Kudos to Wal-Mart CEO

For my money, you can ignore everything coming out of Washington on the subject and simply listen to Wal-Mart's (WMT) CEO. Matt Laure actually does a good job. As much as I criticize him here, he deserves kudos when deserved.

Key Points:

• "A lot of stress still in the system"
• "This is not a V recession that we just bounce out of"
• "When people start buying more expensive cuts of meat, we may be coming out of it"
• Children's apparel sales stronger than adults. "Mom and Dad will sacrifice but they will not deny their children"
• On increasing Wii sales, "Outside entertainment is being cut back on"

This goes to my assertion that the recent market rally is overblown and contrary to recent pronouncements from Obama and Bernanke (green shoots showing), we are far from the end of this.

Those buying equities today must be extremely careful they are buying them based on the actual current situation of the company, not what you HOPE the economy will be doing in 6 months to justify today's price. After a 20% market run, should the economy be as bad as today in October (very likely), you will have discovered you overpaid today for that stock.

My recent purchases of General Growth Properties (GGP), RHI Entertainment (RHIE) and Natural Gas (UNG) (yesterday) do not depend on an economic turnaround to justify their current valuations or the case for appreciation. All three have an investment thesis independent of the overall economy and should it improve, it only enhances the thesis.

Unless we get a dramatic correction in the market, I just think that is the only play right now for the vast majority of stocks out there.

Disclosure: Long WMT, GGP, RHIE, UNG

Comments

[Longinvestor:]

Clever insight. However, never underestimate the power of good advertising and good weather on customers!

Apr 16 02:54 AM

[Carlos Lam:]

NYT: General Growth Properties Files for Bankruptcy

Ouch! I'm curious: what sort of "investment thesis independent of the overall economy" does GGP have? GGP's business was highly dependent on consumer spending. With household debt at 100% of GDP, the consumer HAS to cut back on buying clothes, books, CDs, and electronics. I will admit that GGP actually has assets (real estate) but it is also highly leveraged.

Apr 16 06:03 AM

[Tech_analyst:]

You have a very strong portfolio, GGP goes to bankruptcy today, I am sorry, please be very careful.

Apr 16 08:59 AM

[Michael Jahr:]

Todd,

I too am long on GGP and look forward to your assessment.

Thanks!

Apr 16 04:28 PM

[madmilker:]

People in America need to realize jus what got America in this shape…”cheap” yes so-call cheap items from a foreign land.

quote*Wal-Mart firmly believes in local procurement. We recognize that by purchasing quality products, we can generate more job opportunities, support local manufacturing and boost economic development. Over 95% of the merchandise in our stores in China is sourced locally. We have established partnerships with nearly 20,000 suppliers in China. *end quote!

Now! if there be 182 country’s making items for the world to buy and they have only 5% of the pie in China…duh! This company makes the nice people of China support their currency(yuan) by keeping it in their country working for the people there…. but with the “yuan” going up in value and the US dollar going down…all the foreign items that the American consumer buys thinking it is cheap has went up in price.

People…its all about the currency and to keep a currency strong you got to keep it floating around the country you live in so it can work for you. For the past 12 years all them US dollars are being shipped overseas to a foreign bank and with the American worker not making anything for the foreigner to buy the “we the people” have to turn to the “second” largest employer in America(Uncle Sam) to sell “we the people” debt in order to get all them dollars back!

50 years ago a foreigner would had given their left nut for a US dollar or a Hershey’s chocolate bar and today the same foreigner has got Uncle Sam and the American consumer by both all the while Hershey is moving the chocolate factory to Mexico. Wake up! America and think “MADE IN AMERICA.”

Apr 16 04:29 PM