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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 652.56-1.5%4:00 PM EST
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To: Casaubon who wrote (42418)3/6/2000 9:53:00 PM
From: Terry Whitman  Read Replies (1) of 99985
 
I'm no MBA- but the reason a companies profits should go up as the price of their commodity goes up is profit margin. The company will make say a 5% margin irregardless of the price of the raw material. 5% of 150 is 50% more than 5% of 100.

Lots of other factors are involved of course- like labor expenses, taxes, etc.

IMO, the reason the basic materials stocks are not following their underlying commodities is two fold. Unpopularity, and expectations for a slowing economy (i.e. recession).

BWDIK,
TW
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