Sears, a 125 year old company is now a penny stock.

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nisiprius
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Re: Sears, a 125 year old company is now a penny stock.

Post by nisiprius » Sat Sep 29, 2018 7:03 pm

Elbukari wrote:
Sat Sep 29, 2018 5:57 pm
The fate of many retail stores.

If you could somehow virtually try on a pair of shoes (i donno...scan your foot somewhere) and have a 95% accuracy rate, that would remove nearly most shoe sections in stores. Knowing the shoe size isn't enough in my opinion because even if they fit they may not be comfortable depending on the manufacturer.
Don't get me started. Too late. Even knowing that a specific size, width, and model is comfortable, if you buy "the same" shoes again from the same company, if the country of origin has changed, the fit often changes. And nowadays the country of origins seems to change every few years. I don't know why. You'd think they could ship exact copies of the lasts and send in some QA people to make sure they were making them to fit the same. My tentative conclusion is that shoe companies don't actually care if the fit stays consistent from year to year.
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Re: Sears, a 125 year old company is now a penny stock.

Post by UpperNwGuy » Sat Sep 29, 2018 7:05 pm

nisiprius wrote:
Sat Sep 29, 2018 7:03 pm
Elbukari wrote:
Sat Sep 29, 2018 5:57 pm
The fate of many retail stores.

If you could somehow virtually try on a pair of shoes (i donno...scan your foot somewhere) and have a 95% accuracy rate, that would remove nearly most shoe sections in stores. Knowing the shoe size isn't enough in my opinion because even if they fit they may not be comfortable depending on the manufacturer.
Don't get me started. Too late. Even knowing that a specific size, width, and model is comfortable, if you buy "the same" shoes again from the same company, if the country of origin has changed, the fit often changes. And nowadays the country of origins seems to change every few years. I don't know why. You'd think they could ship exact copies of the lasts and send in some QA people to make sure they were making them to fit the same. My tentative conclusion is that shoe companies don't actually care if the fit stays consistent from year to year.
Yes, that is the TRUTH.

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Re: Sears, a 125 year old company is now a penny stock.

Post by cashmoney » Sat Sep 29, 2018 7:36 pm

lostdog wrote:
Sat Sep 29, 2018 4:56 pm
My wife and I were at the mall today and walked through Sears. It was depressing because barely anyone was there and the store looks old and out of date.

Right on it kind of reminds me of walking through JC Penneys

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Re: Sears, a 125 year old company is now a penny stock.

Post by Wagnerjb » Sat Sep 29, 2018 10:39 pm

arcticpineapplecorp. wrote:
Fri Sep 28, 2018 8:00 pm

A cautionary tale about buying individual stocks, no matter how long they've been around.
I think what you mean is "a cautionary tale about the importance of diversifying". Buying an index fund is nothing more than buying a bunch of individual stocks.

You said it more clearly at the end of your post:
The three most important things when it comes to investing is diversify, diversify, diversify."
Best wishes.
Andy

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Re: Sears, a 125 year old company is now a penny stock.

Post by mindboggling » Sun Sep 30, 2018 5:37 am

My first piece of plastic was a Sears charge card back around 1975. I had just graduated from college and couldn't qualify for anything else yet.
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Re: Sears, a 125 year old company is now a penny stock.

Post by ddurrett896 » Sun Sep 30, 2018 6:31 am

[quote=Elbukari post_id=4141809 time=1538261832 user_id=132041]
If you could somehow virtually try on a pair of shoes (i donno...scan your foot somewhere) and have a 95% accuracy rate, that would remove nearly most shoe sections in stores. Knowing the shoe size isn't enough in my opinion because even if they fit they may not be comfortable depending on the manufacturer.
[/quote]

Zappos solves that. Buy a couple similar sizes, return the ones that don’t fit for free.

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Re: Sears, a 125 year old company is now a penny stock.

Post by Elbukari » Sun Sep 30, 2018 10:53 am

ddurrett896 wrote:
Sun Sep 30, 2018 6:31 am
Elbukari wrote:
Sat Sep 29, 2018 5:57 pm
If you could somehow virtually try on a pair of shoes (i donno...scan your foot somewhere) and have a 95% accuracy rate, that would remove nearly most shoe sections in stores. Knowing the shoe size isn't enough in my opinion because even if they fit they may not be comfortable depending on the manufacturer.
Zappos solves that. Buy a couple similar sizes, return the ones that don’t fit for free.
I was talking to a coworker who does this with clothes. She orders a whole bunch of different sizes and then just returns whatever she doesn't like or doesn't fit to her liking for free. Perhaps it's just me, but its a hassle even returning things for free. If they gave me a box with a return address labeled, I still have to take it to the postal office and I don't want to do that. On the other hand, if an Amazon drone picked it up for me from my house, that would be a different story.

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Re: Sears, a 125 year old company is now a penny stock.

Post by dknightd » Sun Sep 30, 2018 11:02 am

Trust me. Somebody made money on Sears.

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Re: Sears, a 125 year old company is now a penny stock.

Post by arcticpineapplecorp. » Sun Sep 30, 2018 7:52 pm

Wagnerjb wrote:
Sat Sep 29, 2018 10:39 pm
arcticpineapplecorp. wrote:
Fri Sep 28, 2018 8:00 pm

A cautionary tale about buying individual stocks, no matter how long they've been around.
I think what you mean is "a cautionary tale about the importance of diversifying". Buying an index fund is nothing more than buying a bunch of individual stocks.

You said it more clearly at the end of your post:
The three most important things when it comes to investing is diversify, diversify, diversify."
Best wishes.
perhaps I have it reversed. Instead of saying "Don't buy individual stocks" I should have said "Don't buy stocks individually." Does that better capture the essense?

