Stocks Crossing The 13 Week Moving Average <$10.01 Message Board

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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01

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To: Sergio H who wrote (9385)	8/16/2001 10:56:24 AM
From: James Strauss	Read Replies (2) of 13094

Sergio: With fewer people working we could get artificially inflated productivity numbers... If a company lays off 10% of its work force and is able to produce 95% of its production in a period of economic weakness, it will show a net gain in productivity... Going behind the numbers we see that sales dropped while expenses remained constant... So, people are layed off to reduce expenses in line with projected sales... So, if the IMF or the FED or anyone else tries to look at productivity gains in a vacuum they'll get a rude awakening... When sales and profitability are growing, rising productivity is more meaningful... When sales and profitability are shrinking you have an analogy to the Amazon.com argument that "revenues are growing and we're not losing as much on each sale"... That type of false sense of security can drive you out of business... Bottom line, when business is bad, all the various types of spin, improved productivity, met lowered estimates, we are fully funded, etc., cannot cover the negative impact of a weak economic environment... Jim

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