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

To: valueminded who wrote (9035)	11/27/1999 3:49:00 PM
From: Michael Burry	Read Replies (1) \| Respond to of 78609

Just as papers are still delivered and read, people will continue to shop at the malls, etc. They do so for social as much as any other reason. My argument isn't that people will stop going to malls, but that it will become an even more competitive, and hence low-return, business activity. A lot of retail businesses will go from being good businesses to poor yet still marginally profitable businesses. Your comment about people raising there hands if they do 1/3 shopping on internet is misplaced. All told, now of total Xmas sales, about 2-3% will be over the internet this year, and that's like 10X last year's. I see no reason why this won't continue to explode upward. That's coming right out of the hide of traditional retailers. And if you look 20-30 years out, boy it gets bloody. Here in Silicon Valley, malls are trying to ban their tenants from advertising their web sites. I do want to say that the new emphasis on P/S ratios in the press is an obvious ploy to cater to the outrageous valuations of internet retailers. Here on the value thread, we've looked at a lot of retailers over the last few years,and we know that retailers often get sub-1 PSR's for a reason - big margins are the exception. It's just basic economics - inject more competition into a market and the margins and returns shrivel. I realy wonder as to the achievement and maintenance of any market power in the retail segment as more and more people become familiar with the mouse. Any valuation of JCP or other retailers will have to take a somewhat speculative look at maybe a 3 or 4 or 10 stage dividend discount model to estimate this impact. There are lots of potential scenarios. If and when the capital markets stop funding the .com's losses, traditional retailers with cash flow will no doubt regain an edge to a degree. It's all just very hard to estimate, IMO, and playing JCP for its contrarian virtues may not be the way to go. Mike