When I say "Don't buy individual stocks" what I really mean is to suggest in conrast to "Buy the market" (which means don't buy them individually, own them all". I could have also said, "Don't buy individual stocks, buy the stock market"

language can be a difficult and confusing thing. Thanks.

And to those who corrected my morningstar graph/data I appreciate it. I didn't dig enough before posting. I thought it seemed weird, I assumed it would have been public for much longer, but when the data isn't showing from morningstar, I just use what they have instead of digging further, which I should have. Ultimately, it doesn't change the central premise which is how risky individual stocks can be no matter how large they are, or how long they've been around and why it's safer to own the market in its entirety.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Re: Sears, a 125 year old company is now a penny stock.

Post by abuss368 » Sun Sep 30, 2018 9:29 pm

At some point in the future the stock certificates will be available on ebay.
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Re: Sears, a 125 year old company is now a penny stock.

Post by whodidntante » Sun Sep 30, 2018 9:55 pm

I've had great success exploiting their freecash and points systems to get items I need for very little money. Apparently their business model is to import things from China and ship it to my home for very little money. Good times, but I don't see it lasting.

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Re: Sears, a 125 year old company is now a penny stock.

Post by MossySF » Sun Sep 30, 2018 10:21 pm

criticalmass wrote:
Sat Sep 29, 2018 4:53 pm
This article from last year is very illustrative about what is going on inside Sears. Some investors (e.g. CNBC's Jim Cramer) thought that Fast Eddie would transform Sears into some sort of real estate hedge fund while turning the retail around. But instead, Sears has a CEO who terrorizes the senior executives in Illinois via VTC from his south Florida palace until the talent is gone.
https://www.businessinsider.com/sears-f ... ces-2017-1
In the early 2000s, I bought into this hype.

Luckily, I found Bogleheads in 2006 and sold my SHLD stock off at it's peak.

But the truth is CEO Eddie Lampert did exactly as the financial press said he would ... run it like a freaking hedge fund because in hedge funds, the people running it benefit, not you.

Yes, big brick-n-mortar retailers are having a tough time and it's doubtful they will ever return to their heights. But how many totally imploded so fast like Sears? For this, you can put it squarely at the feet of CEO Eddie Lampert. In most other companies, the shareholders/board can change CEOs after a few years of utter failure (abeit with a golden parachute) but since ESL owns 55% of Sears, Sears has no choice but to continue down its death march.

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Re: Sears, a 125 year old company is now a penny stock.

Post by corpgator » Sun Sep 30, 2018 10:58 pm

Don't worry, Eddie the Vampire will continue sucking it dry while whining about how hard it is until it's not even a penny stock. There really should be no 5 year limitation on suing these hedge funds that purposely load companies up with debt to pay themselves with every intention of bankrupting the company eventually.

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Re: Sears, a 125 year old company is now a penny stock.

Post by criticalmass » Mon Oct 01, 2018 12:06 am

corpgator wrote:
Sun Sep 30, 2018 10:58 pm
Don't worry, Eddie the Vampire will continue sucking it dry while whining about how hard it is until it's not even a penny stock. There really should be no 5 year limitation on suing these hedge funds that purposely load companies up with debt to pay themselves with every intention of bankrupting the company eventually.
I'm still not sure what Fast Eddie's end game is.
1.) Takeover company, run Sears as a hedge fund vehicle
2.) Run company into ground, terrorize executive talent until gone
3.) Sell off real estate to keep some cash flow while busy executing #2.
4.) Apply for bankruptcy.
5.) Buy damaged Kenmore brand to wound that more too
5.) Profit ????

Maybe he can make a deal with Carl Icahn.

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Re: Sears, a 125 year old company is now a penny stock.

Post by Valuethinker » Mon Oct 01, 2018 2:48 am

criticalmass wrote:
Mon Oct 01, 2018 12:06 am
corpgator wrote:
Sun Sep 30, 2018 10:58 pm
Don't worry, Eddie the Vampire will continue sucking it dry while whining about how hard it is until it's not even a penny stock. There really should be no 5 year limitation on suing these hedge funds that purposely load companies up with debt to pay themselves with every intention of bankrupting the company eventually.
I'm still not sure what Fast Eddie's end game is.
1.) Takeover company, run Sears as a hedge fund vehicle
2.) Run company into ground, terrorize executive talent until gone
3.) Sell off real estate to keep some cash flow while busy executing #2.
4.) Apply for bankruptcy.
5.) Buy damaged Kenmore brand to wound that more too
5.) Profit ????

Maybe he can make a deal with Carl Icahn.
He would see it that he was applying the merits of a free market approach to allocation of resources within the company - turning it into an internal market.

See one of the Koch brothers who wrote a book about how they run Koch Industries that way - required reading for employees, I gather.

He will make his return by stripping cash out of the business. Kenmore brand will at some point be sold to the Chinese, I imagine.

Hedge fund managers are not short of ego. Success is never the result of "good luck" it is skill. Failure is never the result of personal bad decisions, but of forces outside the control of the executive. You see similar patterns of self belief in the top executives in any industry or area of life.

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Re: Sears, a 125 year old company is now a penny stock.

Post by MossySF » Mon Oct 01, 2018 2:55 am

Eddie Vampert has a plan to convert Sears debt that will net ESL another $1B in profits. What'll it do regular Sears shareholders -- well tough luck.

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Re: Sears, a 125 year old company is now a penny stock.

Post by donfairplay » Mon Oct 01, 2018 2:55 am

Image

Eddie Lampert in happier, more innocent times. It's hard to remember that he was once a toast of the town.

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Re: Sears, a 125 year old company is now a penny stock.

