Manufacturers of smartphones have seen steep declines when it comes to sales, and this has ripped into profit numbers of many major tech companies. Apple, Samsung, and others have felt the sting of this trend in one way or another, and although whether or not it has hurt their stock prices in a noticeable way, it is easy to conclude that declining sales have certainly not helped them at all. Companies like Apple have attempted to rectify this situation by expanding their business in other areas, either by tapping more seriously into the sale of apps and other products, or by expanding into other markets.
However, while sales have certainly declined, not all companies are being impacted in the same way. The companies that will be best able to compensate for this change will see their stock price remain the most competitive. This is something that requires a strong team of executives and other leaders within a company, but it’s not the only factor that will determine success.
Companies that are already established in developing and growing markets have an inherent advantage it this area. For example, the Chinese company Xiaomi has been very outspoken in letting their clients and investors know that the shrinking global market is not projected to impact them in any way. Of course, this is a precarious situation, simply because Xiaomi is a startup company and doesn’t have the same background that larger and older companies have. There is also the issue of the reliability of the data coming out of Xiaomi, However, despite these disadvantages, it does make sense that a decline in global sales would be easier for the company to overcome, especially as they have already built themselves up as one of the largest smartphone companies in China. This position gives them an opportunity to tap into the huge population and expand into other Asian nations. Given the legal limitations that Apple has found in China, this could position the company for better than expected growth, even while the rest of the industry seeks new chances to make profits.
Looking at sector growth potential is an important long term component of your options or stock trading strategy, even if you are a ultra short term or day trader. This helps you to establish a framework within which to create signals for yourself and get an idea of what the general trend of an industry or sector is.
While this translates well into stocks, it can be a bit tough to extend the concept into other asset classes. For example, does a declining smartphone market mean anything for currencies? What about commodities? These kinds of concepts and connections are not easy for most traders to see, but they do exist. When it comes to smartphones, certain materials are produced, but they are not generally widely traded. This includes metals like tungsten, copper, platinum, and even gold. Tungsten is the metal that is used in phones that is most heavily impacted by phone usage, but that is not carried by most options brokers. However, gold and others are, and they are even carried by some Forex brokers, making them very easily accessible to the average trader. Even little bits of movement can turn into large profits if you approach them correctly.
Not all markets are as easy to see connections within as the tech industry, but this does serve as a great example simply because it is such a widely traded sector right now. As you make any sort of trade, looking for connections can help you to gain a better perspective on the correct long term view—and thus make short term trades more effective and profitable.