Page 468 - How to Make Money in Stocks Trilogy

338 INVESTING LIKE A PROFESSIONAL

In 1983, Fleetwood Enterprises, a leading manufacturer of recreational
vehicles, was a big winner in the stock market. Textone was a small cousin
stock that supplied vinyl-clad paneling and hollow-core cabinet doors to RV
and mobile home companies.
If you notice a company that’s doing particularly well, research it thor-
oughly. In the process, you may discover a supplier company that’s also
worth investing in.

Basic Conditions Change in an Industry
Most group moves occur because of substantial changes in industry conditions.
In 1953, aluminum and building stocks had a powerful bull market as a
result of pent-up demand for housing in the aftermath of the war. Wallboard
was in such short supply that some builders offered new Cadillacs to gyp-
sum board salespeople for just letting them buy a carload of their product.
In 1965, the onrush of the Vietnam War, which was to cost $20 billion or
more, created solid demand for electronics used in military applications and
defense during the war. Companies such as Fairchild Camera climbed more
than 200% in price.
In the 1990s, discount brokerage firms continued to gain market share
relative to full-service firms as investing became more and more main-
stream. At that time, a historical check proved that Charles Schwab, one of
the most successful discount brokerage firms, had performed as well as
market leader Microsoft during the preceding years—a valuable fact few
people knew then.

Watch for New Trends as They Develop

In our database research, we also pay attention to the areas of the country
where corporations are located. In our ratings of companies as far back as
1971, we assigned extra points for those headquartered in Dallas, Texas, and
other key growth or technology centers, such as California’s Silicon Valley.
Recently, however, California’s high-cost, high-tax business environment
has caused a number of companies to move out of the state to Utah, Ari-
zona, and the Southwest.
Shrewd investors should also be aware of demographic trends. From data
such as the number of people in various age groups, it’s possible to predict
potential growth for certain industries. The surge of women into the work-
place and the gush of baby boomers help explain why stocks like The Lim-
ited, Dress Barn, and other retailers of women’s apparel soared between
1982 and 1986.