His nickname was “Engine Charlie,” and he’s credited with the quote, “What’s good for GM is good for the country.”
But this quote isn’t accurate…
Charles “Charlie” Wilson served as Secretary of Defense under Eisenhower and was CEO for General Motors prior to serving. That much is true.
However, one of the great urban myths of American corporate history is that Wilson once said, “What’s good for General Motors is good for America” — the point being if GM was doing fine, so was the United States.
Regardless of how it got into business lexicon, the quote has stuck for generations.
That’s because General Motors not only once dominated the auto industry in America, but across the globe. It was American pride at its best.
But that’s not exactly what happened…
In 1953, President Dwight D. Eisenhower nominated GM’s CEO Charles Wilson to be Secretary of Defense.
During the confirmation hearings, when asked if as Secretary of Defense he could make a decision contrary to the interests of General Motors, Wilson answered affirmatively — but added that he could not see such a situation, “because for years I thought what was good for the country was good for General Motors and vice versa.”
The quote isn’t the same as the urban myth, but the message is on point: The health of a major business can be the indicator of the health of its host nation. And in all honesty, it’s not a stretch to make that assumption.
Although Engine Charlie uttered those words 60 years ago, another company can lay claim to his sentiment to this today…
And that’s Wal-Mart.
As Goes Wal-Mart, So Goes the World
It was almost exactly one year ago that I wrote about the world’s greatest and largest retailer, Wal-Mart.
At the time, Wal-Mart was trading around $60 a share and breaking out to new highs. I made the case that the stock would double to $120 a share.
This past May 15, Wal-Mart touched $79.96 — up 33% since my original review of Wal-Mart back on April 2, 2012.
My colleague Chris DeHaemer recently pointed out to me that Wal-Mart is breaking out from a ten-year consolidation period.
The Hammer is correct. The breakout began in the spring of 2012 when shares of Wal-Mart broke above historical resistance at $63 a share. Shares went on to make an all-time high of $75 in the fall before pulling back.
Wal-Mart’s chart is bullish:
It has fulfilled its short-term technical target of $80 a share. However, I maintain my long-term target of $120 a share.
Fundamentally, Wal-Mart looks great.
However, Wal-Mart is no longer a domestic story. It’s global.
And you can gauge the health of the global economy by the global expansion plans of Wal-Mart.
This past April, Wal-Mart announced that it will open 30 new stores in China. That’s where its next growth phase will come from. China’s market has a billion more customers than the United States, yet Wal-Mart has barely scratched the surface of the Chinese market.
So here’s the opportunity…
Currently, Wal-Mart operates 394 retail outlets in China. To put that into perspective, Wal-Mart operates 374 units in Canada, with its population of 30 million. In the United States, Wal-Mart controls 4,663 stores.
For Wal-Mart’s stock to rise, it has to expand. Period.
And expand it will… as will its stock price.
To put Engine Charlie’s sentiment into perspective, GM’s annual revenue is $151 billion. Wal-Mart’s is $470 billion.
What’s good for Wal-Mart is good for the world.
Forever wealth,
Brian Hicks
Check us out on YouTube!Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy & Capital. For more on Brian, take a look at his editor’s page.
