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The durability of concrete structures varies widely: while it is impossible to offer an average longevity figure, many will deteriorate badly after just two or three decades while others will do well for 60–100 years. This means that during the 21st century we will face unprecedented burdens of concrete deterioration, renewal, and removal (with, obviously, a particularly acute problem in China), as structures will have to be torn down—in order to be replaced or destroyed—or abandoned.
How the World Really Works
Vaclav Smil
Walmart stock closed out 1999 at $69.13, and later reported earnings per share (EPS) of $1.25 for the fiscal year ending January 2000, up from $0.99 in the previous year. This gave it an earnings yield of 1.8 percent, or a P/E of fifty-five. Obviously, investors were counting on returns that would match the return on equity of 20 percent, or the earnings growth rate, not the tiny earnings yield. For fast growers, I try to tie together the growth rate and the earnings yield. To produce an earnings yield of 8 percent, Walmart would have needed EPS of $5.53 (8 percent × $69.13). Then I calculate how many years of an assumed growth rate it would take to reach that target. In the best case, the crossover is not many years away, I trust my forecast, and I believe that when it is attained the enterprise will still be growing dynamically. I thought Walmart’s growth rate would continue, perhaps at a less torrid pace, closer to the 12 percent gain reported the following fiscal year. As the already dominant American retailer in many categories, Walmart couldn’t keep grabbing share indefinitely. While Mexico became a stunning success for Walmart, its other international expansion has been a mixed bag. Assuming a 12.1 percent compound earnings growth rate, it would take thirteen years for Walmart’s earnings to reach an 8 percent earnings yield hurdle on the initial purchase price. Some analysts were more enthusiastic about Walmart’s future growth and believed it would get to the target sooner. But, my calculation ignored the compounding of time value of money for those thirteen years, so the target should have been even higher. Historically, few companies have been able to grow earnings 12 percent every year for thirteen years. Surprisingly, Walmart’s earnings did advance in an unbroken string at an 11.3 percent compound rate over the next thirteen years, yet its stock stagnated. The low price for Walmart in 2012 was $57, which, along with cumulative dividends of just over $10 per share would have summed to a negative total return. The average price of Walmart stock in 2012 was close to its price at the end of 1999, or zero capital appreciation, so its dividends were the stock’s total return. Cumulatively, the total return and dividend yield were a lot closer to the initial earnings yield of 1.8 percent than the earnings growth rate or return on equity. Uncharacteristically, shoppers of Walmart shares in 1999 had not demanded a bargain, perhaps because it was otherwise an irresistible story. The realized return on Walmart undershot the discount rate of 8 percent used in my example partly because earnings disappointed, but also because P/Es are prone to mean reversion. Walmart’s actual earnings of $5.02 were not that far behind the initial target of $5.53. But over thirteen years the compounded effect of that technical detail about the difference between the required earnings and actual earnings was substantial, which implied a much higher earnings target to…
Big Money Thinks Small
Joel Tillinghast
We were developing empathy and the ability to be aware of what was happening in the mind of another person. This, we realized, is the key, the fundamental ingredient without which real communication can’t happen. Developing empathy and learning to recognize what the other person is thinking are both essential to good communication, and are what this book is about.
If I Understood You, Would I Have This Look on My Face?
Alan Alda
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