Another reason for unsuccessful investment strategies is reliance on numbers, which have been in fashion, and their consistent use only secures the cozy jobs of the analysts. However, this will soon change as we are in an era where every information is available freely and success depends upon your ability to understand and relate the information to a specific objective. Lets see how our markets have worked in the last 50 years and those who were able to navigate the change have been very successful.

After the independence we followed asocialistic system of society which in turn gave birth to the licence raj. Here you could set up industries only if the government allowed it and that depended upon your contacts and the relationships with those in power. The competitive edge was not productivity or efficiency. People invested in the stock markets and made money by investing in to the inefficiencies. This worked as long as the Indian economy was closed but with the onset of liberalisation in 1991, things started changing.

Another turning point was in the phase after 1973 when the Fera Act was introduced forcing all the multinationals doing business in India to offer at least 40 per cent of the shares to the Indian public. Those who invested in such companies made handsome returns. Then with the 1990s we had the birth of the knowledge worker and the intangible advantage of the human mind was the competitive edge. In this scenario we saw the growth of the software sector picking up and people made money in investing in to businesses ofinformation technology and computers and software.

However, now we are entering the new economy, which has totally different characteristics. The very process of production is being revolutionised. Virtual integration is replacing vertical integration as more and more corporations use the Net. Till date we had different technologies working parallel, but now we see them converging and opening up a whole new world and opportunities. The information and the life sciences are slowly beginning to fuse into a single technological and economic force.

This is going to be the new economy where the industrial economy is going to be replaced by the emerging biotech economy. It is important to understand the new revolution as it helps us make the right investment decisions. The new economy is the economy of ideas and innovations. Would you believe that the following scenarios are possible?

* New micro-organisms will replace the miner and his machine in the extraction of ores. It will be possible to increase therecovery of gold from the earth through this process.

* Scientists have been successful in inserting a plastic-making gene into a mustard plant and thus transforming the plant into a plastic factory. Monsanto hopes to have the plastic producing plant by the year 2003.

* The new field of tissue culture research will make it possible to move agriculture indoors.

* Scientists are experimenting with genes that confer resistance to herbicides, help ward off viruses and pests and can adopt a plant to salty and dry terrains. This will help increase the quality and the yield of the agricultural product.

These are just a few examples of what the future is going to be and investors would do well to be invested in the businesses of the future like biotechnology and genetic engineering. This is where the growth is going to be and not in the commodity stocks of the industrial era. Companies which are positioning themselves into this new era are the innovators and it makes common sense to be invested in suchcompanies although their numbers like earnings growth, top line and bottom line growth, earning per share (EPS) and book value and so on are negative.

No doubt in such a fast changing scenario not all companies in these sectors will be successful; there would be winners and losers. But it is better to bet your money here rather than the winners of the yesteryears as the ground rules, which made them the winners, have changed drastically.

The author is the chairman of Parag Parikh Financial Services