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

Essay topics:

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 experienced twenty days with below-average temperatures, and local weather forecasters throughout the region predict that this weather pattern will continue for several more years. Furthermore, many new homes have been built in this region during the past year. Based on these developments, we predict a large increase in the demand for heating oil. Therefore, we recommend investment in Consolidated Industries, one of whose major business operations is the retail sale of home heating oil."

Write a response in which you discuss what questions would need to be answered in order to decide whether the recommendation and the argument on which it is based are reasonable. Be sure to explain how the answers to these questions would help to evaluate the recommendation.

The author of the argument recommends to invest into a company whose main specialization is selling heating oil. Their recommendation is based on two facts: recently increased number of households and weather forecasts predicted an increased number of cold days during following winters. While the recommendation may seem reasonable, a number of questions must be answered in order to be sure that it has been grounded properly.

Firstly, there is not enough factual data about the current levels of heating oil consumption in the region, so it is needed to provide potential investors with such data supported be the information about the number of households, their preferences in heating technologies, materials and fuel. It would also be plausible to know about the changes in this market during recent years, which could help to identify trends and the the whole range of possibilities for investments. If the growths of the market is supported by facts, the recommendation would look more informative.

Secondly, relying on weather forecasts may seem a bit too naive, because the climate may change unpredictably, so stronger evidences should be provided instead. For instance, the author mentioned the number of cold days during one winter without mentioning any real temperatures and market state during the coldest days. Moreover, twenty days long period mentioned in the argument may be too short to be regarded as an evidence of stable income during the whole year, so the author should provide the clients with more details about company business. For example, they could have mentioned other fuels types sold by the company and other sources of income, because it might be possible that their business model let the company grow thanks to other activities not limited by selling heating oil in winter. It even should be done despite that providing more details about the company business would possibly weaken the advice, but it would help to make right investing decisions.

Thirdly, recent advancements in civil construction may not be a sign of growing demand for heating oil, because, for example, new houses may be designed to be heated using other sources of energy like electricity or solar power, or the total number of household may be decreasing, so instead analyzing civil construction data separately, demographic analysis must be conducted too. If the new houses are going to be heated by oil and the number of households is going to grow, the interest of investors will be higher, but in the contrary case mentioning this fact must be considered irrelevant to the advice.

Finally, investors are mostly interested in predictable income, so they need more proofs that the company's market-share and total revenue will be growing within observable future. Since oil is a non-renewable resource whose prices are also affected by politics, there is a chance of instability caused by such circumstances like lack of supply caused by natural circumstances or, for example, war. These issues have to by analyzed carefully, and all traceable risks have to be mentioned and calculated. Mentioning such information would help investors to be sure that everything has been taken into consideration, because only observed things can be controlled.

To sum up, while the advice is based on certain data, it requires more facts and details in order to be considered seriously. This includes more factual data like the number of houses, market distribution, market changes, risks etc.

Votes
Average: 7 (2 votes)
This essay topic by users
Post date Users Rates Link to Content
2018-01-02 mohammad.sh 69 view
Essay Categories
Essays by user andr2k :

Comments

Sentence: It would also be plausible to know about the changes in this market during recent years, which could help to identify trends and the the whole range of possibilities for investments.
Description: The token the is not usually followed by an article
Suggestion: Refer to the and the

----------------
argument 1 -- OK

argument 2 -- not exactly. maybe there are more days with above-average temperatures.

argument 3 -- OK

argument 4 -- somehow duplicated to argument 1
----------------

Attribute Value Ideal
Score: 4.0 out of 6
Category: Good Excellent
No. of Grammatical Errors: 1 2
No. of Spelling Errors: 0 2
No. of Sentences: 19 15
No. of Words: 561 350
No. of Characters: 2874 1500
No. of Different Words: 264 200
Fourth Root of Number of Words: 4.867 4.7
Average Word Length: 5.123 4.6
Word Length SD: 2.807 2.4
No. of Words greater than 5 chars: 224 100
No. of Words greater than 6 chars: 159 80
No. of Words greater than 7 chars: 107 40
No. of Words greater than 8 chars: 77 20
Use of Passive Voice (%): 0 0
Avg. Sentence Length: 29.526 21.0
Sentence Length SD: 11.509 7.5
Use of Discourse Markers (%): 0.737 0.12
Sentence-Text Coherence: 0.319 0.35
Sentence-Para Coherence: 0.582 0.50
Sentence-Sentence Coherence: 0.06 0.07
Number of Paragraphs: 6 5