What I read this week: Showing off is passé and very middle class now
By Ritesh Jain
Season’s greeting to all my reader!
Magazine covers are notorious for giving out contrarian signals, as journalists catch a trend which is matured and not in its infancy and, hence, we can question the need for forming a view based on a cover story. The rich are becoming less flashy, preferring inconspicuous consumption over spending on material things, which the middle class seems to enjoy more these days. This enables and displays the acquisition of cultural capital, thereby providing entry into social networks that, in turn, help pave way for elite jobs, key social and professional contacts, and private schools. If you are in awe of the wave that bitcoin is making these days, then you haven’t seen anything. Companies are changing their names to add blockchain and seeing their stock prices zoom by 1000 per cent. Now, this is what I call madness and as always will end in tears.
I reiterate that this is only a sampling of some of the best content I read through the week, with a dash of my own thoughts. Until next week…
Showing off is passe and so middle class now
Source: Conspicuous consumption is over. It’s all about intangibles now
One way to identify people in elite classes were the tangible or the physical things they used to possess.
Owning a SUV, wearing expensive watches, high end television were amongst the many things which used to make them apart. Now, even middle classes have started owning these once expensive goods thanks to credit cards.
However, the democratisation of consumer goods has made them far less useful as a means of displaying status. In the face of rising social inequality, both the rich and the middle classes own fancy TVs and nice handbags. They lease SUVs, take airplanes, and go on cruises. On the surface, the ostensible consumer objects favoured by these two groups no longer reside in two completely different universes.
But the dramatic changes in elite spending are driven by a well-to- do, educated elite, or what I call the ‘aspirational class’. This new elite cements its status through prizing knowledge and building cultural capital, not to mention the spending habits that go with it – preferring to spend on services, education and human-capital investments over purely material goods. These new status behaviours are what the author calls ‘inconspicuous consumption’.
Eschewing an overt materialism, the rich are investing significantly more in education, retirement and health – all of which are immaterial, yet cost many times more than any handbag a middle-income consumer might buy.
The top 1 per cent now devotes the greatest share of their expenditures to inconspicuous consumption, with education forming a significant portion of this spend. Inconspicuous consumption enables and displays the acquisition of cultural capital, thereby providing entry into social networks that, in turn, help to pave the way to elite jobs, key social and professional contacts, and private schools.
In short, inconspicuous consumption confers social mobility. More profoundly, investment in education, healthcare and retirement has a notable impact on consumers’ quality of life, and also on the future life chances of the next generation. Inconspicuous consumption choices secure and preserve social status, even if they do not necessarily display it.
Not contrarian, just behind the curve
Source: Are magazine covers a contrarian indicator
Finding a reliable way of timing the market is something that has eluded the greatest investment mind in history. That is why many people are tempted by the “magazine cover indicator” as a contrarian signal.
One of the most famous was Business Week’s “Death of Equities” cover in 1979 which actuall came three years before the great bull market got going.
Analysts from Citigroup have written that the premise behind the indicator is that when a journalist or editor finally devotes a cover to a market trend, company, country or person, the story or theme has been in vogue for some time and is likely past its peak.
Positioning and sentiment should already fully reflect the story on the cover of the publication and the story should be fully priced in. In other words, by the time a journalist writes about the trend, a majority of the move has already happened.
Interestingly, their analysis finds that after 180 days only about 53.3% of Economist covers are contrarian; little better than tossing a coin. After 360 days, the signal is a lot more reliable—68.2% are contrarian.
Buying the asset if the cover is very bearish results in an 18% return over the following year; shorting the asset when the cover is bullish generates a return of 7.5%. There have been calls which have gone right too, like about the Scottish referendum or about the internet shares in January 1999 and many more.
Good articles many-a- times have a different perspective. It is upon us readers to interpret the same in our scheme of things rather than take the opinion on face value. They broaden our thought process, not necessarily help in taking the right decisions.
Scams & Stupidities around “Blockchain Stocks”
Source: Scams & Stupidities around “Blockchain Stocks”
It just doesn’t let up. UBI Blockchain Internet, a Hong Kong outfit whose shares trade in the US, filed with the SEC to sell an additional owned by its executives. In other words, it isn’t selling the shares to raise money for corporate purposes, but to allow its executives bail out.
This is happening after the company – which sports zero revenues and a disconnected phone number, within six days of in SEC filings – managed to get its shares to spike briefly by over 1,100 per cent, pushing its market Read More…
Via:: Economic Times – Stocks