I'm not a big fan of forecasting in stock analysis. Why? There are just too many moving parts and the further you get away from right now, the more variability there is. With each step further in time, the variability multiplies at an exponential rate.
Nvidia and Costco are up to bat with their earnings. They are great proxies of what is currently going on in the economy.
That said, Nvidia is reporting today. While I think the numbers will be good, the numbers will disappoint. Like a vacation that everyone has talked about for months, Nvidia has become "larger than life" with the absolute craziness of AI. Reminds me of the old Heinz ketchup commercial, "Anticipation... is making me wait..." Oh how I love Carol King!
Anyways, back to the story. Every couple of decades there is a buzz word or phrase that turns the crowd into a herd of raving lunatics. In the 60's it was the tronics word. In the early 2000's, it was anything associated with the internet. Now, it's AI. The way people are getting so excited you would think it was some kind of sex!
Whenever we get too excited about something BEFORE it happens, our tendency is to be disappointed with the reality of what really happens. It is called cognitive dissonance.
Costco is reporting tomorrow. Costco is a great proxy of the economy. A few months back, everybody and their brother was talking about Costco and the great deals they had. Whenever I went there, the place was packed with people and the lot was chock full. The last few times I went there, it has been "thinning out". Also, Costco appeals to the people in the higher income brackets. I read recently that 20% of the population do 40% of the spending. So, to me, this means economic pain is climbing up the economic brackets and reaching the higher levels.
I also like Costco because of their reporting. They are known for being candid with their reporting. The earnings call isn't a "pitch" filled with jargon and obfuscation. Their earnings aren't reported by Costco’s unique accounting system. They are GAAP. They use their earnings to measure their performance. They don't try to manipulate the score board. Therefore, Costco is a good proxy of what is really going on. Moreover, their large reach of customers provides an excellent sample set. Too often I see companies like Disney and Intel providing so much crap that you can't tell which way is up. "If you can't dazzle them with brilliance, baffle them with bull shit!"
So, Nvidia and Costco are going to tell us a lot about this economy - candid and straight forward while leaving the shit back on the farm! Hey, I’m not into mucking the stalls. Leave that for those CEO’s since they are so well versed!
Be smart, be well-read, be aware and be successful.
