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Industrial Goods

With global barriers reducing, and the economies becoming more volatile now, the main differentiator to most products is reduced to just two: quality and costs.

The high fluctuations in the demands and the contraction of growth projections are adding to the risk exposure of their investments. In such times, it is a necessity to go for diversification of risks and maintaining a low cost base: both fixed and variable.

A category of stocks that relate to producing goods used in construction and manufacturing. This sector includes companies involved with aerospace and defense, industrial machinery, tools, lumber production, construction, cement and metal fabrication.

Performance in the industrial goods sector is largely driven by supply and demand for building construction - residential, commercial and industrial - as well as the demand for manufactured products. When the economy contracts and consumers save more and spend less, activity in this sector drops because companies will postpone expansion and produce fewer goods.