A Bourse Diary

Thoughts on stocks, speculation and ... life

Monday, May 15, 2006

Something from the Business Scene

I have read several days ago in the German Newspaper Die Zeit (Print Edition) two interesting articles, which I’d like to mention here:

The first one was an interview with the Head of DaimlerChrysler, Zetsche. The keynote, which attracted my attention, was: “Focus on core business!”, “Focus on core business!” and “Take care of rentability!”. I believe this attitude is predominant in the German business scene nowadays, and maybe to some great extend in Europe and America as a whole.

Especially in Europe, a more rigid job market, a weaker growth of the national markets and the fact, that the bigger companies are mostly involved in “classical” industries, imply a more cautious and lean management. At present.

That “classical industries” point is surely more pure subjective opinion of mine, and certainly does not mean that the prospectives for the European stock markets are bad. Warren Buffet has also always had a pronounced affinity for “classical” stocks. With innovations and (risky) business expansion one can also loose money - much money.
Supporting the view of very good outlook for the leading European companies should be additionally the fact, that these have managed to increase substantially their profitability and have reached now the international level. Because, historically, particularly the German enterprises have always had a great business, great products, but lacked strong record on profitability.

Some people argue, that it would be normal if we come back to the historical averages, but I think, in the globalized world and with more flexible structures (implemented mostly due to the economic and bourse weakness in the years after 2000), the German companies will hold approximately the world level. And in this case the valuation (which is partly derived by historical standards) will appear seriously low.

But back to the interview: I assume, that enterprises, which focus that much on their core activities will much less surprise with negative profit development. The profits may somewhere be disappointing, but not “surprising”. This will add stability to the stock exchanges.

The second article treated the new internet developments, ever often referred to as “Next Economy” (oh, my dear!) or Web 2.0. This blog is by the way part of those Web 2.0 story...

In short, there are numerous new success stories, which developed out of the more intensive and personalized usage of the world wide web - prominent exsamples are Youtube, Facebook, OpenBC etc. etc. All in all profitable companies, which grew up from “a garage” and show very stable and prudent financial picture (not the hot air of the New Economy, HOPEFULLY).

But the new boom (if there is one) takes place “behind locked doors” for the investors. The companies are not listed publicly and for the investors remain only the old, established shares. Interesting: the supply of stocks in that growing industry is now relatively clammy...

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site


At 3:01 PM, Blogger Em said...

i enjoyed reading your thoughts.


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Disclaimer: All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and are in no way intended to serve as personal investing advice and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Readers should not make any investment decision without first conducting their own thorough due diligence. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed.