Wal-Mart

I recently got this in an email. I don’t know what it means. 1. Americans spend $36,000,000 at Wal-Mart every hour of every day. 2. This works out to $20,928 profit every minute! 3. Wal-Mart will sell more from January 1 to St. Patrick's Day than Target sells all year. 4. Wal-Mart is bigger than Home Depot, Kroger, Target, Sears, Costco, and K-Mart combined. 5. Wal-Mart employs 1.6 million people and is the largest private employer. 6. Wal-Mart is the largest company in the history of the world. 7. Wal-Mart now sells more food than Kroger & Safeway combined. 8. During the last 15 years, 31 supermarket chains have gone bankrupt. 9. Wal-Mart now sells more food than any other store in the world. 10. Wal-Mart has approx 3,900 stores in the USA of which 1,906 are Super Centers; this is 1,000 more than it had 5 years ago. 11. This year 7.2 billion different purchasing experiences will occur at a Wal-Mart store. (Earth's population is approximately 6.5 billion.) 12. 90% of all Americans live within 15 miles of a Wal-Mart. Maybe Wal-Mart should bail out Wall Street?

Another Wal-Mart

From a Yahoo! News story: “FRANKFURT (AFP) – Sales women paid five Euros (6.6 dollars) an hour, Asian subcontractors with dubious practices, and counters in the shape of swastikas -- in Germany the success of textile discounter Kik has kicked up a storm. In all, 3,500 Kik workers in Germany, of a total 15,000 worldwide, are paid five Euros per hour and receive the strict minimum in state health and pension benefits according to the services trade union Verdi. "Our workers might have to do more than others, but in exchange they have a secure job," the co-founder of Kik, Stefan Heinig, told German media. In nearly 15 years of activity, Kik, which is majority owned by the German distributor Tengelmann, has steadily gained market share and posted sales of 1.4 billion Euros last year. In Germany or in Eastern Europe, where the company is expanding, the group targets families with kids, "thrifty people and socially weak people," according to its Internet site. According to testimony provided by Verdi member Henrike Greven, staff are watched closely, their bags and even their cars are regularly inspected. At suppliers, such as in Bangladesh, clothing sewers must sometimes work seven days a week at jobs that do not pay a living wage and that have been slammed by the "Campaign for clean clothes." Some are said to employ children. Heinig has acknowledged that could not be ruled out. Kik rejects charges by antifascist Internet sites which call it "a Nazi store." In 2007, clients were shocked to find counters were shaped like swastikas, a symbol used by Nazis and which could be seen in Frankfurt. "It is a completely normal presentation in retail," a spokeswoman said. She said the chain has never been condemned by a court and stressed Kik's commitment "against racism."
Well, well – like they say, there’s no such thing as bad publicity. I had never heard of this Kik thing until today. People, as usual, will always have their priorities in this order: Commerce, Country, and finally, Church. Who cares if the products are sewn by little children? They are cheap and – to the customer - that’s all that matters. Like Clinton said, we’re not about to let a matter like human rights get in the way of our trade negotiations with the Chinese.

What's up?

From a Yahoo! News story: “NEW YORK (Reuters) – Stocks climbed on Tuesday, driving the S&P 500 to its best month since October 2002. Upbeat news from Europe set the tone for financials, helping them recover much of Monday's losses and continue a recent robust rally after British bank Barclays (BARC.L) declined to take part in a government asset-protection plan. Even as the broad S&P 500 rose 8.5 percent in March for its best one-month percentage gain since October 2002, uncertainty about the struggling economy left the benchmark U.S. stock index down 11.7 percent for the first quarter.” I think this is rather dumb. Doesn’t anyone adjust for the change in the average? 8.5 percent sounds like a lot but 8.5 percent of 1,000 is a lot less than 8.5 percent of 10,000. There is no reason to smile. Please.

The few

There is some sort of pattern about this. Cortez conquered more than 300,000 Aztecs with 400 Spaniards and a few thousand Indian mercenaries. Enron was brought low by the actions of fewer than a dozen men. President Nixon resigned and caused a crisis after the Watergate mess planned by a few men. Bernie Madoff caused the collapse of several financial entities by paying out much more than he was taking in, losing 30 billion in the process. Now, Wall Street has collapsed and many banks are insolvent due to the actions of a handful of men. The national economy is in dire straits because a few men thought there was no end to the flow of good money available for bad investments. What next? Will crops fail, too? Are the farms in the hands of a few? Pictures at 11:00.

