If you own the whole company, you are the only investor that needs to be appeased. If you own 51% of the company, you are the only investor that needs to be appeased. Most investors are not appeased by a status quo investment.
Yes it works for stock investments. The better you can forecast future earnings, the better you can value a stock. Go study for the Chartered Financial Analyst test. It’s all covered there. I’ll be here in the 6 months it takes to cover the subject, plus whatever extra time is needed to build the foundation to understand the subjects covered in the test…
Portfolio managers do not earn their money through commissions and trading activity. Traders do. Portfolio managers != Traders. Portfolio managers are rewarded when they keep commissions and trading expenses down, because they earn their money off of assets under management and, for hedge funds, performance.
Fine. You are still doing worse than if you put that money in a money market fund and withdrew only half annually. You’re losing all compounding.
This point was addressed above by even sven – unsafe streets have a greater impact on urban-storefront shopping (making lots of individual visits to various small specialty shops) than on big-box shopping (making one visit to the big box) because the former exposes you to greater risk:
The former involves going out more often and to more different places.
The latter puts you at a greater distance from the street (behind the humongous parking lot) and under at least nominal store-security cover.
The latter is much more likely to be done by automobile, even if both options are within walking distance – “walking distance” is a lot shorter if you’re lugging your entire week’s food, soap, hardware, etc shopping (the big box) than if you’re lugging one category (the specialty shop).
All the big stores I know of in Manhattan - Staples, Home Depot, Best Buy, the million supermarkets and department stores - have no dedicated parking lots. There are public parking lots and garages nearby, of course. That’s not to say Walmart won’t have any parking. I’m just saying a humongous parking lot doesn’t have to be part of the equation. Also, just because there’s a Walmart doesn’t necessarily mean people are suddenly going to adopt a different (i.e. once a week) shopping routine.
The objective of a business is not to load up on as many employees as possible.
I think people are romantacising inner city small business a bit. In many poor neighborhoods, the only businesses are Quick-Checks, pawn shops, liquor stores and crappy storefronts that look like they don’t sell anything legitimate.
When I lived there I bought my groceries at a chain supermarket – a Publix or Kash ‘n’ Karry or something – that was much like its suburban counterparts except that it was generally very shoddy and run-down, the produce was often not the freshest, and, most strikingly, the front area was fenced in by concrete posts, making it impossible to wheel one’s shopping cart out to one’s parked car; you had to pull your car up to the entrance (and deal with street people offering to help you for tips). I asked, and apparently they had a couple of hundred carts stolen before they put up those posts. (No, I don’t know why anyone would steal a shopping cart. Only homeless people would have any use for them, as far as I can see; and they would only need one apiece.) I also recall a Subway sandwich shop where the prep area and cash register were behind a thick plexiglass shield, money and food were passed through a rotating plexiglass cylinder, and you needed to ask for a key to use the restroom, because they had trouble with junkies using the restroom to fix.
So, I’m not saying Wal-Mart wouldn’t find any customers there, but they might have to make some adjustments in their business model. And they might not get enough paying customers to turn a profit.
Pardon the hijack, but one reason that people steal (or simply borrow) shopping carts from grocery stores is for transportation. If you don’t have a car, and you need to transport a bulky and/or heavy item, a shopping cart is a reasonably convenient (and usually free) conveyance for it. This can solve the basic problem of getting your groceries home, too.
I’ve never owned a car, and I’ve always got my groceries home without relying on the store carts. But once or twice I’ve borrowed a shopping cart from an unfenced parking lot to schlep a piece of furniture or other bulky item. I always bring the cart back, and when possible I pick up an abandoned cart from somewhere on the street rather than taking one off the store premises, so I’m doing the store a net favor by returning it.
But yes, if there are enough people out there who find shopping carts convenient for hauling stuff, and if most of them aren’t as conscientious as I am about always bringing the cart back, the store’s gonna lose its carts unless it adopts security measures to prevent it.
When I was in college (back in the dark ages) it was pretty common for students to walk to the grocery store and then bring the food home in a shopping cart. I suspect that many of the students who did this did not bother to return the cart.
Why do I hate poor people? Maybe a more appropriate question would be: Why does Wal-Mart hate poor people? Maybe if Wal-Mart cared about poor people, they’d pay their employees better. From what I’ve seen, Wal-Mart does a pretty good job of creating and keeping people poor. I really fail to see how putting Wal-Marts in inner cities is going to help them in the long run. PBS story Interesting study by UC Berkeley Labor Center
Even assuming you are right and Walmart pays its employees rock bottom (even criminal) prices for their labor aren’t more poor people helped out by the low prices on goods that Walmart gives? Are you saying then that Walmart should raise their wages (for a small percentage of poor people) while also raising their prices (which would effect a much larger percentage of poor people adversely)?
I would think the you guys would be happy with Walmart…the Greater Good™ and all that.
-XT
p.s. Realize this is a joke. I’m well aware that your probable preference would be for Walmart to raise their wages and lower their prices and boldly go out of business with their head held high and the nobility of purpose strong on their lips…
Given WalMart’s massive profitability, they could actually afford to raise wages and lower prices somewhat without going out of business.
Are they? How much money would you have to save on groceries before the savings made up for a cut in your wages? If your friends and neighbors were saving money on groceries, would you consider that that helped make up for the cut in your wages, and if so, how much?
Exactly. It is possible to pay employees enough to get them above the poverty line without going under. See: Costco.
Also: How much are you really saving by buying your groceries at Wal-Mart when as taxpayers you’re helping Wal-Mart pay for the healthcare it should be providing its employees but does not?
Logical question then Kimstu…there are stores that offer better wages than Walmart. Why are their prices higher? Or to put it a different way, if its so massively profitable for Walmart to offer low prices and low wages, why doesn’t someone come in and offer LOWER prices…or perhaps prices as low but with better wages (better PR)?
