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FallMart

Tim Knight from Slope of Hope's picture




 

From the Slope of Hope: On Tuesday morning, WalMart reportedly a 15% drop in profits year-over-year and warned they would be dropping estimates for forthcoming periods. I've placed countless thousands of trades in my life, but I don't think I've ever traded a single share of WalMart. In spite of this, I decided to dust off the WMT chart and take a look at what was going on.

Take a look at this long-term chart of the company below (click for a larger image):

0818-wmt

I've tinted the chart various colors to indicate these broad periods:

  • Green - the Growth Years (1977-1993): this was the period where long-term holders were awarded with life-changing gains. The stocked moved up 33,000%. A few thousand bucks bought while Jimmy Carter was President was worth a million bucks around the time Bill Clinton was inaugurated. The ascent in the stock was virtually uninterrupted. This is a textbook example of a long-term growth stock.
  • Cyan - Short Stagnation (1993-1997): The stock spent about half a decade digesting its gains and going nowhere. Latecomers, envious of the eye-popping returns from the "green" period, jumped on board, but they were evenly matched by those taking profits. After five years, a newcomer to the stock would have nothing to show for it.
  • Yellow - Internet Wannabe (1997-2000): Here the stock enjoyed the zany market of the late 1990s and also rode along Amazon's coattails. The gain of 260% which was nothing to sneeze at, but 260% isn't 33,000%. The big money had been made already.
  • Magenta - Long Stagnation (2000-2012): Here was a dozen year period in which WMT lost about a third of its value and gained it back again a number of times. There was plenty of money to be made by swing traders, but long-term holders, after a full dozen years, had absolutely nothing to show for their patience.
  • Gray - Sputter (2012-Present): WalMart starting regaining some of its past glory during the start of this period, and by January of this year, it reached the highest price in its entire multi-decade history as a public entity. It was up about 65% at that time from the start of the "gray" period, but then it started to slip. As you can see by the more detailed chart below, the stock eroded its gains away, and at present, less than half of the "gray" profits still exist. I've put a green tint to show the gap-down in price today.

0818-wmtclose

Thus, over the past half-year, sixty billion dollars in shareholder wealth have vanished, and it seems altogether likely that WalMart has seen its peak stock price for a long, long time.

What's striking to me about the recent activity is that this a singularly ugly period of WMT stock behavior. Over the years, there has been a lot of "backing and filling", but what's happened over the past six months is a different beast altogether: lots of "backing" and hardly any "filling".

I think we're witnessing a sea change in the behavior of WalMart, and this is probably a helpful harbinger of the American economy as a whole.

 

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Wed, 08/19/2015 - 10:50 | 6443603 Consuelo
Consuelo's picture

 

"I think we're witnessing a sea change in the behavior of WalMart, and this is probably a helpful harbinger of the American economy as a whole."

 

Nothing focuses the mind like hunger.

 


Wed, 08/19/2015 - 10:58 | 6443637 bpj
bpj's picture

Or as the french say"hunger is the best sauce"

Wed, 08/19/2015 - 10:39 | 6443553 Raging Debate
Raging Debate's picture

My poor performance of my micro business matches Wal-Mart. I was hedged so this summer I partied my ass off.

Part of my hedging is always dancing as the music plays or put another way, making hay while sun shines a little.

Back to working harder again as there is a segment of a market I started in 1997 and now this downturn year is actually good to get capitulation from a few market participants. Ill make some dough and continue building hard assets, slowly but surley.

May not finish market normalization if things get bad in geopolitics but I am ready for those contingencies also.

Politically, the addict has now admitted it, the first step to a painful but necessary stage to get back to a better place. Take care of one another.

Wed, 08/19/2015 - 10:26 | 6443521 Son of Captain Nemo
Son of Captain Nemo's picture

You're being modest with these Walmart pictures.  I've seen too many to count that will make you physically ill just looking at the trash that walks in and out of it!

Perhaps when Walmart ceases to exist because of "selling out" their clients will go extinct as well!

One can only hope!!!

Wed, 08/19/2015 - 10:20 | 6443501 theyjustcantstop
theyjustcantstop's picture

green area, pre NWO-nafta. when america produced and consumed it's own.

Wed, 08/19/2015 - 08:42 | 6443129 Escapeclaws
Escapeclaws's picture

Doggone, I missed the 33,000% rise. Those would have been some fat profits!

