Value Resource Investing
It seems prudent right now to be cautious with spending. Profitability at asset managers is way down in 2009, primarily driven by the drop in asset values. It’s not clear yet, as it never really is, where markets will be going , so it seems prudent to limit all spending. Budgets set early in the year are very tight. As I speak to managers, many seem to be waiting for the Fall to set their budgets for next year and to assess whether they have any discretionary spending left this year to hire employees, and fund discretionary spending such as advertising and conference sponsorships. But another way to look at things is through the lens of value resource spending, which is like contrarian investing. Because most managers are not spending freely, there is a lot of talent that can be acquired at deep discounts. A contrarian value resource spender should strongly consider hiring this talent, and using some discretionary spending, while they have the leverage in the marketplace, before the spending rebound occurs this Fall and in 2010. Investment managers should evaluate their budgets and spending patterns as a value investor would.
1 comment July 12th, 2009
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