Thursday, April 10, 2014

Stocks Are Expensive: One Big Datapoint

Whole Foods is trading on 34x trailing earnings. That, for me, is today's market in a nutshell. Yes, it's just one stock but it reinforces to me the reality of a stock market fives years into ZIRP. Investors are so desperate to find something reasonably valued, they've implicitly bought into the notion that Whole Foods will maintain its growth and popularity when it expands from New York City and other trendy urban areas, into Kansas, Pennsylvania, Arizona, etc. Come on, folks, these are grocery stores!  Selling food!  Low margin, low barriers, weak brands. And now it looks like investors are figuring out how overhyped the story was. 


It's Really Hard to Be a Whole Foods Clone - WSJ.com


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