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  • Ritholtz Calls for More Reliable Holiday Retail Projections

    Barry Ritholtz would like to rein in the hype about holiday spending. And not just this year. But every year. At least until we focus on some measurements that are reliable. Ritholtz points out that much of the reporting on holiday sales at this time of year is based upon consumer surveys. And those surveys have shown to be way, way off. From Ritholtz's most recent Washington Post column: When you conduct a survey, you are asking people to say what they plan to do. Hence, what you learn is what they believe about their future behavior. We are an unreliable bunch. If you want to learn how much people actually spent, you need to measure that at the cash register. History has shown again and again that there is little correlation between our expectations and our actions. Yes, we want to save more for retirement, lose weight, get into shape. We say so each January. And by February, you will discover the yawning chasm between intentions and action. So when those breathless retail sales surveys were released, we had no idea as to whether, and by exactly how much, sales might climb. The most that could be accurately said was that more people appeared to be in stores on Black Friday 2011 than in 2010. Indeed, that can be explained in part by the unseasonably warm weather around the country; as well as the extended store hours (including midnight Thanksgiving Day). How far off have these surveys been in the past? Enormously. In 2005, based on a survey on Black Friday and Saturday, the NRF forecast a 22 percent increase in holiday shopping gains for the Thanksgiving weekend. The results? Up just 1 percent. The National Retail Federation has been especially off in their projections. On his The Big Picture blog, Ritholtz shows just how far the NRF projections have been: Read Ritholtz's Washington Post Column, Did Black Friday save the season? Beware the retail hype , here . Read Humans Are Awful at Predicting Their Own Behavior at The Big Picture , here .

  • Ritholtz on the 'Many Hats' of a Great Investor

    Barry Ritholtz 's blog The Big Picture is one of the most popular--and frankly one of the best--in the econo-business blogosphere. But he's not above making an appearance in old media every now and then. He has a column in today's Washington Post that is worth a read. In it, Ritholtz muses on what it takes to be a great investor. He argues that an investor wears many hats. At times, an investor is an Historian : Knowing what has happened in the past (and how often) is an enormous advantage when it comes to investing. It informs you of the range of possibilities, allows you to conceptualize possible outcomes to various scenarios and provides a framework for thinking about market cycles. Heading into the market bottom in 2003, some market historians warned about a secular bear market. These are the decade-plus long periods of huge rallies and great collapses. Some warned that investors should not be surprised if after a decade, the markets were essentially unchanged, which is exactly what happened. Think back to the market lows in March 2009. After about a 20 percent bounce off the bottom, quite a few commentators expressed fears that the markets had gone “too far, too fast.” Market historians knew that the median bounce after a drop of 50 percent or more was 75 percent. With that information, you might not have been scared away from equities just before they gained 80 percent in value over 18 months. At other times he/she may be a Psychiatrist , a Trial Lawyer , a Mathematician , or an Accountant . Read the full column here .

  • Education and Income Map from Good

    In an effort to hammer home a point about the correlation between education and income, Good put together this map: The more educated and well paid the population of a given county, the darker the color--as data for education levels are overlaid with data for income. Take a look at Good's work here . (hat tip Barry Ritholtz )

  • The Big Picture Chart of the Day: What You're Paying for a Gallon of Gas

    Gas prices rose more than 10 cents this week. The average price of gas in the US today is over $3.47, according to AAA . The Big Picture 's chart of the day is an appropriate one. Macroman used data from the U.S. Energy Information Agency to chart the cost of a gallon of gas since January, 2000. And notice the fluctuation of the cost of crude, as a percentage of the cost of each gallon of gas: See the full size chart, and read Macroman's analysis here .

  • A Time Person of the Year Curse?

    With Time naming Facebook's Mark Zuckerberg the 2010 Person of the Year , Barry Ritholtz reminds us that back in 1999 Time selected another pioneer of the digital business world: Amazon's Jeff Bezos . And what did it bring Amazon? Well, the company seemed to top out--at least for a decade. At The Big Picture , Ritholtz provides this picture of Amazon's market fate following the Time proclamation: Will the same happen to Facebook? Read Uh-Oh: Facebook’s Zuckerberg is Time Man of the Year here .

  • Economic Indicator?: Hemlines

    With New York having just survived another Fashion Week , Barry Ritholtz says it is time to revisit the Hemline Index, the notion (urban legend?) that the average length of women's skirts gets shorter during good economic time and longer during bad times. Ritholtz, shares this graphic from Smith Barney to help make the point: It seems there is something to this idea, but according to Ritholtz's sources, the effect is a delayed one. Read The Hemline Index at The Big Picture , here .

  • Black Friday Stats and Consumer Confidence

    Black Friday is always a day ripe for hype and wide-though predictable-television coverage. But the last two Black Fridays seem to have attracted even more speculation, and anxiety, than usual. So it is impossible to resist looking at some of the numbers that are coming through today. The takeaway seems to be that there were more people shopping this Black Friday than last year, but they spent less. So the overall take by retailers was higher, but not by much. Andrea Chang shares some of the key stats in today's LA Times : Sales on the day after Thanksgiving rose just 0.5% to $10.66 billion, according to ShopperTrak RCT Corp., a research firm that monitors sales at more than 50,000 stores. That compared with a 3% year-over-year Black Friday increase in 2008 and an 8.3% surge in 2007. "It's a positive sign that we had an increase in sales, but the numbers certainly don't indicate that those will be sustained," said Britt Beemer, chairman of consumer behavior firm America's Research Group. Nationwide, 195 million shoppers visited stores and websites over the four-day weekend, up from 172 million last year, the National Retail Federation said Sunday. But average spending fell 7.9%, to $343.31 per person, from $372.57 a year ago. Total spending reached an estimated $41.2 billion. The resistance to making big purchases is no surprise to the folks at The Big Picture , where, before any Friday stats came out, David Rosenberg shared the below chart and stressed that consumer frugality is alive and well: Rosenberg writes: The Conference Board’s consumer confidence index may have improved (48.7 in October to 49.5 in November) and beaten consensus expectations, but it remains firmly in recession terrain. It is so obvious that consumers are tired of the over-borrowing and over-spending days of yesteryear. Despite all the temptations provided by the government, auto buying plans dropped to an eight-month low (from 4.7 in October to 4.4 in November); home buying plans slipped to a new 27-year low of 2.3 (from 2.5 in October and 3.0 in September); and intentions to buy a major appliance stayed at a 14-year low (23.2). Read Consumer Confidence in the Doldrums here .

  • The Good and the Bad in Housing Data

    Yesterday's release of the Case-Shiller Price Index was cause for some small celebration for some market watchers. The index showed housing prices stabilizing across the board, and even rising in some key cities, including San Francisco--which has seen the third biggest drop in housing prices during the recession (behind Phoenix and Las Vegas). The Times quotes Mark Fleming, chief economist for First American CoreLogic, as saying “We’ve found the bottom, and Wells Fargo chief economist John E. Silvia writing in a letter to investors, “Recession is over, economy is recovering — let’s look forward and stop the backward-looking focus. Here's the year over year Case-Shiller trend (source: Standard and Poor' s , via The Big Picture ): Before anyone gets carried away with the recent spate of apparently positive housing news, Barry Ritholtz reminds us all that new home sales are at their lowest level for the last 27 years, and it is taking a long time for seller and builders to find buyers. Read Worst June New Home Sales Since 1982 here .