Costco
We have written about Costco in the past and it is one of the best performing stocks in our portfolio. Our main detailed note on the company can be found here.
Yesterday we read two articles about Costco.
The first is from Bloomberg and it is about the high demand for Gold bars.
Gold’s breathtaking surge this year to repeated record highs hasn’t stopped bullion from flying off shelves at Costco Wholesale Corp. stores across the US.
Costco’s one-stop shopping convenience is bringing gold buying to the masses by offering prices that undercut traditional precious metals dealers and extra rewards for its most loyal customers. Add to that gold’s appeal as a safe haven and hedge against inflation, and it’s easy to see why bullion buyers are turning to the warehouse retailer.
“It’s a great experience overall,” said Sourav Sethia, a 33-year-old analytics engineer from New Jersey. “I get calls from Costco whenever gold bars arrive as I am a previous buyer. So whenever I see the price has pulled back, I rush to Costco to buy one.”
Sethia visited his local Costco with his parents on Sept. 28 while the store was promoting one ounce gold bars stamped to mark the Indian festival Diwali. A Costco greeter clutching a laminated paper sheet advertising the item was directing shoppers to the center of the store, where the gold is displayed in a glass case. A small sign showed the price — $2,699.99.
While the retailer doesn’t disclose much about its gold sales, a Bloomberg survey revealed how hard it is for the company to keep shelves stocked with the precious metal. About 77% of surveyed Costco outlets that stock bullion bars were sold out in the first week of October, based on calls to 101 stores in 46 states — all the stores surveyed had received fresh stock of the gold products in recent weeks.
Spot gold has jumped nearly 30% this year, successively hitting record highs. Its ferocious rally makes it not only one of the best-performing commodities, but also means the metal has outperformed US equities and bonds. The surge has been driven by its appeal as a haven asset in times of geopolitical and economic uncertainty and its role as diversification play to safeguard wealth
The second article is about the Costco Kirkland own brand. The key points in the detailed article which can read here are as follows:
Many of the Kirkland products are made by the very same companies who make the well-known branded products that Costco also sells.
Costco’s specification demands are such that the Kirkland brand version is a little bit better than the branded product.
Costco sells the Kirkland products much cheaper than they sell the branded products.
The brand manufacturers go along because of the huge volume of both types of products they sell through Costco.
Beating the Market
As we noted in our recent article called “How Do you Get Rich?”, beating the market is tough,and most investors should just make regular investment into low cost of ETFs. We were reminded of this when we saw the chart below:
Beating the market is tough, the graphic above shows the track record of Bridgewater Capital, one of the most renowned hedge funds. In the five years to 2022, Bridgewater achieved a return of just 4% per annum. Despite the efforts of hundreds of analysts and others that it employees, their performance was much worse than a simple investment in the QQQ ETF which tracks the Nasdaq 100 Index.
European Union
We have highlighted a number of charts here showing various ways in which the European economies and stock markets are falling behind those of the USA and China. Recent comments by Mario Draghi suggest that there is great concern at the highest levels. In his context, I was interested to read the following comments by the French President.
"The EU could die, we are on a verge of a very important moment. Our former model is over - we are over-regulating and under-investing. In the two to three years to come, if we follow our classical agenda we will be out of the market" – Emmanuelle Macron.
China
This chart of the Chinse stock market shows that authorities there have tried monetary stimulus programmes there at various times but these have had little lasting impact on the market overall. The latter is represented in the chart by the MSCI China Index.
"A pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons: First, many in Wall Street - a community in which quality control is not prized - will sell investors anything they will buy. Second, speculation is most dangerous when it looks easiest."
~Warren Buffett
09/10/2024