The following appeared in a newsletter offering advice to investors."Over 80 percent of the respondents to a recent survey indicated a desire to reduce their intake of foods containing fats and cholesterol, and today low-fat products abound in many food s

The author advises investors against investing into Old Dairy Industries, which specializes in high fat and cholesterol food, and since a recent survey allegedly indicates a desire of consumers to reduce their fat intake, Old Dairy is going to witness a reduction in sales and, consequently low profit as well. However, certain questions need to be answered before this advice can be held valid.

The first question that needs to be answered is the veracity of the survey. The author makes mention of a survey of which 80 percent of its respondents indicated a desire to reduce fat and cholesterol intake. However, the author does not present any other information about the survey. The survey may have asked a lot of questions and few on fat intake, or the survey may not have been detailed enough on questioning people’s desire to reduce fat intake. Like the author infers, the survey only indicated, it did not directly make an assertion, which questions the premise of the authors argument - trend for low fat/cholesterol intake.

Secondly,one does not know who the respondents are. If the survey respondents were fat or obese individuals trying to reduce their weight, they would most likely want to reduce their fat intake so as to lose pounds. It would therefore be incorrect to make an assertion about people’s fat in take based on the opinions of fat or obese people alone.

Even if the survey is valid, another question that ought to be answered before investors make a decision is to determine if it is possible for Old Diary to easily shift its prodduction to low fat and cholesterol food. The author states that many and not all of Old Diary’s product are high fat food; hence Old Dairy markets some low fat/cholesterol food. Old Dairy may be able to shift its production to these low fat food, rendering the need for investors to pull out their share void. Perhaps, Old Dairy possess an advanced effective technology for food production which makes them dominate the market and if they concentrate on low fat food, they could still win the competition and make a lot of profit for their investors.

There is also a need to determine how easy it is for investors to pull out their shares from Old Dairy. If the investors had signed some sort of agreement on the period of their investment, pulling out their share could result in a breach of contract, which could result in penalties against such investors. Investment contracts need to be studied to determine the feasibilty of such an action.

Though this advice may sound reasonable, certain questions still need to be resolved before investors can make decisions on their investment.