Michael Shulman

The Value of 99 Cents

by Michael Shulman   09/12/08

I've never had much of a problem explaining the value of a dollar to my teenage twin sons when it comes to investing, as they've been learning right alongside me for many years. But to a lot of long-stock investors, it sometimes requires a new way of thinking to believe that you can pay a dollar or less to initiate successful options positions. But in the spirit of "a penny saved is a penny earned," we do that more often than not in my ChangeWave Shorts service.

Recently, we learned the value of 99 cents -- thanks to the 99 Cents Only Stores (NDN) to be exact.

As early as the fall of 2007, we were positioning our portfolio to cash in on recession rumblings that our ChangeWave Alliance survey research told us about before the news made its way onto Wall Street. At that time, no one on the Street had any idea about the extent of the recession, but for investors, the fear of something is often enough to make waves.

What we did know, thanks to our Alliance survey data released months earlier, was that we were certainly facing slower economic development. In October 2007, this was confirmed when the Federal Open Market Committee released meeting minutes explaining that it saw slow growth through 2009.

I knew there was money to be made from the economic slowdown and, coupled with the critical sales figures that were on the horizon, I made a move to establish a short-side play in the 99 Cents Only stores.