Square One

From the New York Times: “Speaking at a conference in New York in December, Walter M. Pressey, president of Boston Private Wealth Management, a healthy bank with a mostly affluent clientele, said there were no immediate plans to do much with the $154 million it received from the Treasury. “With that capital in hand, not only do we feel comfortable that we can ride out the recession,” he said, “but we also feel that we’ll be in a position to take advantage of opportunities that present themselves once this recession is sorted out.” The report on the TARP concluded that the Treasury’s top priority seemed to be to “stabilize financial markets” by simply giving healthy banks more money and letting them decide how best to use it. The report also said it was not clear how giving billions to banks “advances both the goal of financial stability and the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs, and families unable to pay their credit cards.” For Mr. Hope, the Whitney National Bank chairman, “the main motivation for TARP” was not more loans, but rather to safeguard against the “possibility things could get a lot worse.” He said Whitney would continue making loans “that we would have made with or without TARP.” “We see TARP as an insurance policy,” he said. “That when all this stuff is finally over, no matter how bad it gets, we’re going to be one of the remaining banks.” WHAT UNBELIEVABLE CYNICISM. Isn’t this the same kind of greediness that got us here? Now, thanks to the bailouts, China and the Middle East hold the mortgage on the entire country – first and second lien, as it were. The higher ups don’t care – they will just go live in Europe. (The woman is indifferent to all this. She is actually disillusioned too.)

Church on Sunday

From Yahoo! News: “VATICAN CITY – The Vatican says Pope Benedict XVI is getting his own channel on Google. It says the Vatican TV Center and Vatican Radio are collaborating with Google on the project. The Vatican's press office said Saturday that texts and video of the pope's speeches as well as news about the pontiff would be posted directly onto the channel. It says more information will be given next week. The Vatican began using its Web site widely to publish teachings and pronouncements under the late Pope John Paul II.” This might make it easier for the Church and the State to re-unite. What do I know? Nothing, that’s what. If commerce can be globalized, why not religion?

Macy's

By now, everyone knows that Macy's is closing eleven stores here and there. If you looked carefully at the list, these are all stores that have been in operation for a long time - some from as long ago as 1956. I think the newest among these stores being closed was opened in 1990 - eighteen years ago. I have no idea what that tells us but I'm sure someone out there does. My guess is that the older stores were under performing because they were old and Macy's was not about to spend a small fortune refurbishing them. What do I know??? Perhaps this woman used to model at one of those stores.

Target or Wal-Mart

From a story on Yahoo!: "NEW YORK – Shoppers hit the stores Friday to return unwanted gifts and take advantage of drastic price cuts offered by retailers desperate to get rid of old merchandise and boost their less-than-cheery holiday sales. Many retailers opened before 6 a.m., offering 50 percent to 75 percent off on toys, furniture, electronics and clothing. Stores were hoping the discounts would entice shoppers to redeem gift cards and use cash from returning unwanted gifts to buy something new." I did the same except I went to Target. Target had no deals for me. All the prices were about the same or higher. Shame on Target - a very, very bad store. Go to Wal-Mart instead. I think that's where this woman is headed.

Recession???

I stopped by Target, Wal-Mart, and JC Penney this afternoon to do some last minute shopping. The parking lots were full to the gills, filled to the rafters, standing room only inside. Many shelves were bare. So, I asked myself - where is this recession that economists keep talking about??? Maybe everywhere else except here? Washington should put a commission together to look into this mystery. I did notice the price of gas is at $1.60 now. That much is true, but everything else is still expensive. Where is the deflation I keep hearing about? The woman at left must be smiling because her unemployment check is huge? Or she has a very rich husband? I have no clue.

Deficits and ham

Someone is definitely in a panic over the government’s spending so much on the bailouts. The deficits are mushrooming. Yes, of course. There’s also this guy peddling a video entitled IOUSA. Here's the quote: “It is difficult to know what impact these changes will have on stocks, but I believe, in general, they will drive up prices. In addition to buying the world's best businesses (the Cokes, Intels, and Microsofts of the world), I believe you should have hedges in place for the coming devaluation of the dollar. In other words, you should be buying gold: plain, regular bullion gold coins.” Sure – like the man said: “If I had some ham, I could have some ham and eggs, if I had some eggs.” The woman at left has nothing to do with the credit mess, but it does no harm to have a pretty woman to look at while you go hungry or while you write a blog.