Post by JoMoney » Mon Oct 01, 2018 3:03 am

Valuethinker wrote:
Mon Oct 01, 2018 2:48 am
... Hedge fund managers are not short of ego. Success is never the result of "good luck" it is skill. Failure is never the result of personal bad decisions, but of forces outside the control of the executive ...
There would seem to be an internal conflict with those two aspects ;)
As far as I can tell, it all seems to center around taking on huge amounts of debt leveraging things up, convincing someone else to hold the risk, if they can make it work the payoff is big, if it doesn't they walk away and the debt holders are left holding the bag. The "skill" is in the persuading others to bear the risk of a "heads I win, tails you lose" situation.
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Re: Sears, a 125 year old company is now a penny stock.

Post by Valuethinker » Mon Oct 01, 2018 4:03 am

JoMoney wrote:
Mon Oct 01, 2018 3:03 am
Valuethinker wrote:
Mon Oct 01, 2018 2:48 am
... Hedge fund managers are not short of ego. Success is never the result of "good luck" it is skill. Failure is never the result of personal bad decisions, but of forces outside the control of the executive ...
There would seem to be an internal conflict with those two aspects ;)
As far as I can tell, it all seems to center around taking on huge amounts of debt leveraging things up, convincing someone else to hold the risk, if they can make it work the payoff is big, if it doesn't they walk away and the debt holders are left holding the bag. The "skill" is in the persuading others to bear the risk of a "heads I win, tails you lose" situation.
This is a way a lot of famous people in real estate have made their fortunes -- leverage up, take fees, walk away if it goes bad.

He really believed in his internal reorganization measures, making each part of the company compete against the others for resources.

I think what he missed is that might well work in oil refining, where there are huge barriers to entry (and a tradition of vertical integration). Divisions of Sears did not cooperate to solve common problems.

In retail, in the US, stores had a locational advantage (but distances people will drive are much greater than in other countries). However the Big Box stores can source their stuff (even) more cheaply than you can - you lose the advantage of selling scale in terms of sourcing. And the likes of Amazon can compete with you anywhere, without buying space in the malls.

Sears was an artefact of an older era - the rapid demographic and income growth of postwar America and the burgeoning middle classes buying fridges, air conditioners etc. Of a homogeneity in consumption tastes and decisions. It made the jump from catalogue retailing to the world of the postwar shopping mall.

But the shopping mall is now over (transformed into a leisure-entertainment centre). Even the era of the Big Box is losing its allure (new growth at least). The consumer is more segmented - you have to narrowcast to specific demographics. Growth is slower.

Add to that the layer of financial engineering he put it, and you have the recipe for disaster. It's possible to survive in a declining industry, even to make good money but financial engineering (selling off the rights for streams of cash flow to different holders) hampers your ability to react and defocuses you.

He may be good for his investors. He is not good for Sears as a business. Should have thrown in his cards long ago, when it was clear his reforms were not working.

Shrug. He will attribute failure to factors beyond his control ;-).

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Re: Sears, a 125 year old company is now a penny stock.

Post by DartThrower » Mon Oct 01, 2018 7:26 am

Bacchus01 wrote:
Sat Sep 29, 2018 2:19 pm
socaldude wrote:
Sat Sep 29, 2018 1:40 pm
Even before the Internet, maybe early 80's (late 70's ? ) Sears management starting driving their stores into the ground. True of many retail companies, they cut wages and try to sell you cheap crap on every aisle. You can watch greed slowly destroy great companies. I have bought Kenmore and Craftsman for 40 years, it is sad. The local JC Penneys has been remodeled (by some idiot consulting co. I'm sure... it's a maze) and it's a poor excuse for a store, like Walmart poor or no training and low wages, they love desperate poor workers, service is such a rare thing...they drive you to the internet.
Sounds like political ranting, not facts
I think it has to be recognized that these retailers were in a Catch-22 situation. If you pay higher wages and provide great training, the internet retailers crush you on price. If you provide poor training and low wages and cheap products, you get crushed on customer satisfaction. I was one of those customers deeply dissatisfied with my experience at Sears for about the last 10 years.

I'm sure that the rise of financialization hasn't helped better manage the retailers either. It is probably much more lucrative to manage their slow demise instead of working to make them great companies again somehow.

This article from Knowledge at Wharton discusses the issue:

http://knowledge.wharton.upenn.edu/arti ... -business/


With regard to the decline of Ford Motor Company, Rana Foroohar writes:
Eventually, this disconnect from core product and value came back to haunt Ford and other companies driven by finance. A famous Harvard Business Review article from 1980, “Managing Our Way to Economic Decline,” dates falling investment in research and development back to the mid-1960s. Increasingly, the authors found, U.S. companies focused on “sophisticated and exotic” management of their growing cash reserves, grew preoccupied with cost-cutting measures, and treated “technological matters simply as if they were adjuncts to finance or marketing decisions.”
To some extent I think Sears and other companies like it started to treat the value proposition to their customers as an adjunct to finance or marketing decisions.
A Boglehead can stay the course longer than the market can stay irrational.

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Re: Sears, a 125 year old company is now a penny stock.

Post by Strayshot » Mon Oct 01, 2018 7:37 am

nisiprius wrote:
Sat Sep 29, 2018 7:03 pm
Elbukari wrote:
Sat Sep 29, 2018 5:57 pm
The fate of many retail stores.

If you could somehow virtually try on a pair of shoes (i donno...scan your foot somewhere) and have a 95% accuracy rate, that would remove nearly most shoe sections in stores. Knowing the shoe size isn't enough in my opinion because even if they fit they may not be comfortable depending on the manufacturer.
Don't get me started. Too late. Even knowing that a specific size, width, and model is comfortable, if you buy "the same" shoes again from the same company, if the country of origin has changed, the fit often changes. And nowadays the country of origins seems to change every few years. I don't know why. You'd think they could ship exact copies of the lasts and send in some QA people to make sure they were making them to fit the same. My tentative conclusion is that shoe companies don't actually care if the fit stays consistent from year to year.
Carbon ( Carbon3d.com ) is 3D printing soles custom to the consumers feet for Adidas. Info on their website. Very cool stuff!

