Yesterday evening, I noticed that Select Comfort had ended the day down about 5%. It wasn't obvious what had happened—there was no company news that day. But after a little while I remembered that the Consumer Confidence Index had taken a little dip for the second month in a row. This is a poll of consumers that is supposed to indicate how likely they are to spend money over the next six months. Theoretically, if consumers feel good about their current financial situation and their immediate futures, companies that sell directly to them will experience strong sales. This is especially true for makers of "big ticket" products such as Select Comfort.
If consumers are really less likely to buy mattresses over the next six months, we can expect a couple of less than stellar quarters. If this is the beginning of a recession, it could be more like two years of disappointment. So investors have good reason to worry—especially if they are going to need cash sometime soon. Short-term bonds will be considerably less volatile.
But I have a lot longer time period to consider. I bought Select Comfort because I beleive it will outperform the market over the next 10 to 15 years. I wouldn't be too surprised to own both a Select Comfort mattress and Select Comfort stock in 20 years. If I'm correct, I don't think a bad quarter or two will hurt all that much.