What Hip Hop Can Tell Us About Investing
One can make the case that everything, literally every thing, could be considered a fad upon its introduction, and those fads that are compelling enough are, eventually, no longer "fads."
When my 66 year-old psychiatrist father quoted a Snoop Dogg lyric during a conversation at the dinner table not long ago, I knew that hip-hop had truly cemented its place in the mainstream.
The ever-quotable Snoop…
Beginning as a fad in the Bronx back in the early 1970s, hip-hop truly arrived in 1979 when the Sugar Hill Gang's Rapper's Delight hit the Top 40.
Public Enemy's Chuck D described hip-hop as "the CNN of black culture" as rap quickly became a multibillion-dollar-a-year global industry, influencing everything from fashion to language while marketers used it to sell everything from automobiles to computers.
In a 2002 interview with NPR's Morning Edition, breakdancing pioneer Louis Angel Matteo said the dancing began as a way for rival gangs to mediate differences and set the location for upcoming rumbles. Dance-offs pitted gang leader versus gang leader and determined whose turf would play host to the rumble.
Fad? Perhaps at first. But, would you say things changed in 2004, as evidenced by this?
Point is, there are countless ideas, products, services, and so forth that seem "faddish" until they, for lack of a better explanation, no longer are. In fact, one can make the case that everything, literally every thing, could be considered a fad upon its introduction, and those fads that are compelling enough are, eventually, no longer "fads."
Houston fund manager and Minyanville Prof. Ryan Krueger told me this morning that Crocs (CROX) "are currently defying all fad claims with extreme prejudice."
Click here to enlarge.
Krueger also mentioned Hansen Natural (HANS), makers of Monster energy drink (another "fad"), a company that, last week said profit rose 39%, sales were up 57% to $244.8 mln, and, in 2006 showed 73.5% year-over-year revenue growth. Distribution deals with Anheuser-Busch (BUD) and Pepsi (PEP) will only reinforce that success.
Just a fad?
Uhhhhh…I guess not.
In December, 1970, a newsletter called "The Libertarian Forum" published an editorial called "The Death of the Left," excerpted below:
"From sometime after the end of October 1969, all of a sudden the media had discovered The Environment; and it was impossible for anyone to pick up a book or a magazine, to listen to the radio or to watch a TV show, without The Environment being beamed at you from all directions. Environment clubs were everywhere; paperbacks were poured out, each repeating the data of every other in a frantic quest for the quick buck; and then, Boom!, the orgiastic climax of Earth Day last spring, and Bingo! The Environment was forgotten, finished."
Well, the environment wasn't forgotten. Or finished. It simply ceased being a "fad" and became part of everyday life. Environmental issues are no longer discussed solely on college campuses by goateed beret-wearers and the editors of Mother Jones, but by energy executives, airline executives, automotive executives, manufacturing executives, and so forth.
In fact, Airbus (EAD.PA) Chief Commercial Officer John Leahy speaks of the company's new mission being "Saving the planet, one A380 at a time," as the A380 can apparently fly more passengers further and more fuel-efficiently than any previous jet, resulting in lower carbon dioxide emissions per passenger.
Now, to bring this full-circle.
Snoop Dogg, the one-time Crip gang-member from Long Beach, California, has gone so mainstream that Jakks' (JAKK) JPI Pets division launched Snoop Dogg Dogg Toys. Among the offerings are: a plush DJ Headset, Boom Box, Dogg Bone, doggie Football, and vinyl chewy handcuffs.
So, how to discern between a fad and something that has staying power? The reality is, no one can with any real authority.
Just remember, Elvis was a fad.
The Beatles were a fad.
The Pet Rock was too…but who's counting?
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