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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (9028)	11/27/1999 1:22:00 AM
From: Michael Burry	Respond to of 78618

Re: retail Raise your hand if you are spending at least 1/3 of your Xmas shopping on the internet. I'd ask you to raise your hand if you are getting outrageous deals, but I already know it's 100% of those with hands raised. I'm not sure how the net will play out, but the current valuation of any stock assumes an effective earnings stream that goes out 20-30 years. Knock out the last 20 years of that stream and really the stock quite rightly loses a lot of its value. That said, what will the retail environment look like in 10 years? It's hard to say, but there's a good chance that with the onset of the internet the world of retail becomes much, much much more competitive. You don't need to be an economist to know what that means. Returns come down. IOW, retail is now a worse business in terms of potential market power, margins, and returns on capital than it was just 10 years ago. Lower those barriers to entry and put a mouse in everyone's hand, and that's what you get. JCP, Sears, Kmart. They are in for some rough times, and frankly, some contracting market share and the loss of whatever pricing or purchasing power they now possess IMO. Any valuation then has to look at liquidating value, takeover value (whatever that is), or a very speculative and downtrodden approximation of discounted PV of cash flows. Difficult, difficult. Mike