April 12, 2018

In what seems to be a bit of an alternating daily pattern, markets were up on Thursday as Trump clarified that when he told Russian to get ready for missiles “because they will be coming” he did not say when.

The S&P 500 was up 0.8% on Thursday and Toronto was up 0.1%.

WSP Global was up 3.5%

Costco was up 2.3% after reporting another month of very strong same-store sales. Adjusted for foreign exchange and volatile gasoline prices, same store sales in March were up 5.8% year over year and 6.5% in the first 31 weeks of this fiscal year. That is excellent growth.

It’s not clear how much of that is higher store traffic and how much is higher prices. While Costco boosted membership fees last June, I don’t think same-store sales includes membership fees. I had thought that with lower income taxes there might be competitive pressures to lower prices but there is apparently no sign of that so far.

Costco is a fantastic business that always looks expensive in relation to earnings. But if this level of growth keeps up then perhaps the shares are worth the price.

Taking Advantage of Volatility

Over the past few months I added to a number of stocks that I like when the price fell.

Logically, I could sell those latest buys even on a 10% or so rise. That would give me cash in case more and bigger dips occur.

However, when it comes to the stocks I have rated Buy and certainly (higher) Buy or int eh Strong Buy range, I find it difficult to sell any. The reason to sell in this case would have little to do with valuation but would be more for portfolio management. Still, I feel like a traitor or something to sell any of those higher-rated stocks. However, today I entered a few orders to sell just some shares that I bought on dips should their prices rise about 10% from where I recently bought. These orders were for Linamar, Toll Brothers and AutoCanada and I had an existing order in for TFI Industries. Again, this is just to sell some shares recently bought on dips while retaining mot of the position. This seems to me to be a logical approach to take advantage of volatility.