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April 23, 2014

Investment Fads - From hula hoops to search engines

Quick! Your money and your retirement rely on giving the correct answer to the following question. Which of the following is just a passing fad:

  • Social Media
  • Search Engines
  • Smart Phones
  • Streaming Video

There are a number of major blue chip companies that are betting on each of these products continuing their hot ubiquity. You know, in the same way that companies in years past bet on the train system, typewriters, and film developing. (Did you ever hear of a fly-by-night called Kodak?) Now, that doesn’t mean that every successful product is necessarily a fad. Manufactured products like cars, televisions, and headphones are still going strong. So how do you know which ones are here to stay and which ones are going to be upended in the next technological tsunami? Simply, you don’t. It’s impossible to predict the future of the economy, tech world, or consumer lifestyle. Even today’s corporate giants – Apple, Netflix, and Facebook – can easily fall prey to the same forces that have washed out others before them. Some things will change, some things won’t, and the uncertainty makes conservative long term stock investments seem like a crummy deal. Even the stalwarts, the industries that are seemingly impervious to societal change, are now looking to come to terms with new realities. Bloomberg recently reported that the mechanism of higher education is being slowly broken down, and it’s only a matter of time before the notion of college as a necessity is foregone entirely. Let’s rephrase that: the past two generations who viewed college as an absolute must for economic advancement are now being replaced with a skills based perspective that sees higher education as a fun but meaningless frivolity. And remember how you always heard how the food business is safe because people gotta eat? Well, one aspect of that world, specifically the pastry corner (no - not pastry!) is seeing an upheaval. Businessweek is reporting that Crumbs Bakery, which has been a juggernaut in the recent baked goods resurgence, is now battling lackluster sales and actively seeking new venues for its products. (They’re looking at groceries, but come on! Since when has a grocery bakery ever transcended epic birthday cake fails?) In the end, what does it mean for your retirement? On one hand it means don’t chase the next big thing. You never know when the hotty will suddenly morph into the notty. And on the other side it means to follow a sensible approach. Do you have a conservative business idea? An income producing property? An innovative fund that produces solid believable results? Seriously consider that idea as a viable aspect of your retirement planning. I actually had a few more ideas to share about fads in investing, but I just remembered I need to water my pet rock. Until next time.


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