In my Walmart (WMT) guest post at Dividend Power, I touch upon why I do not think it is a safe investment decision at the current valuation.
There is nothing fundamentally wrong about the company. The issue I have is that we are experiencing a period of irrational exuberance. Some investors are paying little regard to how much they are prepared to pay for a company's projected earnings.
I remember the late 1990s when investors were making REALLY stupid investment decisions. A WMT investment made in October 1999 led to a NEGATIVE average annual total return of ~0.64% until October 2007! This does not even take into consideration that the value of $1 in 2007 was much less than in 1999.
Mark Twain once said “History never repeats itself, but it does often rhyme.”
In my opinion, Walmart shares have become grossly overvalued in recent quarters. Could a Walmart investment made in this environment end up being a terrible investment? I don’t know but the odds are not in an investor’s favor.
I wish you much success on your journey to financial freedom!
Note: Please send any feedback, corrections, or questions to [email protected].
Disclosure: I am long WMT.
Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation. I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.
