Comments on: On lack of Investment and how this could end up very badly http://blogich.com/2009/02/27/on-lack-of-investment-and-how-this-could-end-up-very-badly/ ...On Business, Management, Leadership, Art, Me and other random stuff Mon, 20 Jun 2011 18:17:17 +0000 hourly 1 http://wordpress.com/ By: Listen to the Man! - Follow-up on Lack of Investment « Le Blog’Ich http://blogich.com/2009/02/27/on-lack-of-investment-and-how-this-could-end-up-very-badly/#comment-17 Tue, 03 Mar 2009 03:27:34 +0000 http://richbiah.com/?p=355#comment-17 [...] Listen to the Man! – Follow-up on Lack of Investment Posted on March 3, 2009 by Romain Ok, citing Buffet might not be 100% Independent Thinking, but you have to admit, the guy is often right. According to him, even gloomier news ahead if there is no investment. [...]

]]> By: Romain http://blogich.com/2009/02/27/on-lack-of-investment-and-how-this-could-end-up-very-badly/#comment-14 Mon, 02 Mar 2009 22:30:57 +0000 http://richbiah.com/?p=355#comment-14 I agree that the uncertainty surrounding the cost of capital or Wacc are definitely a part of the equation indeed. Thank you for bringing up this up.

Regards,

Romain

]]> By: stevemcgee99 http://blogich.com/2009/02/27/on-lack-of-investment-and-how-this-could-end-up-very-badly/#comment-10 Sun, 01 Mar 2009 01:34:59 +0000 http://richbiah.com/?p=355#comment-10 Unfortunately, I think we’ll see the stimulus package funding a few projects that will end up like much of the housing projects of the last decade – with no interested buyers. Let’s hope I’m wrong and that forcing people to spend money on something ‘they should’ will work.

I think the hesitation to invest is partly based on the fear that capital structures will need to change soon. What will be the new tax policy?
And, where are interest rates going to go? If they are left to what the market says, few projects in any pipeline will have a positive NPV.

Businesses have initiated too many projects, confused by artificially-low interest rates. This waste needs to be cleaned out. I think some great investments will be to liquidate bad investment, retrench (oxymoron, I know), and develop a conservative strategy limited to engaging the company’s strengths to meet a well-defined, profitable need. Go ahead and reduce market share, but be the first choice for the few in your niche.

One last thing about being prepared – I am not convinced there is an upturn coming any time soon. For this reason I agree with Mr. Ichbiah about differentiation (and I extend this to mean sell more to fewer people).

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