Target Stock: A Poor Business Strategy Ahead

Guess what Wal-Mart Stores, Inc. just did in my former university town today? They launched a clearance sale at their Wal-Mart Express mini-location that will be closing down for good this Friday. This anecdote is not location specific. Wal-Mart is in the process of closing all 102 of its Wal-Mart Express locations this year.

Carol Spieckerman, a retailer, offered the most succinct of why this project failed: “Wal-Mart openly acknowledged its struggles to manage everything from pack sizes to back room processes and transportation to urban location. It was faced with operating a model that was more unique that synergistic with its core business. The small-format landscape is also quite crowded with seasoned competitors such as dollar stores, drug retailers, and hard discounters.”

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Old-School Blue-Chip Value Investing

The reason why I prefer the type of investing that is conventionally called “growth at a reasonable price” investing is because the ride is enjoyable and time is your friend. If you own a huge block of Nike stock, it doesn’t really matter that the stock has fallen from the $65+ range to the low $50+ range over the past eighteen months because the earnings keep growing at a 12-16% annual rate so it is a near inevitability that the price of the stock will be much higher five, ten, and fifteen years from now.

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