Why Stock Picking is A Mug’s Game, Part (Chapter) XIII
Looking at the past six months, Sears was outperforming Wal-Mart until mid-December. (Graphic via CNN)
Relevant and even prescient commentary on news, politics and the economy.
Why look at the relative performance of the two stocks? That gives you two degrees of uncertainty to judge by, assuming that by performance you’re referring to the stock prices of the two companies. I wonder what the relative performance would have been if performance were based on basic data such as revenue per store, gross and net incomes, etc.
On the other hand one could have looked at Sears stores during the past few years and drawn the conclusion that the stock was a gambler’s choice. In a word, dreary. That is the interior activities in their stores. And that would be all one has to know to avoid buying Sears shares.
A few years ago, when my 401K was doing nothing encouraging, I asked myself a simple question. What did all the old folks that I knew, aunts, uncles, grands, etc., know that allowed them to live reasonably secure lives in spite of not having worked for a decade or so? Utilities!!! No, there are few public utilities like telephone company and the electric company that had virtual monopolies in their regions, as they once did. But their business was still as basic as one could get. Who is going to live without electricity? I bailed out of the loser mutual fund game, which dominates the 401k and IRA markets, and went electrical utility whole hog. Thank goodness for one smart play in my life time. Think basic needs. As Willie Sutton once said, because that’s where the money is.