Sunday, August 08, 2010
"The Future Definition of Wealth"
The energy equation is changing fast. Death of OIL is but guaranteed.
Looking at definition of money, wealth .. we need to understand something ... Wealth/Money can be equated to energy consumption. For example.
- Rich household and a Poor household .. the basic activity is same.. food clothing and shelter the only difference is "Energy Consumption" levels. A Rich household of 4 will consume 4 times or more the energy consumed by a "Poor household" providing the same basic activity.
- Transportation: The basic functionality is same .. reach from point A to point B.. but a Rich man transportation and a poor man transportation is different in terms of level of energy consumption.
Every aspect of life can be measured/translated valued in terms of energy consumption.. the important fact is wealth of a person is defined in the amount of energy consumed to carry out the basic requirements of a human being "Food clothing and shelter"
New Energy Equation:
Now with the dawn of "End/Death of Oil" which is well known fact. how will the definition of "Wealth", "Rich" change?? The Rich are spearheading "Environmental awareness" "Carbon Footprint" well aware of the fact that "They" (The Rich) have the largest footprint as far as energy consumption is concerned..
Today wealth is attributed to your "Energy Consumption" levels. As already stated before a Rich household spends 4 times or more energy as compared to a "Poor" household fulfilling the same basic requirements of "Food , Clothing and Shelter"
So the question I am trying to ask is what will be the definition of Wealth/Rich in the future?
This is a very very important question from an investment perspective cause.. everyone .. I mean "Cattle Class" would be aspiring for the same "Wealth".. demand for what is going to be definition of "Wealth" is going to be tremendous. Look around you .. everyone aspires for a "Car", a big house and all that defines the current definition of "Wealth", "Rich".
Lets dig a little deeper..
Wealth is created by providing value addition. Value addition is done by buying something that is cheap (abundant) and selling it (creating a demand/marketing it) to the masses at a premium. The current definition of "Wealthy" is based on the simple fact that "Energy" (in the form of Oil) is abundant..
- Energy has been accumulated "cheap" (in the form of oil fields, coal mines, gas deposits)
- Energy is then value added/transformed into (petrol, electricity, gasoline)
- Demand is created by defining "Wealthy" as "big house, big car, gadgets"
- Everyone starts aspiring for "Wealth" demand skyrockets for energy.
Wealth of the Future
The most important thing that we must do is define correctly "Wealth of the Future". There are very few criteria required to define "Wealth of the Future" The most important points are:
1. The wealth of the future should be abundantly available for the next 200 years
2. The wealth of the future could be accumulated/hoarded by few "Cheap" right now.
3. The wealth of the future should be simple and have the ability to be value added/transformed repackaged.
4. The wealth of the future should be something to "Aspire for" "Dream of"
Conclusion
- The demand for "Gold" right now could be because people "The Rich People" have not yet defined for sure what is going to be the next "Black Gold" .. so they have been stocking up the "Yellow Metal" hoping to exchange "Gold" for the "Future Wealth" (Smart - Very - Smart)
- Another observation is that you don't need to own "Black Gold" you could have made money just by being "IN" one of its "Value Added" products.. "Cars, Gadgets, Computers"
- Easy money lies in "Future definition of Wealth" as there is going to be very high demand and short/controlled supply.
- Another important thing is "Yellow Metal" is perceived to be a store of value even in this day and age.. (which is a hogwash)
- "Black Gold", Oil reserves in the future will still be perceived as a store of value just like "Yellow Gold" is being treated like "King".. also because Oil has a utility value unlike "Yellow Metal"
"GOLD (Yellow metal) can be dumped for sure!!" buy basics industries of Food, clothing and Shelter.
Large Population is no longer necessary.. population reduction is "ON"
The verdict is yet to be passed...
I do not have the answer of "The future definition of Wealth".. I would like "You" to help define the most important question from an investment perspective. Ideas are eagerly awaited.
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15 comments:
To give clear answer to this question is very tough. but i feel owning gas and gas related stock is future of wealth
Softee:
what you say is true.. GAS is going to be a store of wealth..
but is it abundant and cheap?
I think like GOLD its a transitional store of Value..
Energy will continue to play an important role.. but the demand might fall.. from current levels.. because of the perception change (carbon footprint, global warming)
Oil/Gas/Coal store value because we have so many downstream uses of them..
They will help us maintain value during the transition period
=happy investing
whatsup-indianstockideas.blogspot.com
BullBirSingh@Moneycontrol
information could be one of `future definition of wealth`, read with UID AND FREEDOM OF INDIVIDUAL somewhere in the message board...
BullBirSingh:
Thinking about your question..
I think it needs to be a rephrased ..
UID and Freedom of Individual is about "Control"
Yes through UID and other such Unique Indentifiers (like the Employee badge which we so proudly wear.. passport, driving license ) control is done..
Control is the ultimate power that we all aspire for (subconsciously because of "ego")
I think its an interesting area that needs a deep dive... How do we profit from it? what does UID translate into at a basic level.
