I have read the strategy document (written in Norwegian), written by some excellent investment advisors with recommendations for the Norwegian pension fund (the second largest investment fund in the world with 600 billion dollars). As this is a pension fund with a 20+ year investment perspective, the main advice was to exploit this long-term scope to invest in assets that normal investors would not have the patience for. One of the ways to do this is to create insurances (also heavily exploited by investment guru Warren Buffet). One of the insurances that could be sold is insurance against a financial crisis.
I am wondering whether something similar could be exploited by my company. My company works for medium to large companies. Some of these companies think almost exclusively short term. Some think one year ahead, some just one month ahead. Do you have any ideas how to exploit this differnce in time scope to earn more money? I specicially do not want to tell what I am working with, because I want this to be a general discussion on this topic.
Well, unfortunately most business owners or managers are thinking in short terms. At maximum they think about 5 years ahead. If you want to change that, you are trying to educate them, thus you need very good arguments. However, it is absolutely normal to think in short terms, if your business faces an economic downturn.
So, if you like people to invest in something which has an investment perspective of 20+ years, you need to show 2 important things:
- security of investment
- acceptable interest/return on investment
IMHO insurances against financial crisis bears a unforeseen risks. Anyone has to pay for the losses, if they may occure, though who will that be? Your Company? Another Insurance Company? Where is the profit for the investor?
If you just think about earning money from the different time scope of investments, I don't see any opportunity so far.
So, it depends on how good you could educate your clients to see the benefits of long term investments.
Hope this helps a bit.