Winners in a Recession

It is easy to analyse the losers from the upcoming (or more appropriately, prevailing) recession, but who will be the winners. Sure the equity analysts will trot out the usual suspects (buy McDonalds and the like) but lets me more imaginative.

1. Anyone who cuts costs.  Somewhat obvious but worth analysing nonetheless. Over the past 10-15 years, the big winner from this category has been China (and to a lesser extent, India). Their contribution to the world has been to cut the cost of everything from stuffed animals to electronics. (though in turn increasing the cost of energy and commodities!). In the future, I believe that China will continue to benefit from this, but there may be others. Dwolla is a clear example of an initiative that will cut a few percentage points off of transaction costs. It may not sound as dramatic as a remote control toy car having fallen in price by 70-90% over recent years, but it is far more important to the world economy and financial structures.

2. Cleantech.  Perhaps more controversial is my sense that the the recession will cause a change in people's priorities (or at least accelerate the growth of a nascent trend). This involves a greater sense of the environment and our treatment of the world. I dont think that we will all become tree huggers, but I do believe that when we can not afford to closet ourselves in luxury cars as we drive from luxury mall to luxury mall, and have more time on our hands, we will become more aware of environmental issues. The big question is whether this trend will offset the undoubted reduction in funding that will inevitably happen.

3. Waste Services. We need to maximise our use of resources and eek out every last penny. Mothers and housewives understand this. When money is easy, they throw out any dinner that is not eaten. When money is easy, it becomes leftovers and the next night's dinner is built around it. It is the same in industry. Even in agriculture, where only a percentage of the plant may be used. For example, grapes may be pressed for wine, but what happens to the rest of the grape after pressing? The same goes for palm oil with over 40% of the crop being discarded. The reality is that this 'waste' can be used and has value. People who do this will make a lot of money.

Am sure that there are many more examples.....need to put my thinking cap on!