ERICOPOLY

You're not alone in really, really liking the rising interest rates and how it impacts the pension liabilities. Rates rise 3% or so and poof the pension liability is gone. Or the 10 yr goes to 1% (which might happen) in a bad upcoming recession (perhaps next year) and then what? Their sales are falling right now without a recession... what a bad combination that could be.

They are completely unrelated.

Eric, I would be interested to hear why you sold, if you don't mind sharing. Was it because you were looking for a big short squeeze or a small loss and didn't want to wait around for something in between? Or was there something in the report that actually bothered you. I'm adding to my call position (that got "hosed" today, to use the technical jargon) and happy to hold me stock as well, but always interested if there is a good reason to sell that I don't know about. Thanks, t-bone1 I have no particularly new insights that I haven't already expressed. I woke up in a bad mood perhaps. It was a 20% position. Eric, I'm curious of your strategy. I recall you buying a few months ago, then selling to take the tax loss, then buying 31 days later, then selling today. Do you typically trade your portfolio this actively or is it more "I like the upside but I'm just unsure as to when it will be unlocked" kind of thing? Just caught me by surprise you were trading it being 1/5th of your portfolio. When I have positions that size (as I do with SHLD) it's due to a certain amount of conviction and I might trade options around it, but I leave the core position intact. He probably remembered this: Ain't that the truth of it. How can I make myself just sit still and wait for the next such opportunity.

Eric, I would be interested to hear why you sold, if you don't mind sharing. Was it because you were looking for a big short squeeze or a small loss and didn't want to wait around for something in between? Or was there something in the report that actually bothered you. I'm adding to my call position (that got "hosed" today, to use the technical jargon) and happy to hold me stock as well, but always interested if there is a good reason to sell that I don't know about. Thanks, t-bone1 I have no particularly new insights that I haven't already expressed. I woke up in a bad mood perhaps. It was a 20% position. Eric, I'm curious of your strategy. I recall you buying a few months ago, then selling to take the tax loss, then buying 31 days later, then selling today. Do you typically trade your portfolio this actively or is it more "I like the upside but I'm just unsure as to when it will be unlocked" kind of thing? Just caught me by surprise you were trading it being 1/5th of your portfolio. When I have positions that size (as I do with SHLD) it's due to a certain amount of conviction and I might trade options around it, but I leave the core position intact. +1 Great question. There's no adult at the wheel over here.

To find out why, just remember where people go for home improvement projects these days. It's not Sears, it's Lowe's and Home Depot. And look at the home page for Home Depot today: "10% off Appliances. Free delivery and haul away." Sears could cease to exist tonight and shoppers tomorrow morning could find everything they need elsewhere, in nicer stores with helpful salespeople and better organized searches on websites. In fact, you'd probably be doing the habitual Sears shoppers a favor.

My thoughts are that it's probably worth at least $120 in assets. However if an oil company has $5b of oil in the ground it doesn't trade for $5b necessarily. Rather, it trades roughly based upon the speed that oil comes to the surface.

Eric, I would be interested to hear why you sold, if you don't mind sharing. Was it because you were looking for a big short squeeze or a small loss and didn't want to wait around for something in between? Or was there something in the report that actually bothered you. I'm adding to my call position (that got "hosed" today, to use the technical jargon) and happy to hold me stock as well, but always interested if there is a good reason to sell that I don't know about. Thanks, t-bone1 I have no particularly new insights that I haven't already expressed. I woke up in a bad mood perhaps. It was a 20% position.

I sold out at $40.

I feel like they would be seeing sales growth if they were new customers.

Declines in appliance sales at Sears. Must be the rebound in housing that is driving this? Just kidding... I jest...

She deserved to be laughed at. That's like getting an interview with the head of BMW and then telling him that the (take your pick El Cheapo economy car manufacturer) is their competitor and should they be worried about it.

Click on 2015 on this page to see where resale value is headed: http://www.teslamotors.com/supercharger Here is what my Tesla dashboard looked like when plugged into the Atascadero supercharger: That's right, charging at 248 Amps x 363 volts! 90,000 watts. (and they will soon be upgraded to 120,000 watt charging per Tesla).

