This week, the P4Capital team continues it’s discussion into the Next Industrial Revolution.
Amanda: Good morning listeners. Stay tuned for the conclusion of P4Capitals discussion on the New Industrial Revolution.
Archana: Its no coincidence that the industry watchers are actually calling this resurgence of manufacturing as the third industry revolution. Just to mention the point that Jim had alluded too earlier on, within a decade Baby Boomers will, possibly control 72% of the wealth in Canada, and apparently that’s up from 60% in 2004. So given those stats it absolutely becomes necessary to hold manufacturing in your portfolio mix.
Jim: And following up with what Archana just discussed, one of the things investment managers, they’ve done, and one can look at simplified mutual funds as maybe an example, but there’s way more sophisticated products out there right now. Where you can take that overall baby boom wealth and then take a slice or a segment of that, and use that into your initial funding so instead of having to go out to venture capitalists, you can then use Baby Boomer wealth to do some of the VC funding required for these companies in central Canada.
Shaheerah: Another advancement in the automotive industry is that they’re using these advanced composites, and these can help to reduce the weight of a passenger car by 50%. In which turn that improves the fuel efficiency by roughly 35%, without compromising on any performance or safety level. And that can actually help American families to save more than $5000 in fuel costs over a cars lifetime.
Jim: So with that said, is the price of gas, at its current level, is it ever going to go back to what it was in the summer which was double or maybe 120% what it is right now. Shaheerah’s point was, quite clear there, the answer is no it’s not – so what does again mean to your portfolio
Jeremy: On the subject on oil prices and manufacturing, you’ve got to say that the low price of oil, $48 a barrel this morning, which favour China. I mean, that’s been one of their major costs for Chinese manufacturing – shipping things across the ocean. A lot of oil is used in production as well; that’s another point for the Chinese going forward.
Archana: Just coming in this morning in fact, just to add to the point that Jeremy and Jim just made. Coming into work this morning I just listened to something on the news. Goldman Sachs has apparently brought out these recent stats saying that oil might actually hit a record low. They are predicting 39 dollars per barrel. Which again means that the discretionary income available to consumers, be it spreading out in their portfolio, it does give them options as well to play around with the extra money that they might be able to save.
Jeremy: I don’t know how much money we’re really saving. When you’re fueling up at the pumps these days you might save 15, 20 bucks. You’re not going to fund your retirement on that, are you Archana?
Archana: Again, going by stats I think that they’re predicting per family the saving could amount to almost $2000 on an annual basis. Oil also sorts of obviously translates to natural gas, the stuff that we need and we use on a daily basis. Having said that, this also might mean that some of the other sectors might experience a boost. Possibly retail, because if there is so much discretionary income to go around with all the savings that families could possibly make, retail sectors might be one of the sectors to possibly look out for.
Amanda: And don’t knock those 15, 20 dollar savings. I’m enjoying gassing up my car now-a-days.
Jim: Well, exactly. And think about that -that’s like found money. So as Archana pointed out, where’s that money going to be directed too? Because it’s not a huge amount – it’s not like its $10000 on a one time short which you would take that and do something with. This is, as Amanda quite correctly pointed out, these are depending $15 – $40 dollars a week savings. Well, that money is going to be directed into a new pair of shoes, a new shirt, whatever, a renovation to a household item. That wealth is then being redirected.
Amanda: That was the conclusion of P4Capitals discussion on the Industrial Revolution. What to know more? Check out our all new website at http://www.p4capital.com You can also check us out on Twitter @p4capital . Thanks and see you next time.