We’re looking at it all wrong: the intangible information gap

I have been really heartened to see more attention to the way that the intangible information gap skews investors’ understanding of what’s really going on in today’s knowledge-driven companies. This latest article comes on the heels of a Reuters piece last month calling for getting intangibles on the balance sheet.

Yesterday, this new examination came in Jeff Saut’s Market Call column where he quoted Steve Vannelli of the GaveKal Platform Company fund talking about technology and intangible capital (I added the bold):

To this technology point, I asked Steve to discuss his “knowledge,” or intangible capital, theme. He responded by stating that our current accounting system doesn’t value “intangible capital accumulation” appropriately. Most certainly, intangible capital accumulations are “expensed,” not capitalized. Such accumulations increase productivity, foster more efficiency, and drive better financial money flows than are currently measured. Moreover, if you are not measuring such metrics correctly, you are also not measuring our country’s “economic output” correctly. For example, “What is Amazon’s (AMZN) “search engine” worth? Read more

Starting Today

Today seems like a good time to talk about the future. Yesterday, the United States elected a new president, Barack Obama. For months we have talked about the challenges that face our nation. Success is not guaranteed for our nation or our business community. We need to up the odds and strengthen the companies that form the foundation of our national economy. Starting today.

Where does the strength of our companies come from? Read more