Staples: Seriously?

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Okay, so the State Street Consumer Staples ETF – XLP, if you’re keeping score, which, frankly, who isn’t? – is up 13% year-to-date. February 18th, 2026. Marked it on your calendar. It’s the best start to a year since… well, since they started tracking this stuff in ’98. And people are… excited? I’m trying to figure out the logic. It’s not like suddenly everyone decided they need more canned soup. It’s just… numbers. And numbers, I’ve learned, are often profoundly misleading.

Look, I’m a patient guy. Relatively. But this whole “rewarding patience” angle… it’s insulting. Like we’re all supposed to be grateful for… mediocrity? I’ve been diversified, yes, because that’s what responsible investors do. But to be “rewarded” now? It feels like a participation trophy. And I don’t do participation trophies.

Everyone’s hyperventilating about tech, about AI. Fine. Deservedly so, probably. The tech ETF is trading at 27 times earnings. Insane, yes, but at least there’s a reason for the insanity. They’re building… things. The future. Meanwhile, staples? It’s trading at 23 times earnings. 23! For… toilet paper? It’s like the market collectively decided that a slightly cleaner bottom justifies a premium valuation. It’s preposterous. And it’s a bad sign. A really bad sign.

Valuations? Don’t Even.

A high valuation is worrisome for any sector, but for staples? It’s practically a cry for help. Tech stocks can justify their valuations with growth. These companies are, you know, growing. Staples? It’s supposed to be steady. Defensive. Like a good, reliable cardigan. Not a speculative bubble waiting to burst. And that’s exactly what’s happening. Valuations need to come down. Which means prices need to fall. It’s basic math, people! Are we really this dense?

Let’s talk history, because apparently, nobody remembers anything. Back in ’98, staples were also at these levels. And what happened? They plummeted. 40%. And they underperformed the S&P 500 for two years. Two years! That’s an eternity in the market. It’s like watching paint dry… in slow motion… while losing money. And people are forgetting this? It’s astounding.

The difference now is that staples actually underperformed the S&P 500 during the tech boom. They lagged. Badly. So maybe there’s some “catch-up” potential. But don’t mistake that for a solid investment thesis. Earnings growth in 2025 was… flat. And 2026 isn’t looking much better. These stocks are priced for perfection. And perfection, let me tell you, is a very fragile thing. Especially when it comes to consumer staples.

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So, if you’re thinking about chasing these recent winners, just… don’t. It’s a trap. A perfectly packaged, brightly colored, conveniently located trap. And I, for one, am staying far, far away. I mean, seriously. Toilet paper? At these prices? It’s an outrage. A complete and utter outrage.

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2026-02-24 18:32