How is the market like a funky hard drive? There are a lot of bad sectors out there.
You probably don't realize it after watching stocks kick up and down in unison like a Radio City chorus line, but there really are some industries that just aren't going to bounce back when the rest of the economy does.
I'm going to single out a few of the sectors that scare me the most, but with an unexpected twist: I am going to single out a stock in every industry that has what it takes to be the exception to the drool.
Your time isn't trivial, so let's dive right in.
If you're building a community of cookie-cutter homes in the suburbs or have cranes erecting metropolitan high-rises, I can't feel sorry for you. You've seen the glut of residential properties expand, yet you still unrolled the blueprints.
Shame on you, homebuilders.
Some investors feel that the time to pounce on the developers is now, just as losses are narrowing and some survivors are even back in the black. I wouldn't rush to that conclusion.
Existing home sales fell a jaw-dropping 27% in July, a record drop since that metric was introduced over a decade ago. Even some of the homebuilders that are holding up better than the pack -- I'm talking about you, Toll Brothers
Cable and satellite television providers
Are cable programming contracts the new landlines? It's no longer a mere theory that folks will begin canceling their old-school television packages. Media researcher SNL Kagan reports that this past quarter was the first time the pay television industry suffered net subscriber losses. There were 216,000 fewer homes on cable, satellite television, or telco offerings than there were at the end of the first quarter. SNL Kagan feels the blip is temporary, but I believe it's more than an anomaly.
The tech darlings are rushing to roll out home theater devices that make it easier to pluck content from cyberspace. Apple's
Regardless, we live in customized times. Even hundreds of channels are no match for the on-demand mix of studio content, viral videos, and friend-generated clips that make up today's eye candy library. Economic hardships may push along cable dinosaurs to an earlier grave, but they were heading there anyway.
Diehard gamers are starting to show signs of life. Electronic Arts'
I'm not so confident. There are too many people killing time on free or nearly free smartphone apps and social games on Facebook. It's not the quality of these diversions. They can't compare to the rich console gaming experience. However, it's the time suck that's problematic. Connectivity is also giving the more popular games longer playing lives, eating into the need to shell out $60 for a new game.
Exception: Take-Two Interactive
Are any of these sectors better than Rick thinks they are? Are there any industries that are uglier? Share your thoughts in the comment box below.