At Archery Capital we provide a wide range of strategies and solutions including short-term finance, debt consolidation
Time for a Cuppa!
Welcome to our last Bulletin of the year, which also caps off six months since we have been open. In this Bulletin we take a look at 2016, and the role that Expertise (or lack thereof) played in shaping it into the rocky ride that it was.
All businesses aim to satisfy demand in the market through their offering, which might take the form of a service, product or combination of both. In its most simplest form, the formula for the business to grow is demand for this offering and a subsequent delivery that satiates the need of the end consumer. Take the Tea Industry for example, which has enjoyed enduring demand over time due largely to the role that it fills which can be clearly defined as providing liquid nourishment to an increasingly health conscious consumer. The versatility of tea – hot, cold, sweetened, unsweetened, combined with the refreshment, hydration and documented health benefits – have ensured that tea remains unrivalled in value creation and consumption (by volume) within the beverage industry. It also has another rumoured utilisation, which we will look at later in our Bulletin.
All players that operate within the ‘Tea Chain’ whether they are growers, packers, retailers servers or consumers understand the role that this simple product plays. As a metaphor to all businesses, tea reminds us that growth is more than fulfilling a purpose. For all its simplicity, and in spite of historically being overlooked within the beverage industry as a low-priced commodity, tea has endured because it does not fail to meet the expectations of the end consumer. Failure to meet expectation is terminal to business. But, you need only observe your nearest tea lover for assurance that this is one product not in danger of becoming redundant. Which brings us to our next segment:
Business as (Un)usual….
Following the release of the Government’s Mid Year Economic Fiscal Outlook earlier this week, the rating agencies responded by confirming Australia’s AAA Credit Rating would remain for now. A surprising outcome to many onlookers, ourselves included, given the run of ‘headwinds’ that have recently surfaced that signal challenging times ahead.
In our opinion 2016 has been the year where all the Experts (term used very generously) got it wrong. It was the year that gave us ‘Brexit’, the Coalition a near death experience, the return of ‘One Nation’, ‘Trump’, Bob Dylan the Nobel Prize, Prince’s passing, and no foreseeable Budget Surplus. Out of all of this, the only predictable occurrence was the pontification that occurred after every surprising event by the subject matter experts who were not content to have just got it wrong and doubled-down by providing their expert analysis on why they got it wrong.
We think that 2016 will be viewed as the point where the once valued and sought after expert opinions across a range of disciplines proved their fallibility….and the demand that we as consumers have for their product was irreparably damaged. As events unfolded, the once valuable insight that was provided was quickly dismissed into a sea of redundancy. For peddlers of information to claw back any relevancy, their advice needs to shift from the theoretical, and be grounded from analysis of the environment that we all exist in, and have existed in for quite some time.
The Big Banks all chose to finally cut the hair-thin link between themselves and the RBA in the past few weeks as far as interest rates are concerned, when they demonstrated that interest rate cutting cycle was over from their end, by increasing rates across a number of their products. It is likely that 2017 will see more rate rises by the Banking Sector which will be independent of the RBA’s action. (This is our humble opinion, and in no way a prediction mind you). Further, the RBA will most likely allow the balancing act in this space to be done by the US Fed, as if they continue to increase rates, that should keep the Australian dollar in check.
In our previous Bulletin we reported on the Parliamentary Hearings into the Banking Sector, and the much heralded (and highly derided) decision to form a Banking Tribunal. Earlier this month, the Minister for Financial Services, Ms. Kelly O’Dwyer confirmed that this Tribunal would really be a ‘small t’ Tribunal.
C’mon, who did not see that coming!
Given the unpredictability of events in 2016, our view for 2017 is that all business owners should stick to their strategic planning, and really know and understand their environment and the end consumer. They should not follow the approach of kicking the table over, as adopted by the voting public across the globe who have chosen to install those that loudly proclaim expertise in knowing what is best, but have very little by way of solid experience to achieve this. It will be interesting to say the least.
Business owners should be more disciplined than ever. We refer you to our previous Bulletins on Agility, Complacency and Planning in this respect. Business owners should trust their own experienced instincts, and if they do require advice, they should ensure that it is obtained from those that understand them and their business. Our enduring view however is that:
“Demonstrated Experience Trumps Hollow Expertise” (Pun intended)!
In the meantime, and in the run up to year end, we wish to take this opportunity to thank all our stakeholders for their support of Archery Capital since we opened 6 months ago. Please have a safe and enjoyable festive period, and we will be back in 2017 when we can continue to work together.
Now go and have that cup of tea. For those that remain anxious about 2017, and as alluded to earlier, it might be time to bring back Tasseography, which is the art of reading tea leaves to predict the future. In all honesty, tea leaves would probably provide better insights into next year, and will certainly not do a worse job than the experts that gave us their opinions this past year. Their accuracy to predict economic shifts in particular has been waning since the GFC, and now they are so far off the mark, that they may as well have used tea leaves!
Finally, and as always, please feel free to contact us for a discussion on anything you believe we might be able to help you or your clients with.