Why job losses can be good news for investors

The Motley Fool
Pound coins
Pound coins

Most investors are also workers, because they have jobs, or they used to be workers but are now retired. Investors have very different interests from workers, and this distinction is important because things that are bad for workers can often be good for investors.

One example is job losses. These are awful news for the affected workers, but they can be good news for investors. That's because they demonstrate that the employer is responding to competitive pressures by controlling its costs. These cuts should increase its profits, or at least reduce its losses, unless they are excessive and disproportionately reduce the quality of its products.