Watching the indices of today there is a strong impression (I think not only from doitinvest.com) that shares are going down and never stopping. It should be so in a sea of bad economic news and recession warnings.
Low-cost airlines soared this decade with cheap fares and helped push several traditional U.S. carriers into bankruptcy, but their struggles and failures now are providing little relief for troubled bigger rivals. But as it happens in the recessions with most of the cost-lead companies, the airlines who compete based on low fares are the first to feel the blade of the cost increases.
It is well known that the airline industry, especially in the US, is one of the lowest performing of all times. Despite the government protection granted to virtually all the national airlines and despite all the non- market advantages they have, the airline companies have undeperformed systematically the markets.
Fears that the recession-hit U.S. consumers will decrease the third-quarter earnings for makers of MP3 players, cell phones and other gadgets, pummeled the stocks of consumer electronics companies like Apple Inc and SanDisk Corp on Tuesday, a day after they issued grim forecasts. This is relatively normal in a tightening economy, where the consumers give up first to the luxury and the technology goods when their revenues get tighter.
“Growth does not always lead a business to build on success. All too often it converts a highly successful business into a mediocre large business.”
Richard Branson (b. 1950) British entrepreneur, business executive, and founder of the Virgin Group. Speech to the Institute of Directors, London. ‘Growing Bigger While Still Staying Small’ (May 1993)
“Is your company so small you have to do everything for yourself? Wait until you’re so big that you can’t. That’s worse.”
Michael Bloomberg (b. 1942) US entrepreneur, business executive, and Mayor of New York.
Bloomberg by Bloomberg (co-written with Matthew Winkler; 1997)
As anticipated in our previous posts (unfortunately), shares continue to decline today on all the major markets, especially in Europe and Asia. There is an old investment adagio which says that “No news is bad news” (Ernest Hemingway, “For Whom The Bell Tolls). In this particular case, no good economic news means bad news for our shares investments.
I found today a couple of interesting articles on the Japanese car producers which have US factories.
Everything started in 2006, when it was announced that the combined market share of the main Asian auto makers (Toyota, Honda, Hyunday and others) has exceeded the one from the native Detroit car makers. It was a big hit to the local car producers and the US manufacturers (such as Ford or GM) announced big restructuring plans… Unfortunately for them, those plans failed to deliver the promissed superiority, whilst the Japanese producers continued their advancements in the car manufacturing.
“The empires of the future are the empires of the mind.”
Winston Churchill (1874–1965) British prime minister. Speech (September 1943)
