Transcript:
Tom Vaughan:
Hello everybody, welcome to Monday. The S&P 500 was up 0%. That’s very unusual, actually. I’ve probably done about 400 of these daily videos, I’ve never had that happen yet. But the overall indexes were down a little bit today, nothing too substantial one way or another. I still would like to continue talking about kind of how we keep up with inflation.
You know, we had a 6.2% inflation number that came out last month. I don’t know if we’re gonna see worse or better if it’s going to be temporary or not. But one thing’s for sure if we can keep our investment accounts growing at a faster rate than inflation, even if we have to take more money out to buy the same things, we’ll have more in there. And so what I’ve been trying to do is really focus on those types of stocks that can do well, in this inflationary environment.
And I talked about last time, basically, you know, companies with huge name recognition, have some pricing power, because somebody wants to buy that, just because of the name. You see companies that have low number of competitors, so they don’t have to worry too much about their competitors, undercutting them as far as that goes.
We see companies that have very unique offerings or offerings are just in really big demand that are able to kind of overcome that. So, for example, right, one of the things I saw this weekend is that, that travel and retail type stocks are doing quite well, right now. As things reopen, people are going to Williams Sonoma and Dillards and Macy’s. And even though the prices might be higher, there’s still a lot of pent up demand. We’re seeing, for example, Airbnb have a really good run last week. I think, again if people want to travel, even if it costs more, there’s a lot of pent up demand and they’re going to pay more for that.
So these are all examples of companies that have pricing power: they can kind of control the price of their offering, even if their expenses are going up. But I did find a couple of other things that I thought were interesting this weekend. And that was, you know, companies that are doing well in certain categories.
So one is, companies that can do well, that don’t have a supply chain issue. So for example, if you look at Microsoft and Apple, it’s a great example of what I’m talking about here. Apple has supply chain issues, because they’re delivering a hard product for their main piece. So, it’s hard to sell iPhones, if they can’t make them, right? Whereas Microsoft does not have as many hard products in its line, and it can deliver those software irregardless of the supply chain issues. This is the same things that kind of happened, during the heavy part of the pandemic. So those companies that don’t have supply chain issues are worth looking at, for example, software.
The next thing that I’m seeing is we’re seeing an awful lot of movement in companies that are able to try to help fix that supply chain. Specifically, semiconductor companies and companies that make equipment to make semiconductors. So for example, AMD and Nvidia and Applied Materials would fit in that category. They’re running flat out right now, and they can control their pricing power just because the demand is so high for what they’re doing. And you’re seeing a trucking companies like Old Dominion, for example, doing well. Again, they’re just running flat out trying to get this supply chain issue resolved.
So, those companies that are involved in solving supply chain, those companies that don’t need the supply chain, and those companies that can control their pricing power, that’s where we want to make sure we’re taking a look pretty closely, to be able to try to make sure that our accounts can continue to grow at a faster rate than inflation. Obviously, there’s no guarantees there. But that would be the objective, and that’s I think it really narrows down to trying to find those things. And we are seeing some narrowing of the market, which is a good thing in a sense that we if we get in the right spot, we can see some hopefully see some good gains. So anyway, look forward to seeing what’s going to happen tomorrow. Thank you very much.