"Pets are important to people and pet ownership is widespread, as Alex Seagle ably highlights in his recent Contrary Investor. However, the pet industry is economically sensitive and not a reliable investment niche.

"My wife is a veterinarian. We own a large animal hospital that she started in 1993, so I am intimately familiar with the economics of the industry. People spend freely on their pets when times are good and cut back sharply when the economy slows.

"People don't love their pets any less when they are worried about the economy or suffering financial setbacks, but they do spend less - scheduling doctor visits less frequently, electing cheaper treatment alternatives, choosing euthanasia sooner, feeding lower quality foods, making do without new collars, toys, and leashes. Some people keep spending on their pets no matter what, but pet industry profit margins rise and fall with economic sentiment.

"PETM and WOOF, pet-industry icons, rallied while the broad market fell after the highs of 2000, not because spending on pets remained strong during that recession, but because these companies were in the sweet-spot of their growth phases, adding stores and locations rapidly, taking business away from smaller operators. Both are mature now, and neither provided refuge during the market selloff of 2007 and 2008."

David Fuller's view Thanks for these insights.

There is little refuge during a global panic, other than cash. Bond prices surged for six weeks during the worst of the equity slump in 2008 but then fell back just as quickly. Gold fell with stock markets, albeit somewhat less and recovered more quickly.

However I think Alex Seagle is onto something with PetSmart (PETM) which has shown considerable relative strength during the recovery, rallied nicely following a mean reversion to the 200-day MA and is challenging former highs near $35. It is way outperforming VCA Antech (WOOF). Did this company make a mistake with its stock market symbol, which sounds…well, dogist?

Living in a household which had more pets than I care to remember when the children were young, I sometimes think our two delightful cats, which run the place, eat better than I do. They get M&S roast chicken and meaty delights while I am supposed to eat more plants and less fat.