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P&G quarterly profit drops, but stock holds steady
The big story for the quarter was higher commodity costs -- and whether the company will have to raise prices in a struggling economy to offset those new expenses. Chief executive Bob McDonald said P&G will try to cut costs instead of increase prices, according to Dow Jones.
I guess that means we can't expect Procter & Gamble to go on a hiring spree anytime soon.
But if price hikes are necessary, he said, the company will deal with those by launching innovative new products.
I'm going to go way out on the limb here and suggest that the innovative new products will be overpriced relative to the existing products.
It would therefore make sense to "hoard" Procter & Gamble's existing "basic necessities" products at these low prices (through coupons issued at Costco for instance). Just a thought. What's the harm? Been there, done that, still doing it.
Sunday Night Futures
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Weekend:
• Schedule for Week of November 24, 2024
Monday:
• At 8:30 AM ET, *Chicago Fed National Activity Index* for October. This is
a composite index of ...
5 hours ago
7 comments:
Anecdotal information from China over the past two weeks suggests that consumer-price inflation over there is running well above the U.S. rate and also well above the official statistics. Particularly for imported goods.
I wish I had hard data but haven't had time to collect any (our family has been doing the strep fugue for the past 2 weeks), but it sounds like the hoarding isn't just around here.
(Hey! Why not... With all the new but largely unoccupied see-through apartment towers, they now have tons of storage space!)
P.S. With regard to dividend stocks, what screening techniques do you use to make sure you aren't buying unsustainable Ponzi stocks? I have been having a hard time finding stocks with decent dividends, that are cash-flow and debt-level healthy, which I think have reasonable long-term business prospects and the ability to survive a double-dip.
Example: http://blog.i4sg.com/2010/09/22/kmp-kinder-morgan-ponzi/
Wisdom Seeker,
"With regard to dividend stocks, what screening techniques do you use to make sure you aren't buying unsustainable Ponzi stocks?"
I've been using an abstinence screener, lol. I have not owned any stocks since 2004!
No complaints so far. I have TIPS and I-Bond ladders instead. I've been going with the known ponzis (lesser evils?) over the unknown ponzis.
In the past I'd buy the S&P 500 book and read it cover to cover though. I'd look at 10 year revenue, earnings, and debt growth. I'd also try to factor in name brand recognition and try to find stocks that were as boring and as cheap as possible.
Ahh, thanks. I'd assumed, from all the posts about dividend-yield stocks, that you were shopping for some!
Interestingly, I just read a research report out of Fidelity warning investors that the long bull run for bonds has about hit its limit, and investors need to expect low returns going forward. (Bill Gross also called the bond market "top" as widely reported yesterday, and of course the writing has been on the wall for some time since yields can't drop below zero...) The interesting thing about the report was that it analyzed bond returns from 1941-1981 or so, and noted that the 3.3% nominal annual return over that period lagged behind inflation, resulting in negative real returns over the 40 year timeframe. By comparison, from 1981-2010 the nominal annual return has averaged about 9%/year, which implies a real return around 6%.
The bottom line is that bonds may once again become "certificates of confiscation", and if we were to get a rerun of 1941-1981, then any TIPS or I-bond with a positive (real) yield is likely to outperform the wider bond market. So TIPS may not be as overpriced as people (including myself - until tonight!) have been wont to think based on the long-term trend of declining real TIPS yields.
BTW, I found your analysis of I-bonds vs. TIPS very helpful. I'm still loathe to finance Federal Government overspending any further, but I expect to need to rotate funds out of other bonds, and I-bonds look like the "least worst" option...
"launching innovative new products": I wouldn't really expect them to launch innovative old products.
Wisdom Seeker,
It is scary that I-Bonds might be the least worst option, especially since the real yield will likely be 0% on November 1st.
However, the ability to defer taxes on I-Bonds up to 30 years is worth a lot more than many might think. That's especially true if inflation actually does pick up.
It's clearly one reason why people have bought gold. Unlike gold, 0% I-Bonds have not appreciated in price though. You can always buy $1,000 of them for $1,000. This would have been very important for those buying in the late 1970s and holding until 2000.
As for dividend stocks, I am certainly very tempted. Kimberly Clark was certainly one of my temptations. I'd owned it in the past.
Tempt not a desperate man. - William Shakespeare
I am not desperate for yield. At least not yet!
dearieme,
Very amusing! How true that is!!!
You got a chuckle out of me today. Well done. :)
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