MGMAT CAT 5 AWA-Analysis of argument

[NOV 1907]

"Over the past several years, investment in precious metals, such as gold and silver, has proven to be one of the most profitable investment strategies for our firm. Over the next decade, the demand for these metals is expected to be strong, largely driven by the economic growth of large emerging markets--China, India, and Russia. Thus, our investors are best served by increasing their exposure to precious metals to take advantage of this unique profit-making opportunity."

Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.

This was a topic I received on my MGMAT CAT-5. I did manage to churn out abotu 300 words but I have a basic question in terms of what the assumptions are in this argument. I went with

- The emerging markets may not invest in precious metals just because their economies are boming.
- Just creating awareness among clients is insufficient they need to know which companies or mutual funds to invest in.

Is this correct? I think what threw me for a loop was the "increasing their exposure to precious metals to take advantage of this unique profit-making opportunity." portion. Could someone shed soem light on this? Thanks in advance.

[StaceyKoprince]

That last sentence is a mouthful, isn't it?

I think your first bullet highlights the weakest point of the entire argument b/c it is the major assumption upon which the conclusion hinges - how do we know these emerging markets will keep the demand for these metals high? So you definitely want to use that one.

Your second point is a little bit weaker b/c the argument doesn't say that they will simply be creating awareness. "Increasing their exposure" is investment-banker-speak for "increasing the portion of their money invested in this area." Into which specific companies should these clients put their money? The argument doesn't go that far, but it doesn't say that the author will only make them aware without telling them specific company or fund names. If your point depends upon making an assumption yourself, then try to find a different point (if you can - granted you don't have much time to think these things up).

Another point might revolve around the idea that the investors are "best served" by investing in precious metals. Maybe there are some other investment vehicles that would make them even more money than precious metals - the author has provided absolutely no evidence to support the contention that precious metals are the "best" of all available options.

[Nov1907]

Aah yes! The good old "taking an argument too far" trap. Thanks for pointing out Stacey!