Why I Refuse to Chase Staples and the Companies that Sell them
Over the last few weeks, we have all heard (and seen) the shift investors have made away from growth, financials, energy, and cyclicals to the most exciting of groups, consumer staples. The shift has been not only the consumer staples companies, but who they sell to as well, like McDonald’s. It has been a good move so far. Sell your Apple (AAPL), buy some P&G (PG). And to a certain extent this has made sense. I have been very vocal about the earnings cliff coming for the likes of Apple and Nvidia (NVDA). And, the consumer is doing well – we still have low unemployment and wages are rising. But please remember one big fact. These stocks are companies with revenue, earnings, cash and dividend streams. And all the hiding and reallocating won’t help when the environment changes again, and these companies are just expensive.