Choose investing over spending on Black Friday for a winning portfolio

Annual boosts in retail profits during Black Friday make investing in associated stocks enticing. Learn from the pandemic's lessons and explore the potential of a blue-and-white investment strategy.

Black Friday at Dizengoff Center (photo credit: AVSHALOM SASSONI)
Black Friday at Dizengoff Center
(photo credit: AVSHALOM SASSONI)

The month of shopping is upon us, with Black Friday deals unveiled and more anticipated. Consumers are reserving credit lines and cash balances, gearing up for significant benefits that enable them to purchase previously unaffordable products and services.

"Black Friday" gets its name from accounting reports where profit lines are in black, contrasting with loss lines in red. On this day, companies experience a dramatic jump in profits, driven by high sales turnovers of hundreds and even thousands of percent compared to normal days, coupled with enticing deals.

While many indulge in luxury items on Black Friday, some choose to channel their capital into increasing accumulated wealth. They seize unique investment opportunities influenced by the sales surge during this period.

The shopping spree positively impacts companies' profits, causing their shares to soar, contributing to the so-called "year-end rally." The stock market feels the effects with the release of reports on sales cycles during Black Friday celebrations.

E-commerce giants and credit card companies benefit the most from Black Friday transactions. Retail companies, marketing their products to the public, also reap rewards.

Black Friday amidst the coronavirus pandemic and Swords of Iron War

It's essential to acknowledge the stock market's volatility, as historical patterns may not repeat every year. For instance, in 2020 during the outbreak of COVID-19, retail stocks declined post-Black Friday due to concerns about a new virus variant. Yet, consumers set new purchase records on this day.

This may not be the sole instance of the market deviating from historical trends. There's a high likelihood of witnessing a unique reaction in the capital market to Black Friday events, especially in the local market.

The Swords of Iron War reshaped Israeli consumerism, with public sentiment favoring local production, industry, and trade. Support for Israeli businesses led to various Blue Friday initiatives, potentially boosting purchases from local businesses despite more lucrative overseas offers.

Beyond ideological interests, favorable exchange rates play a role. Israelis purchasing abroad face higher costs in shekels this year, compounded by shipping challenges and delays due to limited air traffic during wartime.

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Local consumer and retail companies may see higher profits this year, presenting a rare opportunity to invest in undervalued stocks. This contrasts with their earlier dramatic share drops amid war-related profit fears.

In reality, global markets have surged recently, making further stock market leaps challenging. High interest rates and monetary tightening may curb purchases despite significant promotions on Black Friday.

If you aim for this upcoming Friday to yield black on your financial report, now is the time to explore local stocks with potential gains from the shopping celebration.

Daniel Shabaks, CEO of Hirshovitz Finance, shares insights. Note that this is not investment advice, a recommendation, or an opinion on financial product advisability.