Getting tipped off

Isn't it cool when you know someone on the inside and you get information about something important that most people cannot possibly know about???? The party girls on the left (I have no clue who they are) are having a good time at some posh party somewhere - it doesn't matter where. They are there because their husbands are there. Trust me on that. Their husbands are investors. They do not appear to be worried about stock market losses. They do not appear to be worried about anything at all. Before the financial collapse of so many large firms (like Bear Stearns and AIG) that caused Wall Street to reel and shake, I think some people got tipped off. As was the custom every six years in Mexico, with the changes in administration came official peso devaluations and people were financially hurt every time. There were some people who were never hurt because they got tipped off. Get to know someone on the inside if you can possibly manage it. You'll be glad you did.

Microsoft shares

As I've been saying for many weeks now, buying is fun.... This is an abbreviated article from an everyday investor newsletter. Enjoy....

By Porter Stansberry: As longtime readers of my advisory can tell you, I haven't been bullish on the stock market in years. In fact, for the last couple years, I've been warning that stocks, in general, were vastly overpriced. Investors were too complacent. They had too little fear. It turns out that was very close to a huge top in asset prices. Stocks, bonds, commodities, foreign currencies all peaked over the next several months. It was easy to see this peak coming with three key points: the number of stocks trading at reasonable prices, the amount of insider buying in the stock market, and the spread between emerging-market bonds and U.S. Treasury bonds. Reviewing these key data points today shows we're building an important bottom in stock prices. And it's why I'm telling everyone I know that this is one of the great buying opportunities of the last 30 years. Looking through the list of cheap stocks, several great businesses jump out: ExxonMobil, Wal-Mart, Microsoft, Johnson & Johnson, McDonald's, etc. Any reasonable evaluation of the market would find plenty of safe and cheap stocks... thousands more than you would have found a year ago at the market's peak. What about insiders? Brian Heyliger covers insider buying and selling for my firm Stansberry Research. He follows corporate insiders on a full-time basis. Throughout this bear market, the ratio of buys to sells has been steadily increasing. In June, the ratio was in the high thirties – anything over 35% is bullish. But since then, the ratio doubled, hitting 63% in October... a level I've never seen before. What about that lack of fear? My favorite measure of fear is the spread between emerging-market debt and U.S. Treasury debt – the so-called "risk spread." Institutional investors consider U.S. Treasuries a "risk-free" asset. Emerging markets have much lower credit ratings, higher inflation, and a much greater risk of defaulting on their debts. Investors normally demand much higher interest rates from emerging-market economies. But... in big bull markets, near the very top, investors become so complacent, they begin to assume holding emerging-market debt is tantamount to holding U.S. Treasuries. Looking back historically, you can see this spread is a great indicator of global tops and bottoms in stock prices. In about a year, we've moved from a period of complete complacency to absolute terror. Paradoxically – and this is hard for most people to understand – you want to be a buyer of equities when everyone else is panicking. None of these factors mean that stocks have to go up or that they will. No one can predict the future – but you don't have to be perfectly right to do very well in the market. Yes, our economy is struggling right now with huge problems. Enormous risks threaten America's leadership in the world, the dollar's status as the world's reserve currency, our energy supplies, the rule of law in this country, etc. But all of these risks – all of them – existed a year ago, when stocks were almost 100% higher, on average. And all of these risks will exist 10 years from now, when stocks have gone up three or four times from their averages now. To do well as an investor, you have to buy when stocks are cheap. And stocks only get cheap when most investors are afraid. So you have two choices: You can r refuse to invest in stocks, or you can learn to buy stocks heavily when their prices offer you a reward for taking smart risks. That moment is right now. END OF ARTICLE

You might recognize the lady at the left - she didn't need to buy stocks, she used to own Monaco.

