We’ve banked a few posts for the upcoming week, so expect a more regular schedule again for a while.
For today, enjoy some of Charlie Munger, discussing “The Art of Stock Picking.”
There he provocatively highlights the stunning success of one Sam Walton:
“It’s quite interesting to think about Wal-Mart starting from a single store in Bentonville, Arkansas against Sears, Roebuck with its name, reputation and all of its billions. How does a guy in Bentonville, Arkansas with no money blow right by Sears, Roebuck? And he does it in his own lifetime ‑ in fact, during his own late lifetime because he was already pretty old by the time he started out with one little store….
He played the chain store game harder and better than anyone else. Walton invented practically nothing. But he copied everything anybody else ever did that was smart ‑ and he did it with more fanaticism and better employee manipulation. So he just blew right by them all.
He also had a very interesting competitive strategy in the early days. He was like a prizefighter who wanted a great record so he could be in the finals and make a big TV hit. So what did he do? He went out and fought 42 palookas. Right? And the result was knockout, knockout, knockout 42 times.
Walton, being as shrewd as he was, basically broke other small town merchants in the early days. With his more efficient system, he might not have been able to tackle some titan head-on at the time. But with his better system, he could destroy those small town merchants. And he went around doing it time after time after time. Then, as he got bigger, he started destroying the big boys.
Well, that was a very, very shrewd strategy.”
Later Munger opines that “were [he] a young man,” he might concentrate his investing energies of finding great companies with stellar management when they are just starting out. In that vein, we’ll be doing a little research on the young Sam Walton and his retailing tricks over the next few weeks. If you have any resources you’d recommend, or would like to contribute, please pass them along.
Disclosure: I, or persons whose accounts I manage, own debt of Sears at the time of this writing.