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Sunday, February 05, 2006


Walmart. Wow. Has there ever been a company that has gotten so much press lately? Well, I'm sure there has, but it seems that Walmart has gotten its share in the past few years.

Walmart. It seems you either love Walmart or you hate it.

What is it about Walmart that leaves no room for indifference?

Reasons some people HATE Walmart:

1. When Walmart comes to town, everyone panics because the store overwhelms all the other smaller businesses and steals everyone's jobs.
2. Walmart decides what kind of music YOU want to listen to.
3. There are never enough cashiers at the check out.

And I am sure there are many more.

Reasons some people LOVE Walmart:

1. Low prices

Well, OK, there's only one reason why anyone would love Walmart. But you have got to admit, Walmart does have low prices. How do they do it? How can they offer such low prices day after day. In fact, I believe their slogan is: Always. Low Prices.

One theory is that Walmart forces US manufacturers to ship jobs overseas in order to meet their requirements for the lowest wholesale prices. Those suppliers choosing not to deal with Walmart's stringent requirements do so at their own peril, because to not do business with Walmart can be tantamount to disaster to their businesses.

Investing in Walmart

With all the negative publicity surrounding Walmart, who in their right mind would invest in such a company?

Well, I did. But who ever said I was in my right mind?

In earlier posts, I talked about my expectations of making it big in the stock market with Sears and Kmart. Man, with the popularity of The Sears Catalog and the longevity and recognizability of Kmart under my belt, how can I lose? The bottom line is that I didn't lose.

I didn't win either.

In fact, I was lucky to break even. Those two stocks did so poorly during the 90s that I decided to dump them both once they "climbed back up" to what I bought them for during the late 80s. Lessons learned.

But why Walmart? And why now?

I was at one of those inspirational meetings one year. You know the type. The one where the guy is standing up there expounding on where the industry is going. What's the hottest company and what to avoid. He talked about the big disappointments for which everyone was hoping to make a killing, and of those sleepers of which only the wisest of investors was aware.

The speaker asked a question. "Which Fortune 500 company is poised to overtake General Motors as the largest employer in the United States in the coming months?" he asked. Audience members ventured guesses, but nobody knew the answer.

"Walmart," the man disclosed.

There were a few nods, as if some were saying, "Yeah, I can see that. After all, I know someone who works at Walmart ..." Just like everyone knows someone who works at a McDonalds, Starbucks, or Best Buy.

He continued to tell us how Walmart had become bigger and bigger over the years, all the while wiping the floors with Sears, Kmart, and Target. I thought, "OK, I learned my lesson with Sears and Kmart. Maybe it's time to give Walmart a try. After all, if they are about to overtake GM at something, they must be doing something right. I mean, GM's a big company, aren't they?

So let's buy Walmart

In the winter of 2001, I visited the Walmart Investor's Relations page to see what I would need to do to get started as an investor in Walmart. Turns out if I opted to have regular, direct deposits from my savings or checking account, I could buy shares directly from the on-line broker handling Walmart, Computershare (formerly Equiserve) rather than to need to visit my local discount broker in person.

No need to humiliate myself in front of seasoned brokers commiserating over my measly purchases. Now I could be humiliated remotely - much less personal.

I made my first purchase of Walmart on-line. A short time later, Walmart did indeed overtake GM as the nation's largest employer. So now Walmart is bigger than General Motors for numbers of employees. Can they mimic such superiority in other areas of their business to excel in value to their shareholders?

Time will tell.

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