Just maybe

From an abbreviated article in an investor newsletter:

By Tom Dyson: Less than nine weeks ago, I was in Singapore, at the headquarters of one of the fastest-growing, best-managed companies in the world. This company is the world leader in water treatment and purification systems. The name of this company is Hyflux. The CFO told me his company was on course to make 300 million Singapore dollars (SG$) in earnings over the next five years. He told me his order book is so full, the company is turning business away. The only problem was, I wasn't the only person who had figured out what a great company Hyflux was. The stock price – at around SG$2.75 – implied the company was worth more than SG$1 billion. I would never spend $1 billion to get $300 million in earnings over five years, even on this superb company."If only this stock was 50% cheaper..." I thought to myself as I left the company, feeling a little deflated. "Maybe someday." Now... after stocks have experienced one of the worst crashes in history, Hyflux is 35% cheaper than it was during my visit. It's amazing it's not down more. International stock markets have been destroyed. Ireland fell 80% during the crash. Russia fell 79%, China fell 74%, Brazil fell 72%, India fell 71%, and Korea was down 70%. In all, 43 stock markets have suffered even greater declines than the U.S. market, and only three did better (Switzerland, Israel, and Jordan).These stupendous declines tell me we're now living in a different world. This isn't just a standard bull-market correction like the crash of 1987. This is something bigger. Like a child who touched a hot stove, investors won't make the same mistake twice. I see a return to thrift and caution all over the world. Saving trumps speculation. Prudence trumps risk. And unfortunately, with this sentiment, it's going to be a long time before emerging-market stocks embark on a new bull market. In light of all this, I'm making cash the focus of my portfolio. Let me explain... First, the crisis we're heading into will have strong deflationary forces. Deflationary means prices fall. I expect we'll see a wave of bankruptcies, defaults, forced selling, and unemployment. Cash will be the most valuable asset around. It already buys double the real estate, the stock, and the natural resources it bought six months ago. I expect cash will be even more powerful in the years to come. I want to own Swiss francs, New Zealand dollars, and U.S. dollars. I'll also be buying safe stocks that generate lots of cash. I'll look to buy a stock like McDonald's or Wal-Mart. The crisis will also have strong inflationary force, as governments furiously pump in cash to revive the economy. These inflationary pressures could generate some spectacular "ripples" in the market. In a few years, we could see the rate of inflation get much higher. END OF ARTICLE

I disagree with almost all of what this guru has to say. Cash might be powerful but not for years to come - perhaps in the next few months to come. Inflation destroys the power of cash. You cannot have too much cash and assets at the same time. Use your cash to buy good, conservative stocks or real estate (not land). Real cash (paper currency) will sooner or later be outlawed anyway. Almost all investor newsletters are the same - they drone on and on about the same things. All they want to do is sell you something.

Spanish pride

This is a lovely photo of a Spanish market. I borrowed it from a photo site. I hope they don't see it here and then sue me for using it. I asked permission but they never responded. What should I have done? If we ever meet and they make demands, I'll have to take it down. Oh well. Just try to identify some of the goods for sale here. It's impossible. I remember my dad used to take me to the market in Juarez almost every weekend. There was incredible variety and everyone tried to sell you something. He would almost always have a shrimp cocktail and I would get a lemonade made from green limes.

Back at the Ranch

Well, as people get used to the recent turn of events and forthcoming changes, the market is down a little bit more - just where I like it. It will hover around 8500 for a while then start to shoot back up. Buy 100,000 shares of anything conservative. Don't get into any penny stocks - too risky right now. In six months, you can reinvest some of your profits in some cheap, high-risk stuff, just for fun. Meanwhile, back at the ranch, it appears Putin wants to get back in the driver's seat some time in the future. Communism may have changed, but totalitarianism sure hasn't. That's not him to the left, by the way. That's someone else - from another time and place - Angela, an opera singer. Ciao.

Transparency

Pay no attention to the markets. The markets will be just fine - I don't want to repeat myself so much. In less than a year, everyone will be better off. The adjustments will have washed away all the dirty financial grime. The thing you should be paying attention to is the proposal to eliminate cash as an instrument for barter. The Europeans no longer trust the U.S., even if they act like they do. Keep your eyes on the November meeting of the G20. Your credit card will be your new ID. All of this in the name of financial transparency. Get a second opinion if you feel the need.

Target or Wal-Mart

Wal-Mart seems to be the store of choice for many. Not so much for me. I prefer Target. The reason is simple. Target is not as messy and not as cluttered and not as dirty as Wal-Mart. I'm not saying Wal-Mart is dirty or cluttered or messy. I'm saying it's just got a little bit more of that lived-in look and feel. Of course, one feels more at home at Wal-Mart. At Target, you probably feel like you should not disturb or handle the merchandise too much because the housekeeper might get mad at you. It's like going to a house where a friend has put everything in its place and you have to watch where you step and where you put your glass and all that. That makes one feel uncomfortable. However, the quality at Target is just a tad better, though the prices are higher.