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Actionable news in KR: THE KROGER CO.,

Kroger’s Recent Price Weakness Might Just Be A Good Loss

Investors usually hate it when they buy a stock and the price goes down. However, being upset with a price drop is not always the appropriate response. There are situations where a price drop is a disaster, and there are times where a price drop is a gift. This is a distinction that relates to valuation.

Kroger has recently experienced two major price drops of which I contend that one was justified, and the other and more recent price drop unjustified.

Bad Losses – Good Losses?!

Obviously, there are no good losses. However, not all losses are the same. A loss that comes as a result of paying too much in the first place, is a bad loss. The time for recovery with a loss from overvaluation is usually so long as to be considered permanent. There is no fixing this type of loss, it is a huge mistake. It’s a different matter altogether if you paid a sound and attractive price for your company based on strong fundamentals and the “stock market” had an irrational panic attack. In this case, your sound investment has become a speculator investment and represents a golden opportunity. Understanding and making these true distinctions is vital. Alas, few investors actually do.

In today’s F.A.S.T. Graphs video, I will show clear examples of these important principles based on simple arithmetic. The numbers tell a compelling story that is too obvious to deny. I am sure that there are investors in Kroger who believe that they could not possibly get their money back within their lifetime, they are...