Back on topic, Sears has been in a prolonged death spiral for years. I should have been shorting all along the way. All of the good retail space they owned has been sold off, otherwise I could see a play by some other retailer to acquire them just for the buildings they have left (maybe that will still happen, but they would have to also deal with other sears baggage). Kmart was a dead company, and having one dead company buy a dying company never turns out well.

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Re: Sears, a 125 year old company is now a penny stock.

Post by CyclingDuo » Mon Oct 01, 2018 8:32 am

gd wrote:
Sat Sep 29, 2018 7:39 am
I don't see this as a cautionary tale in common stocks at all, just a lesson in paying attention. For the first half of my life Sears was my "go-to" store for just about everything- clothing, housewares, I had nothing but Kenmore & Craftsman, didn't even shop elsewhere. After bad experiences, first I stopped buying their work clothes, then their appliances. That got me in to other stores, and the spell was broken. I don't know if they could have survived the big-box trend, in fairness probably not, but I would have continued a loyal customer if justified. If I'd owned their stock, I'd have sold it 7-8 years ago when I threw out the 3-year-old lawnmower and dehumidifier.
Don't you think it was over LONG before 7-8 years ago?

Walmart, Home Depot, Lowes, Best Buy, Bed Bath and Beyond, Toro, Stihl, and every decent clothing line company and retail department clothing store blew Sears out of the water what seems to me like at least two, if not three decades ago. Tools and household appliances were about all that Sears even had left in their portfolio the past 10 years (if even then before the sale of Craftsman in 2017) to hang on to for as long as possible. Globalization wiped out any appliance advantage Sears once owned. The rest of the Sears store was like a graveyard and has been for at least 20 years. Sears simply got overwhelmed and outdone by other shopping experiences from companies who were able to attract consumers for the same types of products in a way that Sears just could not match.

Think of your own shopping habits over the past two decades, and compare how often you set foot in a Walmart, Home Depot, Best Buy, Lowes, retail clothing store, Bed Bath and Beyond, Williams Sonoma, automotive parts store, quick oil change place, discount tire shop, Toro lawn and garden store, etc... compared to Sears because the experience and the products were more attractive to your consumption.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Sears, a 125 year old company is now a penny stock.

Post by MichCPA » Mon Oct 01, 2018 9:09 am

Watty wrote:
Sat Sep 29, 2018 6:23 am

+1

Sears is as much a victim of being a leveraged buyout that gutted the company as changing times.
Yep, same story as Toys R Us. You can't rely on financial engineering to bring long term prosperity to a company. I don't understand why the financiers of LBOs haven't placed more scrutiny on deals for more capital intensive (brick and mortar first) retailing.

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Re: Sears, a 125 year old company is now a penny stock.

Post by Watty » Mon Oct 01, 2018 9:15 am

MichCPA wrote:
Mon Oct 01, 2018 9:09 am
Watty wrote:
Sat Sep 29, 2018 6:23 am

+1

Sears is as much a victim of being a leveraged buyout that gutted the company as changing times.
Yep, same story as Toys R Us. You can't rely on financial engineering to bring long term prosperity to a company. I don't understand why the financiers of LBOs haven't placed more scrutiny on deals for more capital intensive (brick and mortar first) retailing.
The people doing the LBO usually do very well even though the companies do not survive.

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Re: Sears, a 125 year old company is now a penny stock.

Post by AnalogKid22 » Mon Oct 01, 2018 9:20 am

Toys R Us, now Sears. There will be many more. The Sears near me took up two floors in the town mall and is now only a single floor with maybe 1/3 the merchandise.
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Re: Sears, a 125 year old company is now a penny stock.

Post by Whakamole » Mon Oct 01, 2018 10:22 am

MossySF wrote:
Sun Sep 30, 2018 10:21 pm
criticalmass wrote:
Sat Sep 29, 2018 4:53 pm
This article from last year is very illustrative about what is going on inside Sears. Some investors (e.g. CNBC's Jim Cramer) thought that Fast Eddie would transform Sears into some sort of real estate hedge fund while turning the retail around. But instead, Sears has a CEO who terrorizes the senior executives in Illinois via VTC from his south Florida palace until the talent is gone.
https://www.businessinsider.com/sears-f ... ces-2017-1
In the early 2000s, I bought into this hype.

Luckily, I found Bogleheads in 2006 and sold my SHLD stock off at it's peak.

But the truth is CEO Eddie Lampert did exactly as the financial press said he would ... run it like a freaking hedge fund because in hedge funds, the people running it benefit, not you.

Yes, big brick-n-mortar retailers are having a tough time and it's doubtful they will ever return to their heights. But how many totally imploded so fast like Sears? For this, you can put it squarely at the feet of CEO Eddie Lampert. In most other companies, the shareholders/board can change CEOs after a few years of utter failure (abeit with a golden parachute) but since ESL owns 55% of Sears, Sears has no choice but to continue down its death march.
I don't see this.

Look at all the other once great department stores and how they have fared. Montgomery Wards declared bankruptcy in 2000. Regional chains like Best, Ames, Gottschalks, Bon-Ton, gone. Macy's is closing stores, JC Penney's is closing stores. If you take a wider look at retailers, Toys R Us was once dominant and now they are gone.

Brick and mortar retailing has been on the ropes for a long time. If Sears was the sole company dying, by all means blame the CEO. If the industry is dying, I'm not sure if even <insert name of your favorite CEO> could have done anything.

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Re: Sears, a 125 year old company is now a penny stock.

Post by Herekittykitty » Mon Oct 01, 2018 10:26 am

DartThrower wrote:
Mon Oct 01, 2018 7:26 am
.....
To some extent I think Sears and other companies like it started to treat the value proposition to their customers as an adjunct to finance or marketing decisions......
Makes sense to me.

