A couple of years ago I downloaded the “research” paper that inspired this article and then forgot about it. I was reminded of it today after coming across yet another “14 Investment Ideas for 2014” type article that are all the rage every January. The paper in question was produced and promoted by a very large investment firm that “specializes in serving families with a net worth of $100 million or more.” The title was “Ten Key Investment Themes” and was written by the firm’s Chief Market Strategist. So this information must be important. Let’s look at some excerpts (click to enlarge):
Did you get that last part? “Companies prepared to meet the world’s changing needs with respect to alternative energy, global infrastructure, materials and industrials stand to benefit.” You might want to write that down.
Here’s another:
Breaking news! “Increased consumption and increasingly sedentary lifestyles have created an expensive health crisis in industrial nations.” Who knew?
Hang on for this one:
Women buy stuff and companies that sell that stuff stand to benefit! I guess regular access to this kind of information is one of the unique advantages granted to the .1% of the 1%. Membership has its privileges.
One more just for fun:
When poor people make more money they buy more stuff. How about that.
The paper goes on for 39 pages and has a lot of facts and statistics backing up these important themes. The problem is that none of this information is usable. It’s a complete waste of time for these reasons:
- Ridiculously vague. Take the first example above. The list of companies “prepared to meet the world’s changing needs with respect to alternative energy, global infrastructure, materials and industrials” includes basically every mid to large manufacturing, energy, construction and natural resources company in the world. A lot of the small ones too. You can make something this broad mean anything you want, which is a great tactic for never being wrong.
- Price and timing are disregarded. Since we are not immortal, we should have some expectation that an investment theme is compelling from a price standpoint and that it may play out during our lifetime. In a world of thousands of investment alternatives to choose from, how does pointing out the rise of global obesity help me make a decision today? For information to be valuable, it has to be actionable.
- This information is already known to literally every human on earth. OK, maybe not literally every human, but certainly the lion’s share of human investors. There is no edge to be gained in acting on information that everyone already knows and has known for many, many years. Pointing out that women are now 40% of the global work force is not a startling revelation. Parade magazine probably talked about it in a Mother’s Day article ten years ago. I’ve been hearing about the “emerging market middle-class consumer” since my first month in this business over twenty years ago. It’s not an insight, it’s an observation.
No doubt the author of this paper is a highly intelligent and accomplished professional, which begs the question. Why? What purpose can something like this serve? People tend to like some kind of narrative or story to support an investment rationale and I suppose that’s the value of these. They’re flexible and gauzy enough to justify almost any recommendation. There’s probably no harm in it as long as these predictions are treated no more seriously than most New Year’s resolutions.
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