Archive for the 'Commentary' Category

Sears and Creative Destruction

Published
by
Doug
on July 16, 2008
in Commentary and Sears
. 0 Comments

Another article on Sears (SHLD), this one from The American. Keeping in line with majority sentiment, the article is mostly negative on Sears’ future. However, I like the article for the fact that it describes the history of Sears and how it once was like the Walmart of the early 20th century, a true innovator in business and retail.

Along with his partner, Alvah Roebuck, Richard Sears opened one of the first mail-order businesses. In 1895, they rolled out their first catalogue, a 532-page behemoth containing thousands of items, enough to supply every need a family could have. Sears was a master marketer, an apostle of advertising, and it pioneered such innovations as the money-back guarantee. By the 1920s, Sears was selling everything from houses (now highly desirable collector’s residences) to violins. Local merchants couldn’t compete, and the culture of mom-and-pop stores was devastated by modern marketing and low prices.

Sears soon branched out to retail stores, which had already started emerging due to growing consumer demand stimulated by the mail-order business. By the eve of World War II, more than 600 Sears department stores dotted the American landscape. Production and distribution systems evolved and multiplied; thousands of smaller producers whose products were carried by Sears found themselves expanding beyond their dreams, providing employment for tens of thousands more workers.

I would agree with the article that Sears has been a victim of its own success and failed to innovate and keep up with its competition, but I also believe there is still some hope that Lampert and management will be able to turn Sears around.

Disclosure: I own SHLD and I also used to work for The American

Unreasonably High Expectations: Viewing Obama Like a Growth Stock

Published
by
Doug
on July 13, 2008
in Commentary, Elections and Politics
. 2 Comments

Writing for American Thinker, Kyle-Anne Shiver describes how McCain could win the election in a landslide victory. The three important factors are time, the anti-Obama vote, and Obama’s own arrogance.

I myself favor McCain, believing he will win a close election. I follow the Intrade prediction markets very closely and right now Obama is trading at 65.3 and McCain at 31.2, which seems very lop-sided to me. With over 100 days to go until election day, this spread has to narrow. People have very high expectations of Obama, and when he is unable to meet those high expectations whenever he makes a mistake or when he breaks another promise (e.g., recently voting for the FISA bill with immunity to the telecoms intact) his ratings will fall dramatically.

I think of Obama like I would a popular growth stock. When investors are irrationally exuberant with their expectations of companies and prescribe unreasonable growth expectations upon a company, when that company fails to meet those expectations, its stock price falls precipitously. The price of the stock will usually fall until it is in line with its fair value. Perhaps it will fall below fair value. I view Obama the same way. No doubt he’s got a great campaign and talks a good talk and he gets a lot of people fired up, but I will be really surprised if he can hold up this sort of popularity until election day.

Overlooked Factors That Have Contributed to the Dollar Demise

Published
by
Doug
on March 26, 2008
in Commentary, Economics and Money
. 0 Comments

Thebulltrader.com has created a list of five overlooked factors that have contributed to the demise of the U.S. currency. They are petrodollars, weather, Wal-mart, the U.S. Treasury Secretary, and public perception. I’m not sure about the weather or Wal-mart, but maybe they are very small factors.