Well of course I would…and I’m hardly alone. Perhaps you’ve noticed that Walmart is not on the brink of bankruptcy due to lack of customers? I think most people look at the matter more practically. The folks at Walmart aren’t slaves. They aren’t indentured servants. They CHOSE to work there. So…if me, a blue collar worker, can save $50/week on groceries (or other odds and ends) compared to going somewhere else, but if that (supposedly) costs the folks working at Walmart something in wages…well, thats THEIR choice. My own is driven by my own needs…or to put it bluntly by my selfish needs and the selfish needs of my family.
(understand this is hypothetical…I’m neither a blue collar worker nor do I generally shop at Walmart. I hate the crowds and I hate the poor service…and frankly I’m willing to pay more to get better service and less crowd/less waiting)
For the year ended 31-Jan-2006:
(in billions)
Revenues: $315.7
Operating income: $18.5
That means that a operating profit margin of less than 6% on sales (which would make most supermarkets giddy).
Add in:
Net Income: $11.2
That’s a 3.5% net profit margin.
Moral: Don’t just look at the big numbers. Look at what they relate to. Consider every corner Wal-Mart has to cut to earn a mere 3.5% on sales. There really is no room for Wal-Mart to increase its expenses without increasing prices (or finding further operational efficiencies). 37% of their shares are owned by institutional investors and mutual funds. You, as CEO, try telling them you are going to decrease your profit margin purposefully. That’s not going to happen.
Wal-Mart has shown the same thing no-frills airlines have. No matter how poor the service, people will flock in huge numbers to the lowest price (and then complain about the service). Personally, I’m a believer of “you get what you pay for.” It’s why I don’t shop at Wal-Mart, and Mrs. D_Odds had to drag me kicking and screaming to get on a Spirit Air (motto: Greyhound with Wings but not the Service) flight.
As yellowval pointed out, there are some large retailers, such as Costco, that offer low prices (although not perhaps as rock-bottom as WalMart’s) along with much better wages and benefits for workers. They simply don’t make as much in profits.
Sorry, but I don’t understand your answer. Are you saying you do consider that other people’s saving money on prices helps compensate for your own wage cut, or that you don’t?
Why should WalMart be providing healthcare for its employees? It certainly would be a nice thing to do, but it would also be nice for them to provide houses, cars, and food for their employees, too.
BTW, it’s not a true statement that WalMart does not provide healthcare for its employees. It might not provide the kind of healthcare you think it should provide, but that’s a different debate.
Yes, they do provide company health insurance to some. About 48% are covered by company health insurance. Wal-Mart associates pay about 34% plus deductible.
You ask why Wal-Mart should provide healthcare for its employees, and I ask why should I provide healthcare for its employees?
I think the point is simply that if WalMart doesn’t provide these things, and doesn’t provide enough money in the form of wages for employees to provide these things for themselves, then communities and governments have to provide them in the form of tax-subsidized social benefits. Essentially, governments are subsidizing WalMart’s low wages, which means that their low prices in the long run aren’t that cheap after all.
There was a thread on here not too long ago (it might have been in IMHO, now that I think about it, I would search, but this site, like always, is running really slow for me). Someone posted the difference between Costco and Walmart and showed how difficult it was for Walmart to make profit (it might have even been D_Odds).
Anyway, the point I wanted to make was that Costco and Walmart numbers are not a fair comparrison. The numbers are comparing Costco (a warehouse club with paying members) and Walmart - which your site has numbers that combine their crappy warehouse (Sam’s Club) along with their free to public Walmart stores. Costco can afford to run a union along with their wages mainly because of their $40 membership fee (which I thankfully do not pay – thanks work!), I suspect. Also, Costco and Sam’s Club are in two different markets. Sams Club is just huge bulk discount on popular items, and whatever discount they can exploit the most. Costco, arguably, has higher end products, but with roughly the same price exploitation – which is why you can argue that Costco sells more per sales space, i.e. American’s paying for membership are more likely to be wealthy enough to pay for better products.
Leaving aside that Costco doesn’t have the same business model as Walmart, if they offer lower prices and still have better wages/benifits than Walmart then simply allow the market to work…and eventually Costco will reign supreme and Walmart will become the new K-Mart. Right?
Yes, thats exactly what I’m saying. When I take a job (in theory) at Walmart I’m making a determination of the value of my labor with respect to my own situation…I’m not thinking one way or the other about how this effects the customers. Just like when THEY buy stuff from Walmart THEY aren’t thinking about MY needs or the value of my labor…they are thinking about whats best for THEM.
Its really quite basic. Let me ask you a question Kimstu…when you shop, do you think about each product or where you shop based on the needs and wants of your fellow man? Or do you shop and buy things based on your own needs/wants? Be honest here.
I’ll answer my own question honestly…when I shop I do so based on what I want. I don’t shop at Walmart because to me price isn’t the main consideration…I want quality of service and am willing to pay more for it. The fact that the places I patronize also may have better wages/benifits never really comes into the equation as far as I’m concerned…its more along the line of a nice side benifit I suppose (if I ever really even thought about it…which I don’t). Am I harsh? Perhaps. But then, MY customers never really consider my needs or wants, my wages or benifits or those of the employees who work for my company…all they care about is getting good service at a reasonable price.
It’s quite true that WalMart and Costco have very different business models in some respects. But so what? Nobody is forcing WalMart to use its current business model.
And if you’re arguing, like WillMagic, that you have to support WalMart’s current business model because otherwise you must hate poor people who are saving all that money on groceries, I’m just pointing out that it’s not necessarily such a savings if it’s costing them money in other respects.
