More cyclicality – real-estate, insurance, shipping

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Here’s three new cases:

  • Shipping – see Sink or Swim on massive over-building [also discussed in my presentation on lessons from the crisis]
  • Commercial real-estate – see article on office vacancy.
  • Insurance – can’t say more on this at the moment, as there’s a client opportunity, but there is crystal-clear evidence of the big swings in profitability in this industry too.

As I say, the frustrating thing is that we know why it happens, and some strategies for coping ...

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Strategy in cyclical industries

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The world’s biggest basic materials firms are suffering along with others as the world economy collapses, and the Economist points out that taking on loads of debt to grow and acquire others did not help. But these industries have always suffered cyclicality, even when not buffeted by extreme market conditions. Pity is that we have known how to steer away from these dangers for many years. Seems to me the same principles would have been useful to a great ...

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Profiting from the downturn – e.g. airlines

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Nice example of what looks like a strategically sound business [Lufthansa] pouncing on valuable resources shaken loose when a feeble competitor [Alitalia] stumbles. The Economist reports they will be offering new services to eight other European cities from under-served Milan.  

With the downturn accelerating, there will be many more examples of weak firms forced to surrender potentially valuable resources – especially capacity and people – to those whose sound strategic management avoided getting into trouble. In the extreme, this will involve ...

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