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Much larger physically (admittedly not a clear competitive advantage), Wal-Mart barely ekes out revenue growth and has an enterprise value of $286.6 billion, just 0.6 times revenues and only 8.1 times its EBITDA.

Machine #3: Dividend greed

Some sophisticated investors hold onto common shares of large publicly traded companies because these offer cash dividends whose yield is so much higher than interest rates otherwise available.

Moreover, investors who hold high-yielding common shares may have put on their positions years or even decades ago — they refuse to sell despite rising risks now fearing punishing tax bills.

In the latest correction now in process, these yield-chasing and tax-deferring investors will ultimately rue their obstinate foolishness — far better to pay capital gains taxes and then reinvest after-tax proceeds in alternatives such as precious metals (coins or bars) then to watch as valuations plummet to earth.

Four centuries ago, Francis Bacon observed: “hope is a good breakfast, but it is a poor supper.” Investors today should ask themselves whether conditions in August 2014 are better or worse than they were in August 2008, and act prudently rather than foolishly.

Charles Ortel serves as managing director of Newport Value Partners (, which provides economic research to executives and to investment firms.