Saturday 3 November 2007

Let’s make a deal

Deal making is on the up and up. Everywhere I turn I hear people talking about the deals they are doing. Everyone seems to be doing a bit of this and a bit of that. I have never understood what this really means, but whatever it is, it seems to be heating up.

I was reading in a financial magazine recently that of the 1000 new dollar-based billionaires that were created in the past year, over half of them were in the hedge fund business. Now, I don’t even know what a hedge fund really is, but I do know it has something to do with managing money; from what I understand, other people’s money. And lots of it.

The message that this kind of publicity puts out to the youth, who all want to get rich quick, is that there is big cash to be made in the “money business”. So, if hedge fund folk become the new role models and the masses are inspired to become money managers then I have important question to ask: who is doing all the real work? If everyone starts becoming money managers then who is creating the initial wealth that then goes on to get managed?

In this world of high finance and fast deal making it seems that once again the fundamentals are being left aside. This can only mean one thing, a correction is coming. But, if you listen to the financial experts, no one seems to think that it is anytime soon. When the last bubble burst we never considered the influence of the new emerging power houses, China, India and Russia. There is so much money floating around out there for investment that it seems like the party is never going to end.

I remember when I was active at Internet Solutions. The financial guys spoke of financial year end, of profits, of performance, etc. These days, when it comes to all this deal making, I don’t hear people speaking about profits or growth or financial year end pressures. The other day I asked someone if they had a good financial year end, and they replied by saying that they had a good year. You see, profits didn’t seem to come into it. I didn’t hear any talk of a good year, just a good time. Yup, it seems that the party if still going strong. So, let’s make a deal !

Posted by Ronnie Apteker