Wednesday, January 26, 2011

Kimberly Clark's Smoke and Mirrors

I was at Costco today.

This is for the inflationists.

The Kleenex boxes got smaller. What was once 300 sheets per box is now 260 sheets per box.

It cost $12.91 ($14.99 + 9.5% sales tax - $3.50 Costco coupon) in October.

It now costs $14.01 ($15.99 + 9.5% sales tax - $3.50 Costco coupon) in January.

I'm not quite done describing the situation though.


This is for the deflationists.

You now get 10 boxes instead of 8!

"New! LARGER PACK"

There's no mention that the boxes are smaller, lol.

So what does this really mean?

What once cost $12.91 for 2400 sheets now costs $14.01 for 2600 sheets. I checked the size of the sheets and they have not changed.

The increase in the price per sheet works out to 0.17%. Nice job Kimberly Clark. Way to hold the line. You manged to eek out a 0.17% increase, much like rates found on short-term Treasury Bills.

The battle between the deflationary forces of the Great Depression and the inflationary forces of the 1970s rages on.

That said, I do now have a 30% return on the investment in the garbage bag hoard. Sugar prices are also way up (not seen in the picture). I'm not seeing much price action elsewhere though. Kleenex is the pillar of price stability. I could name off quite a few other items showing similar stability (from Ensure to spaghetti to sneakers Made in China).

For what it is worth, I'm just not seeing much inflation at Costco and I do continue to look.

As a side note, Kleenex is a staple around here. Not only do we have allergies but we also have one of
these. I do not think it is possible to hoard too much of it, lol.

24 comments:

Stagflationary Mark said...

Here's some bonus trivia.

The shopper without a coupon actually saw a bit of deflation.

$15.99 for 2600 sheets is 1.5% cheaper per sheet than $14.99 for 2400 sheets.

The coupon offered more bang for the buck (on a percentage basis) on the $14.99 item than it did on the $15.99 item.

G.H. said...

Stupidity helps close the fiscal deficit.

"You have to be stupid to play the lottery. Despite what you might hear on TV, the chances of willing millions are vanishingly close to zero. Buying a lottery ticket is like giving money away and getting nothing back in return.

I'm on my way to Costco to buy a willbarrow to bring home the millions I'll when win I when the lottery. (insert laughing smiley here)

Anonymous said...

>>Mr. Roth is skeptical of President Franklin D. Roosevelt’s New Deal programs, and worries that the president’s fondness for deficit spending will ultimately be disastrous. He keeps thinking inflation is right around the corner.<<

http://www.nytimes.com/2009/10/17/business/17nocera.html?_r=1&adxnnl=1&adxnnlx=1296123783-kyIHxjArRm0hIKkIDuQVpg

Mr. Roth, of course, is writing without the benefit of hindsight. Today, when we look back on the Great Depression, we have a clear narrative in mind <<<

>>Mr. Roth’s inflation fears are one good example. A rock-ribbed Republican, he can’t understand why Roosevelt’s New Deal programs — and the spending they require — don’t bring with them the kind of scary inflation that had occurred in Germany after World War I. He keeps waiting for it, predicting it, ever fearful that it will make an awful economic situation even worse. He is baffled that inflation remained subdued. He can’t get outside of his mental framework and see — as we can today — that Roosevelt’s programs are the only things keeping the economy alive.<<

>>At various points in the early 1930s, the stock market spikes — and he starts to think it’s a good time to buy stocks. Indeed, he writes, many experts are advising people to get into the market, and some of his wealthier friends do so. But six months later, the experts invariably turn out to be wrong, and his friends wind up losing their money. During the Depression, optimism was ruinous.
And yet — and this is something we tend to forget — between 1935 and 1937, business began to boom again, and a sense of growing prosperity took hold in the country. In Youngstown, the steel and rubber factories were operating at near capacity, just as they had in the 1920s. On Christmas Eve in 1936, Mr. Roth wrote: “Just came back thru the stores on my lunch hour. People are spending like drunken sailors.”<<

>>A week later, he added, “It seems to me that the time has come where we can formally and officially announce that the depression of 1929 has ended.”
This, of course, turned out to be completely wrong. That September, the market crashed, and the Depression took hold once again. Today, most economists believe that the downturn was caused by Roosevelt, who turned off the spigot too soon, trying to balance the budget instead of continuing to pump money into the economy.<<

Hello 2011!!

getyourselfconnected said...

Wasn't Mr. Roth into smuggling molasses during prohibition?

GawainsGhost said...

The two most commonly used words in advertising are "new" and "improved."

Exactly what is "new"? Not much, usually the box or the packaging. Exactly what is "improved"? Not much, usually in the case of say a detergent the fragrance.

What really is new and improved is the profit margin. Smaller portions, larger price, that sort of thing. Companies have been doing this forever.

It's the same with real estate. You know, back in the day, from the 50s through the 80s, houses were solidly built--4x8 oak wood frames, real brick, hardwood floors, knooks and crannies for energy conservation. Starting in the 90s, houses were cheaply built--2x4 pine wood frames, fake brick, lineolum floors, wide open spaces which necessarily make for higher heating and cooling costs. And the prices went up!

