Hi G,
I'm getting frustrated by all the people who want to see the fast rise in orders ,so we can get on with excess capacity and have us another crash.
What is so wrong with controlled growth? - no excess capacity and we build capacity as new widgets get embraced (Apple) and we do business on a "smart projection of reinvestment".
In my world car biz is very depressed.I don't see it v- bottoming to new glorified sales levels - as the price of gas has robbed the wannabe new car buyers of having a down payment - instead the tax returns are paying off revolving credit -that has been built up with energy payments that weren't equally compensated for with income rises.
Employers aren't giving raises, as they are just trying not to charge their employees for the HUGE increases in health care costs they are absorbing in there behalf - at least I have and am struggling with those increases.
As a result of less than robust business opportunites - a "smart business person" plans very conservatively.
Reduce inventories,reduce work count,eliminate over time,stop air freight expense to build quickly - just in time everything.
Embrace "level production" and "just in time" manufacturing techniques.
These are all conservative "smart businesses practices".
They are the correct response to "slow business" or better yet - "Predictable business".
With that in mind - it is good to see that these business people have leveled the peaks and valleys.
It is not a response tactic to run away improved business - because it just isn't there.
Having said that - we go to depression ,because these execs are playing it efficient and that is not to say we're never going to get there again.
If the entire world can succumb to slow growth because energy is getting expensive to find and the global recovery is creating demand that almost exceeds the capacity of the existing global energy system capability to invest and there is no hope in the future of it ever getting better - then why does that very same concept not apply to demand for chip, cellphones,laptops,PC's,PDA's,Ipos's whatever?
Its all spin and every dog gets his day.
We're long term investors in tech and it has been a long time.
I would propose that as new global markets emerge - they will create demand for chips at a much faster rate than demand for energy is created.
This demand comes from metroplexes - often with mass transit infrastructure.
As middle classes are created globally - demand for chips will far outstrip demand for energy.
No doubt the cost of energy will increase over the long run.
But as demand for ebergy increases price - conservation will be naturally self imposed, and as energy extracts a premium price - investors will invest and produce supply.
These two invitabilities will find equilibrium.
Take IC's, as demand for them increases Capex is always created.
As excess capacity produces surplusses prices drop and more technology devices are affordable and embraced by a growing population of users.
IC's alaways get cheap and create their own acceptance and new growth curves.
Resources go up in price and create the need to conserve as supply is always increased to reach the demand of higher prices.
Extrapolate that over a decade or two and I'll be an investor in SCE and tech in general.
The cycle may well be stretched out ,from good busness practices - but it is inevitably exponential.
The cycle over a long time will be much quicker with IC's vs resources.
Last but not least, my money will go to tech because there is a little thing called innovation.
In tech, innovation is rewarded with a premium price and huge profitability.
In the resource world - IF innovation occurs,prices are cut and the efficient leads prices down-so the competition loses market share.
This is also true in a mature technology environment.That is what we dislike about now.
No new killer ap - just manufacturing technology innovation.Given the "bric"s - Brazil,Russia,India,China,emerging markets there due: they will create demand for technology and resources.
My bet goes in a long term viewpoint to innovation in tech being much more rewarding than resources.
The middle class of the world will much sooner have and be able to afford a cell phone ,camera,internet,laptop - which can all be enjoyed because the price of acquisition will get continually get cheaper vs that of buying a durable good (personal transportation)which will continue to become continually more expensive.
That's a big swallow for a guy who is invested in 4 dealerships.GG (me) - but I think it is the market place reality.
We who want a quick turn into boom town have forgotten how long term tech investing was before 98-00 and we yearn for the gogo days.
Alas I think patience is the needed ingredient and we must once again simply "KNOW WHAT WE KNOW" about the long term.
It is a thing called investing and time diferentiates itself from speculating.
PUT UP, SHUT UP, QUIT MOANING,and STILL GET RICH!!
You just have to accept it as a longer term investment.
No TOTO - were not in the dot.com era any more - but there still is a Knasas.
JMHO
Bob
I Ramble and have a great night all. |