I'm wondering too if the employee experience is also an adjunct and if so, if that itself impacts the customer.

Also: Years ago when gender discrimination was still legal, I was studying economics in a junior college while my husband was in Viet Nam. The professor told the class Sears had asked for students interested in management trainee positions to apply. I arrived to apply and was not allowed to, "We're looking for men only." I asked why, and they launched into a bunch if reasons that made no sense. I asked what I could apply for and they said I could apply for a secretarial position, but I already had a secretary/bookkeeper position for another company and was put off by not being allowed to apply for the management position anyway. I left Sears and never over the decades since have I even walked into one. I would buy used Sears products occasionally after that, but not directly from Sears. Years and decades went by, I raised a family, worked as a secretary/bookkeeper and sometimes some blue collar jobs, and finally was able to go to college, then medical school, and am now a practicing physician. Never once stepped into Sears in all those years. What happened to me there may have been the culture everywhere but that's where it happened to me.

Once I did wander into a K-Mart not realizing the connection between them, but it was dirty and disorganized with indifferent staff and at checkout I was asked, "Do you want to put it on your Sears card?" and I never went back (not that I ever did go into K-Marts much before, as I didn't care for the dirt and disorganization and so on.)

I did continue over the decades to frequent department stores and similar, even when the Internet brought the possibility of quick delivery from Amazon and so on, because I liked the experience. It was good to be in a physical location where I could see and feel the merchandise, try on clothes, and there would be a knowledgeable salesperson readily available who could explain the merchandise when needed, offer educated opinions, and even help me pick clothes that fit and would look good on me. And what I wanted was easily available in store or occasionally if not, it would be ordered for me by the store. You could tell the quality of the merchandise, and generally it was made in the USA. Once those good aspects of the department store experience trickled away, I pulled back on going into the stores and now rarely do.

So overall, basically department stores and similar and the experience and quality that brought me into them - well, I didn't leave them, they left me. And I resort to the Internet, such as Amazon and eBay. I have voted with my feet because the experience in the department stores and similar is no longer pleasant. And because if the merchandise offered is not made in the USA, well, neither is the merchandise in the stores. I don't enjoy ordering online, I just do it because the alternative is less pleasant.

I do regret seeing the demise of all those stores, though. And I can't help thinking if employees were consistently well trained and incentivized for good customer service, merchandise of consistently good quality, and the experience overall good, and had the companies gotten on top of integrating technology with the experience, that they could survive. (For example, say a customer wants a particular item that isn't in the store the customer goes in, don't send the customer running all over town between stores - have a rapid delivery system from a central warehouse to the store and from other stores to the store where the customer wants to get it or even to the customer's home - rapid as in within hours. And call or text the customer after delivery to see how their experience went. )

I'm not a business person (although it interested me in my younger years), so I can just reflect on my own experience over the years.

ETA: Let me make my post actionable by asking: How about names of department and other stores with good customer experience and likely to stay in business - i.e. that are bucking the trend? I'd like to give them a try. (For shopping, not for investing outside of what the index provides.)
I don't know anything.

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JoMoney
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Re: Sears, a 125 year old company is now a penny stock.

Post by JoMoney » Mon Oct 01, 2018 11:13 am

Herekittykitty wrote:
Mon Oct 01, 2018 10:26 am
... How about names of department and other stores with good customer experience and likely to stay in business - i.e. that are bucking the trend? I'd like to give them a try. (For shopping, not for investing outside of what the index provides.)
Costco is the only large department store I shop at that has decent customer service, but the 'store experience' leaves something to be desired.
Walmart is lousy all-around, but it's usually cheapest and most convenient, hard to beat them on price.
I like Target, it's competitively priced and as convenient as Walmart, and I don't feel dirty after going there... but they seem to be struggling more than Walmart.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Sears, a 125 year old company is now a penny stock.

Post by Wagnerjb » Mon Oct 01, 2018 8:34 pm

arcticpineapplecorp. wrote:
Sun Sep 30, 2018 7:52 pm

perhaps I have it reversed. Instead of saying "Don't buy individual stocks" I should have said "Don't buy stocks individually." Does that better capture the essense?

When I say "Don't buy individual stocks" what I really mean is to suggest in conrast to "Buy the market" (which means don't buy them individually, own them all". I could have also said, "Don't buy individual stocks, buy the stock market"

language can be a difficult and confusing thing. Thanks.
I don't think you understood my point. Let me restate. The problem is not with individual stocks, it is with the lack of diversification. You could buy 35 large cap individual stocks (as done by the mutual fund BRLIX) and your performance would likely match that of the Vanguard Large Cap index fund. (Yes, they essentially tied over 10 years).

You can achieve diversification by purchasing individual stocks, but that obviously isn't the recommended course of action on this forum. But it is important to understand the proper strategy. The proper strategy is to diversify adequately, not necessarily to buy an index fund. Owning an "index fund" that its based on a very narrow slice of the market isn't a good strategy either.

Best wishes.
Andy

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Re: Sears, a 125 year old company is now a penny stock.

Post by DartThrower » Wed Oct 03, 2018 7:23 am

And here's a followup article on Sears. Each new article sounds more like an epitaph than an analysis.

http://knowledge.wharton.upenn.edu/arti ... 2018-10-02

To make this actionable, what impact would this have on malls? Will repurposing happen quickly enough and effectively enough to save most of them?

REITs look so undervalued and then you read things like this...

Quoting Mark Cohen, a former chairman and CEO of Sears Canada, Lazarus Department Stores and Bradlees:
As Sears closes more and more stores, it will accelerate the secular decline of malls across the country. Cohen said between 800 and 1,000 malls are “at risk” across the country. “The majority of them are in trouble and aren’t going to extract themselves because they don’t have enough economic energy to warrant the reinvestment that would be required.
A Boglehead can stay the course longer than the market can stay irrational.

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Re: Sears, a 125 year old company is now a penny stock.

