Trends and Actions

Welcome to the New Year. After a tumultuous 2008, we can expect lagged effect through the first half of the year here.
Singapore, together with other export-oriented economies, tends to exhibit high beta. This translates to a sharper decline on the way down.

The recovery is likely to predicate on how the US economy will shape itself after the new administration takes over. It will be hard to predict the winners as well as the losers. However, there are a number of signals that serve to provide some guidance.

1) the excesses within the financial industry are not likely to be replicated,

2) growth is likely to be tampered as US economy adjusts to the new reality,

3) the size of US government will expand in keeping with its ideological stance, and new jobs created will need to take this into account,

4) velocity of money supply may pick up once sign of recovery is in sight, and the downside is that money supply through credit expansion will increase substantially pushing general prices upward,

5) growth in the US, if driven by infrastructural build, may yield the optimal result as far as job creation is concerned,

6) if such fiscal stimulus is funded by borrowing and a willingness to repay through the budgetary means, the inflationary impact can be contained,

7) it is not sure whether the new energy policy can help to wean all of us from our addiction to a fossil-fuel driven business model.

The above poses significant challenges for most individuals even before the credit crisis of past year. Now, it will be even more daunting for many small and medium enterprises. First, it will need to stay afloat by making sure that it has sufficient cashflow to go through the downturn. At the same time, preparation must be made to position for the upturn. The upturn may mean more challenges in the form of higher costs not necessarily accompanied by rising revenue.

To mitigate against such dire possibilities, we need to

1) preserve wealth by ensuring that a portion goes into asset classes that will perform under theses circumstances - A US-led recovery that may not entirely benefit the export-oriented economies,

2) focus on value creating activities by leveraging on domain knowledge, technology and networking.

3) diversify the revenue base and if possible create multi-sided revenue models to better position for a share of the customer's wallet.

Keywords: quality, value systems, trust, domain knowledge, technology, networking, maven traps, speed of trust, lifestyle

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