"We Like To Let People Go On A Friday When There's Less Chance For Confrontation."

I'm reading "Beating The Street" by Peter Lynch, an older book but renowned for its insight on stock trading. He talks about watching for companies that downsize. When a company downsizes with layoffs, it's sole intent is to cut overhead. By cutting jobs, workers who remain employed pick up additional tasks and work harder, as not to threaten their own employment. As a result, a company gets the same work performance, if not better, and they pay less overhead costs. Lynch explains that these companies are likely to see a quick boost in profits and may make a good stock to short. The key, however, is knowing the company well enough to attain the information before the market does.

Today, Business Week reported that Cemex (CX) will lay off ten percent of it's 60,000 employees worldwide, in addition to selling over $2b in assets. There's more to the move, such as loan extensions and equipment sales, but waiving six thousand people is a major event. With third quarter net income down 74%, the company had to do something to drag up the bottom line.

If Lynch's theory is accurate, we should see a steady rise in Cemex for the remainder of the calendar year. That and the conclusion of the U.S. Presidential election should help the housing market and hopefully pull CX out of the muck.