Stock Market Philosophy: The Flip Side of the Economic Winter

The northern USA is drowning in snow again, at least parts of it. Not just people are suffering in the severe winter, but nature too. Many trees are losing their branches under the heavy weight of the snow. But at least the weak ones are down now, and the strong trees made it through.

The same is happening in the economy. The companies which survived the harsh economic winter of 2008 seem to be stronger than before. In the last few days Caterpillar, Intel, General Electric and many other companies reported in the last days fast rising profits for the last quarter (Q4 2010). Some of them climbing on new records.

The reason: The companies reacted to the crises of 2008. They reduced their cost drastically and became much more efficient & leaner. Now they are becoming stronger in the upswing of the economy. Bloomberg reported today that manufacturing in the USA accelerated in January and grew at the fastest pace in more than six years.