Friday, March 5, 2010

Graham's advice to Retailers

We have seen the death of three retailers in India over the last two years, Subhiksha, Vishal Retail and Pyramid. Pyramid was acquired by Indiabulls and so it didn't face a death but we can say it got bailed out. The father of value investing in his 1934 edition of Security Analysis had following to say:

The chain-store grocery trade contained within itself many elements of relative stability, such as stable demand, diversified locations, and rapid inventory turnover. A typical large unit in this field, provided only it abstained from reckless expansion policies, was not likely to suffer tremendous fluctuations in its earnings.

Alas!!! People would listen to what others have said in the past!!!!
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1 comment:

Ekram said...


most people either don't know Graham or think we are way past his times.

Current realities however show principles based on rationality don't become obsolete.

I think its good that most people don't follow value methodology. It gives us that much less competition.

Happy investing

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