The following appeared in a letter from a firm providing investment advice to a client."Homes in the northeastern United States, where winters are typically cold, have traditionally used oil as their major fuel for heating. Last year that region experienc

Since people of northeastern Unites States traditionally uses oil as their major fuel for heating, the investment firm advices its client to do an investment in Consolidated Industries, whose major business is in the retail of home heating oil. Here, the firm has given several premises to strengthen the conclusion. But there are several questions if unanswered make the logic of argument weak.

Firstly, it is stated that homes in the Northeastern United states have traditionally used oil as their major fuel for heating. Here the firm has assumed that people is still using oil for fuel heating. So it is possible that people may be using another form of fuel i.e. petrol, kerosene etc. as their medium of heating. The question is, has people’s habit of using oil as their major fuel of heating changed over the years? If their habit has been changed, the firm does not make a convincing case of investment in oil industry for its client.

Secondly, the firm has predicted a gelid weather in northeastern based on the observation of the last year’s cold temperature, and also relies on local weather forecasters, that have predicted cold weather pattern will continue for several more years. The authenticity of local weather forecasters is also in question. What’s the likelihood of cold weather of forecasters claim? Does local forecasters’ suggestions turns out be correct one in most of the cases? Apart from this, the firm cited that last year region experienced below-average temperature for only twenty days. This is the small fraction of an entire year. The question is, what is the average temperature of other 345 days of the year? Is it below average or above average? If temperature of remaining days keeps above average, it is possible that people don’t require to use any kind of fuel, and which eventually makes firm’s recommendation weak.

Lastly, the firm suggested that large increase in the demand of oil in the region as more number of houses has been built in that region last year. However, it is possible that this is a mere investment of some affluent denizens of the region. Eventually there will be no increase in the number people in the northeastern. The question is, are new people come to newly build houses? It may be the case people from outside northeastern would migrate to newly built houses. And these people don’t have oil as their chief fuel of heating. So the question is, are people in newly built home come from northeastern only or some other part of country? Would newly migrated people use oil primary as source of fuel heating? If newly migrated people are less likely to use oil as a source for fuel heating, the firm is not able to successfully substantiate its recommendation.

In general, it may be said that the firm has failed to make a convincing recommendation because of the complete absence of statistical data and proper logical reasoning. The argument ends with an unjustified optimistic conclusion based on wishy-washy observations that are likely to be incorrect. However, if the firm has answered above mentioned questions clearly, its recommendation would have been more convincing.