Post by Valuethinker » Wed Oct 03, 2018 3:58 pm

JoMoney wrote:
Mon Oct 01, 2018 11:13 am
Herekittykitty wrote:
Mon Oct 01, 2018 10:26 am
... How about names of department and other stores with good customer experience and likely to stay in business - i.e. that are bucking the trend? I'd like to give them a try. (For shopping, not for investing outside of what the index provides.)
Costco is the only large department store I shop at that has decent customer service, but the 'store experience' leaves something to be desired.
Walmart is lousy all-around, but it's usually cheapest and most convenient, hard to beat them on price.
I like Target, it's competitively priced and as convenient as Walmart, and I don't feel dirty after going there... but they seem to be struggling more than Walmart.
Their expansion into Canada (Target that is) was a case study in mismanagement and management delusion.

Nordstrom is the department store with the higher level of customer service? But the price points are on a different plane.

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Re: Sears, a 125 year old company is now a penny stock.

Post by Valuethinker » Wed Oct 03, 2018 4:10 pm

DartThrower wrote:
Wed Oct 03, 2018 7:23 am
And here's a followup article on Sears. Each new article sounds more like an epitaph than an analysis.

http://knowledge.wharton.upenn.edu/arti ... 2018-10-02

To make this actionable, what impact would this have on malls? Will repurposing happen quickly enough and effectively enough to save most of them?

REITs look so undervalued and then you read things like this...

Quoting Mark Cohen, a former chairman and CEO of Sears Canada, Lazarus Department Stores and Bradlees:
As Sears closes more and more stores, it will accelerate the secular decline of malls across the country. Cohen said between 800 and 1,000 malls are “at risk” across the country. “The majority of them are in trouble and aren’t going to extract themselves because they don’t have enough economic energy to warrant the reinvestment that would be required.
I think the mall has passed its peak in America. The US has something like 60% (? more?) more retail space per capita than any other country, even Canada.

Malls that transform themselves into "entertainment destinations" probably have a future. I gather new malls are outdoor malls, generally, as well.

Otherwise it's transform the real estate. I have heard of them being turned into indoor play centres (skateboards, etc.), offices for tech startups, marijuana grow ops (this was in Canada ;-)). In cities where housing land is at a premium, one can see them getting converted into residential.

Some exceptions:

- places where the weather is really severe. Mall of the Americas in Minnesota and West Edmonton Mall in Alberta come to mind. Even hopping between big box stores when it is -40 out seems difficult. Or 100 F in Phoenix, say

- if you are looking for a group in America that has growing families that buy lots of things malls sell, consumes like a family, shops like a family then it is 1st generation immigrants. The clip I saw was of a mall, I think in Chicago area, that had repurposed itself around a Hispanic clientele. On Sundays they had ethnic music, and a market with food stalls. Old people from the community, who often didn't have good English, felt OK coming there to sit and talk-- just like a market square at home. Families came there together on weekends.

If you want 1950s Americans, you have to go to places with large immigrant communities - Latin Americans, South Asians etc.

Buying into mall REITs, undiversified, is probably a high risk strategy. Because it's hard to see where the bottom will be. Malls are leveraged, so what value remains in the malls might well wind up in the hands of the debt holders, not the equity holders.

The Lowey family owned Westfield. An Australian company but a leading mall operator in America (California?) and the UK. Partly this is succession planning by the founder, but Westfield has just been sold for something like $50bn to Rodamco, a French-Dutch property company. Making me think perhaps they are calling the top of the mall business - the smart money selling.

The Paco Underhill books "Call of the Mall" and "Why we shop" are fascinating. Somewhat repetitive between the 2 books, but he is a Phd anthropologist who wound up in retail consulting by accident.

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Re: Sears, a 125 year old company is now a penny stock.

Post by randomguy » Wed Oct 03, 2018 4:48 pm

DartThrower wrote:
Wed Oct 03, 2018 7:23 am

REITs look so undervalued and then you read things like this...
But that is always the story of value investing. It is easy to look back and go man that company was so undervalued 10 years ago. They had more cash than the company value for heaven's sake (or any of a zillion other rationalizations). We tend to forgot all the negativity at the time and dismiss it as overblown. The reality is the current valuation of malls is based on a bunch of people thinking they will bounce back and others thinking they are going away. One of the groups will be more right than the other. Good luck guessing that.

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Re: Sears, a 125 year old company is now a penny stock.

Post by JoMoney » Wed Oct 03, 2018 5:22 pm

Valuethinker wrote:
Wed Oct 03, 2018 3:58 pm
...
Nordstrom is the department store with the higher level of customer service? But the price points are on a different plane.
Yeah, Nordstrom is beyond my cheapskate price level, but I did have my identity stolen once, and the crook opened Nordstrom credit accounts. Someone told me it's because Nordstrom's excellent "customer service" would allow them to return the products without receipts and get cash. :annoyed
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Sears, a 125 year old company is now a penny stock.

Post by CyclingDuo » Wed Oct 03, 2018 8:49 pm

randomguy wrote:
Wed Oct 03, 2018 4:48 pm
DartThrower wrote:
Wed Oct 03, 2018 7:23 am

REITs look so undervalued and then you read things like this...
But that is always the story of value investing. It is easy to look back and go man that company was so undervalued 10 years ago. They had more cash than the company value for heaven's sake (or any of a zillion other rationalizations). We tend to forgot all the negativity at the time and dismiss it as overblown. The reality is the current valuation of malls is based on a bunch of people thinking they will bounce back and others thinking they are going away. One of the groups will be more right than the other. Good luck guessing that.
Amazon's brick and mortar is on the rise... :beer

Image
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Re: Sears, a 125 year old company is now a penny stock.

