Newspaper article Sarasota Herald Tribune

Market Momentum: Has It Got You Down?

Newspaper article Sarasota Herald Tribune

Market Momentum: Has It Got You Down?

Article excerpt


Market momentum, according to Investopedia, is a measure of overall market sentiment, calculated as the change in the value of a market index, multiplied by the aggregate trading volume, occurring within index components.

Market momentum is important because it can be a good indicator of overall market changes that are likely to continue in the near future. It is important to understand that momentum considers not only changes in price level, but also volume.

The more simple definition of market momentum I am using in this column (Zink's definition) is simply whether your industry/business sector is improving, flat or decaying and whether your company's sales are increasing or decreasing.

Your industry/business sector

Is your business in a growth industry like health care or the internet? Or is your business in a decaying industry and are you still selling horse buggy whips? If Henry Ford asked his customers what they wanted, they would have said faster horses. Be sure you are asking the right questions.

Is there a great disrupter in or about to be in your business space? Apple has been and continues to be one of the greatest purveyors of disruptive technological innovation. How would you like to be the marketing director of Garmin with the advent of the iPhone and its GPS maps? Examples of some other recent great disrupters have been cable TV, CNN and the internet itself.

Nothing is permanent. Every business segment has a life cycle and every sector will change, adapt, reinvent and die. It's not a question of if, it's a question of when. The rules of the great game of business have always been in flux. But the speed of change has increased, and it will continue to do so.

So what's a business owner to do?

Your business

To sustain business growth, your company has to be moving forward, not backward. What is necessary to accomplish this positive momentum for your company? Increased profits.

Ideally, you are in a business sector that has a lot of life left in it. It's easier and you travel farther when you go with the flow instead of against the current. A rising tide lifts all boats unless your boat has a hole on the bottom and it's taking on water.

In a small business, a few reliable, great customers can make the difference between having a good month or a great month. Your business has three differentiated humanistic components: management, employees and customers.

Management supplies the vision and direction for the company. The employees execute this vision and mission. If this is done well, assuming all of the other aspects of running a business are successful (marketing, pricing, distribution, etc.), then the consumer buys your products and/or services and your company makes a profit. What if this isn't the case? You must quickly identify the glitches and take corrective action. …

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