Hey {{ first_name | Neighbor }}. True story. Two women in their forties loiter in a home design store in Glenbrook, CT. “I have a landscaper,” says the one with bigger sunglasses. “What I need is a tablescaper.” The one with smaller sunglasses perks up. She thinks it’s a great idea for a company.
“The market for still lifes is def bigger than the market for paintings.”
➺ Thank to “Salmon Pants” for the anecdote above.
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The “OUTDOORSY” Survey is an attempt to understand the Oat Milk Elite’s relationship with nature (and crunchy culture). Full results will be shared with Upper Middle Research members and those that complete the survey.
TASTE ❧ Swinger Party
The least believable scene in Happy Gilmore (sequel out tomorrow) isn’t the alligator fight – it’s when Shooter McGavin, golf’s Arch-douche Ferdinand, tries Happy’s run-up swing once[1], whiffs in the woods, and quits. No pro would ever be too proud to mimic a guy hitting 400-yard drives. Golf is a culturally inverted sport. Tour players will try anything, buy a launch monitor, and try again. Only country club hackademics worry about unwritten rules.
Happy’s swing, like the Flying V in The Mighty Ducks, the annexation of Puerto Rico in Little Giants, or the “granny-style” free throws in Hoosiers, is what soft science PhDs call a benign violation: a goofy move just crazy/stupid enough to work. But Happy Gilmore has more in common with Moneyball than Major League. When the film came out in 1996, the average PGA Tour drive was 267 yards. In the early 2000s, data from sabermetricians like Mark Broadie proved distance mattered more than accuracy. Today, the average drive is over 300. Yardages changed because swings changed.
We think of pro golf as uptight, but that’s the country club game. Pro golf is weird and adaptive, which is why U.S. Open Champ Bryson DeChambeau, a muscle-bound former physics major, actually trained to do the run-up swing. He didn’t abandon the project for fear of looking stupid; he just figured out a different way to nuke the ball 360 yards. Which is all to say that the real fantasy of Happy Gilmore isn’t the long ball or Happy making the tour. The real fantasy is that a khaki-loving marshall-caller like Shooter McGavin wouldn’t be sitting at home, eating shit for breakfast.
➺ Maybe the Europeans are right to push back: Tourism isn’t a path to prosperity. ➺ Etiquette > Rules. ➺ Julia Roberts campus sex thriller with campy Michael Stuhlbarg? We’re so back. ➺ Show up to dinner ready to give people an exclusive.
MONEY ❧ Semiconfuckers
Ask Mr. Market is authored by Andrew Feinberg, a retired hedge fund manager who has beaten the S&P 500 for the last 30 years. He is the author/co-author of four books on personal finance.
Dear Mr. Market:
Every money manager on CNBC seems to own Nvidia, but they almost never say what percentage of their portfolio it represents. What am I to make of this?
Puzzled in Plano
Dear Puzz,
With Nvidia trading at the first-ever $4 trillion valuation,money managers can’t afford to admit they don’t’ own it so they probably do. The question is how much?
Consider the case of Nancy Tengler of Laffer Tengler Investments. On July 16, Nancy went on CNBC to discuss Nvidia. It was an odd booking given that, according to Laffer Tengler’s March 31 filings, her firm had $470M in assets and not a single share of Nvidia. In fact, Laffer Tengler had a .9272% short position in the stock. But Tengler didn’t throw cold water Jensen Huang’s way. Instead, she claimed to have added to her (apparently nonexistent) Nvidia position in April at $108. She calmly went on to explain that the company wasn’t expensive and that investors should continue to hold.
And then there’s CNBC’s resident moron, Jim Cramer, who is also deeply underweight the stock (4.3% in his CNBC Investment Club portfolio vs. a market weight of 6.5%) despite talking up the company every day. As though that wasn’t suspect enough, Cramer recently cemented his reputation for bad calls by by declaring that he would own no more than 5% of any single stock. If true, he will continue to be underweight Nvidia unless it dips back below 5% of the market. Now, I’m not saying that Nvidia will one day account for 8% or 10% of the entire U.S. market, but it could. Drawing a line in the sand at 5% is toddler logic[2].
It’s always the exception that proves the rule and in this case the exceptional CNBC guest is Brad Gerstner of Altimeter Capital Management, who is very specific about how much Nvidia he owns because it’s a lot. At the end of March, he had 15.6% of his assets in the stock.
Some days, I think he is the only guest who should be allowed on CNBC.
Sincerely,
Mr. Market
➺ Now would be a good time to read John Law’s Wikipedia page. ➺ “The bare minimum can be arrived at using this simple formula: result intended ÷ time you have to do it × how much you give a damn.” ➺ Refer to the Fed Chairman as the “Market DJ.” More fun.
STATUS ❧ Background Noise
The difference between success and class can be measured in idiosyncratic volatility. A new study be researchers at the University of Sussex finds that American companies led by CEOs who attended private high schools – a decent proxy for family wealth – experience significantly lower return volatility (as measured by the standard deviation of daily returns adjusted for market factors) than companies led by townies. The study also finds that these two sets of CEOs – both alike in dignity – don’t perform differently. Privately educated CEOs don’t take fewer risks[3], manage crises more effectively, or generate better returns. Investors simply perceives them as safer, an effect that fades with tenure and analyst coverage. This suggests accent, polish, and pedigree buy them the benefit of the doubt until performance data catches up.
This research drives home the point that America has multiple, overlapping elites. Corporate and social elites are often, but not always the same people. And corporate elites pay penalties for not being social elites just as social elites pay penalties for not being corporate elites (just ask a guy wearing his father’s tux). It’s rhetorically tempting to lump Cannes regulars together – dismissing differences as semantic in that privileged context – but when the literal chips are down, we know that different advantages accrue to different kinds of people. We invest accordingly[4].
➺ The Scottie Scheffler Paradox: Succeed constantly and nothing feels like success. ➺ Why hire a lawyer when you can make up a law firm and generate scary letterhead for free? ➺ “We do stand at the edge of a pronounced crisis of identity, but… this has happened again and again in small ways to you, and to everyone ever.”
[1] Actually doing the Happy swing is hard, but not impossible, which is part of the allure. If you’re decently coordinated, you can get it one in every three to five attempts. And it feels absolutely terrific – especially if there’s a Shooter McGavin type grumbling nearby.
[2] Apologies to any toddlers reading this.
[3] It’s actually weird the people from family money don’t take more risks – they can afford to do so. This speaks to an acculturation around risk-aversion that should be disqualifying (quite honestly) for lots of types of leadership
[4] We is doing a lot of work here. “Investment professionals” is probably more accurate. But aren’t those the people trained to see past artifice to real value?