Consumer Goods - Pro

Consumer Goods - Pro

Points in favour of shares in consumer goods

(i)Shares gain earliest and mast from national prosperity and in-flation because increasing wages and salaries, with a resultant increase in spending on consumer goods, have kept pace with growing prosperity and inflation.

(ii)Shares suffer least and last in a national recession, since consumer goods are the chief necessities of life and are regularly and rapidly exhausted and replaced.

(iii) The lowest income groups, which form the majority of the population, must of necessity spend all or most of their earnings on this class of goods.

(iv)Companies providing consumer goods do not confine themselves exclusively to any one class of these, but deal in a wide variety, thus catering for all demands. Because of this their turnover is enormous.

(v)Consumer goods as a whole form an industry which is un-likely to fall under government control and is not faced with the threat of nationalisation (sugar refining and manu-facture perhaps excepted).

(vi)Most important of all, as stated above, 50 % of the nation's spending is on this class of goods.

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