Can we generalise it and get to the bottom of the source.. (which can then be acquired..)
=happy investing
whatsup-indianstockideas.blogspot[dot]com
I tend to think in simple terms. We city folks live & work in abstract world..working on computers, commuting by cars, legal services etc etc. All this to provide food on the table. The way I see things going, my definition of future wealth is:
1. Large tracks of agricultural land with irrigation facilities.
2. Investments in Bi-cycle Manufacturers.
3. Investments in food businesses.
4. Self investment in mental health (like inner peace, meditation etc).
Anonymous:
Agriculture Land: will always hold its value since it takes care of a very core requirement of "Food"
However we must understand that the yields we have from agriculture land is largely because of "fertiliser's and Pesticides" both of which are dependent on OIL.
I think basic chemical industry is going to exist and prosper in the future also.
Land value specially in naturally productive area is going to be great investment.
==================
Bi-Cycle Manufacturing?
What are we going to haul in our bicycles?..
I think future is always progressive.. we might have mass public transportation with customised private space? and compact personal transport carriers acting as "Hub and Spoke"
===================
Food business: Well that is always going to work .. I'm already feeling hungry!
===================
I think we are again missing the point.. :
- We want to look for something "Basic"
- We want this "Basic" thing to be in abundance in the future.
- If possible it should be something we can acquire, accumulate.
- If we can visualise how we can exploit the same then it would be great!!
====================
- I think energy form is going to be electricity..
- Entertainment, work, learning all will be digital.
- Travel could be virtual for most of us.
I Do foresee a decrease in human population though since there is really no need for so many of us..
A lot of the work we do really is to exploit resources and to support the current social fad to "Accumulate Stuff" which could be redundant work in the near future.
Meditate: Yes I think.. a lot of people are already doing it and it is going to change the way the society defines wants and desires ..
Look at the current scenario: Buffet and Gates have used most of their wealth for charity ..
The social norms are changing.. it has not become a "Mass movement" but it could go in that direction.. as soon as we reach critical mass..
=happy investing
whatsup-indianstockideas.blogspot.com
Anonymous:
Agriculture Land: will always hold its value since it takes care of a very core requirement of "Food"
However we must understand that the yields we have from agriculture land is largely because of "fertiliser's and Pesticides" both of which are dependent on OIL.
I think basic chemical industry is going to exist and prosper in the future also.
Land value specially in naturally productive area is going to be great investment.
==================
Bi-Cycle Manufacturing?
What are we going to haul in our bicycles?..
I think future is always progressive.. we might have mass public transportation with customised private space? and compact personal transport carriers acting as "Hub and Spoke"
===================
Food business: Well that is always going to work .. I'm already feeling hungry!
===================
I think we are again missing the point.. :
- We want to look for something "Basic"
- We want this "Basic" thing to be in abundance in the future.
- If possible it should be something we can acquire, accumulate.
- If we can visualise how we can exploit the same then it would be great!!
====================
- I think energy form is going to be electricity..
- Entertainment, work, learning all will be digital.
- Travel could be virtual for most of us.
I Do foresee a decrease in human population though since there is really no need for so many of us..
A lot of the work we do really is to exploit resources and to support the current social fad to "Accumulate Stuff" which could be redundant work in the near future.
Meditate: Yes I think.. a lot of people are already doing it and it is going to change the way the society defines wants and desires ..
Look at the current scenario: Buffet and Gates have used most of their wealth for charity ..
The social norms are changing.. it has not become a "Mass movement" but it could go in that direction.. as soon as we reach critical mass..
=happy investing
whatsup-indianstockideas.blogspot.com
Hi Sir,
"If we are planning to buy a particular car, we would see that car on the road more frequently than normal",
I think I'm also searching for the future definition of wealth so could read your insightful article.
This day USA GDP is $16 trillion, Japan $4 trillion, India $1.1 trillion. I think it is how efficiently we can create, market, and control is the future wealth.E.g. Nuclear Energy.
In a similar fashion we could find the future wealth in service or solution provider.I think! may be wrong.
Niranjan:
Can there be a service every one needs?.. can it be cornered..
Nuclear power? Current nuclear power production is 0.9TerrWatts while total electricity production is: 15Terra Watts (most of the remaining 14TWatts is oil and coal ..
The Go Green initiative is a targeted campaign to have a mass movement out of fossil fuels..
maybe giving us a the future direction .. Yes electricity will be the future energy source as we already have the mechanism of storage,transportation and distribution of this form of energy.. and can rival the oil energy distribution network..
the way energy/electricity will be produced is a good question have you checked out hydrodrive?..
http://whatsup-indianstockideas.blogspot.com/2010/06/hydrodrive-peak-oil-biofuels-hydrogen.html
=happy investing
Nice to read yor Blog...
Very, Very interesting and thought provoking. If we can find answer to this I am sure few of us can be very RIch...?
