Quote:
Originally Posted by flylock shox
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I'm coming around to the idea that only Loblaws is relatively safe now. Maybe utilities, banks, and telecoms. Anything else I should even contemplate hiding my money in? I'm also coming around to the idea that the safest move is just to hold cash for a couple of months at least, or maybe buy some appreciating goods if they go on sale (do Rolexs go on sale?). ...
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This is a common perception mistake. Just because Loblaw and Costco are selling a lot right now due to fears of closures and supply shortages, their valuations are very over-priced. These businesses make a thin net margin (about 3%) based on a through-put volume of goods, for which they do not pay their suppliers until the goods are sold. Their cost of operations is very high and its ratio to revenue can quickly escalate once population's buying capacity dwindles and perishables start going bad. Not a single public stock is safe right now. Neither are private companies. Shrinking cash flows is going to be a recurring theme for the next 6-12 months, unfortunately.