It all started on Halloween at midnight. That's when The Kid and I got tossed out of the local bar -- for talking too loud -- and then handed a $220 bar tab.
In their defense, we're loud talkers. And the Jazz Butchers were hacking through a set onstage. In our defense, the club was, as Joe Namath would say, "strug-a-ling." Did I mention The Kid and I drop a few hundred bucks there per month? Or dropped, I guess I should say.
So who was right?
There was a time when the answer would have been obvious. I'm not so sure anymore. And, frankly, as a stock investor once proud to be called a "perma-bull" on American business, this has me nervous. How about I tell you what has me worried, and you decide whether I'm overreacting.
First, you should know that I'm not much of a consumer, but I was recently thrust into the consumer economy by two unusual events. The first was a long-overdue move from Maryland to Virginia. The second was the worst Christmas shopping season in decades. Frankly, I didn't like what I saw.
Let's start with the low-lying fruit -- Verizon (NYSE: VZ). In its defense, I was trying to cancel my old phone service. That could explain why the phone call took 50 minutes, forced me to miss an important meeting, and almost got me fired (I know what you're thinking, but I'd live in a box before I'd hang up and start that ordeal over!).
Please take my money!
My colleague Dan had a different story. He was trying to give Verizon money. Apparently, that also involves hours of transfers, pleas, and threats. I especially liked when he demanded to be transferred … to Comcast. The folks at Verizon were apparently less impressed than I was.
Does any of this so far strike you as -- I don't know -- out of touch? Especially given the money Verizon and Comcast spend trying to acquire new customers. I couldn't help thinking of those bumbling Ford (NYSE: F) and General Motors (NYSE: GM) execs flying to Washington to bellyache about how the "credit crunch" is destroying their business.
And I typically support the U.S. auto industry! Now, I'm wondering whether these guys live on the same planet we do, much less understand what it takes to unload a $25,000 car in a recession. With these Keystone Kops at the helm, I feel for the rank-and-file auto workers, no matter how generously they're reportedly paid.
As for the folks at my neighborhood Lowe's (NYSE: LOW) -- well, not so much.
"I'll be thinking about you"
"When I read that Lowe's just let go of 15,000 workers, I'll be thinking about you." That's my takeaway from a half-dozen or so Lowe's visits in November. If you think that's harsh, try this: Stop by your local store. If you find one guy (or gal) who seems to understand what it takes to sell a $50 doorknob in a recession, let me know.
Just please don't get me started on Best Buy (NYSE: BBY). Blast! You got me started -- but don't worry, this one's good. It even has a happy twist at the end, though it starts out a tad grim -- with a kid in the "home theater" department asking whether I'd bought the "Black Tie" protection with my surround sound.
Apparently, if you want a $1,000 piece of electronic equipment to make noise for more than 13 days, you have to pay for some sort of "protection" plan. Nobody hipped me to that, dude! As for the "Geek Squad" -- either their hands were tied or they wanted nothing to do with my silent little black box.
"This is what you call customer service"
Long story short, I landed in "customer service" -- where I learned that if I went home and gathered all 15 pieces that came with the system, the somnambulist behind the counter would "push it back to home theater and make sure I really did bring back all the pieces that came with it."
That might not sound like much, but it was progress. Remember, I hadn't purchased the "Black Tie" protection, and the Geeks weren't about to pop open a 13-day-old stereo receiver that probably needed a 50-cent fuse. If my best bet was to load my broken-down home theater system into a tattered box and drag it across the showroom floor … well, let's just say it was on.
You'll be surprised how this one turned out. But first, it's time for the all-important investment lesson: In the 1980s, a guy named Peter Lynch taught us we can find more great stock ideas in the shopping mall than on Wall Street. Well, in January 2009, the same thing holds for finding great "short" ideas.
This fish rots from …
That's because, unlike the auto industry, which clearly rotted from the top, consumer and retail businesses break down at the store -- even the employee -- level. Think about it: When you make your money one customer at a time, that's where the rubber meets the road -- and you're the customer.
That's why companies that make up ground in tough times put so much emphasis on service and "word of mouth" -- we'll look at Apple (Nasdaq: AAPL) and Amazon.com (Nasdaq: AMZN), among others, in my next article. Unfortunately, my recent tangle with the U.S. consumer economy has me wondering whether those aren't more the exception than the rule.
If so, we're in big trouble. After all, apathy and shoddy customer service might fly in a go-go economy, but the days of chasing your spendthrift regulars out of an empty bar are gone. That probably sounds obvious, but I seriously wonder whether the bloated U.S. corporations that got fat on the easy-money expansion can shape up in time.
If not, short these dogs!
Look, I've never been much for shorting the market. Remember, I'm a long-term perma-bull and have faith in American workers. But that doesn't go for every individual company, or even every sector. More and more, I'm waking up to the fact that the purge is just beginning and there's money to be made on the short side.
That's why I was pleased to see Motley Fool co-founder David Gardner and his partner Jeff Fischer launch their new service, Motley Fool Pro, in October. Not only are they actively managing a $1 million portfolio of real money, it's the first time The Motley Fool has made use of options, ETFs, shorts, and other sophisticated hedging strategies.
Motley Fool Pro
is not for everyone. But if you're looking to make money in this roller-coaster market, David and Jeff will be enrolling a small number of new members for 10 days starting Jan. 12. If you'd like to learn more directly from David Gardner, I encourage you to enter your email in the box below.
Meanwhile, let me know what you think about the state of U.S. business -- good and bad. And please come back for Part 2, where I'll have some better news, including the surprising wrap-up of my Best Buy saga. To learn more about Motley Fool Pro, be sure to enter your email below and click the button.
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