TY - JOUR T1 - Practical Applications of The World Has Changed: <em>Investing in the New Economy</em> JF - Practical Applications SP - 1 LP - 6 DO - 10.3905/pa.8.1.374 VL - 8 IS - 1 AU - Jeffrey B. Madden Y1 - 2020/07/31 UR - https://pm-research.com/content/8/1/1.1.abstract N2 - In The World Has Changed: Investing in the New Economy from the Fall 2019 issue of The Journal of Wealth Management, author Jeffrey Madden (RMB Capital) explains how increasing investment in intangible assets—such as R&amp;D, brand advertising, and Internet platforms that grow in value as more users join—has changed how businesses create value and should change how investors evaluate earnings potential. On the other hand, generally accepted accounting principles (GAAP) have not changed to accurately track the value of intangible assets, so investors who study traditional financial reports gain little insight into a company’s value in the New Economy.Madden advises investors to evaluate potential intangible value by reviewing company-specific media reports, corporate communications, and other relevant information. He recommends focusing on three major areas of intangible value: 1) highly skilled managers, 2) a knowledge-building corporate culture, and 3) a distinct ability to adapt to change in a highly competitive environment. Over the long run, companies that possess those characteristics can produce cash flow that exceeds investors’ expectations.TOPICS: Security analysis and valuation, portfolio construction, performance measurement ER -