New Right Brain Business Age

In the industrial age, the world economy is drive by our left-brain power - analytical strength , logic and utilitarianism. German and Japan are the best exemplar in the case, whereby, they are fast emerge again to be a formidable economy empire after defeated during world war 2. In those age, practicality and price are the essence of any businesses to outperform in the market.

In today information age, we are living in a longest peace time ever record in history civilization. We are living in the world of abundance, automation and 3 billion labour forces. In today business model, having a bunch of good engineer and high technology production system will not guarantee the success in business world. Left brain are no more sufficient to meet the consumer market today. For instance, we have a dozen of goods and services in the market now, whereby, we could virtually walk down to a 5 minutes walk shopping mall down the street to get virtually anything that we practically needed in daily life. From hygienic, entertainment, food to health care items, we have abundance of choices. All production today, compare to industrial age, are drive my automation system, manage by artificial intelligent, machines that are more efficient than human flesh in the way of left brain mechanism. Such dramatic changes has enable any business across the globe to produce a high quality product with less price. So, not the quality nor price that destine the success of a business, then what is it that matter?

In the abundance age we are living today, the key for us to outperform the rest is our right brain. The aesthetic side of our mind. Some use a different terminology like positioning or differentiate by a famous author Jack Trout. Other use the world of conceptual mind. Take for instance of a toilet brush. In the past, we purchase a toilet brush for a cheapest price, to do it job - clean the toilet bowl. That's all it mean to be marketable. But today, there are bunch of maker or factory can sell a good toilet brush. Other than it is safe and efficient to be use, other intangible element such as whimsical, beauty and colour become matter. Today people would then to buy a more expensive toilet brush than the ordinary one which possess quality such as a appearance that do not look like a toilet brush. People now are buying the art than buying the stuff. They are in buying a emotional stuff than a simple utility. This how our right brain come into play. Paula Antolleni once quote:" Design is a renaissance that combine technology, cognitive science, human need and beauty to produce something that the world does not know it was missing". Don Norman Said :" Aesthetic matter. Attractive things work better." Today, all business person need to become a designer. To think using their right brain. To create something that have identity, soul, meaning and emotion. In the new business world, it is not about price of practicality, is about the combination of "utility" and "significant". A whole new world to come that need a whole new mind to jibe.

Businesses Cycle

Business cycle is the common nature rule in economic. What goes up must come down. It is true and always true, since it had been depicted by Adam Smith since 1886. So, how we able to understand the business cycle?

Every business is drive by private consumption. For most major economy countries from G20 to 3rd world countries, private consumption making up the major share of annual gross domestic product. In the end, it is the customer that making a business to profit. Yet, most economist are only focusing on the spending pattern of the consumer. Rather they should be paid more attention to what drive those pattern. Apart form the psychological aspect, there are more about the economical aspect, that we can examine.

First of all, salary & wages is what drive consumer to spend. You could not spend if you do not have income. Unless you got a parent who left you hundred of million dollar heritage. Salary obviously is given by private sector - the employer. The economy size of company will ultimately decide the scale of salary, given there is no government wages control policy. Here is the key factor, the economy size of private sector. All private sector is funded by private investor or institution - private direct investment. The same goes to the question of "egg & chicken", "Private investment & private spending" , which drive which, which come first. Indeed, Private direct investment, is motivated by consumer spending. But, in business world, you can't dig hole only when you need to go to toilet. It will be too late. So, the motivator is what perspective and outlook of future consumer spending pattern - the future potential demand and supply. You need to place your money some place though, therefore, decision must be made, by means of calculated risk to potential projection return. Whenever there are prospective economy opportunities available, it will attract private investment. Every boost in private investment will therefore increase the economy scale of certain company. When new fund is introduced to a company, salary and wages normally will increase. New jobs will be created as well to accommodate a bigger and more aggressive business activities. Employment increase making consumer market even attractive. This will induce Productivity, hence, market supply will go up. While for every positive economy demographic, chances for demand to meet the supply is still high during the beginning business cycle. A sound proven economy activities will boost profitability therefore return of investment. Such episode will draw even more private investment. Again, more fund is received, the management of company will need to conjure new way to spend it. Here is the part which drive the ultimate break down in the business cycle. Excessive investment and mis-allocation of funds will likely to happen. While more jobs created, and there is higher productivity; there will started to plant a oversupply seed in the market. Apart from that, competitor will started to flow into the economy, since profitability had been proven from the first cycle of businesses. Now, the oversupply or market glutted will emerge, making price to go down. Profit will retreat. Less jobs will be required. No new private fund will be induce into market. Unemployment raise, making the consumer market even less attractive. And recession set in. Supply will withdraw to the limit where demand is higher again. And only then a new business cycle will begin. This how our economy work, and it will always work. You can't avoid economy bust, if there is an economy boom. So, it is always foolish to believe that market will ultimately goes up to the sky. What always make men kill is utopia optimistic. And a lot of amateur investor always got kill during the end of business cycle. Being optimistic is important, but realistic must play its role as well.

