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Author: stevefsf One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 217  
Subject: Visiting store - bear argument? Date: 8/14/2008 3:58 PM
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Disclosure - I own GME. First bought in Jan 06 for $19 and again late '07 and Feb '08 for $52 and $48. Now priced at $44. Still up about 25% total. My first buy was prompted by a visit to a local store and the enthusiasm of the employees.

So, today, while at a pet store - I saw a Gamestop - and stopped in.

Store was empty and 2 employees (one in late teens and the other early twenties) were glad to spend 15 minutes chatting.

This is all their opinions:

1. The older one kept telling me that they make most of their money as a pawn shop - buying used games, etc. and selling them for a big mark up. There's very little margin on new stuff. He told me a story of some game or system that costs them $39. They reserved 400 of them. K Mart came out selling them as a lost leader for $35. They only sold 80 and eventually did sell the rest.

2. I asked about cycles for new systems - their thought was 2-3 years out.

3. Older one said definitively - I would not keep this stock for 5 years. This is the part troubling to me as an owner. His thought is that more and more used games will be bought and sold on the internet. Right now - the young kids like the idea of getting cash right away - but online sites like Amazon which used to have you wait a whole billing cycle to get your money is now trying to get it to you in 4 days. So his thought is that when the net gets better at turn around time to get paid for items sold and at the whole process of packaging and shipping - fewer and fewer will come into the store BECAUSE (and all this is according to this young man) YOU CAN SELL GAMES, SYSTEMS REMOTES, ETC FOR MUCH MORE ON THE NET. He had a system which the store would buy from him for $90. He said he received over $200 selling it online.

So - is it factual that the profit mostly comes from the "pawn shop?"

So - my fellow FOOLS - what do you think? Any truth here? Perhaps time to sell? I do not trade in and out of stocks - but if the long term is deteriorating - perhaps it's time to move money elsewhere?
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