I too have been trying to find a solution and came across your review by chance. Anyway the point we are discussing is to find something which can be easily accumulated and encashed in Future.
The moot point is that, todays world has become very complex and in order to survive people will have to inundate ourselves and engross in their respective fields, just for survival. With this in view and keeping the future of our country as perspective, few industries that strike my mind are:-
1) Food processing - gone are the times when we used to get grains, cleaned and floored or made pickles and chatnies at home. Soon everything will be hlaf cooked or backed - ready to serve.
2) Information tech - The way we used to learn and communicate is changing fast and we might be in for a surprise to receive the virtual world at our doorstep sooner than anticipated.
3)Gas - as an energy source will become dominant. Availability might not be a concern for next century or so keeping in view that we are now taking it out from rocks as well (shale gas). Atleast you have a solution to burn it, even if spilled.
4)Retail :- Distribution and supply chain mgmt will play a very big role in shaping the future of any company.
5)Stock Market and knowledge about wealth creation and its handling :-will be key to control all the asset classes.
6)Lastly Art - as an asset class will change the way rich people accumulate wealth. As it is easy to acquire and maintain and can be enmassed in small place in physical form.
It will now depend on an individual whether he wishes to accumulate the wealth or control the weath creation source ?
If the accumulation for wealth creation is what we are looking for, than the obvious choice will be ART ony, but we are to control the asset classes than it will be stock market.
Thanks
- Vikas Kumar
Vikas Kumar:
I was just reading an article by Devdutt "Decoding Lakshmi"
Lakshmi The godess of wealth is "Daughter of Asuras" who live in "Pa-Tal" lok (under the ground)
All wealth is under the ground Gold the symbol of Wealth and represents lakshmi is also extracted from the ground..
Gods are "Surya, Indra" help extract wealth from the ground.
- Asuras accumulate Wealth and Devas extract and distribute wealth
Very interesting article and here is the URL:
http://devdutt.com/decoding-lakshmi/
========================
Comming back to Wealth I see Chemicals, IT, Energy and Food.. as the basic investment areas. In Chemicals Jayant Agro which manufactures Castor oil derivatives (Castor is the only Vegetable oil with properties like Petroleum and is a good replacement for Petroleum in chemical industry)
Energy: I see NHPC as the future source of Energy as it is dependent on the flow of Rains/Water which is dependent on nature's Water Cycle.
IT: I am still on the lookout ADC India looks to be good but I donot see scalability..
Food: Gujarat Ambuja Exports which provides basic ingredients for lots of processed foods and industries/pharmaceuticals..
All three are recommended Best Buy
ideas..
http://whatsup-indianstockideas.blogspot.com/2010/05/best-buys.html
=happy investing
www.whatsup-indianstockideas.blogspot.com
Well Decoding Lakshmi again provoked me...
So we have Talked about Energy, IT, Food. But there is now a days another element added to the basics of Roti, kapra & Makaan and that is HEALTH...?
Health.. or Health care as a sector, mind you, not meditation.
That means Solid Pharma and Research companies which can develop new products for the ever increasing new diseases and than patent it to reap billions.
Next comes Hard core - "HOSPITALS". How can we forget the Cheap valuations of Indian Docs and Medical Science compared to the developed world. We have a long way to go and with ever increasing Population and longer life spans, these shops (read hospitals) will earn more and more.
They have power to increase prices at their own free will and lets not forget it is only the Doctors with whom we do not negotiate for the discounts. "That is why I prefer to call them Minting Houses and not Hospitals"
Isn't it ...!!!
and same is the case for Education..!!
Schools and colleges have the same power.
So lets hope that the likes of Amity and Lovely University get listed soon and that we can lay our hands on Apollo, Fortis, Max in a big way in the next melt-down, to become Super RICH.
With All My Love & Regards for Lakshmi Ji, God Surya and Indra.
Looking forward to Receiving them with Wide Open Arms in the next Melt-down.
(Vikas Kumar)
Vijay Kumar:
Yes Healthcare is a great area along with Education ..
I do expect a population reduction program being implemented (forced down our throats actually) by war/pandemics and famine
Do you have any value buy's in healthcare and education with entry price recommendations?
=happy investing
whatsup-indianstockideas.blogspot.com
How about water? Fresh water sources are actually reducing and supply is erratic - missing monsoons, ground water tables falling, pollution rendering sources unusable etc. Water may still be abundant but is there a way to supply that water to everyone who need it? Households, Agriculture, and Industry. Jain irrigation is one listed company. Could be interesting.
Pawan ji:
I think one of the most certain activity that might happen is "Population reduction"
cause with a growing population there is bound to be all sorts of problem..
Yes water and fresh water is a major issue.. Jain irrigation is already a well known company.. and frankly .. I have not done a deep dive as I donot see the value equation... yes its a corporate we can expect to see flourishing in the future also..
=happy investing
whatsup-indianstockideas.blogspot.com
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