Post by SlowMovingInvestor » Wed Oct 10, 2018 5:11 am

There's an article in the WSJ that Sears is filing for bankruptcy.

https://www.wsj.com/articles/sears-hire ... 1539136189

Not surprising to anyone who's visited a Sears store recently.

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Re: Sears, a 125 year old company is now a penny stock.

Post by retiringwhen » Wed Oct 10, 2018 6:00 am

dknightd wrote:
Sun Sep 30, 2018 11:02 am
Trust me. Somebody made money on Sears.
And it’s Eddie Lambert via his real estate deals on the other side of the Sears and Kmart property sales. He his classic private equity, get the value out, dump the rest. His trick was to keep a bunch of suckers around holding a stake in the dead man walking.

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Re: Sears, a 125 year old company is now a penny stock.

Post by beardsworth » Wed Oct 10, 2018 8:01 am

SlowMovingInvestor wrote:
Wed Oct 10, 2018 5:11 am
There's an article in the WSJ that Sears is filing for bankruptcy.

https://www.wsj.com/articles/sears-hire ... 1539136189
And in The New York Times:

https://www.nytimes.com/reuters/2018/10 ... uptcy.html

https://www.nytimes.com/2018/10/10/busi ... er-11.html

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Re: Sears, a 125 year old company is now a penny stock.

Post by AnalogKid22 » Wed Oct 10, 2018 11:03 am

The Sears stock has dropped >30% to under 40 cents! Oh, how the mighty have fallen.
A fool and his money are very easily parted - Anonymous

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Re: Sears, a 125 year old company is now a penny stock.

Post by AnalogKid22 » Wed Oct 10, 2018 11:06 am

CyclingDuo wrote:
Wed Oct 03, 2018 8:49 pm
randomguy wrote:
Wed Oct 03, 2018 4:48 pm
DartThrower wrote:
Wed Oct 03, 2018 7:23 am

REITs look so undervalued and then you read things like this...
But that is always the story of value investing. It is easy to look back and go man that company was so undervalued 10 years ago. They had more cash than the company value for heaven's sake (or any of a zillion other rationalizations). We tend to forgot all the negativity at the time and dismiss it as overblown. The reality is the current valuation of malls is based on a bunch of people thinking they will bounce back and others thinking they are going away. One of the groups will be more right than the other. Good luck guessing that.
Amazon's brick and mortar is on the rise... :beer

Image
Fascinating chart. I don't think any of the stores above Amazon are out of Amazon's reach for a merger or buyout. Only CVS and Walgreens have an edge, since they fill prescriptions.
A fool and his money are very easily parted - Anonymous

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Re: Sears, a 125 year old company is now a penny stock.

Post by Maverick3320 » Wed Oct 10, 2018 11:44 am

socaldude wrote:
Sat Sep 29, 2018 1:40 pm
Even before the Internet, maybe early 80's (late 70's ? ) Sears management starting driving their stores into the ground. True of many retail companies, they cut wages and try to sell you cheap crap on every aisle. You can watch greed slowly destroy great companies. I have bought Kenmore and Craftsman for 40 years, it is sad. The local JC Penneys has been remodeled (by some idiot consulting co. I'm sure... it's a maze) and it's a poor excuse for a store, like Walmart poor or no training and low wages, they love desperate poor workers, service is such a rare thing...they drive you to the internet.
I'm guessing it wasn't all greed. The 70s and 80s are when the US economy really started to be influenced by international competition, external shocks (OPEC embargo, etc), and the rise of countries that had previously been either non-capitalist or destroyed by WW2.

Actually, you could turn your entire argument around and say that it was consumer greed that caused the decline of Sears/Kmart/et al. If Americans can get cheaper stuff from Korea/Japan/China/Vietnam, they generally will.

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Re: Sears, a 125 year old company is now a penny stock.

Post by Freefun » Wed Oct 10, 2018 12:55 pm

JoMoney wrote:
Sat Sep 29, 2018 4:03 pm
whodidntante wrote:
Sat Sep 29, 2018 3:32 pm
randomizer wrote:
Sat Sep 29, 2018 2:27 pm
Looking forward to seeing the same thing happen to Amazon, and hopefully in less than 125 years.
Without any sort of death wish for Amazon, I have found myself buying much less from them compared to two years ago. A lot of other online retailers have upped their game, so I can usually find a better deal elsewhere. I even let my prime membership lapse, which I used to consider a standard expense like renewing my car tags.
Now that Amazon seems to be moving into the brick and mortar retail world, it will be interesting to see what they do there, and what new technology/business comes along to offer something better.
Wait. Suze orman advised holding stocks forever- such as amazon.

"Look at your Googles, look at your Facebooks, look at all of those things, are you kidding me?" she adds. "You keep a great stock forever."

https://www.cnbc.com/2018/10/09/suze-or ... stock.html
Remember when you wanted what you currently have?

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Re: Sears, a 125 year old company is now a penny stock.

Post by alfaspider » Wed Oct 10, 2018 2:46 pm

CyclingDuo wrote:
Wed Oct 03, 2018 8:49 pm
randomguy wrote:
Wed Oct 03, 2018 4:48 pm
DartThrower wrote:
Wed Oct 03, 2018 7:23 am

REITs look so undervalued and then you read things like this...
But that is always the story of value investing. It is easy to look back and go man that company was so undervalued 10 years ago. They had more cash than the company value for heaven's sake (or any of a zillion other rationalizations). We tend to forgot all the negativity at the time and dismiss it as overblown. The reality is the current valuation of malls is based on a bunch of people thinking they will bounce back and others thinking they are going away. One of the groups will be more right than the other. Good luck guessing that.
Amazon's brick and mortar is on the rise... :beer

Image
Isn't Amazon's brick and mortar basically just whole foods?

As far as Sears as concerned... I'm not quite sure why their demise took so long. Most people I talked to thought bankruptcy was inevitable 2-3 years ago. Once a company is ensconced in an obsolete business model, it is very rare for the company to transform into a new one. Kodak, Blockbuster Video, etc. can all attest.

