Jim Gillies and Robert Brokamp discuss small-cap stocks, Costco's healthcare offering, and the forgotten aspect of Costco's valuation. Kirsten Guerra and Jason Moser talk about the benefits of using ETFs for diversification in investment portfolios and the difference between ETFs and mutual funds.
The current market downturn, including the decline in small-cap stocks, should be seen as an opportunity for long-term investors.
Costco's partnership with Sesame and expansion into the healthcare industry enhances its position as a low-cost provider and offers a more comprehensive range of services to customers.
Deep dives
Investing in a Volatile Market
With stock market performance being less than ideal, investors are feeling the pressure. Inflation rates have reached 8% in the United States, and the impact of interest rate adjustments has yet to be fully realized. Small cap stocks, such as those in the Russell 2000, have seen a decline of approximately 6%. While this may discourage short-term investors, the historically negative month of September is a reminder that market performance fluctuates. Additionally, the next few months often yield positive returns, making it a good period for the market overall. Long-term investors should view the current market as an opportunity rather than a setback.
Costco Expands Healthcare Offerings
Costco has recently partnered with Sesame, a direct-to-consumer healthcare marketplace, to expand its presence in the healthcare industry. The company now offers virtual primary care visits for as low as $29, affordable blood tests and follow-up appointments for $72, and online mental health visits for $79. While healthcare is not the primary focus of Costco's business, it falls under the larger revenue category of warehouse and subsidiary businesses. In fiscal year 2022, warehouse and subsidiary businesses generated approximately 21% of total revenues for Costco. With this expansion, Costco aims to offer a more comprehensive range of services to its customers while further solidifying its position as a low-cost provider in the retail industry.
The Value of ETFs in Diversifying Investments
ETFs (Exchange-Traded Funds) are widely regarded as useful tools for diversifying investment portfolios. ETFs allow investors to gain exposure to various asset classes, sectors, and markets in a cost-effective and easily tradable manner. They are particularly beneficial for investors who lack specialized knowledge or interest in certain industries or markets. For instance, investing in cybersecurity-themed ETFs can provide diversification in an industry with frequent technological changes and complex dynamics. Likewise, using ETFs for asset classes like bonds or emerging markets can save investors from the need to actively manage such specialized areas. While some investors may consider thematic or niche ETFs, it is generally advisable to stick with passive ETFs that provide broad market exposure and long-term diversification.
We like stocks. We also like exchange traded funds.
But first, (00:21) Ricky Mulvey and Jim Gillies discuss: - A difficult stretch for small-cap stocks. - Costco’s new healthcare offering. - One piece of Costco’s valuation that’s often forgotten by investors. Plus, Robert Brokamp and Alison Southwick find out how Fools use ETFs in their portfolios.
Companies/ETFs mentioned: COST, CIBR
Hosts: Ricky Mulvey, Alison Southwick Guests: Jim Gillies, Robert Brokamp, Kirsten Guerra, Jason Moser, Bill Mann Engineers: Dan Boyd, Rick Engdahl