Here is a quote from Jim Cramer :
"We are seeing the wholesale destruction of the formerly beloved dollar store segment, with hideous price action in Family Dollar as well as Dollar Tree and Dollar General. All have expressed concerns."
If you're a discount shopper looking for a bargain – Cramer says resist temptation.
"I caution you not to bottom-fish in this group, if only because the 2% payroll tax cut ended December 31st and the dollar stores will be hurt the most by that change."
This sentiment I have seen expressed elsewhere in financial articles. Somebody help me out here and tell me where I have gone wrong in my thinking.......The 2% payroll tax cut put more money into everybody's paycheck. Now that the 2% payroll tax cut is no longer in effect, everybody's paycheck will be smaller. In order to make do with fewer dollars people would be more likely to shop at dollar stores to get more bang for their buck.
Would anyone care to explain to me how "the dollar stores will be hurt the most by" people's paychecks being smaller? Where is the fault in my thinking?
What do they think people are going there to buy anyhow Gucci handbags or a big screen T.V. ??? No people go there to buy Soap ,shampoo ,bleach , a can of spam ,some crackers or a piece of poster board for school. At my house this is not discretionary spending it`s essential . We don`t decide to skip buying toilet paper so we can buy the new Ipad . DG is perfect for buying the things we need without burning ten dollars worth of gas to drive all hte way across town to stand in some ridiculesly long line at Wal mart .
djangosblues - those long lines at Walmart are customers that are not shopping at DG. There is a DG store within walking distance from my humble abode and when I went to the VA Hospital back in September for my annual physical I saw a new DG store had opened in the next city. Long before Warren Buffett, there was a guy at Fidelity Magellan named Peter Finch whose mantra was to invest in what you see in your own backyard. I see DG expanding and growing right before my own eyes. I believe the chances are very good that I can make a profitable trade when I close out my current position in DG.