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Technology Stocks : America On-Line (AOL)
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To: jhg_in_kc who wrote (3324)1/25/1999 4:34:00 PM
From: Steve Robinett   of 41369
 
jhg,

You comment, there is not necessarily high unemployment during deflation as there was during the Depression.

True. An example comes to mind of the US in the late 19th Century. After the Civil War, railroad building and industrial development boomed with something like full employment but financially a time of deflation, that is, falling prices. This was due to high levels of immigrant labor coming into the US and keeping wages (costs) down. Something of the same thing is going on now internationally with China and its workers helping to keep Asia in a deflationary environment.
As to which companies do better in deflation, obviously anyone making money has what's considered higher quality earning in a deflationary environment than an inflationary environment--a dollar of earnings is worth more if it isn't inflated out of existence, so to speak. In other words, in a deflationary environment, I would suggest looking for companies that throw off a lot of cash, and AMZN ain't it.
Best,
--Steve
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