A Christmas Guide to Stock Picking

Wouldn't it be nice if you could pick winning stocks while unwrapping Christmas presents? You can. All you need is a frame of mind, an attitude. No need to sacrifice the festive mood to play Christmas detective - just keep your eyes and ears open. What you are looking for is broad strokes, a big trend. It has to jump at you.

Are people spending more or less this Christmas?

Is the general mood festive or sour? Ours is a consumer economy. If people are not spending at Christmas, they are not likely to spend throughout the year. Not good for the economy. If, on the other hand, consumers are happy and loose with their wallets despite the media doom and gloom, a few predictors may be off the mark, and things are either not as bad, or improving. Are you planning to spend more or less this season? How large is your guest list this year? As much as we like to think of ourselves as unique, chances are, whatever we do, countless others will do the same.

Is your employer going to have an office party this year?

What kind? Where? Business outlook is very important. Is your employer in survival mode, looking for ways to cut costs, or does he have a reason to celebrate and is possibly looking to expand next year? Is your office expecting bonuses or layoffs?

Who is getting the money?

Competition for discretionary dollars is fierce, especially when there's not enough of them to go around. The economy may be struggling but a certain segment may be doing well. Are people eating out or cooking at home? What's on your shopping list? Where are you going to shop? Are gift cards popular? Which ones?

How are the retailers doing?

Most of them turn black at Christmas. If they have a bad Christmas, they may not last much longer. Are people buying up or down? Is the money going to Wal-Mart or Macy's? Are shopping mall parking lots full or empty? Are there clusters of cars in front of certain stores? Which stores are crowded, whose bags are shoppers carrying? Is the trend to shop online? Where?

Are you going to travel for Christmas?

Although business travel accounts for a larger part of airlines' business, how empty or crowded the airports are may be indicative of fuel cost trends, which affect the price of gasoline and oil. (Come to think of it, travel may be a contrarian indicator of sorts: if people are not traveling, you may be able to get a good deal on your next year's vacation package.)

And finally: watch the presents.

What are people getting? Is there a must-have toy? Who is making it?

Check customer service return lines after the holidays.

Are cash-strapped consumers opting for hard cash instead of another sweater? Long return lines may still indicate where the Christmas dollars went; and the recipients may still report good sales and earnings numbers before the returns kick in the following quarter. May be good for a trade.