Apr

26

Floridians tend to think about stockpiling food around the beginning of the hurricane season or at the first instance of a storm brewing off the coast of Africa. Take a run over to Costco or Walmart and load up on water, paper products, canned products, batteries (especially when the governor implements the tax-free shopping, hurricane prep. days), etc.

My earliest remembrance of bulk purchasing as an "investment" strategy was reading it in an Andrew Tobias book back in the 70s—in the inflationary times after the Arab Oil Embargo.

It makes sense if you have the room to do it and you do not end up wasting the food or products. You save on gas, trips and time to the store and you always have something in the pantry when you get home from work–so you may feel less need to eat out at an expensive restaurant. It is a bit of the squeezing a penny till it screams philosophy. It takes a bit of discipline to cut down on expenditures but trimming 10% and saving it is likely possible for many to do.

From an article by Brett Arends in WSJ Online:

Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax. Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year. And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.

Andrew Tobias calculates a 50% return by buying wine at 10% off in bulk.


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  1. gabe on April 26, 2008 1:12 pm

    A nice summary (on page 16) of how edible commodity prices have behaved since 2003, from a Kraft Foods presentation: http://media.corporate-ir.net/media_files/irol/12/129070/4q07confcallslides.pdf

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