Well, people are still buying NEW Mercedes today and they are WAYYYYYYYYYY, WAYYYYYYYYYY, WAYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY behind Tesla today ;)

There is nothing preventing Tesla from offering you a trade in for a longer range battery in the future. But realistically, it's better to just rent the longer range battery for the weekend. Swapping the battery is a lot faster than pumping gas.

What do you mean by removable batteries? Isn't the 90 second battery swap an example of this? Model S already has that.

Elon Musk has addressed that in interviews. These doors are designed differently in significant ways that make them a lot more practical than past implementations. But if they test them in the wild and it doesn't work, they'll just change to regular doors. They've shown that they're very nimble and can recognize and correct errors. The problem with the Falcon wing doors is that you can't have a roof rack. So no ski box on top, no kayak, no surfboard... no Christmas tree! They can't easily just change to regular doors without giving up one of their main goals, which is to be able to have an opening wide enough to be able to step in to the third row seats. You can't go with a door that swings on a hinge -- it would be too long to fit in tight spaces. This leaves you with the sliding door (minivans) as the only option, and they wanted to give you the feeling that you aren't buying a minivan (stigma). So they are stuck.

There are people who only buy white cars. There are people who only buy black cars. The Delorean was only available in stainless. There seemed to be no serious attempt to sell the car.

I like the comparison to the Apollo Lunar Lander: For the side pole intrusion test, considered one of the most difficult to pass, the Model S was the only car in the "good" category among the other top one percent of vehicles tested. Compared to the Volvo S60, which is also 5-star rated in all categories, the Model S preserved 63.5 percent of driver residual space vs. 7.8 percent for the Volvo. Tesla achieved this outcome by nesting multiple deep aluminum extrusions in the side rail of the car that absorb the impact energy (a similar approach was used by the Apollo Lunar Lander) and transfer load to the rest of the vehicle. This causes the pole to be either sheared off or to stop the car before the pole hits an occupant.

I signed up for ShopYourWay last night. My impression is that the website is NOT very easy to use as a shopping tool. Not compared to what I'm used to anyway. Suppose for example you want to purchase LED Light Bulbs. Start your search with "LED Bulb" as the text. Then when the results come up, try to filter on "For the Home". They show you lamps mixed in with the bulbs. It's rather a horrible online experience. The results are not sorted well. Next, go to www.homedepot.com and search for "LED Bulb". The results are terrific -- they only show you what you asked for, and they are sorted well.

Also from the Q3 2012 CC: Robert A. Schriesheim - EVP and CFO: ... Companies moving to transformations make decisions all the time about how to allocate and reallocate capital as they execute on their strategic vision and certainly history in business is replete with examples on the retail world and outside of the retail world of companies going through transformations who choose to remove capital from older business models and reinvested to promote their strategic vision, which is basically what we're doing.

They are actually very clear about what their strategy is for SHLD. I think they keep saying it again, and again, and again, and again, and yet people still say "investors want Eddie to stop being secretive". From the 2012 Q3 conference call: We are rapidly moving to a member-based business model. Our investments are focused on our members and their experience. This is why we are investing several hundred million dollars this year alone in Integrated Retail and SHOP YOUR WAY membership program. More than half of our revenues at Sears and Kmart now come from SHOP YOUR WAY members. Pretty straightforward. SHLD owns businesses, and they plan on running them. William Reuter - BOA Merrill Lynch: You guys really focused on the value of your assets here, I was wondering if you could provide a little more color on some of the assets that you guys are going to plan on trying to monetize last year and generate the $500 million? Robert A. Schriesheim - EVP and CFO: Bill, consistent with our prior comments, we are obviously focused on creating long-term sustainable value through operating performance. As we continue with our evolution we're moving to a more, as we describe, nimble, less asset intensive business model and as we move through this process we are continuously evaluating on asset structure and whether specific assets and/or businesses are better managed within the current Sears Holding asset configuration or outside of it.

