a name=\"video\"><\/a><\/p>\n<p>Ahead of the tape,<\/p>\n<p>Louis Basenese<br \/>\nChief Investment Strategist, <em>Wall Street Daily<\/em><\/p>\n<hr \/>\n<p><script src=\"https:\/\/fast.wistia.com\/assets\/external\/E-v1.js\" async><\/script><\/p>\n<div class=\"wistia_responsive_padding\" style=\"padding: 56.88% 0 0 0; position: relative;\">\n<div class=\"wistia_responsive_wrapper\" style=\"height: 100%; left: 0; position: absolute; top: 0; width: 100%;\">\n<div class=\"wistia_embed wistia_async_ttxzfrohwl videoFoam=true\" style=\"height: 100%; width: 100%;\"><\/div>\n<\/div>\n<\/div>\n<hr \/>\n<p><strong>Question:<\/strong> Martin, the numbers coming out of the retail sector get worse with every passing quarter, and it\u2019s all thanks to Amazon. Put simply, Amazon is becoming one of the greatest disrupters in market history. Do you see this monster of a company continuing to feast on traditional retailers?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> I\u2019m not sure Amazon\u2019s going to make a huge amount of money on it. But yes, I think retailers have a big and growing problem from online competitors like Amazon and others. Online sales were only 8.8% of total U.S. retail sales in 2016, but they\u2019re growing fast.<\/p>\n<p>The big-box retailers in particular are in trouble \u2014 Sears, J.C. Penney and Macy\u2019s. They\u2019ve all tried to get an online division, but that\u2019s actually not the solution. Their online presence is small compared with Amazon\u2019s, and so Amazon is more efficient logistically. It\u2019s very difficult for them to scale nationwide. It requires a different set of assets other than having a bunch of stores.<\/p>\n<p>Also, because Amazon doesn\u2019t care much about making profits, it cuts prices. So competitors\u2019 margins are lousy if they\u2019re competing against Amazon. I see lots of retailers going belly up in the next downturn. Shopping centers as well, which need physical retailers to survive.<\/p>\n<p><strong>Question:<\/strong> If you\u2019re a brick-and-mortar retailer, what does it take to be Amazon-proof?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> I think you look for retailers where the buyers need to touch and sample the goods before committing. You want high-touch products with an in-store experience, to use the retailing jargon. There are four obvious sectors here\u2026<\/p>\n<p>One is clothing and fashion, both men\u2019s and women\u2019s. You can buy commodity clothes online if you just need a new sweatshirt, but you can\u2019t buy clothing that has to be fitted online. And you can\u2019t buy clothing where you want to feel the fabric and see the exact color, and so on, online. Certainly, fashion clothing is a high-touch experience.<\/p>\n<p>A second sector is medium- to high-end cosmetics. Again, not the commodities \u2014 but the ones where you want to smell it and feel it before you buy. That\u2019s primarily a women\u2019s market, of course.<\/p>\n<p>Third is personal service \u2014 haircuts and getting your nails done. All those are things where you actually need to have a human being dealing with you.<\/p>\n<p>Then the fourth one that might have possibilities is arts and crafts \u2014 stores like Michaels, where the store itself sparks off ideas.<\/p>\n<p><strong>Question:<\/strong> Hutch, you know we advocate a diverse portfolio and historically we would want a piece of our portfolio allocated to retail. But that\u2019s getting increasingly difficult with Amazon disrupting the space. What do you suggest to our readers?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> I think overall your allocation to retail should probably be a bit smaller than the sector would normally have. But I think there are still high-touch retailers that are interesting. One would be Ulta Beauty, the cosmetics company, but it\u2019s selling on 45 times earnings.<\/p>\n<p>A better one is Signet Jewelers, which owns Zales, Jared and Kay jewelry stores. The shares have been beaten down recently because of a sexual harassment lawsuit. But it looks to be a buying opportunity, because I think they can settle the lawsuit, fire a couple of people, reorganize their HR practices and so on \u2014 all fairly easily.<\/p>\n<p>The company is selling on 10 times historic price earnings and 9 times prospective price earnings \u2014 which is obviously extremely cheap in this market. Earnings are expected to increase in 2017, and jewelry, of course, is the ultimate high-touch business. People want to feel it before they buy it. I think this is one of relatively few attractive possibilities in the retail sector.<\/p>\n<p><strong>Question: <\/strong>As always, Hutch, thanks for your insights.<\/p>\n<p><strong>Martin Hutchinson:<\/strong> A great pleasure being with you.<\/p>\n<p><strong>Question:<\/strong> This is <em>Wall Street Daily<\/em> signing off.<\/p>\n<p>Good Investing,<\/p>\n<p>Martin Hutchinson<br \/>\nSenior Analyst, <i>Wall Street Daily<\/i><\/p>\n<p>The post <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/04\/04\/amazon-proof-portfolio\/\" rel=\"nofollow\">How to \u201cAmazon-Proof\u201d Your Portfolio<\/a> appeared first on <a href=\"https:\/\/www.wallstreetdaily.com\" rel=\"nofollow\">Wall Street Daily<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By WallStreetDaily.com Amazon shares just hit another all-time high. If you\u2019re an original shareholder \u2014 congratulations on your 58,575% gain. But as historically impressive as Amazon\u2019s rise is \u2014 its market capitalization recently eclipsed $400 billion \u2014 it\u2019s only half the story. The more depressing storyline is Amazon\u2019s ruthless destruction of brick-and-mortar retailers. Business Insider [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-104353","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/104353","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=104353"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/104353\/revisions"}],"predecessor-version":[{"id":104361,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/104353\/revisions\/104361"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=104353"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=104353"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=104353"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}