Once upon a time, I used to work in Supply Chain (self-taught through learn by doing).
And one of the lessons learned is that shorter lead-times are preferred over longer lead-times, all things being equal.
In a way, it's true.
Take for example a factory for DRAM memory chips or LCD panels. Demand good with high prices, what do you do? Increase capacity by investing in a new plant of course!
If only we can add a new factory in one month instead of 1 to 2 years...
By the time the new factory is ready, DRAM and LCD prices may have tanked. All thanks to your competitors having the same bright idea as you; everyone built new capacities. You smart; others not stupid.
And to add salt to your wounds, now must contend with competiting technologies like in Flash memory or LED panels...
It's much easier as a transport operator if you are planning for new capacities as in buying new taxis or buses. But if you are a shipping carrier... Perhaps that's why the share price is quite stable for one sector while the other is quite cyclical with roller-coaster rides up and down.
For those young adults who pick fields of study in tertiary institutions based on the latest starting pay surveys, you may one to keep the above scenarios in mind as there's a 3 to 4 years lead-time. What's hot today may not be so when you graduate. Unless of course you are great at forecasting!
Now comes the dilemma.
Is it easier to predict the weather for the next hour or for the next day?
OK, now combine your answer with your own view on long lead-times.
How?
Makes you pause and think about long term investing and short term trading right?
Singapore Man of Leisure (welcome to my blog; just google it!)
