Our stocks picks did fairly well today. Walmart at $65.82 could soon reach a new all-time high surpassing its old record close which was just under $70. If so it has been a long time coming since its record high was in late 1999. But as I have often said that is not Walmart’s fault. Walmart’s earnings per share are up a staggering 370% since 1999. In 1999 the earnings were 99 cents per share. It was sheer investor stupidity that drove its share to almost $70 and more than 70 times earnings in late 1999.
It is not always the case that a company should be blamed for a share price that under-performs. Investors in late 1999 simply drove the share price far too high. Walmart did its job of growing earnings. Companies cannot be responsible for investor stupidity.
Markets continue to be very skittish and unpredictable (in hind sight markets seem like they were more predictable in the past but looking forward they are actually ALWAYS unpredictable). Tomorrow, Friday, the market may focus on the jobs report. As investors we are probably well served to keep our eyes on corporate profitability. We can’t control the markets but we can choose to be invested in stocks that appear to offer good value.
You know, it is fair to say that the 2008 financial crisis was largely precipitated by faulty notions of risk measurement. This continues today as sovereign debt is counted as zero risk for banks. It’s ludicrous. Pension funds and banks rush to put money into long-term government bonds that are guaranteed to be, at best, very mediocre investments. Regulations and faulty notions of risk prevent the banks and pension companies and insurance companies from investing in equity shares which are virtually certain to provide better returns than long-term government bonds in the next two decades or so.