Sun: What do you think of the article's opinion on this?
But he notes that in a world of falling prices technology companies will be one of the investment "winners" as they "have a huge advantage, because what we're forecasting is nothing new to them." He lists as areas that will be favorably impacted by deflation semiconductors, computers, telecommunications, software, biotechnology, and Internet related products.
"Lower prices," he continues, "far from reducing sales and profits, open up new markets that increase volume so much that earnings grow robustly. It is very similar to the post-Civil war era when huge declines in prices vastly expanded markets to include those who, for the first time, could afford manufactured products."
"Another advantage that new tech companies will carry into deflation is the rapid obsolescence that rapid technological advances bring." Like the auto industry in the early part of this century, buyers did not wait for price declines to purchase vehicles due to rapid technological improvements. |
