Summer Vacation Stocks

There is no time off from stock research. Not in the consumer space. Everything you do, everything you consider doing, on vacation is a datapoint. I can't afford to relax on vacations. I can't learn much going to the same malls over and over again. That's for civilians. I need reps. I don't go to 1 Starbucks and time the transaction. I go to all of them. Don't believe me? He's the Starbucks at the Vancouver convention center at 11am on a Thursday. Service time from order to pick-up: 3 minutes and 52 seconds. Just as fast as NYC last winter. Starbucks is higher today because a divestiture of the China business is valuing the division at $10b, which is higher than expected. I'd love Starbucks to leave China but I'm really stoked to see the Vancouver Starbucks matching the speed of the units in Annapolis, NYC, Claremont, Los Angeles, Seattle and everywhere else I've been in the last year. 

Starbucks can only divest its China business once. They can serve coffee faster 11 million times a day. Both of them are good for the stock price but serving faster and all the goes with it is going to drive earnings for the next few years. Starbucks shares are on a heater because the company is getting better. At least that's why I'm long shares. I'm fine with China as a catalyst as well. (More Starbucks thoughts Here)

But I digress. There's a process to these observations. It'll make you a better investor. I'm here to explain it then tell subscribers what I learned on my Summer Vacation. Let's start with the most basic measure of consumer health extant:

How "discretionary" is the activity? 

When Americans feel good we buy more pointless stuff. I won't argue the idea as fact. We're the best consumers on earth. Embrace it. 

What people tell pollsters means nothing. Watch what they do. Start with your own plans. How much are you splurging this summer? Don't just Estimate. Quantify. Put it on a scale from 1 to 10. "Attending a non-resort destination wedding for a niece I've met twice" is 1. You're going but you're not buying anything new for the occasion. It's the family version of a business trip, except you're paying and it and it counts as a vacation.  

10 is Maximum Discretion. This is spending you don't bother defending from an economic perspective. "Flew to Europe for Ozzy Osbourne's latest Final Concert; talked my wife into coming with me by flying First Class and buying tickets in the VIP Premium Lounge" is a solid 10. I have friends who did that. It might be an 11.

Now rate everything else you see and do using the same system. What are the cool people wearing? How about the rich Moms? What's their luggage look like? Are they travelling with the whole family and paying full fare or did they get a discount? What kind of wine are they drinking? What do they do for a living ("How much are you worth" is horrible form). I talk to all the service people and customer I can meet without making it annoying. As a bonus, this sounds like normal conversation if you do it right. It's even likable. 

But it's work. Never forget it's work.