Conclusion of Shares In Capital Goods

Conclusion of Shares In Capital Goods

Shares in capital goods - Conclusion

Capital goods are not in such regular and frequent demand as are consumer goods. Governments and industries, the main customers of the capital goods industry, often postpone their plans for construction, replacements and modernisation, because of the heavy outlay required, and orders for capital goods are spaced out.

The dependence of capital goods companies on government economic policies and world trade, coupled with theft low profit margins on overseas contracts and huge capital outlay, can lead to depressed earnings or even losses in a recession. For these reasons it seems advisable to limit your stake in this section to 13% of your portfolio, and this may be apportioned as follows:

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