Wed, 08/19/2015 - 09:32 | 6443302 lincolnsteffens
lincolnsteffens's picture

I know a guy that rec'd a large number of shares when the company went public. If the share price goes down 90% he will still be wealthy by any measure. I can guarantee he won't ride it all down to the bottom.

Wed, 08/19/2015 - 09:14 | 6443230 Tim Knight from...
Tim Knight from Slope of Hope's picture

I can assure you hundreds of thousands of people participated in that rise, but only for about 10%, then they sold and patted themselves on the back for making a profit.

Wed, 08/19/2015 - 08:16 | 6443056 RaceToTheBottom
RaceToTheBottom's picture

What is the world coming to? Walmart with problems?
Next you will be saying that boat accidents are bad places to hide PMs?

http://www.bbc.com/news/world-europe-33880350?post_id=10206524454367274_...

Wed, 08/19/2015 - 08:10 | 6443042 PleasedToMeatYou
PleasedToMeatYou's picture

I think the logarithmic scale in that top chart is deceptive, but it does help make room for that fattie who apparently lost a bet. 

Wed, 08/19/2015 - 10:49 | 6443600 decon
decon's picture

I was thinking the same thing about the logarithmic transformation.  I'm no statistical whiz by any means but I did take a course in college and I thought logarithmic transformations were appropriate for the application of some statistical analysis but Tim is looking at chart patterns.  Using a log scale axis seems intuitively bogus if you're looking at chart patterns.

Wed, 08/19/2015 - 11:05 | 6443674 Okienomics
Okienomics's picture

Log scale is the perfect tool when everything in the financial system is built on exponential rates of change.

Wed, 08/19/2015 - 07:45 | 6442971 Banjo
Banjo's picture

Austerity replaces Walmart. Insiders ride the stock down. You lose twice. Eat Rand BITCHEZ LOL

Wed, 08/19/2015 - 07:35 | 6442940 Crocodile
Crocodile's picture

Who replaces Walmart?  This is indeed a sign of the times.  K-mart makes a come-back; NOT!  Lord have mercy on us all.

Wed, 08/19/2015 - 11:33 | 6443783 KnuckleDragger-X
KnuckleDragger-X's picture

Walmart was one of my first buy and hold stocks I bought in '83 and held in various amounts until I got all the way out in 2012. I did well off the stock, but I knew it wasn't going to last after Sam Walton died and its a damned shame that his kids turned out to be complete butt-clowns who never understood who brought them to the dance in the first place.......

Wed, 08/19/2015 - 12:51 | 6444141 cossack55
cossack55's picture

Agreed, with the exception of John T.  who at least paid some dues as a SOG grunt in SEA.

Wed, 08/19/2015 - 10:57 | 6443631 Citxmech
Citxmech's picture

Amazon?

Wed, 08/19/2015 - 10:32 | 6443538 ebworthen
ebworthen's picture

Walmart is Sears circa 1979. 

I'd wager Amazon and UPS/FedEx have taken up the slack on the plastic crap end, and Kroger on the grocery end.

Wed, 08/19/2015 - 10:22 | 6443511 VelvetHog
VelvetHog's picture

Dollar stores.

Wed, 08/19/2015 - 09:25 | 6443278 tbone654
tbone654's picture

Why Target of course...

Wed, 08/19/2015 - 04:45 | 6442728 EhKnowKneeMass
EhKnowKneeMass's picture

The picture next to the chart, is that a picture of Steve Ballmer in drag?

Wed, 08/19/2015 - 10:48 | 6443592 Consuelo
Consuelo's picture

 

Fckn pulled that right outta my head...   Perfect...!

Wed, 08/19/2015 - 09:15 | 6443234 Tim Knight from...
Tim Knight from Slope of Hope's picture

Nope. The armpit area is bone dry.

Wed, 08/19/2015 - 07:59 | 6443011 willwork4food
willwork4food's picture

I don't know, but when we get a small pretty girl treasers we get nothing but words. Here we see blow ups of...wtf?

I'm filing an official complaint to Tyler Inc.

Wed, 08/19/2015 - 10:58 | 6443639 NoDecaf
NoDecaf's picture

Eating lunch, I was down to the last bite of my sandwich when...

 

 

Wed, 08/19/2015 - 11:14 | 6443715 Creepy A. Cracker
Creepy A. Cracker's picture

T-Shirt on heifer in picture: "Fart Now Loading."

Cracked up at that one.  LOL!!!  Good one.

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