It's popular to say manufacturing in the United States is dead, but, of course, such statements are very much an exaggeration, aren't they? We make lots of things, including airplanes, earth-moving equipment, printing machinery, tractors, refrigerators and refrigeration equipment, trucks, pre-fabricated housing, school and regular buses, and lots more, including automobiles. Yes, the latter have had tough times (arguably, the auto companies' fault — their payment for l-o-n-g-term sins). However, the United States is still a manufacturing juggernaut, and even the auto industry is having a renaissance of sorts.
Manufacturing is like the weather
A statement frequently heard relates to the weather, and it goes something like this: "If this is global warming, why is the weather so snowy and cold?"
I'm in the midst of an honest-to-God blizzard. I just made it back to Tulsa, Okla., from Oklahoma City, getting home about two or three hours before the snow hit. Even so, I know, although it's cold and snowy in Tulsa, on average, the temperatures may be higher around the globe.
Now, I don't really know whether there is global warming. However, I realize what is going on globally may not always relate to what is going on for me locally. That applies to investing, too. Someone who lives in certain parts of California may see a really bad real estate situation and lots of empty commercial space and tend to equate that with everywhere in the United States and maybe everywhere in the world.
However, it's not necessarily true that things are bad everywhere. Parts of the United States are doing quite well. Oklahoma has had fewer problems, for example, than many states and is anticipated to be in pretty good shape, aside from some public employee pension debt, in a year or two. Nebraska is humming, and Texas is, well, in some respects, like its own country.
I decided against investing in a company that paid a 10% dividend on mezzanine financing for residential housing in Texas once, based on my general assessment of homebuilding in the United States. I was wrong. Homebuilding financing thrived for this company — even during the downturn. So it's a good investing lesson to realize when things are bad in one place, they may be good in another.
Sometimes, investing opportunities arise even during disasters — if one or two companies are positioned to do most of the clean-up work, they might be a good place to invest for a time.
One can't be right all of the time. However, it's fine to simply be right most of the time.
Have a wonderful week. I figure to catch-up on old work because, with the snow, I don't think I'll be seeing the office until Thursday or Friday at best.
Check out more blog entries from Richard Hoe.
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