"Values go on increasing, while the market
rests..."
Samuel A. Nelson. The ABC of Stock
Speculation. Fraser Publishing. 1999. originally published
1903.
I think that this is the greatest gem of knowledge ever dispensed on the stock market. So what if the price of a stock is going nowhere? In fact, all things being equal, if the price is falling so much the better. To my thinking, value is accrued with the passage of time. With a steady dividend payment, especially a rising dividend, wealth is accruing at a rapid rate. Throw in a little inflation and you've got an honest to goodness asset.
A graphical example of value being accrued over time is the 13-year chart of Wal-Mart (WMT) below. 
If you ever come across a similar chart pattern then it would be worth your time to examine the company financials to verify the true value. Here is what I found out when I tried to confirm if Wal-Mart was actually increasing in value:
If you ever come across a similar chart pattern then it would be worth your time to examine the company financials to verify the true value. Here is what I found out when I tried to confirm if Wal-Mart was actually increasing in value:- Number of shares outstanding have decreased about 1% each year (good)
- Dividends increased every year for 33 years (good)
- Return on Equity in the high-teens (good)
- Above historical high dividend yield, according to IQ Trends (good)
- Long-term debt has doubled in last 10 years (bad)
The price pattern on Wal-Mart reflects a concern by investors, starting in 2000, that the consumer economy was going to be in trouble. If the price goes above $70 or goes below $45 then we'll have some advanced warning about what may be around the corner for the U.S. and Chinese economy. Seems that this company is a leading or more reliable indicator (for the time being).
In general, Wal-Mart's stock is not being recognized for the simple fact that the company can generate positive earnings. Although WMT's debt really bothers me, company management may be clever like a fox by amassing huge amounts of debt now to be paid off later with inflated dollars.
As much as this company appears to be increasing in value, I can't get the image of F.W. Woolworth's (the original five and dime store and former Dow Industrials component) out of my mind. Woolworth's was the equivalent of Wal-Mart but couldn't last even though it was offering rock bottom prices to the public.
Despite my concerns about WMT, I am looking for other Dividend Achievers with similar price patterns of trading in a "narrow" range. The longer the range, like 1906 to 1924 and 1966 to 1982 for the Dow Industrials, the more values are guaranteed to have increased. Touc.
