Overnight the US was flat but all eyes were on AI enabler, chip-maker NVIDIA Corp (NASDAQ:NVDA) as it reported quarterly earnings after the market closed. A strong sales forecast sent the stock up 4% in after market trading. So, good news for the Mag 7.
- S&P 500 = -0.56%
- Nasdaq = -0.51%
- Aussie dollar down 0.2% to 64.28 US cents
- Iron down 0.2% to $95.00 US a tonne
An assault of bargain prices
Today’s blog is my first for the week. I’ve had a pretty nasty cold brought into the house by a filthy toddler. A good mate of mine swears by ArmaForce, so this was motivation to endure the worst retail experience known to man: going to a Chemist Warehouse when already feeling sick.
Tight, jam-packed aisles. Signs jutting out of every shelf. It is complete sensory overload.
Chemist Warehouse merged with/completed a reverse takeover of Sigma Healthcare Ltd (ASX: SIG) in February to become the 22nd largest company on the ASX. This means, investors in ASX index ETFs such as the Vanguard Australian Shares Index ETF (ASX: VAS) immediately became owners of the countries most nauseating shopping experience.
Wondered why the stores are set out as they are? It’s not by accident.
- High density encourages impulse buying, “stack it high, sell it cheap”. It’s a similar approach used by warehouses and discount retailers.
- Overload the senses increases engagement. The overstimulation reduces decision fatigue and promotes quick decisions. Personally for me it promotes “get what you need to and get the hell out of there”.
- “Treasure hunt” experience. I find it incredibly difficult to easily find what I am looking for, I always need to walk down multiple aisles. This increases the time you’re in the store and more likely increases your spend.
- A never ending flood of promotions. Everything seems to be on special as you walk down the aisles. It makes use of anchoring tactics making you believe you’re getting a bargain.
All of this adds up to more in your basket and, now that it’s in your portfolio through VAS – just like our Rask Invest investors – it hopefully will add up to more dividends too. Hopefully that will make up for the migraine inducing shopping experience.
Won’t someone think about the real estate agents?
Remember during the dark days of lockdown when the construction workers of Melbourne rallied together for a super spreader event in the CBD and then stormed the West Gate Bridge?
Does anyone know if there’s a real estate agent union? And, what main arterial road do they need to block in Sydney’s eastern suburbs to finally get some attention?! New South Head Road?
Real estate agents are speaking out about REA Group Ltd’s (ASX:REA) price increases. The dominant real estate online classifieds business has got itself in the habit of raising rates every single year on listings and subscriptions. Apparently they even come around to some offices with donuts to spread the good news.
This has not gone unnoticed with the Australian Competition Consumer Commission (ACCC) investigating REA for price gouging.
The Australian market has a number of duopolies and monopolies, just think of our supermarkets, telcos, banks etc. None are more dominant than REA. With this industry dominance comes pricing power. This is something analysts look for in an attractive business. However, what you want to see is pricing power being present but used sparingly.
REA is the 38th largest holding in Rask Invest held Vanguard Australian Shares ETF and the sixth largest position in the Betashares ASX/S&P Technology ETF (ASX:ATEC). ATEC is a core position in our growth strategies. We think it is a fantastic ETF to hone in on some of Australia’s brightest companies and add an additional growth tilt to compliment more broadly diversified index ETFs.
We’ll be keeping a keen eye on the outcome of the ACCC’s investigation and impact of REA Group.
As always, if you’d like to get in touch with me you can find me in a number of places across the Rask channels. The quickest is to use the chat function in the bottom right of the screen, I’m also very active in the Rask Community or you can jump across to the Rask Invest page.
