Deflation is the danger now
This wonderful graph from Gave kal says it all
Since
WWII we have been used to some growth in the world. Now things are stalling a
bit, in the Developed world first and now even some Emerging Markets are not so
hot anymore. We see riots in Turkey ,
Egypt and strikes in Europe . I don’t see growth coming back soon for the
simple reason that there is excess supply in almost every business. If
factories are working at 50% of capacity why building a new factory? On top of
this every day machines are replacing some workers and doing much better what
humans do, not in every task but enough to have an impact. There are of course
some areas where there is some pricing power, today in FT as a result of demand
from Asia the prices of Fresh sea fish are skyrocketing.
What
to do in this envoirment ?
1.Find
something to do that can not be replaced by a machine (arts, manual labour,
all non repeatable tasks, the guy who programs the machines.)
2.Invest
in areas with pricing power (Brands, some commodities that are rare and you can’t
increase production, monopolies)
3.Get
away from businesses that are essentially a commodity and don’t add nothing and
have no intellectual property (easy to copy)
This is the world we are living now. Supply is bigger than demand & workers are being replaced by machines everywhere.
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