Omer Pervez Khan

Accounting background

Khan's core background is in accounting. He was doing his training at PwC Ferguson in Islamabad. He describes auditing as good work that took him to big companies and put him in front of senior people. [1]

Work with startup founders

Khan went to a startup pitching competition, and describes himself as having been dragged there. He was struck by the energy and passion of the founders who were pitching. His wife was working at an accelerator. [1]

Khan began working with founders on a pro bono basis. He helped them with their accounts and financial models. He became something like a full-time fundraising consultant for founders, and also handled investor negotiations for them. He estimates that he worked with 50 or more entrepreneurs. [1]

Move into venture capital

Khan moved into venture capital as the VC scene grew in Pakistan. He offered a venture firm to work for free for four months, and the firm hired him after three months because of his experience. He has said that he was well into his career when he made the switch, and that he was around 30 or 31 at the time. [1]

High Output Venture

Khan describes High Output Venture as a Singapore based venture studio. It builds some companies itself and also invests in others. It has invested in a distribution business out of Myanmar and in a media studio in Vietnam. Its investments in Pakistan are now more on the venture side. [1]

Views on accounting and venture capital

Khan describes accounting as a cost center. He says clients will not pay beyond a set cost for an accounting service. In his view, venture capital and fund management make money for the people they invest for, and making money for a client has no limit. [1]

Views on investing

Khan defines an asset as something that gives its owner future economic benefits, and says investors should understand what an asset and a liability are. He recommends the book Rich Dad Poor Dad to anyone who wants to understand assets and liabilities. He says an investor should ask why they want to invest and where they want to get to. In his view, a plot that merely doubles in 10 years is savings, not an investment, and investing is a building process in which quick growth should not be expected. [1]

Khan says ROI basically means return on investment and should be judged after adjusting for inflation. He explains inflation as the steady fall in what money can buy over time. He says the investor's job is to make sure ROI beats inflation. He adds that higher returns come with proportionally higher risk, and that investors should weigh risk against return and their stage of life. A person with a family, he says, should be more careful with risk. [1]

Khan says daily research greatly improves an investor's chances, and he emphasises research, reading and learning daily to spot trends. He describes a low-risk, high-return asset as an asymmetric bet. He says the smaller the ticket size, the longer and harder it is to grow an investment. He has said he is not an adviser and is not giving financial advice. [1]

Views on property and mutual funds

Khan says property is a dead investment in the grand scheme of things. He says most property buyers choose developed apartments or rental property, and that property investors should check who the developer is and who backs it. In his view, rental income that beats inflation makes a property an asset. [1]

Khan says a mutual fund has no limit on how much one can invest, and that one can start with as little as 5,000. He says a mutual fund raises money from many people and is run by a manager. Equity mutual funds invest in the stock market, while money market and bond funds carry less risk and lower return. He says mutual funds are heavily regulated, which lowers risk, and that a fund focused only on equity carries higher risk. [1]

Views on saving, cash and gold

Khan says saving in cash does not make sense, and that holding cash is an expense since its value falls each year. He says the Austrian view is that saving should happen, and that these days the Keynesian approach is being followed. He does not fully agree that saving fails to stimulate the economy. [1]

Khan says Pakistanis hold a large share of their savings in gold, and that gold usually protects against inflation. He calls gold a simple asset for Pakistanis to buy and keep. He says that on normal days gold mostly covers inflation, and that it is a good indicator, having been used for centuries. [1]

Views on money supply and the dollar

Khan says about 10% of money in circulation is actual cash and about 90% is credit. He says credit money is not real money backed by anything, and that borrowing to fuel spending is in effect borrowing from future generations. He says the extra money being printed is going mostly to funds and banks. He says bond interest rates have turned negative in some countries. [1]

Khan says the dollar has been trusted for decades as the world reserve currency. In his view, it could lose its place if trust in the US wavers or a rival like China rises. He says every single currency is pegged to the dollar, so a downfall of the dollar would put every paper currency in trouble. He says the rupee's fall against the dollar did not mean the dollar was getting stronger. [1]

Khan says that when big investors sense a problem, they move to safe assets, and that this information does not reach ordinary people. He says that in a crisis many small investors get opportunities they could not get before. He says the pandemic was bad for many people but gave opportunities to those who followed trends. He adds that pandemic stimulus went to big businesses and not to small businesses. [1]

Views on possible futures

Khan says the good scenario is that people can hedge against everything, and he notes that Pakistanis can now open online trading accounts. He says large firms acquired promising startups, such as YouTube, Instagram and WhatsApp. He says the worst case could leave people dependent on a few companies that make the rules, and describes his worst-case scenario as a very Orwellian future. He says the worst case is not a matter of next year or two, and could take 10 to 20 years. [1]

Views on digital currency and blockchain

Khan says the digital yuan is probably the most fascinating development for him, and that it points to a move beyond the fiat currency concept. He says a central bank digital currency could be given with spending limits, such as for groceries only. He says fiat currencies were created so that governments can control them, and that governments make sure their currency is used, for example by requiring taxes to be paid in it. He does not expect governments to give up control, even with a shift to digital currency. He thinks future digital currencies will be government backed or central bank controlled. [1]

Khan says bitcoin is much like gambling for an investor, and that Bitcoin has no real utility beyond use as a currency. He thinks Bitcoin, called digital gold, may end up as a settlement layer, and says countries settle dealings in gold, which he calls the final settlement layer. He says it is very optimistic to think digital money will escape control by the people who run fiat currency. [1]

Khan says blockchain should be seen first as a technology. He says each coin represents a different sub-technology or use case of the blockchain, and that buying any coin is an investment in blockchain. In his view, investors should see coins as shares in the companies that issue them, and new coins are launched through an initial coin offering, not an IPO. He says there were technologies that ordinary people could not invest in, because they were held by private companies. [1]

Appearances

Frequently asked questions

References

1. Inflation is the number every investment has to beat . Thought Behind Things , 2021-02-05.