NFLX: The Netflix Index
Source: http://feeds.feedburner.com/~r/InvestmentU/~3/498712480/nflx-the-netflix-index.htmlPosted on Tuesday, December 30th, 2008 | In Contrarian Perspectives
NFLX: The Netflix Index
Nuevo-indices, like Estee Lauder’s (NYSE: EL) “lipstick index,” the bartender index or the video game index, all have their day in the sun during market downturns. Often they’re dismissed as distractions, or excuses for poor performance.
But their fundamentals are based on real consumer trends and psychology.
Areas like entertainment, clothing and luxury items are often cut back during downturns. But that doesn’t mean they aren’t replaced with substitutes. Frugal doesn’t mean spendthrift. Consumers are still buying.
Purchases are justified by their reduced cost, or the “savings” from not spending money elsewhere. Entertainment like Netflix (Nasdaq: NFLX) carries a cost – but nothing like going to a movie three times a week. It’s this mentality that we can find profits in.
Many companies have benefited from cost-conscious shoppers and savers, and others are benefiting from negative psychology.
Kraft Foods (NYSE: KFT) and General Mills (NYSE: GIS), for example, are profiting from demand for comfort foods and a falling cost of goods.
In fact, discount retailers like Wal-Mart (NYSE: WMT) and Dollar Tree (Nasdaq: DLTR) have actually increased their sales projections.
When the market turns trading and investing rules upside-down, like it has over the past nine months, it’s nice to know that some habits can be counted on. And who knows? Tomorrow you could be hearing about the “Netflix Index” as the newest economic gauge.
Companies mentioned in this article: EL, NFLX, KFT, GIS, WMT and DLTR.
Last 5 posts by Investment U
- The New Crude Oil Benchmark That Could Change the Oil Market’s Price Dynamics - November 24th, 2009
- We Apologize for Interrupting the Gold Rally, But… - November 24th, 2009
- Why Gold Prices Could Fall From Here… And Two Ways to Play the Move - November 24th, 2009
- Momentum Trading: Five Guidelines for Supercharging Your Portfolio with Momentum Stocks - November 23rd, 2009
- Despite What the News Tells You, Crude Oil Prices Set to Fall - November 23rd, 2009
Contrarian Perspectives, Dollar Tree;, Estee Lauder's;, General Mills, InvestmentU, Kraft Foods, Netflix, Wal Mart
 About Investment U (http://www.investmentu.com)
Everything You Want To Know About Investing, But Don’t Trust Anyone Enough To Ask It’s a shame, really, that much of what is offered here - at no charge - is not taught in the public schools. Why is it that you can graduate in the top of your high school class and know next to nothing about credit card debt, adjustable-rate mortgages, or 401(k)s? Founded in 1999, the goal of Investment U is to give you impartial, no-nonsense advice on how to build long-lasting wealth. Our mission is to analyze and discuss all the important financial tools at your disposal. And to make sure, too, that you use them effectively to jump-start your net worth, cut your investment costs dramatically, reduce your risk profile and, most importantly, achieve and maintain total financial independence. It’s the latter point that is truly our goal here at Investment U. Because no one has the opportunity to live his life fully if he’s a slave to his job, his financial obligations, or his overhead. Or, worse, if he’s worried he won’t be able to maintain a comfortable retirement… or leave behind some kind of legacy. |
No recommendations, either expressed or implied, are being made to buy, sell, hold or short any of the mentioned stocks. No legal, tax or accounting advice is expressed or implied. Always contact your attorney, CPA, or tax advisor before acting on any legal or tax issues. StraightStocks.com is not responsible for the content, products, or services of any of the advertisers on this site. StraightStocks.com receives compensation from advertisers on this blog. Services and products referred to herein are trademarks, registered trademarks, servicemarks, and/or registered servicemarks of their respective trademark or servicemark owners.