Topic for Discussion -- In muddy waters are great for catching fish
On one account 40% of the world is now in depression. What sets depression apart from recession is not its magnitude but its cause. Recessions are caused by excess inventory (i.e excess quantity supplied) whereas depressions are caused by excess capacity (i.e a shift in the whole supply curve). Needless to say that to get out of a recession, you cut back on your quantity supply and wait for people to buy out your inventory. But to get rid of a depression, enough companies have to disappear off the map for things to improve and this is a much harder process. With this in mind, here is the thesis I'd like to discuss: Which companies are going to disappear, which ones will be bought out, and which ones will survive to be the kings of the new up turn?
My personal feeling is that Semiconductor, Computer prepheral, board makers (e.g Sanmina), Textile (and clothing manufacturers), Oil producers, oil service companies, and base metal companies are all prime candidates of these changes (add yours to the list). Among these the more the excesses, the more the opportunity. So for example, there are about 26 memory producing companies. My estimate is that the world needs only 4 of them. Will Micron Tech be among the survivors, will it be bought out, or will it disappear off the market? Please don't turn this into a Micron Sucks Vs. Micron Rules debate. I'd like to know why a company will survive (possible reason great finances) or be bought out (possible reason great distribution channel and small size) or that it even is a candidate for this debate.
Another good debate area is the oil drillers and oil service companies. Anyone cares to comment on GLM, SLB, BJS, ... in the above context. On the base metals side I only know of PD and AR both of whom seem too big to fall and too big to be bought out. Any other ideas?
Let the games begin!
Sun Tzu
Psst psst, This forum is now the number one "HotSubject" forum :) pass the word. |
