Let me give you a couple of statistics and then I'll ask a question. Wal-Mart (WMT) has grown its annual sales from $180 billion in 2000 to an estimated $317 billion this year, a total increase of 75%. Earnings per share since 2000 have soared from $1.39 to an estimated $2.66 for 2005, an increase of 91%.

Investors are constantly searching for growth when they try and pick winning stocks. People who foresaw the growth that Wal-Mart could sustain so far this decade clearly have done well, right? There is little doubt that having achieved revenue growth of 75% and profit growth of 91% over a 5 year period would be reflected in a very strong gain for Wal-Mart stock. This leads me to my question. How have shares of Wal-Mart performed during that 5 year span?

If you ask former Fidelity star mutual fund manager Peter Lynch this question, he would most likely tell you that over time stock prices follow corporate earnings. As a result, estimating WMT shares have risen 91% in the last 5 years would be a good answer, because for the most part, Lynch's statement proves correct.

The only problem is, there are exceptions to that rule. Just because a company grows at a very rapid pace, this does not ensure significant price appreciation of that company's stock. In fact, despite sales growth of 75% and earnings growth of 91% since 2000, Wal-Mart shares have lost 15 percent of their value during that time, falling from $55 to $47 per share.

Part 2 of "The Wal-Mart Bear Market" will be published shortly, and will examine why WMT investors have suffered and what we can learn from this example.