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 experi

Investment into Consolidated Industries may seem like a stable financial move at first, but some arguments delivered by de advising company need some more investment before the given advice proves to be warranted.

To begin with, there is stated that local weather forecasters predict a weather pattern with twenty days of below average temperatures that will continue during the following years. On what ground did these local scientists come to this conclusion? Is there any agreement on this matter in the scientific community or is this a premise that is made by a few individuals? One should make sure that there is a second opinion for this claim that proves to be of respectful quality. The claim of the weather forecasters is also that there are twenty days with temperatures below average, but there was never any mentioning of which average they are referring to. Do they imply the average temperature of the year before, the ten years before, ore all years since temperature measurements started? Also, the data of all other days should be published as well, since it could be the case that there were indeed 20 days with below average temperatures, but all other days were above average. This would prove the claim of investing in Consolidated industries unwarranted. One can conclude that more statistical data is needed to make a valid conclusion about this matter.

A second point that needs some more investigation are the new houses that are built. It is stated that many new homes have been built during the pat year in the northeastern United States, however there is never mentioned which heating system they use. In the beginning of the letter, there is claimed that traditionally oil is used as the major fuel for heating. However this may traditionally be the case, this does not necessarilly imply that recent inhabitants of the region adopted these traditions. A survey sg=hould therefore be handed out to take a closer look at the major heating fuel of new inhabitants of the northeastern region of the United States.

Another point of concern is the amount of people that live in the northeastern region of the United States. Is this region highly populated or is there one house every few miles? Depending on the answer to this question, it may be a wise idea to invest in oil companies or not. However the amount of inhabitants of the northeastern region of the United States is an important factor to take into account, oil companies not only deliver to this specific region. Therefore one should look at the broader picture as well. Maybe over all, the temperature in the world has been rising (due to global warming), which may lower the overall oil use, while the oil use in the northeatern region of the United States may increase. Global factors should therefore also be taken under consideration.

However the author of the letter may have a valid point for investing in oil companies, he should provide some extra information before you throw away your money. The data the weather forecasters base their claim on should be published, there should be surveys to see which heating system the new residents have adopted, and investigation in global oil use should be done. If none of these data weaken the argument, investment into Consolidated Industries can be regarded as a stable financial move.