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Strategies & Market Trends : Value Investing
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To: Michael Burry who wrote (6668)4/10/1999 2:39:00 AM
From: James Clarke  Read Replies (1) of 78596
 
<<In your experience is medical capital equipment different by nature than say ag capital equipment? You have a demographic that is increasing the need for the machines at a relatively even speed, unlike the demand in other heavy equipment industries. What would cause these machines to stop selling in a cyclical fashion? >>

You point out something that our tech analyst is always saying too. If you're going to do cyclicals and avoid getting burned, you want to look at the underlying growth rate. Is each cycle higher than the previous one? With medical device cyclicals, you might have a shot at those economics. That makes the question of barriers to entry that much more important though, because you have to make sure your horse doesn't get lapped in the next product cycle. That's the problem with a lot of the technology capital equipment stocks. You don't have that problem with a Caterpillar or Deere.

And I don't know if there is anything that makes $1 million machines stop selling in a cyclical fashion.
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