Crossinvest Thought Leadership series
“We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.”
The first global economic revolution, the agricultural revolution, led to agricultural cities that would rule the world from 10,000 years ago from the Indus Valley to Mesoamerica, and to the great ancient cities of China.
The second global economic revolution, the industrial revolution, led to the rise of the British Empire, Germany and then the economic superpowers of the United States and China. The final stage of the industrial revolution has led to the industrialisation of the socalled emerging markets.
The third global economic revolution, the technological revolution, has been upon us since the mid 90’s and reshaping the global economy like never before. Now we are seeing the emergence of the fourth revolution, at an unprecedented pace – welcome to the digital revolution. The pace of the fourth revolution may have caught everyone by surprise. The world as we know it has become the world as we knew it. This is the new normal and yet we struggle to embrace the nuances of this new normal and the underlying opportunities it represents.
Where real wealth was made at the start of the last economic revolution in the 1800s was at the intersection of the emerging economies of the time, the Americas, and the investments in the new industrialised economy: oil, steel, infrastructure and property.
The Rockefellers, Carnegies, Astors, Vanderbilts: these family dynasties were all built off the back of the merger of the industrial revolution and the emerging economy of the United States. These families had the foresight and perhaps the bravery to be forward thinking and defined the curve rather than allow the curve to define them.
History is set to repeat itself some 100 years later. Like those before them, there are ample opportunities for the forward thinking investors to become the dynasties of tomorrow as the digital revolution intersects with the emerging wealth within Asia and beyond.
The shifts that this revolution will create to company and asset values will be written about for the next hundred years. Markets may not respond immediately as for a while the majority of Wall Street, Tokyo, Shanghai, London will trade shares day-to-day assuming and longing for a return to the past. The media, the market participants, the brokers, the private banks, the investors, continue to do the same thing and continue to invest in the same way they have been used to, expecting the same result – a sign of insanity as Einstein put it. The market dynamics have changed, the old normal is long-gone and the new normal is here to stay. When will the herd wake up to this new reality?
Those that succeed in times like these are not the ones that wait for the herd to wake up. Investing after the herd has never worked and never will. The most successful entrepreneurs and investors in 10,000 years of human history have been the ones ahead of the curve.
Successful investors are the ones that prefer to stay one step ahead. They partner with professional advisors who share the same strategic foresight as them and accept guidance accordingly. They prefer to understand why they are investing rather than just doing so “because it is part of the index”, or the “broker said it was a winner”, or the “mate at the pub thought so”.
They prefer to invest in companies that are not only going to make a difference to the world, but also those that are likely to define and redefine the world of tomorrow, the Google or Apple of tomorrow.
These are also investors who understand the dynamics of relative relationships between the types of invested assets within their portfolios. They understand the criticality of investing in non-correlated assets to protect the wealth for their children and beyond. They want to ensure a large component of their money isn’t going anywhere near stock or bond markets in today’s messed up global economy.
Much like the successful families of the 19th century and today’s most successful investors such as Yale University, the money that successful investors want to protect for future generations sits in real assets – farmland, energy production, infrastructure, commercial and industrial property, private equity, private debt, bio-tech to name a few; real assets, not financial derivatives of the real world.
These are likely to be the hallmarks of the successful investor in the early 21st century:
1. Wealth creation from a limited number of sectors that combined with the capabilities of digital technology will define the shape of the world tomorrow.
2. Wealth protection through investing in real assets which are not subject to the increasingly irrational, short-term trading patterns that drive today’s financial markets.
Crossinvest (Asia) is an independent asset manager with our unique team of investment professionals that believe that genuine wealth creation and preservation comes from leadership of thought and not from following the herd. We are acutely aware of the challenges of the investment world that we are faced with today. More importantly, we are
in sync with what we believe to be opportunities that the current void has created. We understand that we need to think differently in order to achieve a different result.
We are proud to launch the Crossinvest Thought Leadership series as we share our thoughts and ideas for investing in the new world, to help our family of clients to think differently and to provide partnership and guidance to make a difference to their family for generations to come.
The intersection of the emerging wealth of two most populous countries on the planet combined with the radical changes to the economic management of the West and the disruptive, life-changing early stages of the Digital Revolution provides Asia with opportunities global leadership.