New and improved, my ass.

Stagflationary Mark said...

G.H.,

Who Wants to Be a WillBaroness?

Scratch and see!
Instant nobility!
Tickets nearly free!
Try buying three!

Stagflationary Mark said...

Anonymous,

Don't go making trouble. Wall Street says Wall Street's stocks are a bargain. Who am I to question why?

Stagflationary Mark said...

GYSC,

Well, Roth certainly wasn't smuggling NFLX into Canada. Someone must be though! D'oh! Sorry!

Stagflationary Mark said...

GawainsGhost,

Someone needs to invent a marketing word.

New and __________!

We need a word that means "not worse". Stagnant?

Kimberly Clark's tissue is New and Stagnant!

Oh yeah! I definitely have a future in marketing. I can just feel the job offers lining up. ;)

getyourselfconnected said...

Nasrt NFLX jibe man, ouch!

So Kleenex is a staple at your house.......

Anonymous said...

If you read Roth's diary he obsessed endlessly about stock prices trying to find a pattern in stock movement. Technical analysis didn't work any better then.

GawainsGhost said...

Actually, the best analysis on stock prices was done by Mandelbrot. He looked at daily prices changes going back over 100 years. What he found was not order but chaos.

Stagflationary Mark said...

GYSC,

Oddball: Why don't you knock it off with them negative waves? Why don't you dig how beautiful it is out here? Why don't you say something righteous and hopeful for a change?

Moriarty: Crap!

getyourselfconnected said...

Whoa, a little before my time.

Stagflationary Mark said...

The allure of technical analysis is that you can dream of beating the average investor without even having to think about the value of the companies.

Good luck on that one long-term, especially if the average investor uses the very same technical analysis you do.

In my opinion, using technical analysis is like bringing a knife to an armored division fight. Investment banks use high frequency tanks (HFT).

Stagflationary Mark said...

GYSC,

Kelly's Heroes is must see TV!

getyourselfconnected said...

Hey, I like technical analysis in uptrending or downtrending markets. Not so great in sideways ones though. Like lately.

Mr Slippery said...

"In my opinion, using technical analysis is like bringing a knife to an armored division fight. Investment banks use high frequency tanks (HFT)."

It's not just the HFT. They can see all of your orders, you can't see theirs. And they bring millions to a trade against you.

Hedgies, pension fundies, they are elephants and you have to stay out of their way or walk in their shadows. You can be right on the fundamentals, right on the technicals and still be wrong if an elephant steps on you.

Now, excuse me, I need to finish placing my swaptions, stradles, condors, reversals, and calendar spreads before lunch.

Stagflationary Mark said...

Mr. Slippery,

"They can see all of your orders, you can't see theirs."

That is the #1 reason I have never used stops. I do not wish others to know when I will sell. I do not wish that information to be used against me.

G.H. said...

"That is the #1 reason I have never used stops. I do not wish others to know when I will sell. I do not wish that information to be used against me."

This is a good point but...let me see if I'm understanding you correctly.

Are you referring to a stop that would be placed ahead of time, through some form of software or online tool, that would be visible to others who have access to your account?

If so, I can understand your concern. However, if you track your investments on your own, without using online tools available through your broker, and furthermore, if you only base sell orders on conditions that you yourself have designed, how would anyone besides you know your intentions?

One more thought. It is likely that there exists a widely employed percentage "range" that historically investors have used as sell stops, or protection, against downturns. Like, for example, 5% or 10%. And brokers might be able to game the retail investors at this point.

I've always used sell-stops which I have clearly defined BEFORE I hit the buy button. No one knows what they are. They vary depending on the type and volatility of the investment, i.e. bonds, stocks, ETFs, mutual funds. No one knows what they are or when I might pull the trigger.

Stagflationary Mark said...

G.H.,

"Are you referring to a stop that would be placed ahead of time, through some form of software or online tool, that would be visible to others who have access to your account?"

Yes indeed. That's all I'm talking about.

My decisions to sell are all in my head. I generally stick to the following sell rule.

Would I buy at this price? If I think "no" then I'll probably just hold. If I think "hell no" then I will sell.

I can't say it is a great approach, but it is better than not thinking at all perhaps.

G.H. said...

I understand, and that explains your 11:19am comment.

The main reason I use "manual" sell-stops, as opposed to broker offered tools is my fear of those rogue trades that are designed to trip preset sell-stops. At least I've heard of them, I guess I don't really know if they exist. But it's better to be safe than sorry.

I guess you could say my system is programmatic without being programmatic!

"You can call it the art of fighting without fighting."

Stagflationary Mark said...

G.H.,

"But it's better to be safe than sorry."

Absolutely.

The thought of automatically being pushed out of an investment based on the herd running for the exits doesn't appeal to me either.

Generally speaking, as the price of something falls I'm inclined to want to buy more, not less. What applies in a grocery store also applies to my investments.

That said, the lettuce might be cheaper for a reason. I'd prefer to look at it first!

Stagflationary Mark said...

G.H.,

By the way, the SPAM detector got you again.

Good Guys Wear SPAM! ;)