Tuesday, March 10, 2009

I forgot about my blog

It was to my surprise that I found I had a blog. I posted my first (and only) post over a year ago. So, the question begs asking, do I really need a blog? Does anyone really need a blog? What the heck is a blog, anyhow?

Well, I don't think I need a blog, but that doesn't mean I don't want one. It's an excellent forum to express one's opinions on a variety of topics.

My first post was a commentary on market forces. It seems to me that we are currently in what analysts are calling a recession. As far as I am concerned, this is the optimum time to invest. When you (or your wife, as the case may be) go shopping, you want to get the best value for your money. So what do you do? You look for sales. Well, right now, most stocks are on sale. It strikes me that this means that we should be looking for value and buying. That being said, certain companies that may have previously been considered safe havens are no longer in that category. Each investor needs to look at the risks and benefits of each stock. The auto industry seems to be unsafe, as they have not adapted to the demands of consumers. The recording industry is in a similar boat. What we need to look for is companies that are able to quickly adapt to change and keep up with the demands of their customers.

I work in the outsourcing industry. I will not say which company, as we are currently in a blackout period while we announce our financial results, but it strikes me that this is the way to go as far as investments are concerned. Outsourcers have to constantly adapt not only to the demands of their customers, but also the demands of their customers' customers. Also, this is a growth industry. As businesses look to cut costs they will increase the amount of work they outsource, moving from internal support to less expensive external support. This may or may not include offshore solutions. So if you are looking for a solid investment vehicle, look for companies that have operations on multiple continents and provide services that are not going to go away. Demand may weaken, but everyone needs front-line agents to handle customer inquiries and support. The other nice thing about the outsourcing industry is that they generally have a broad spectrum of clients. If one client drops out, they are usually able to find more to fill the gap. This prevents the need for restructuring costs (i.e. severance, etc.), and allows organisations to dynamically adapt to the conditions of the market.

During boom times we see companies looking to maximise profits and become more appealing to investors. This leads to outsourcing. During bust times (i.e. now) companies look to cut costs to keep up with the cost of doing business. This also leads to outsourcing.

In short, outsourcers are a solid investment at any time. Given the current economic conditions, and the fact that stock prices are all depressed (on sale, remember?), this is the optimum time to buy in to an outsourcing company.

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