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Re: Sears, a 125 year old company is now a penny stock.

Post by beardsworth » Sun Oct 14, 2018 6:10 pm

An interesting overview, in today's New York Times, of the history of Sears as a national retailer, and what was done to Sears as a business organization.

https://www.nytimes.com/2018/10/14/busi ... er-11.html

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Re: Sears, a 125 year old company is now a penny stock.

Post by nedsaid » Sun Oct 14, 2018 6:19 pm

nisiprius wrote:
Fri Sep 28, 2018 9:01 pm
Keep this in mind whenever anybody starts saying that a portfolio of a few good blue-chip stocks are not risky, if they are stocks in truly great companies, household names, that "aren't going to go away."

Because "everybody will always need" refrigerators, sensible clothing, and durable tools.
Well, Sears has been having serious problems for a decade, at least. There has been plenty of warning to get out of this stock if you had owned it. It has shown the classic signs of a dying company for a long time. A darned shame, I liked Sears, but the world changes and Sears couldn't change with it.

A portfolio of stocks does need a bit of monitoring and maintenance as Blue Chip stocks don't always recover from bad times. So "buy and hold" is in reality "mostly buy and hold" as you do have to check from time to time, the future prospects of the companies you own.
A fool and his money are good for business.

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Re: Sears, a 125 year old company is now a penny stock.

Post by donfairplay » Mon Oct 15, 2018 12:17 am

https://www.wsj.com/articles/sears-file ... 1539579819

Chapter 11 bankruptcy filed by Sears.

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Re: Sears, a 125 year old company is now a penny stock.

Post by ReformedSpender » Mon Oct 15, 2018 5:26 am

Another one bites the dust

RIP
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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Re: Sears, a 125 year old company is now a penny stock.

Post by Valuethinker » Mon Oct 15, 2018 5:53 am

Maverick3320 wrote:
Wed Oct 10, 2018 11:44 am


Actually, you could turn your entire argument around and say that it was consumer greed that caused the decline of Sears/Kmart/et al. If Americans can get cheaper stuff from Korea/Japan/China/Vietnam, they generally will.
But where would they buy it? It's not as if consumers can deal directly with the factory.

What you have is that WalMart figured out how to do the same thing, better - cheaper prices due to superior sourcing, better logistics, greater efficiency. And Big Box standalone stores rather than malls - thus saving considerably on rental costs. WalMart is something like one third of all US retail, non food, sales?

Sears and Kmart could not just keep up. However financial engineering in the Sears case definitely did not help plus manic reforms from someone outside the industry - turned out retailing is hard, really hard. Who knew?

(I think there is also something going on re increasingly delineated consumer groups. Sears grew up on "middle America" of families in suburbs in the postwar years. It's been observable since 1980 that there are fewer of those and more different types of consumers - senior citizens, single people, divorced parents, urban subgroups, etc. etc. You have to get to certain immigrant groups (South & East Asians, Mexican-Americans, Middle Easterners) to see growth in "typical" 1950s style consuming families.

It was hard for a retailer catering to mass tastes like Sears to keep up. Aging demographics also mean people buy less "stuff" that Sears sells, and more experience goods like travel and healthcare, entertainment.

Then along came the internet and ecommerce (B to C). Amazon for sure, but also Ebay - many of the suppliers there seem to be Chinese, now.

As to the pursuit of cheapness. Median incomes for Americans have stagnated since 1980 (average incomes have risen but most of the gain has accrued to the top 20% (in fact the top 1%) of income earners*). It's no surprise that for those on the lower half of that distribution curve, they are going to buy as cheap as they can. WalMart, and now the Dollar stores, offer stuff those people can afford to buy on incomes that don't get any bigger.

* there's a whole question of whether we correctly measure hedonic (qualitative) improvements in inflation indices. Probably not. Healthcare costs a lot more, but you'd rather have leukemia now than in 1980. Or the functionality of consumer electronics is on another plane. But real incomes have been pretty static (or fallen) for those below the 50th percentile, since 1980 - I think that's fairly clear in the numbers.

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Re: Sears, a 125 year old company is now a penny stock.

Post by beardsworth » Mon Oct 15, 2018 7:38 am

Valuethinker wrote: It was hard for a retailer catering to mass tastes like Sears to keep up.
Agree. I've already commented, with links, elsewhere in this thread, on the fact that "changes in retailing" do not provide the whole story of what happened to Sears, and what was done to Sears, under its current management. But this "mass taste" phenomenon is certainly part of the story. And it has been a problem for department stores in general. They typically offer a little bit of everything, but not a whole lot of anything, and shoppers with substantial disposable income have increasingly gone to stores that specialize in particular product types.
Valuethinker wrote:Median incomes for Americans have stagnated since 1980 (average incomes have risen but most of the gain has accrued to the top 20% (in fact the top 1%) of income earners*). It's no surprise that for those on the lower half of that distribution curve, they are going to buy as cheap as they can. WalMart, and now the Dollar stores, offer stuff those people can afford to buy on incomes that don't get any bigger.
And, just as many American towns and cities have "food deserts" without a substantial grocery store, many small towns have also become "retail" deserts. Your comment triggered my memory of this recent story about the ongoing spread of Dollar General stores into this small-town vacuum, a phenomenon not necessarily always welcome.

https://www.theguardian.com/business/20 ... ven-kansas

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Re: Sears, a 125 year old company is now a penny stock.

Post by workerbeeengineer » Mon Oct 15, 2018 9:08 am

Just to add another comment...I remember the phase when Sears tried having a Stock Brokerage desk in the store. I think it was Dean Whiter (spelling?) or something close. I had left my first employer after college and had a few ESOP shares of stock. Was able to sell those shares using this service. Should of held onto the shares, but that's another story.

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