August 24, 2017

On Thursday, the S&P 500 was down 0.2% while Toronto was up 0.1%.

Costco was down 5.0% on news that Amazon will close its acquisition of Whole Foods on Monday and intends to lower prices. For the same reason, Walmart was down 2.0%.

Costco has always been quite safe from competition because it had the lowest costs. It charges lower prices and still make a good profit. I don’t think Whole Foods under Amazon can achieve costs as low as Costco. But then again, Amazon has shown a strong tendency to seek sales even at low or zero profits. It is a scary thing to have a competitor like that. Traditional style grocery stores including Walmart probably have a lot more to worry about than Costco with its low-cost warehouse style approach. Costco has long been an expensive stock. Possibly its P/E will come down to account for the risk of Amazon. My strategy would be to nibble slowly at Costco if and as its price comes down. I hold a small position in Costco and am certainly not considering selling.

I happened to be looking at Alimentation Couche-Tard today and decided to add to my position. It reports earnings next Tuesday which are expected to be very strong.

I also on Wednesday made a small purchase of Home Capital shares just on the strength of the Warren Buffett investment. I do consider this to be somewhat speculative as the company has warned it could be hurt by new mortgage rules and also it could be hurt of home prices decline in Ontario which appears to be the case in Toronto. So, I will keep my investment small and revisit later.