Five Things You Need to Know: Word of the Moment, Frugality
Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. Word of the Moment: Frugality
Over the weekend the Financial Times reported the results of a recently conducted survey among affluent households that showed "frugality" is spreading to affluent households.
The survey, by Harrison Group and American Express Publishing, found that 56% of respondents said they are buying fewer big-ticket items now than they did six months ago, and 82% said they wait for something to go on sale before purchasing it, a 15-point increase from December 2007.
For survey purposes, the study focused on households with discretionary income of at least $100,000 after taxes, mortgage and education costs and other regular payments.
At one point earlier this year, the perception was that the affluent were largely immune to a "bottom up" consumer recession. But that viewpoint misses the secular nature of this downturn and the increasing pressure to conform to shifting social attitudes toward consumption. "In fashion, the well-to-do are making sure they need what they buy and reducing the number of items they buy without shifting away from the brands they prefer,” Cara David, co-director of the study, told the FT.
"Executives at Procter & Gamble (PG), the world’s largest consumer company, argue that austerity-minded US supermarket customers will still opt for proven brands of items such as toilet paper and nappies against cheaper alternatives," the FT noted.
2. The Upside of Down?
"Contrary to the enormous and growing literature on how to be happy, perhaps there’s something to say for dissatisfaction," writes Stephen Cave in the weekend edition of the Financial Times. The centerpiece of Cave's article is the relation between three recent books celebrating the "good" reasons we should embrace and celebrate "our grouchier sides":
Enough: Breaking Free From the World of More
By John Naish
Against Happiness: In Praise of Melancholy
By Eric G Wilson
Complaint: From Minor Moans to Principled Protests
By Julian Baggini
3. Inside the Psychology of the Turn
Cave's piece, above, and all three books he mentioned, provide a fascinating glimpse into the thought process and the psychological turns involved in the ongoing transition from peak positive social mood to a darker state. Just as consumers in the aggregate, driven by economic necessity, are beginning to rebel against the pursuit of material goods by repositioning the social status involved in acquiring and even desiring them, so too is the overall "pursuit of happiness" falling victim to a cultural repositioning.
Faced with the seemingly pointless futility in craving material goods that are perceived to be increasingly unattainable, it is preferable to re-categorize The Unattainable as The Unwanted. This mood shift will be an important driver in the larger deflationary credit contraction that persists for far longer than policymakers think possible.
What is worth mentioning here is that, as negative as these titles may seem in the afterglow of the fading bull market, they are likely still too positive, reflecting the optimism that, even in tough times, "melancholy can be praised" and we have the ability to "break free" from the "world of more." A more pessimistic slant awaits, one where "the upside of down" will likely be met with ridicule and hostility.
4. Suddenly, Boasting "I Am Rich" Isn't So Funny Anymore
Yet another sign that we are seeing a sea-change in attitudes toward ostentatious displays of wealth and "frivolous" expenditures comes via an interesting report in the New York Times today on a "joke" iPhone application that costs $1,000 but does nothing except display a multifaceted ruby. The application, naturally, is called "I am rich."
German software developer Armin Heinrich created the app, but soon found himself bombarded with e-mail and phone messages, “many of them insulting,” he told the Times. "I regard it as art. I did not expect many people to buy it and did not expect all the fuss about it," he said.
Last March, Apple (AAPL) announced it was opening the iPhone to outside software developers in an effort to boost the utility of its iPhone. The hope was that software developers would soon create interesting applications in exchange for royalty fees they would split with Apple.
5. Whatever, Martha!
As the tide of social mood continues to transition and turn more aggressively against former icons of consumption, status and wealth, there will be some who attempt to cash in on this shift by adopting postures of self-mockery and self-deprecation.
Fittingly, Martha Stewart, herself no stranger to the dynamic nature of social mood, is among the first to try and get ahead of the transition by poking fun at herself - or at least allowing others to - in a new show.
On Sept. 16, Fine Living Network, part of the E.W. Scripps Company (SSP), will debut the new series, "Whatever, Martha!," built around the same premise that worked for "Mystery Science Theater 2000" and featuring two hosts who, in “candid and often acerbic” language, will proceed to mock clips from Stewart's 1990s crafts and cooking show.
Stewart hopes that "allowing herself to be roasted will woo a new generation of younger fans: people interested in household advice but who might find her meticulousness comical," the Times says.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2009 Minyanville Media, Inc. All Rights Reserved.
considering the utter irrationality, maybe blind hopefulness? maybe willing manipulation of sentiment, your stmt above may be more true (as a counter-trend) than i'd realized
thanks
Aesop wrote many moons ago about pointless futility. Obviously, the story of the fox and the grapes has some relevance to the circumstances we find ourselves in today.
