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Argument15
15The 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 stores. Since many of the food products currently marketed by Old Dairy Industries are high in fat and cholesterol, the company's sales are likely to diminish greatly and their profits will no doubt decrease. We therefore advise Old Dairy stockholders to sell their shares and other investors not to purchase stock in this company."
The author of this newsletter suggests Old Dairy stockholders to sell their shares and other investors not to purchase stock in this company, because of the popularity of low-fat food and the tendency that Old Dairy, whose products contain normal amount of fats and cholesterol, may be predicted a decrease on their sales and subsequently profits. This suggestion seems reasonable at first glance but, examinated carefully, flaws in several fallacies as I see it.
To begin with, lacking adequate information, the survey cited by the author is hard to be considered as representative of the public’s general opinion. The fact that over 80% of the respondents indicated a desire to reduce their intake of foods containing fats and cholesterol is significantly different from the condition that 80% of customers all agree with it. Since the author fails to provide us any evidence that the survey has ruled out possibilities such as it took place only in a certain group like young girls who are commonly in found of weight losing, it is too hasty to conclude that taking less fats has already become current trend nowadays.
Even if this right the case, the desire to reduce intake of food with normal fat level does not necessarily result in realistic action, for common sense tells us that the food’s taste will inevitably decline along with its fats and cholesterol amount. Considering the possibility that many people may not willing or even capable to endure the worse taste of low-fat food even they do want to control their fat intake, the desire is likely turning out to be only a desire which will hardly become a real action and therefore bring about less threat to normal food products than the author predicts.
Further more, the mere fact that today low-fat products abound in many food stores lends no strong surpport to the author’s speculation that the sales of high-fat products will surely go down because of this influence, without evidence showing that customers tend to buy newly coming low-fat products instead of normal ones. Even if some people would like to try these new food profucts, it does not mean that they will keep on taking them and therefore does not buy any food with normal or high level fats and cholesterol any more, which is the only way leading to a decrease of Old Dairy’s sales and profits.
Finally, even assuming that Old Dairy Industry’s sales indeed diminish a little, we still can not make sure that its profits will significantly decline and further influence the price of its stock. Considering this possibility that the priceof Old Dairy’s stock has been keeping going up rapidly and the decrease of its sales and profits may by only slowes down the stock’s rising speed in value, the author’s conclusion that Old Dairy’s stock will become worthless and therefore should be sold as quickly as possible seems not very convincing to us and calls for more information and evidence.
In sum, the author’s seemingly plausible suggestion is likely to be a misleading to investors, based on such a series of unwarranted assumptions. To make his or her advice logically acceptable, the author should provide more convincing reasons and evidence to prove the inevitability that food low in fats and cholesterol will be popular and the causal relationship between the replacement and the decrease of Old Dairy’s stock price. |