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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: tradermike_1999 who started this subject1/10/2004 5:16:23 AM
From: Seeker of Truth  Read Replies (2) of 74559
 
A while back somebody raised the question of why shares of manufacturing companies are less promising on the average than service companies.
My three answers to this are:
1. For a long time the % of jobs in manufacturing in relation to the number of jobs in the whole economy has been falling. Now it seems that the absolute number of manufacturing jobs in the world is decreasing day by day. So we should go cautiously into an area which is shrinking.
2. Goods are less "sticky" than services, usually. The consumer looks at the stuff and if it's more attractive in some way than the previous same type of thing which she or he has been buying, they won't think too long before choosing the newer one. On the other hand changing newspapers, radio stations, banks etc. is less rapid and easy.
3. Manufacturing is changing more rapidly than other fields.
Keeping up is difficult. Today's product may be great but tomorrow's product must come with better features and/or be produced at lower costs. The company must be on top of things continually.
For those fascinated by their recent profits in some manufacturing companies, I reiterate the phrase "on the average".
Doubtless there are economists professional and amateur out there who can contribute a more penetrating analysis of the matter. A deeper discussion would be useful. Such as when are the exceptions, for example.
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