Wal-Mart is dead, long live Wal-Mart

Full disclosure: my clients and I own shares of Wal-Mart.

Back on October 3rd, 2007, I posted a blog criticizing a Wall Street Journal article that claimed “Wal-Mart Era Wanes Amid Big Shifts in Retail; Rivals Find Strategies to Defeat Low Prices; World Has Changed.”

More specifically, I claimed the author of the article had picked the bottom for Wal-Mart’s stock.

On October 3rd, the stock closed at $45.13 per share. The most recent low for Wal-Mart had been $42.27 posted on September 10th, 2007.

Today, the shares trade at around $56 and have been as high at $59.80. At $56 a share, that’s a 24% gain in value, not including dividends.

On October 3rd, 2007, the S&P 500 closed at $1,539.59. Today, the S&P 500 is around $1,235. That’s a 19.8% loss (once again, without dividends).

In other words, the performance difference between Wal-Mart and the S&P 500 from October 3rd, 2007 until now was a whopping 43.8%!!!

Now, why am I bringing this up? Just to toot my own horn and brag how smart or lucky I got? No (okay, maybe a little).

My reason for bringing this up is the same reason I made the post on 10/3/2007, to highlight how far astray you can be lead by following the popular press for investment advice.

By the time the Wall Street Journal, or any other popular periodical, comes out with news about a company, it’s almost always figured into the price and then some.

In fact, the time to buy a company is when the popular press is saying it’s dead. The time to sell is when they are singing its praises.

As I said on 10/3/2007, “I’ll bet that in a few years I’ll be writing a blog saying that I’ve sold Wal-Mart because the popular press is reporting that Wal-Mart is back at the top of its game again.”

Perhaps that time will come sooner than I think…

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.

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