There are many industries that are considered a bad choice for investors as they generally do not give good returns. Most investors simply stay away from these industries, which include airlines, real estate and other such industries that are capital intensive and suffer a lot of uncertainty.
Similarly, investors are often advised to exit from certain industries such as those selling luxury goods when there are signs of start of a recessionary cycle. You may have to wait a long time to get returns on investment in such industries and even then there will be a risk of making a loss.
Although it is generally advisable to stay away from these industries, you should not hesitate from investing in companies that show a good potential. If you invest in a company that makes a huge revenue and has a good history with many years of sustained profits, then you are likely to get high returns on your investment. Moreover, stocks of these companies will be cheaper as they are a part of a bad industry, which would give a further boost to your profits.
There are some companies whose products are unique and competing products cannot act as good substitutes for them. Moreover, many companies are just too strong as compared to other players. These are always a good choice for investment. Successful companies find a way to deal with uncertainty and they will be less risky investment options as compared to other companies in the sector. For example, even if residential construction companies are doing badly, there are many companies out there which are still making good profits.
You can get very high returns on your investment, by looking for gems in a bad sector. For example, real estate has been written off as a bad industry because of the massive declines in house prices. However, title insurance companies have been doing well even if the rest of the real estate players are stumbling.
There are many companies in this niche which have a stronghold over the market and they are a safe bet for investors. Similarly, trucking business is very volatile because it depends on fuel costs and economic condition. But some companies in this industry have a global presence and they have tapped into high growth markets, and have thus showed good financial performance.
So do not write-off the whole industry as a bad bet for investment. You would always find some investment options that promise good returns.
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