For many people, tonight is Christmas Eve. This is a time when advertising portrays families as happy units, sharing a few days together when dad and mom have a little time off work. For many others, this is a time when we wish we had a "Santa" cure for our kids. For the latter individuals, I hope you get at least three hours' sleep tonight.

If you don't get any sleep and the toys are all assembled, this would be a good time to take a look at how the toy market fared this year. What is happening in the world of stuffed, mechanical, electronic, and plastic toys? Who survived this year? When will we know the results? Why would we care?

I'll answer the last question first, since most of us would not read past the last paragraph unless we felt this sector was pertinent to our portfolios. The toy market is part of the overall retail market, and each toy manufactured in the U.S. and abroad is part of the overall wholesale market as well. A portion of our portfolios may be socked away in the retail industry. If so, we know this market sector is seasonal, and the holidays affect this sector.

There are specific companies that do quite well with the toy market. At BUYandHOLD, these companies are listed under "Research Stocks." From there, go to the category labeled "Recreation/Leisure" or "Technology/Internet." Don't let the names of the industries bumfuzzle you - you might be surprised at who manufactures top-selling toys. Some of the toys are made for adults, to be certain (like motorcycles). Some other companies are known entities. Other companies can be found by doing a search at BUYandHOLD. Simply go to the homepage and plug in the ticker symbol in the search box on the right. If you don't know the company's symbol, follow the link to the symbol lookup. Just because a company isn't listed in the top ten does not mean it isn't worth investigation.

We could spend the better part of a sleepless night researching companies and drinking eggnog. But, the question to answer now is how these companies will fare this season. There is no way to answer this question at the moment, as reports for the season will not be verified until after the holidays. However, guesstimates can be made through various market reports. A few weeks ago, the forecast was positive, in spite of limited markdowns this year. However, the stores that were doing well were at extremes. The high- and low-end markets were doing well and expected even more sales the days before Christmas.

What happened to the middle market? Well, there are several theories. One is that the high end market will always be with us. The other theory is that the low end market will always be with us, too. There are no real answers at the moment for the fate of the middle market. Rich or poor, many astute parents know that toys last as long as our children maintain interest in them (or until they break). A $100 doll is a collectible. The $19 doll is the right choice for mangling or neglect.

What does this mean for specific retailers, though? There are rumors that various toy sellers are leaving the playground. An interesting article, written about the February 2003 Toy Fair might be used as an indicator for the 2004 market climate. The most significant news here is that our children experienced a great deal of stress over the past two years, and the toy manufacturer anticipates this environment with "comfort" toys designed for a global market.

This international market has, if you haven't noticed, become much more technical, animated, and aggressive - the latter consists of action figures and games that employ the concept of good against evil (nothing new - just more fantastical). Toys that imitate the worlds of anime cartoons and magical worlds are prime targets for the hearts and minds of our children. Toys that come in parts and pieces, like models or construction blocks were also hot items in 2002, and were expected to sell well in 2003. Many of these toys are made by reliable companies, and - not surprisingly - these items are available for online purchase.

Brick-and-mortar retail shops might fail, but the online market might fare even better this year than in past years. Money for gas, limited parking, long lines at the register, and screaming, tugging, tearful, pleading, noisy adults at toy stores may be more than mom and dad can handle, especially if time is restricted by single parenthood and work. New tactic - place the kids in front of the computer and shop from the convenience of home. The toys are just as colorful, the prices may be less expensive (on the other hand, unless the company employs free shipping the gift may be overpriced), and impulse shopping is kept to a minimum.

There it is. Impulse shopping is part and parcel of the overall retail market environment. Without these little odds and ends filling up our shopping carts, the retail market suffers in general. In addition, the job market suffers, also. The Monthly Labor Review Online states that brokers in overall wholesale and retail markets may lose more jobs in the next decade, because - for one reason - the Internet makes procurement easier.

How this affects our portfolios depends on how much we have invested in specific companies within the retail market. Toys will always sell, but the types and prices of toys will change over the next decade. If we're as astute with our equities as we are with our toy purchases, we may see a wonderful gift by way of dividends and percentage increases in our portfolios.

Cora and I believe this is enough information to help you through a long and, hopefully, peaceful night (she's asleep, and I'm gloating). We wish you all a happy holiday, whatever that holiday might be.

Until Next Week,
Linda Goin