The Upside to Avoiding Drawdowns: “If you buy things you don’t need, you will soon sell things you need.” -Buffett
- Our first newsletter of 2021 suggested it might be a great time to rotate out of speculative IT and into Staples
- Our second newsletter of 2021 showed that Staples were trading as cheap relative to the market as they were at the peak of the internet bubble
- The chart below shows that over any 3 rolling year period, Consumer Staples stocks have almost NEVER lost money
- At the Dot.Com trough, IT and the S&P 500 lost investors -75% and -41% of their money while Staples were UP 10% over the three year period
- At the GFC trough, IT and the S&P 500 lost investors -34% and -39% of their money while Staples were down only 5%
If you invested $1 in IT at the peak of the Dot.Com bubble, you lost 75% of your money, leaving you with only $0.25 cents – that requires a 400% increase to break-even. Might be a great time to buy what you know & need!
Hat Tip to the folks at Ash Park for their wonderful work on Staples and the idea for this chart!!
Want more content? Subscribe now
The information, data, analyses and opinions presented herein (a) do not constitute investment advice, (b) are provided solely for informational purposes and therefore are not, individually or collectively, an offer to buy or sell a security, (c) are not warranted to be correct, complete or accurate, and (d) are subject to change without notice. Kailash Capital, LLC and its affiliates (collectively, “Kailash Capital”) shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information herein may not be reproduced or retransmitted in any manner without the prior written consent of Kailash Capital.
Kailash Capital, in preparing the information, data, analyses and opinions presented herein, has obtained data, statistics and information from sources it believes to be reliable. Kailash Capital, however, does not perform an audit or seeks independent verification of any of the data, statistics, and information it receives.
Kailash Capital and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.