The more I read the annual report and conference call, the more I see where Eddie believes the value is. They are growing the membership program ShopYourWay. They aren't doing this half-assed just to claim they have an online store, but rather they are hanging their hat on this strategy. Their goal is to have a store where you can go in and try it on, and either take it home or have it shipped to you. Or if you order it online, you can go pick it up right away from the local store with no hassle. The advantage SHLD has is they already have the brick-and-mortar side in place. The membership-based sales are growing, not declining. Then they believe they can manage inventory better (smaller store inventory with backup supplies in fulfillment centers) and marketing costs can be more directed at the individual member. I believe the thing to focus on is the rate at which they can drive their ShopYourWay membership sales growth, and look at their huge retail footprint as the shoes they need this business to fill. Then ask why they are closing mostly KMarts this year? Well, from what I understand from the conference call, their Sears shoppers are successfully moving over to the membership model, but their KMart shoppers are not (or to a far lesser degree). So the only thing I believe Eddie is focusing on is the growth rate in ShopYourWay. Beyond that, they have a ton of assets tied up in the business and they are trying to optimize that (store closures and real estate strategy is part of that).

From the Q1 CC. In this comment Eddie seems to be saying that they have mistakenly doubled down on the promotional pricing. However if they fix that problem I don't know what it does to their growth in sales among their ShopYourWay membership. I added bold to the lines of particular interest. Paul Swinand - Morningstar Investment: I guess, we are all interested and view the online and technology investments positively I guess we are trying to bridge the gap of how we get to a profitably company from where we are today, could you maybe comment on the gross margins generated by the online side of the business, are they above the stores or is there some way that you could see as this grows the profitability will increase? Edward S. Lampert - Chairman and CEO: I don't think we break that out specifically, but I will tell you category-by-category, it varies. There are some categories where online margins can be higher than store margins and vice versa when you consider markdowns – clearance markdowns, promotional markdowns, etcetera. I think that one of the things that we've been very focused on is the sensitivity of our gross margins to small changes in price. A 2% price change, plus or minus, on $8 billion a quarter is $160 million. So, when you are selling product at 40% and 50% off, the opportunity to do better than 40% or 50% off to get 38% off or 48% off is a big variable. And I think that the broad-based 'everybody gets the same deal' marketing that Sears and Kmart and many others have engaged in for a long time will be changing. I'm not predicting that the retail industry will become like the airline industry where 10 people across the row in plane all pay different prices for their seat or five people on the floor of a hotel room all pay different prices for their hotel room. But I do think there's going to be a lot more variability and it tips both ways. Better price realization doesn't mean raising prices. It can mean being more accurate in where you place your inventory, being less general and less long lead time in terms of the promotions. The ability that we have now to target our promotions to specific geographies to specific members, groups of members gives us an opportunity to realize a much better answer. Having said that, and what Rob referenced is, as we run both systems simultaneously, there have been instances, more than – it's instances where we're running, not sure it's promotions, but we're also giving away significant SHOP YOUR WAY point which is real money that has the impact of hurting our margins. And I think that that, bringing a much more heightened awareness to our merchants and to our marketing people about how these things can work together rather than – not being additive, but being substitutional, if that's the word. I think we have an opportunity to do much, much better in terms of price realization. And the leverage there if you run the math, it can be very substantial.

I'm not organized enough to put it in one post (too long anyhow) so I'm going to put them in piecemeal across multiple posts. There are a few tidbits here and there which are making things look worse than they really are. Here is one (from the Q1 CC) that pertains to the gross margin of Sears: Edward S. Lampert - Chairman and CEO: I think the important point is that and Rob correct me if I am wrong. We will include the revenue that comes from us selling product to the Hometown and Outlet business at our cost. So that’s really – it's a loss for us, but that's just from accounting convention standpoint what gets included in our revenues and in our margins, it's essentially a zero margin business. Robert A. Schriesheim - EVP and CFO: That's right. As we indicated they had about 160 basis point negative impact year-over-year.

Flat for 10 years is devastating. I think value investors tend to emphasize their downside protection too much, believing they are losing nothing if they take a flyer that recovers all their initial investment in the event of a liquidation. That's a 61.4% loss if you otherwise took a more conservative approach and compounded at 10% annualized. Or it's a 75% loss if you otherwise would have made 15% annualized.