Imo, it'll be the vendors who bring about the demise of WMT. Wall Mart dictates the prices and policies until it becomes unaffordable to suppliers - game over.
Regardless of whether it's Wal-Mart or BJ's... most (all?) of the marketplace will gravitate to the lowest cost provider... Whoever provides the lowest cost of EVERYTHING will be the "last standing"... and most of the higher cost providers of ANYTHING will go by the wayside.
The scary part, aside from the massive job losses, which is most paramount, is that so called 'recession proof' and 'defensive' sectors such as health care are not only being punished, but sodomized. It must be that so many people are losing their health care insurance, whether employer-based or individual plans...
I work in a hospital and I can tell you first-hand that our ER is getting a dramatically increased number of uninsured patients as a result of the high unemployment rate. It is nearly impossible to collect money from people who have no or low-paying jobs. Our hospital system is in a financial crisis as a result. They stopped matching our 403Bs and the executives are all taking pay cuts.
The old man has lost his edge. Buffett's and Graham's strategy only works in a Bretton-Woods world. Those days are numbered. The dollar as the reserve currency is the only reason why we haven't seen real social unrest in the US. In 2, 5 or 10 years once hyperinflation kicks in due to the money printing the question of the dollar's value will come into question. Once people around the world start selling foreign reserves in an attempt to repatriate that capital due to increasing social unrest the game will be up and then there will be social unrest in the US on a whole different scale. Areas like China and even Central/Eastern Europe were used to a level of poverty, whereas in America the only qualification to being poor is not being able to afford more than one ipod every 1-2 years, that is not a healthy situation. The commercial real estate market still has not crashed yet. When there are companies like Circuit City, and Linens and Things going under not to mention the plethora of large chain stores closing their shopping centers it has a REAL effect. Once the Commercial loans start to reach maturity later this year and next year then you will see a completely new level of systemic risk. If you think leveraged residential real estate is something then you haven't seen anything yet.
I can tell you that the idiot HMO's are increasing their rates this year in a recession.Blue Cross announced a rate hike of 40% for me in january!!!No reason given.So i cut them and switched to a cheaper provider...Kaiser is raising their rates in april! These ceo s are unbeleivable.They must be living in rick santelli's house...hah!
Sorry but I cannot disagree more. Graham's strategy for the conservative investor dictates ⦠1. 50% - 50% capital allocation between risk free assets and stocks 2. Invest only in leader stocks that are conservatively financed and pay dividends for at least the last 20 years, have earnings growth for the last 10 years, and pay no more to buy them than 1.5 their net worth and 15 times average operating earnings of the last say 5 years. 3. Do a time-spread of the purchases over a long time period using dollar cost averaging. I donât know a single investor having unsatisfactory results in any type of market using this strategy. Only âinvestorsâ that buy any stock at any price and never rebalance their portfolio are in trouble during bear markets.
What Graham failed to calculate were the social and political components to his equation. In many countries around the world nationalization and social unrest often become large factors over time. In Latin America for example when you have companies being privatized and nationalized in a political theater depending upon the current regime it is not easy to discern which large viable businesses will be unaffected. There are also massive currency fluctuations that are brought on by changes in economic policies due to different political parties. In capitalism the tool of money is the dominant power used by the wealthy, whereas in socialism it is the power for the lower classes, in totalitarian dictatorships and dominant monarchies money is not even the major force that can dictate policy and the rulers can breakup or takeover major corporations on whims.