Comfort Zone Investing: Either Prices Are Going Up or Margins Are Going Down

Filed under: Comfort Zone Investing

You may not have felt it yet, but inflation is running rampant for certain commodities. Prices for some raw materials like cotton, oil, aluminum, tin and many others have skyrocketed in the last year. Manufacturers from electronics to apparel are feeling the pain as they report lower earnings due to higher raw materials costs. That can only mean one thing: prices will be going up on many items in the near future or profit margins will be lower, driving down earnings.

If the first scenario plays out, then inflation will start making a comeback as it will take more dollars to buy the same products. That means a semiconductor chip that cost $2.50 last year may cost $2.75 this year. Same chip, just more expensive. Or an all cotton shirt that cost $50 this year will go to $60. Same shirt, just more expensive.

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Comfort Zone Investing: Either Prices Are Going Up or Margins Are Going Down originally appeared on BloggingStocks on Sat, 12 Feb 2011 10:30:00 EST. Please see our terms for use of feeds.

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