Saturday, 16 May 2009

The Recession is Dead...Long Live the Recession

There has been a virtual tsunami of content lashing every medium known to mankind elucidating on why we got here in retrospective magnificence. Nobel laureates, industrialists and even social workers are in the company of laid off millionaire junk bond dealers elucidating on black swans and the death of capitalism (and banking) as we know it. There is also the trickle of hope that creeps its way through the swamp of pessimism in the shadow of the recent global enthusiasm in the stock markets.

The irony of the situation lies in the fact that yet again optimism breeds on the same speculative phenomenon of clearly irrational stock markets which have wiped off trillions within 18 months, but have displayed an irrational exuberance over the last 90 days. This rather feels like the case of the battered wife that files a complaint and then returns to the husband to seek emotional support.

The Internet boom (&bust), the dizzying reality valuation explosion and stock market benevolence have bred a generation of global professionals that have set very high growth rate benchmarks for wealth creation in their professional and personal realms. With decades of personal savings having been wiped off, most retail investors find themselves out in the cold.

With corporates facing liquidation or bankcruptcy, nations on the brink of insolvency and banks witnessing capital and reputation inadequacy, the notions and vanguards of trust are seeking true champions.

Entrepreneurial zest, intellectual brilliance, ingenious rural & urban economic ecosystems would find it difficult to navigate in the current sea of mistrust. Derivatives, junk bonds, swaps, market linked insurance products have been sold to hapless corporates and consumers alike. In this backdrop, the largest and most pertinent need that arises is for a suite of services that can provide unbiased advise on capital/wealth protection and growth.

A stimulating dialogue with a young organization earlier today has further reinforced my belief in the need for financial advisory services that are driven only by the client interests and not by the commission and incentive structure of the manufacturers (of bonds, mutual funds, insurance companies etc.). The future lies in independent, trained and certified advisors that would recommend a savings mix to retail individuals which truly address the individuals' risk appetite and hygiene wealth requirements.