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(B)(N) Every Day Low Prices – Walmart and Amazon

July 9, 2017
Amazon and Walmart

Figure 1: Every day low prices.

Drama. The two heavyweights in this Battle of Champions for our food dollar are Walmart and Amazon and the market has decided for David (or Jeff) even though Walmart could easily pay out Amazon’s entire earnings ($2.6 billion) last year several times over (5×) from its own ($13.6 billion) and even from its dividends of ($6.2 billion) which Amazon (Jeff) has never paid and probably never will.

But the real story is that the market is willing to pay $490 billion today for Amazon which is an entire year’s sales for Walmart and twice its market value ($240 billion).

And it also swallowed the Apple (Tim) whole; please see Figure 1 on the right.

However, we cannot rule out the old-time contenders such as Costco, Target, Whole Foods (now an Amazon company for $14 billion), Kroger, and maybe SuperValu (which is still in business) or international names such as the privately owned Aldi’s and Lidl which each have more than 10,000 stores in Europe and they are both landing aggressively in the US now.

Moreover, what are we going to do about food stamps (SNAP) which is an $80 billion free shopping experience in the US which compares to about 20% of all of Walmart’s US sales and which is administered for extraordinary profits by the mega-bank, JP Morgan Chase & Company; might they not second it to Amazon so that we can shop on our Obama Smart Phone and not on our feet?

Shopping Bag

Thank you.

And what about all those decaying malls, plazas, and business centers that your pension plans bought for your next income in twenty years?

If you bet on them, you’re going to be left holding the bag for them (and those) in your next job.

 

The Flying Tomatoes

Tea Leaves

Figure 2: Read the tea leaves?

But we’re don’t have to read the tea leaves for our future because we can place our bets on all of them, long or short as the case may be, and our profits don’t depend on the stores but on what the market will pay for them on the way up or down.

And we’ve already profited hugely from the flying tomatoes (and such) because what we have today will cost us more than four times as much (4.3×) as it did in 2012 and the portfolio of seven companies which is our domain (and we don’t own all of them all of the time), outperformed just buying and holding Amazon itself which is the only stock that we’re left holding today.

And unlike the property mavens above, we have no capital risk to show for it at any time; please see Exhibit 1 below (and click on it and again to make it larger as required).

Exhibit 1 (B)(N) Flying Tomatoes - Risk Price Chart

Exhibit 1: The Flying Tomatoes – (B)-Class Portfolio

For more examples of the (B)-class portfolio in difficult markets, please see our recent Posts on”The “W” Syndrome“, Steel,  Green EnergyUFOs and the High Flying Techs, and The Coal War which is heating-up again now; and the Canadian Mines have also taken-off – please see our recent Post “(B)(N) Extreme Economics – The (New) Canadian Mines” for a heads-up on that as well as The Great Rotation & Twenty Hot Canadians 2017.

And for more information and examples of the Free Market Yield and the terms that we have used above, please see our Posts “(P&I) The Dismal Equation (Ecclesiastes 9:1)” and “(B)(N) S&P 100 Volatility Risk and The Full Moon” and “(B)(N) NASDAQ 100 Volatility and The Stone Bunnies“ and for an introduction to The Barometer “(B)(N) What’s A Girl To Do” or “(P&I) The Swiss Franc Debacle“.

And for more information on real “risk management” in modern times and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary and “(P&I) Dividend Risk and Dividend Yield“, and our recent Posts “(P&I) The Profit Box” and “(P&I) The Process – In The Beginning“; and we’ve also profiled hundreds of companies in these Posts and the Search Box (upper right) might help you to find what you’re looking for, such as “(B)(N) TLM Talisman Energy Incorporated” or “(B)(N) ATHN AthenaHealth Incorporated” or “(B)(N) PETM PetSmart Incorporated“, to name just a few.

And for more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more on what risk averse investing has done for us this year, please see our recent Posts on “(P&I) The Easy (EC) Theory of the Capital Markets” or “(B)(N) The Easy (EC) Theory of the S&P 500“, and the past, 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.

Postscript

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
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

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®™, The Medina Bond®™, The Barometer®™, the Free Market Yield®™ and Extreme Economics®™ 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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