Time to Be Downbeat About Wal-Mart?

When I bought Wal-Mart (WMT) a bit more than a year ago, I wrote an article for Financial Times where I laid out my theses.

Time to Be Downbeat About Wal-Mart

When I bought Wal-Mart (WMT) a bit more than a year ago, I wrote an article for Financial Times where I laid out my theses:

Wal-Mart currently appeals mostly to lower income demographics, and this is where things will change the most… Cleaner, better, more appropriately merchandised stores will attract new customers… encourage shoppers to… spend more… As initiatives take effect and the shopping experience improves, Wal-Mart will be taking market share from upper scale retailers…

I was wrong! Wal-Mart failed to improve its stores and merchandising to attract a more affluent shopper (the sub-par same store sales are a testament to that). Thus future fundamental return (earnings growth and dividends) will likely be in the high single digits, below original estimates, making the stock fairly valued (at best) at today’s valuation. My (accounting) loss on the purchase was miniscule – because I did not overpay for the stock; however, I experienced an opportunity cost loss as the market has appreciated since.

Please read the following important disclosure here.

New to investing?

Explore these valuable guides to get started.

Related Articles

The AI Hangover Is Coming. The Pandemic Already Showed Us How It Ends

The AI Hangover Is Coming. The Pandemic Already Showed Us How It Ends.

We don’t have to go decades back to find an analogy. Just look back a few years, to the pandemic. We all lived through it, most of us in sweatpants. And it offers a near-perfect preview of what is about to happen in AI.
Your Sophist Filter On CEOs, Cynics, and the Voice in Your Head

Your Sophist Filter: On CEOs, Cynics, and the Voice in Your Head

A great speaker can bend logic with emotions and exert undue influence on your decision making. The better someone speaks, the more discriminating your Sophist filter needs to be.
Depressing Reasons Why I Am Bullish On Gold

Depressing Reasons Why I Am Bullish On Gold (part 2)

Here is what changed my mind. Not something about gold, but many things about the dollar. The US dollar is the world's reserve currency. It has had a well-deserved place since WWII, and that rested on three things: the largest, steadiest, most diverse economy; a politically stable democracy; the best military.
Narrative Change

Narrative Change (part 1)

Narrative change is a reversal of mass behavior. Economics and stock market valuation are governed by soft laws, but the reality bent by human behavior can disagree with these soft laws for much longer than rational actors would expect, or stay solvent. The change, going from euphoria to despair, is a change in narrative.

Leave a Comment