The Bookshelf —

Book of the Month 12-19

Wealhouse Capital Management


December 2019 – The upcoming holiday break is a great time to pick up a new read. This month, Scott Morrison recommends Capitalism without Capital – The Rise of the Intangible Economy by Jonathan Haskel and Stian Westlake.

When we started Wealhouse in 2008, I told everyone on our team that no matter what sector or company they are following, they are a technology analyst. I did this because I kept on seeing how best-of-breed companies were investing in technology initiatives around software, patents, digital brands, proprietary databases etc., in order to build a competitive advantage.  No longer were all the CapEx going into the hard assets that a lot of my mentors had me analyze early in my career (e.g. plant and equipment, real estate, infrastructure etc.).  It was now important to understand for many businesses, intangible assets you cannot touch and see are increasingly important to win as a business.  Capitalism without Capital – The Rise of the Intangible Economy by Jonathan Haskel and Stian Westlake shows that the growing importance of intangible assets has also played a role in some of the larger economic changes of the past decade, including the growth in economic inequality and the stagnation of productivity.

I was lucky to discuss his research going into this book with one of the authors, Stian Westlake, over lunch.  I even got a copy autographed for my mentor.


Wise Words

“Microsoft’s market value in 2006 was around $250 billion. If you looked at Mircosoft’s balance sheet, which records its assets , you would find a valuation of around $70 billion, $60 billion of which was cash and various financial instruments. The traditional assets of plant and equipment were only $3 billion, a trifling 4 percent of Microsoft’s assets and 1 percent of its market value. By the conventional accounting of assets then, Microsoft was a modern-day miracle. This was capitalism without capital.”