I write to you from my garret in early December. The Christmas buying season is upon us.
Visitors from the future, let it be known that in this year, 2013, the United Kingdom (Royaume-Uni, nil points) enjoyed its first Black Friday.
This glorious institution, imported from the United States, involves retailers slashing prices across the board on what is, for us, a random Friday in November (I appreciate that in the US, it’s the ‘dead day’ between Thanksgiving on Thursday and the following weekend*).
We were treated to scenes of visceral consumerism and supermarket fighting. A joyful time of year.
Black Is The New Black
I’m sure I cannot be the only one to notice that Black Friday joins a pantheon of ‘Black’ days that, for the most part, have been viewed as a bad thing:
- On Wall Street in 1929, October ‘enjoyed’ a Black Thursday, Monday and Tuesday, on which the market crashed 11%, 13% and 12%;
- In October 1987, Black Monday marked the first (and most severe) day of price falls in stock markets around the world;
- In the UK, Black Wednesday refers to the day in September 1992 that the British government was forced to leave the European Exchange Rate Mechanism in the face of huge pressure on the pound.
On all of these days, people rushed to the shops. But rather than buy things, they sold.
In the ‘normal’ market, Black Friday is great for consumers (investors, albeit in depreciating assets) because prices are lower. In the ‘market’ market, ‘Black’ days are bad for investors (consumers of appreciating assets) because prices are lower**.
(We’ll politely ignore, for the purposes of my argument, that the sellers of Sterling on Black Wednesday were doing so for profit).
When Is A Sale Not A Sale?
I’m not a massive fan of buying junk. It clutters the house; I feel bad about sending it to landfill. But I do buy things. I like books, bikes, computery stuff.
If I’m in the market for a new bike on sale for £2,000 and then the market crashes it goes on sale for 10% less than what it was priced yesterday (a price I was prepared to pay), why should I be anything other than delighted about the extra £200 in my (hypothetical electrical) pocket?
So on Black Friday, we the people, rush into our local Asda and grab as many cut-price televisions as our little hands will hold. Yet when the market decides to put our favourite shares on sale at ‘everything must go’ prices, we run for the hills.
We are strange people indeed.
* ‘Black Friday’ was first used in Philadelphia in the 1960s to describe the huge traffic jams caused by shoppers on that day. Subsequently, some people have said it relates to the fact this is the day that retailers move from making losses (i.e. in the red) to becoming profitable for the year (due to Thanksgiving and Christmas). ‘Some people’ appear to be wrong.
** When I say investors, I mean normal long-term holders (individuals or funds) that want to own companies that provide them with a series of tangible future returns.