"The only way to avoid economy recession and contraction, is by to prevent a economy boom" John Maynard Keynes

Dollar Crisis - Major Impact To The Future Generation

Since 1973, under president Nixon administration, the fall of Bretton Wood system had planted a seed of global financial crisis. The new monetary system that replace Bretton Wood gold standard - Fiat Currency, had making country, especially United State to print as much money they desire to fund against imports and credits. Such phenomenal has create a irreversible disequilibrium in global financial system. On 2002, it has been reported money supply level in United state had set all time record high since peace time. The conservative estimation of 1.2 trillion us dollar of international reserve now available in the market. As replacement of dollar standard to gold standard, United state can purchase goods and services from other nation by debt. United state which her import are encompassing 75% larger than her export, has since became the major trading partner across the globe, especially those developing country such as china. Therefore, the stability of United State will direct effect the global economy health. The excessive cheap credit, Quantitative Easing policy, and the "helicopter" policy originated by Fed Chairman Ben Bernanke during credit crunch crisis in 2008, has help fuel the monetary instability - debasing the dollar. Such intention to ease a temporary pain of economy crisis and stimulation to prevent deflation as happened in Japan, will make the asset bubble easy to be created than sustained. Money are pumping into the market to encourage private sector to invest and create jobs. However, the action has cause back-fire to United State as private market started to feel confident against the credit worthiness of the country. Dollar market become less attractive, as private investors started to selling their holding. But, simply selling the dollar will not help to prevent from being part of the dollar crisis. As United State is the major import nation to most export countries across the globe, the value of dollar will direct effect to its earning. By selling the dollar and exchange to their own currency, this will simply inflated the value of their own currency therefore making export less attractive. So, major export country such as Japan and China, to avoid the negative impact to the export sector and income to the nation, they will rather using its us dollar revenue to reinvest into us dollar dominated assets. Again, such action will making assets bubble in United State even bigger. Since in basic economic, everything that goes up must come down. As the conclusion, the ripple effect will be the perfect storm of economy crisis in future, which will cost be paid by the future generation. This will not be a rhetoric. This will be the episode of the son to pay off the father's debt. The question is how the young generation be able to do it? What will happen if the economy totally collapse? Will we be able to enjoy the peacetime we enjoyed for the past 50 years? Economic has always been the reason to social stability. Weimar Republic in German during post WW1 is the best example. In my point of view, history does has the tendency to repeat itself, as human tend to repeat the same mistake again.

The Market Is More Important Than The Real Estate Deal

Location is the most important word when come to real estate investment. I am agreed. But, location is shouldn't be measured based on geographical alone. It has to be based on the market concept of supply and demand. In the idea case, a great location is based on the market that the supply is low and the demand is high. Meaning, even though a property that is located at a metropolitan city, it does not justify the soundness of the location. As in from the perspective of economic, "location" in real estate investment is the "market".

In real estate investment, the most frequent mistake that people make is making first priority on looking for a property deal. These type of amateur real estate investor always just go to any major cities, especially capital cities which the properties prices are high, and the communities seem to be crowded, starting to picking up 1 or 2 good looking houses, buying at broker offer price, and believe in a year or two, price will be higher. They always fall prey into the jargon and sale pitch that broker gave to them. They invest in gut feeling rather than a rational facts and findings.

In any place in today civilization, before looking for any property, the first priority is doing research to the market that you interested in, market research that will provide you information which related to supply and demand. For current supply normally is the number of housing start, a overhang rate of constructed building available, the new launching housing rate, and the unsold under or non- constructed units in the market. For future supply, that will be the pre-planned housing start in coming years. All these information can be obtained from well established broker firm, and real estate government agency. For the demand is a little bit tricky. Demand normally can be estimate from the absorption rate of new housing launch. In other word, it is the sale performance. Occupancy of the property in the given market also very related to the demand. If the vacancy is low, the demand is strong; if the vacancy is high, the demand is soft. Employment opportunities, schools and universities also a indication of demand for now and future. Population are in the function of employment, that the basic of economic. Housing price at particular market also has a very strong indicative to the demand. If the housing price on particular area is high, people at median income group could not afford to buy any houses. they are only about to rent. Therefore, rental market for medium cost apartment could be great vice versa. Buying right is profit when you buy, not when you sell. In order to archive that, the market is obviously more important than the property itself. Identify a market should come first when come to real estate investment!

Information Age - Change is Wealth

Berlin wall had tumbled down on 1989. It mark the end of industrial age that started 500 years ago, when Columbus sail out Atlantic ocean to seek a new trade route to east. Today, on 2010, our new information age, our new world is 21 years old. For the pass 21 years, we had witnessed the greatest pace of changes happening around us. From financial, social, politic to cultural, dozen of significant revelation and revolution had occurs. In the information age, the industrial age idea had became obsolete. For those who still live in the industrial age idea, they will lose. Industrial age idea such as the government has to take care the people, find a high paid job and work hard to climb corporate ladder, would not work in the information age. During the industrial, the problem is lack of information. Today, in the information age, there are too much information. The problem is how you be able to differentiate which information is good, unbiased and truthful. In the industrial age is how much you know that will make you rich. But, in the information age, is how fast you can learn and how compatible you to adapt with changes that keep continue coming in your everyday life that make you rich. For those we cannot keep up with the changes pace will be left out. The information age formula, Moore's law said that, the information processing capacity are doubling every 18 months. It means that, the information that you have know might expired in within 18 months. Meaning, today, you might be the king of the business, but tomorrow you might be out of businesses. In the information age, "changes" is wealth!

Insanity is "doing the same thing everyday to expect a different result"