Tuesday, November 20, 2012

Thanksgiving Repast

As we sit down to Thanksgiving dinner this week with family and friends, there is much for which to be grateful.  Some of my neighbors in New York City are just glad to have a roof over their heads after Hurricane Sandy blew through last month. Others around the country are reveling in having a paycheck, especially those in occupations hit hard by slow economic times.

One blessing for all of us is a cheap meal.  The American Farm Bureau (AFB) estimates that this year the usual menu  -  turkey, stuffing, mash potatoes, gravy, peas, pumpkin pie and cranberry sauce  -  for a family of ten will cost about $49.48.  This is less than 1% higher than the average price the AFB calculated for the T-Day meal in 2011.

Some might point to this comparison and suggest that we are not suffering from significant inflation  -  another circumstance for which we can offer up tones of gratitude.  Still the AFB says that our celebration this year cost 17% more than in 2007 -  the last really festive Thanksgiving holiday before things seemed to begin unraveling in our economy.   The comparison gives one pause given that in the same intervening period our economy has shed hundreds of thousands of jobs and shuttered numerous businesses. 

This Thanksgiving I will offer up a silent prayer of gratitude that the Crystal Reports track record exceeds the 17% ‘Turkey Day’ inflation rate over the last five years.  The same cannot be said for the broader market.  The S&P 500 Index has shed 4.1% of its value since Thanksgiving Day 2007 and the Dow Jones Industrial Average has been trimmed by 3.0%.  The small-cap sector was the safe haven, at least from the perspective of the Russell 2000, which grew 4.5% in the same time period.

Interestingly, the comparison of this year’s Thanksgiving Day meal with the 2006 repast yields a 29% increase.  The price of the ‘turkey meal for ten’ increased from $38.10 in 2006 to $42.26 in 2007, one of the largest annual surges in recent years.  Was that remarkable hike in patriotic celebration a harbinger of asset bubbles poised to burst?  I cannot say.

One thing I can say, is thank you to the readers of Small Cap Strategist and the clients of Crystal Equity Research for all your support.  Have a peaceful and safe holiday!


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