Financial Education

There are many factors that influence the investment performance of securities and industries. Only some of these are related to the general economy. Structural changes in a variety of categories can affect the prospects for companies and industries.

Demographics

Changes in birth rates can have a profound impact on the overall economy. The “baby boom” in the US drove many trends as the needs of a large segment of the population evolved from diapers to education, from first homes to child-raising and finally to retirement. As the group retires, it may result in wage increases as the workers must be replaced from a smaller pool or in greater demand for financial services advice.

Lifestyle

Are people living in cities or moving to suburbs? Is the divorce rate rising or falling? Are more people buying second homes or discretionary items? All of these can influence industry prospects.

Technology

Technology can make some products obsolete, and introduce entirely new products. It can also effect the efficiency of the overall economy.

Politics and Regulation

Regulations affect many industries, and the political climate, lifestyles and social values can impact the future of those regulations. New regulations, changes to existing regulations, and deregulation can all have profound impacts on company and industry prospects.

For more information, see all articles on: Economic Analysis, Industry Analysis, Investing in Stocks, Security Selection

See also:

Top Down Investing

Industry Classification: Business Cycle Reaction

Industry Analysis: External Factors

Affect in a Behavioral Asset Pricing Model

The Top Down Approach to Security Selection