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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (6717)	8/18/1998 10:58:00 AM
From: Robert Douglas	Read Replies (1) \| Respond to of 10921

Ian, Do you believe that periods of high innovation in either products or processes lead to growth in profits? If so, then the period of margin / earnings growth should last at least as long as the innovations from integrating electronics / communications in the various products and services making up the economy. Most certainly! My original post didn't even bring up the subject of productivity growth, which is essentially what you are referring to. Going from memory, I believe productivity has been growing at around 2% the last few years. It follows then, if employment costs rise 4% then business would only need to pass along a 2% price rise to maintain their profit margin. That is certainly a workable situation. The problem is that over the last 30 years productivity growth has only averaged 1% a year, (again from memory) so once again we don't have much room to improve and possibly will return to historical norms. Having said all that, I still agree with you about the positive effects the pace of technological change will have on things. It's why I frequent SI as much as I do. I believe the long-term outlook is exceptional and that the world has a long lasting period of growth ahead of it. I just get a bit cautious when I see these forecasts of double digit earnings growth for as far as the eye can see. It leaves little room for disappointment. -Robert