Tuesday, June 17, 2008

Live-Blogging the P100 Summit - 2

Here are some points from PROFIT 100 speaker Brian Beaulieu, a common sense, plain-speaking economist, from the Institute for Trend Research. He warned us early on, “I don't have good news for you.”

* The US economy has slowed down to less than 1% growth.

* The liquidity crunch has not gone away.

* There’s a breaking point for how long the consumer can keep the growth going, in Canada and the U.S. Canada is hampered by the strong loonie, shrinking auto industry, and low levels of business reinvestment.

* “You will be confronted with increasing headwinds and you have to be ready for this.“

* “A perfectly acceptable strategy is to sell your business at the top of the business cycle ... you could sell it to your kids.“

* “Banks have a new model now: It’s ‘trust no one.’ And they don't…they're running scared as can be ... And that's how a liquidity problem spreads very rapidly.“


Beaulieu has just credited previous speaker Jaynie Smith: “One of the ways to combat an economic downturn is to understand what your strategic advantages are, and then pound away at them.“

He forecasts a steeper downturn than in 2001-2; more like the recession of the early 1980s. As Mark Twain said, “History doesn't like to rrepeat itself, but it sure likes to rhyme.“

Update 3:

* The deflationary trend for U.S. home prices will go till early 2010.
* Bealieu says interest rates will go up 100 basis points over the next year – and he`s an optimist. Some economists think rates will rise by 200 to 300 basis points: “That will delay recovery to 2012.“

Here`s the good news: “You should be thinking, so what? How do I turn this economic weakness to my advantage?“

* “A downturn can mean enhanced economic opportunities... at the bottom (2010) there will be lots of opportunities if you have the guts.

* His advice: “In 2010 you go into debt as much as you can – fixed, long-term debt. You borrow and borrow and borrow.”

* “You need cash and visceral fortitude. If you don't have those two things you will miss out on that massive period of opportunity.“

* “This will be the mother of all buying opportunities for real estate… Buy as much as you can, and then sail through the rest of your lives watching the value of your real estate go up around you.”

Update 4:
Beaulieu cited the following sectors as growth industries or recession hedges:
Energy, travel, green, higher education, health-care practices, leisure, pets.
* ``There`s a worldwide explosion in pets,`` he said. ``We see people cutting back on dental care in order to take their pets to the vet.”

He ended on a high note. “We have no excuse for letting our business go into business cycles- not in this room anyway.”

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