Customer Health as Bell Weather for Short Selling Stocks (Part 1)
Though lay investors may prefer to ask finance professionals about which stocks to buy and sell, marketing experts may be the first to know which way some securities are headed. Consider your own experiences as a customer: there must be brands which you love, but cannot afford to buy as often as you wish. Each of us takes periodic decisions to switch brands or to change other aspects of our regular purchasing decisions.
This is not just for tangible products, but also for service providers such as accountant, attorneys, and medical professionals. The financial fortunes of manufacturers and of service providers may be influenced by our individual decisions so slightly that no one can make out the immediate impacts, but results will inevitably show up in annual reports of stocks when large numbers of consumers act in concert.
The rationale behind all reasoned short selling of stocks is inevitably a forecast that an event in the foreseeable future will detract from value. One of the best ways to make such an educated guess is to develop a strong understanding of the purchase decision-making of a defined customer segment with respect to a specific product or service category. Marketing is largely pre-occupied with understanding and serving targeted customers, and the best companies try to integrate this process across all their functions and tiers: this forms an interface between marketing and other business functions. All investors can use the concept of customer integration to understand how stocks will behave in future. The key is to understand the linkages between stocks in terms of business effects on customers and their preferences. The results may be provocative, because they lead to short selling of stocks in a sector with no superficial linkages in sector or country terms. This system of thinking may also result in short-selling stocks of reputable companies with strong track records of past success.
What We Learn from Telecommunication Network Stocks
Modern telecommunications involve some of the most impressive technologies of the last two decades. Electronic engineering may justifiably claim to have reached its zenith with the amazing advent of cellular telephony. The facility to stay in constant touch with family, friends, and colleagues, changes lives radically, and by all accounts, is highly prized across customer categories. Cellular telephone use has become so ubiquitous that some health authorities have begun to worry about the effects of these electric waves on our minds and states of health! These fears do not deter technology developers, since they have graduated to provide multi-media Internet feeds across cellular telephone networks. Prized and prestigious companies with such telephone technologies take pride in a global spread of their enterprises, and some of them make specific references to the growing shares of emerging economies to their stocks.