| Here are questions which should be asked
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| | five minutes' inspection of your
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| about any stock group you are studying.
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| | supermarket's shelves. Plastic
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| Some of the answers will be
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| | squeeze-bottles of one sort or another
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| contradictory; the significance of all of
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| | have cut into glass as far as the
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| them will be relative. But each will
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| | packaging of cosmetics is concerned.
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| contribute a plus or minus factor to your
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| | On the other hand, the appearance of
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| thinking about the industry you may wish
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| | liquid soaps has given glass an
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| to invest in.
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| | opportunity in a field that was
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| 1) Does the industry deal in necessities
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| | exclusively the paper-carton supplier's.
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| or "postponables"? Does it produce things
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| | The paper-carton manufacturer, meanwhile,
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| people have to have in good times or
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| | has benefited from frozen foods at the
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| bad-food, drugs, power, or heating
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| | expense of the tin-can producer. But the
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| supplies? Or can people put off buying
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| | tin-can man has a new area in the
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| its products to another year? There is
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| | pressure containers now used to dispense
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| one investor who holds meat-packing and
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| | shaving cream, toothpaste, hair lotions,
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| distillery stocks, not notably high-grade
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| | and anything else that can be squirted or
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| issues, because of his conviction that,
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| | sprayed-and that isn't already in a
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| come hell or high water, beef and bourbon
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| | plastic squeeze-bottle.
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| will be staples of the American diet.
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| | 5) Are wages a big item in the industry?
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| The same question on a different level:
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| | How large a percentage of total sales are
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| Is the industry involved in durable or
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| | they? This, of course, can bear heavily
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| capital goods, such as locomotives,
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| | on net earnings and, consequently,
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| trucks, freight cars, ships, large
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| | dividends. In the chemical industry, the
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| buildings? These are expensive items with
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| | ratio of wages to sales is quite small.
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| a long life, and are usually financed
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| | In steel and railroading, which have vast
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| with long-term, fixed obligations. In a
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| | numbers of employees and huge payrolls,
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| pinch, they are among the first things
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| | it is quite large.
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| customers are prepared to do without.
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| | 6) Do raw materials come from domestic
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| 2)Is the industry depression-resistant?
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| | sources or from abroad? Are their prices
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| Retail stores, tobacco, metal containers,
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| | traditionally stable or volatile? This,
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| and, again, food products have a
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| | of course, applies to the oil, rubber,
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| reputation for stability, not only in
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| | and sugar companies, to some of the
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| terms of continuing consumer demand, but
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| | mining and metals companies, and to a few
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| in terms of production costs and price
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| | of the chemicals. This is, possibly, not
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| structures which make them attractive as
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| | so important as it once was, considering
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| so-called defensive issues.
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| | that few industries are totally dependent
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| 3)Is it an extractive industry? Does it
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| | on foreign resources, and that political
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| deal in natural raw materials, such as
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| | upheavals or wars are so far-reaching
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| oil, lumber, asbestos, metals? Stocks of
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| | these days that almost everyone is
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| these companies are considered good
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| | affected to some degree, at home and
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| hedges against inflation because they
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| | abroad.
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| represent a primary material, an asset
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| | The question should also be broadened to
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| already owned. The acquisition cost of
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| | include foreign markets: What percentage
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| oil underground, for instance, may
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| | of income derives from sales abroad? This
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| already have been rationalized;
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| | would affect air and shipping lines,
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| henceforth all that can be inflated are
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| | distributors like W. R. Grace and U. S.
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| the extraction and distribution costs.
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| | Industries, and the export trade of the
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| 4)How keen is competition within the
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| | auto, machinery, movie, and
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| industry? Usually competition is keenest
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| | electrical-equipment industries.
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| where the differences are least.
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| | The investor will have to decide, too,
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| Automobiles, soaps and detergents, drugs,
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| | whether he considers foreign trade a
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| tobaccos, gasolines and motor oils-within
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| | positive or negative item. Overseas
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| these categories the companies all offer
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| | markets may be uncertain or undependable,
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| the consumer pretty much the same thing.
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| | but they are also frontier areas of
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| The local power and light company, the
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| | tremendous potentiality for an economy
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| telephone company, and the natural gas
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| | like that of the United States, which has
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| companies (except for the scramble to run
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| | lived so largely off its own people.
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| pipelines here or there) are virtually
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| | With Forex trading economic indicators
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| without competition.
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| | will have to be studied as well.
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| Cross-competition between industries is
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| | Good Forex software can greatly help you
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| also a factor. This is not the struggle
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| | with this task.
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| of Coke vs. Pepsi, or Tide vs. All, but
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| | Forex software has become so good that it
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| whether new office buildings are going to
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| | has artificial intelligence and can
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| have a skin of brick and mortar, aluminum
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| | predict future currency movements with
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| sheets, or glass panels.
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| | some accuracy.
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| The container and packaging people are a
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| | You still need to be aware of the risks
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| lovely example of round-robin
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| | involved in any financial investing and
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| competition, as is perfectly evident from
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| | only invest what you can afford to lose.
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