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(B)(N) The U.S. Retail Value Trap

February 9, 2014
Courtesy: Bon-Ton Stores Incorporated

Courtesy: Bon-Ton Stores Incorporated

Drama. There are no “bargains” in the stock market and shopping in the basement for the end-of-the-line and bespoke brands has cost investors ($7.7 billion) last year for an aggregate return of minus (-52%) and another ($8.6 billion) and minus (-38%) so far this year as they hang-on or maybe “double-down” for a better outcome.

The current market price for all five of the stores – and a lot of employees, customers, debt, inventory and real estate – is $14 billion and that’s only 1/2 of the price of risk ($28 billion). We’ve included Best Buy Company Incorporated but the jury is still out on that (Business Wire, January 17, 2014, Investor Alert: Best Buy Co., Inc. Investigation Announced by Holzer & Holzer, LLC). Please see Exhibit 1 below for the scary fundamentals.

Exhibit 1: The U.S. Retail Value Trap – Fundamentals – February 2014

The U.S. Retail Value Trap - Fundamentals - February 2014

The U.S. Retail Value Trap – Fundamentals – February 2014

The "Overvalued" U.S. Retail Value Trap - February 2014

The “Overvalued” U.S. Retail Value Trap – February 2014

These stores could be called a “value trap” for small investors but they are a “liquidity trap” for large investors and it is they – entrepreneurs, institutions and hedge funds – who will determine the buying and selling price for these stores.

The solution is to buy them all, job the inventory to Amazon and the Dollar Stores, and deal with the debt, pension plans, severance, and all the real estate.

Exhibit 2: (B)(N) The U.S. Retail Value Trap – Prices & Portfolio – February 2014

The U.S. Retail Value Trap - Prices & Portfolio - February 2014

The U.S. Retail Value Trap – Prices & Portfolio – February 2014

For more information on the chart elements and additional references to the theory, please see our Post, The RiskWerk Company Glossary.

And for more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.


We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
With No Fees and No Loads on Capital

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Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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