The Defensive Value Investor: A complete step-by-step guide to building a high-yield, low-risk share portfolio by John Kingham

Author:John Kingham [Kingham, John]
Language: eng
Format: azw3
Publisher: Harriman House
Published: 2016-04-04T04:00:00+00:00

12. Does the company operate in markets or industries where demand is expected to grow?

As well as cyclical changes in the amount of demand and periodic changes in the pattern of demand, I want to avoid markets where demand is in rapid decline.

The speed of decline is important because some markets are in a long-term contraction, but this could take several decades or even longer. For example, the market for fossil fuels is likely to be in long-term decline throughout the rest of this century. However, few investors think this will have any significant impact on oil and gas related profits within the next decade. The decline is so slow that its impact on current valuations is minimal.

On the other hand, the market for physical digital storage media, such as CDs and DVDs, collapsed so fast that companies like HMV and Blockbuster could not adapt quickly enough, rendering their shares worthless.

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