But the shift in social and cultural mood goes beyond simply resigning ourselves to "lessness," and disdain for all things uber-material. There is indeed a cultural reflection upon where we have been as a nation lo these many years that leaves a sour taste in our mouths- just like the fabled fox.
As we have pondered the consumer-based economic model that has "worked" to build mountains of mystery-debt, crush the true value of homesteads and leave open the door for government manipulation in markets, we collectively realise that that kind of thinking is immature, basic and irresponsible to oursleves and our children.
Schadenfreude is actually not the order of the day, nor is the attitude of the spoiled fox.
Rather, there is a deeper paradigm shift occurring in our mindset. We are truly maturing as a nation and the growing pains we are experiencing now are a vital rite of passage that Americans will face, as we always have, with aplomb, grit and determination.
Please see my blog on this site for more on this idea.
I would truly appreciate any commentary and response.
Your reference to the perception of a "Bottom up consumer recession" is secular in and of itself, perhaps bandied about by the well-heeled. Being a common man myself (there you have it, the self-deprecation!), for selfish reasons perhaps, I prefer to consider our current economic state of affairs as a trickle-down mass consumer depression.
Less is indeed more - esp after Mr and Mrs Clinton, the raccoons, became trusting enough to start bringing their 6 kids along for dinner (had to buy more food bowls for the additional mouths - but the next morning both new bowls were gone. Ricky and Micky immediately acquired a last name, as when they left they took the china with them).
As usual, Prof Depew has anticipated and characterized the secular changes that are evolving, hence being way out in front of Main and Wall Streets. Things may get ugly mood-wise over time.
What is less for me is more for my critters, though. Keeping a lot of food around keeps fights from breaking out (the fox, raccoons, and skunk frequently have their noses in the bowls at the same time) - and me from being sprayed by accident. Rodents and snakes are no longer in my yards now that the fox hang out there - less is good there too.
Somehow I think being sprayed by humans will be worse if things get nasty.
Whats the difference? Credit is for a short period of time to be used to simplify a transaction. Debt is the mortgaging of ones future productivity for current consumption.
What will the turning point be in the conversion of consumerism to whats next. When you go from wanting to have a lawn to wanting to grow and maintain your lawn be cause you get some satisfaction from the process.
The turning point in the change will be when people realise that casting your vote does not constitute participation in government. One must be active in the process. One person's work can affect many others, those others can affect the multitudes. We currently have the next four months to determine the future of our country.
When will the turning point become a new well defined country?
When a candidate is elected because he/she is honest. When that candidate has the understanding of the way things are that he/she will answer this simple questions responsibly. Do you support an economic stimulous package? Answer, No we can not afford it, we have no money, we can't even pay for what we have going on now. Good luck with that.
Un-fortunatley I had hope for Obama, but now he proposes some type of energy credit or some such hog wash to help people get by. I say turn down your winterheat, drive slower, be responsible for yourself. Don't expect government handouts.
.
You say in your post "turn down your winter heat", well some people (actually, probably more than just some) will have to turn off their winter heat next year...many people on main street will suffer for the greed party that went on in the supposely "free-markets" of wall street and the absolute mis-management of a government energy policy....maybe an energy credit will help get some people through the winter of 2008...I understand your view point as i certainly have been conserving on energy, but these are getting to be extreme times for many people who have not participated with any wealth production in this country...
I took me a while (I'm slow) but I figured out those foo-foo food dishes are exactly no fun. Who has ever said "I had the time of my life eating super fancy unrecongizable food on over priced plates!" Great times seem to involve good friends, copious amounts of alcohol if that's your thing, eating simple fun food on stuff you don't worry that you broke.
Happily, I can I say I have no china and my guests eat on paper plates with plastic forks. The food tastes the same, no one worries about breaking anything, and clean up is a breeze. (We do throw the plastic forks in the dishwasher as it's easy and I'm too cheap to throw those away.)
Seeing Martha's pictures now make me think that there must be some formal place to put the Valium you'd need to serve the guest to convince them they were having a good time.
So, I go out and spend $300 on a pair of sturdy leather boots that I can wear everyday, and if all goes well they'll last me for a few years rather than a few months. And I learn to take care of them properly. And if the soles need repairing somewhere along the line, I can throw my hard-earned cash at a local shoe repair person, rather than at yet-another-crappy-manufacturer- of-low-grade goods. Sometimes, in order to be properly frugal, you need to spend. Nothing will be solved as long as consumers continue to regard most of their purchases as disposable, and as long as the bulk of items available on store shelves aren't worth what it will cost to repair them when they fall apart a month later.
Quality over fashion every time.
