What's Obsolete? What's Rising?
Board: Macro Economics
International Paper, once a Dow 30 company but no longer, is laying off people due to lack of demand for paper.
As new technology is developed, paper is only one of many products and services that are becoming obsolete. (Tim pointed out that many elderly do not use computers, but many do and the ones who don't will eventually fade away.)
As investors, we don't want to hold buggy whip manufacturers. We do want to invest in the rising sectors.
So the question of the day is: what's obsolete or will soon become obsolete? What's likely to remain stable in price while providing a reliable income stream? What's rising?
Which companies will be affected?
I hope that many METARs will chime in with industries and specific companies.
I'll start out by proposing a few. Please feel free to add more and/or disagree.
1. Heading toward obsolescence. Paper, some technology companies (e.g. producers of personal computers and their software, including Dell and Microsoft, as well as some electronics such as Nokia), brick-and-mortar retailers whose products are easily sourced online, such as Best Buy.
2. Stable. Consumer staples, such as food (KO, PEP, etc.) and family-care consumables (KMB and JNJ). Utilities.
3. Rising. Exporters of consumer goods. Big pharma (MRK, JNJ, Novartis).
I'm really not sure what to think about energy (e.g. XOM, CVX) and energy-related companies such as pipelines. I'm also not sure how to evaluate the financial sector, which now produces 40% of all after-tax profits, because the change in the accounting rules makes it harder than ever to evaluate their balance sheets.
Of course, any company's stock price is based on supply and demand. Sectors rise and fall in popularity. Investors may be more or less interested in growth (which can lead to high P/E ratios) than dividends.
Each investor has personal risk tolerance and desire for growth vs. income.
Please add your thoughts.