Welcome to The Value Economy
What do Politicians, businesses, and consumers have in common? They all agree on the affordability trend.
Unemployment is ticking upwards. AI/tech makes tasks cheaper/faster, reducing entry-level hiring. Bank records show lower-end consumers are spending less.
We’re well past the COVID-era age of excess and revenge spending. Corporations have noticed and responded:
Target and Walmart reduce prices on thousands of items
Macy’s is closing dozens of locations while online discounters Temu and SHEIN report 20%+ sales growth.
McDonald’s, Wendy’s, and Taco Bell increase foot traffic with value boxes.
Las Vegas Resorts Plaza, MGM, and Resorts World unveil all-inclusive packages starting at $104/night.
Verizon and Comcast are subsidizing streaming services like Netflix, Disney, and HBO Max to keep customers happy with bundles.
Economies slow down and speed up as normal parts of the cycle. A slowing economy isn’t great for all stocks (obviously!), but some sectors have benefited in the past.
High-quality businesses with low debt, stable income, and that pay dividends tend to be an investor’s friend during these times. These commonly include utilities, healthcare, and consumer staples companies: You’ve seen us write about them before, and we’ll write about them again.
The so-called “checkbook investing” method makes sense: you look at where you spend money, and you buy (or at least hang on) to those stocks.
It’s a useful idea when talking with clients who are thinking about panic-selling their investments.
They’ll say something like ‘I don’t trust this XYZ news report’
We’ll ask “how are you changing your daily routine? Are you driving less? Stopped drinking soda? Shopping less? Stopped brushing your teeth?”
Usually the answer is no, and that’s the long-term bull case for Exxon, Coke, Walmart, and Colgate.
Nobody knows what comes next, but the market and economy have a way of surprising even the smartest people out there. The best we can do is pay attention, know what we own, and make a solid plan to reach our goals.