Value Add is the way forward

There are decadal changes that are happening in economics currently. Rather I would say we are witnessing a confluence of mammoth changes happening. These are happening because certain behaviours, certain things, certain statistics reached their extreme and now reversing.

This reversal however is not that simple it implies that we are reversing from a world that had accepted certain things as their way of life and are changing (for good or bad time will tell). One of the aspects I wanted to cover in this writeup the value of money and its impact on commercial aspects.

For last 100 Year we have witnessed a rise of West and along with it we also have witnessed the ideologies linked to west accepted by every being. It began with aspiring to work in west, travelling to Europe as aspiration to studying in West. Over the years these ideologies have become our way of living as we look upon some of the western education institutions with lot of respect. In financial world capitalism took far more lead as compared to communism and it is the preferred way most of the countries chose in last 50 years when they had an option. I have no problems with these as long as they make our living easier.  

As the world now is closer to USD 100 odd trillion GDP the fundamental question of US dollar as a preferred currency is standing. The USD which was considered as a rich currency and made world believe that it is the only one which is a global currency the thought has started seeing cracks.

USD brought it with the deflation for world, East lost pricing power, made the resource poor economies rich and resource rich economies poor, This brought in lot of thoughts like – Asset light living, focus on quality spending than on savings, the young generation moved towards leasing than owning, Made the desktop work more valuable than ground work – All this happened only and only because Value of Money has gone down.

Value of money went down as US kept on printing dollars and kept pushing interest rates low. Over last 40 years this according to me has created a sharp behavioural shifts. I feel as this shield goes down slowly a bare truth is about to come in front of our eyes.

According to me soon we are going to witness – “ Earning Money is not so Easy”. For every penny that individual is going to pay the value add is going to be of utmost importance. Soon everyone is going to ask “ Why am I Paying, What am I Paying for and What is the outcome of this exercise”.

I feel the real economy has just made a cameo but it is about to launch in the form of movie with multiple parts. The virtual economy will have to make lot of efforts to justify its existence as the outcomes are intangible. The tangibles which were losing value will get more value and intangibles will need to make value add efforts.

I can write about my industry of investments – We have already started to witness the pricing pressure and transparency norms put on the manufacturers. Investors are already looking at reducing costs and actually seeking value for every penny paid. I believe the platforms will perpetually have to Focus on improving execution at competitive costs and advisors will perpetually have to look for Value Add. The Easy Money Era is over and it applies to us as well.

Reading – Thinking – Executing all will be important. I believe the era or Working Hard with diligence has begun and it will keep evolving. One will have to constantly think of Justifying their existence. Lot of people misunderstand that advisors can justify their costs only by generating returns but that is the job of money manager. Advisors job is to customise solution and help manage wealth within the constraints of  investor and periodically keep tracking the navigation. I think the investment house will have to rethink their strategy before someone else does.

In the end these are again interesting times. As the Value Of dollar goes down, it will have lot of consequence… the natural impact of it is … it increases the value of everything else.… great time for resource rich economies have begun. Lets see how we navigate with time.