At last we have a spell of lovely summer weather and people can enjoy putting their BBQs to work without shivering, but the economic backdrop is becoming more chilling. I was talking to a decorator this morning who said that there seems to be an abnormally high number of building trades people spending time working on their own homes rather than working on projects secured by their employers - the decorator knows because he gets requests to do work at the homes!
The above picture is consistent with RISs put out last week by Vertu Motors (a vehicle retailer referring to the fragility of UK consumer demand) and Colefax (an international designer and distributor of luxury furnishing fabrics and wallpapers stating that it is still very difficult to accurately forecast how the group will perform in 2011/12 given the current economic climate). In my opinion, politicians who advocate that the way out of the recession is to boost the ability of individuals to consume more are seeking to seduce us by telling us what they think that we would like to hear - it is perfectly apparent to many people that increased consumer expenditure cannot be relied upon to lead us out of this recession, which reflects a change from economic cycles over the last forty years or so.
By contrast, many of the net exporters which have positioned themselves to compete based on the value which they provide to their customers rather than on price seem to be making positive trading progress in spite of the economic challenges faced by many economies.
If you look, for example, at Tristel's announcement today (see below), whilst the execution of a strategy may encounter hurdles which mean that progress doesn't always follow a straight line upwards to the right, nevertheless the overall trend is positive.
Immunodiagnostics' share price rising to £12 last Friday (vs. an IPO price of 51p in December 2004) is testament to the returns which can be achieved by following this approach - but it is only suited to investors of a patient disposition!
