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Five Things You Need to Know: Word of the Moment, Frugality

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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.

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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.

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No positions in stocks mentioned.

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