Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Anthropology of Finance

InvestorEducation / Learning to Invest Mar 06, 2015 - 04:52 AM GMT

By: John_Mauldin

InvestorEducation

Jared Dillian writes: When I was 11, my grandmother liked to hang out in Bee Bee’s Dairy and smoke cigarettes and drink coffee.

The air quality in that place was like modern-day Beijing, with all these old people smoking and shooting the breeze. I used to get ice cream sodas there, what you would call a “float” in other parts of the country.


Bee Bee’s was at the tail end of a sad sack mall, wedged between the Stop & Shop and the mall proper. The sign had a picture of a cheerful honeybee on it that, in retrospect, bore a resemblance to the bee on the box of Honey Nut Cheerios. I’m not sure how the place made any money since the old people didn’t eat much, preferring instead to smoke and drink coffee.

I would have my ice cream soda, then beg two quarters from my grandmother and head down to the arcade at the other side of the mall. If you only have two quarters to play video games, you get pretty good at playing video games. I was always down there playing Xevious, Rolling Thunder, and Chopper Command, getting myself all sweaty, then coming back 30-40 minutes later to meet my grandmother, who would still be talking to her favorite waitress.

The waitress had brown hair with big bangs, as was the style back then, and sometimes, when she turned to the side, I’d glimpse a lace bra between the buttons of her uniform blouse. I fancied going out with her someday, but I had heard all her stories about boyfriend after boyfriend she had, and the party where someone dropped a cigarette on her couch and set it on fire. Her life seemed pretty unmanageable, even to a kid like me.

This was life in Norwich, Connecticut, in 1985. Not a lot happened in Norwich, the kind of New England town where you’d get stuck driving behind someone wearing a checkered hat with earflaps. Connecticut has a reputation for being Richie Rich-land, but residents know that’s not the case at all. Cross the Connecticut River to the east and you notice a difference. It’s not bucolic Fairfield County. It’s a hard place to live.

Back then, we had a Thermos factory in town, which was about to close. Outside of that, the biggest employer was Electric Boat Shipyard down in Groton, a company that made nuclear submarines. The fortunes of all of Southeastern Connecticut waxed and waned with the ability of the local congressman to get shipbuilding contracts. They had the same guy for years. He seemed to serve no other purpose.

The Rose of New England

Norwich is verifiably a poor town, and it has been a poor town for as long as I remember, except for a brief interlude of prosperity when the casinos moved in a few miles down the road (more on that later).

Why is it poor? It would seem to have quite a few things going for it. It has a world-class school system. It has lots of smart people—the intellectual capital is just incredible. It is something of a transportation hub at the intersection of three rivers. It is equidistant from New York and Boston. It is not far from the Connecticut shoreline, a tourist destination. It doesn’t look half bad. It has all kinds of things going for it.

And yet…

And yet, when I returned to Norwich in 2012 and drove into town on Route 2 from Foxwoods, the first time I had done so in nearly 20 years, I was like, “Son of a bitch—this casino has been here for two decades, and they haven’t put one business along the access road.” And then you get into town, and it hasn’t changed one bit. Frozen in time. Frozen in 1985.

There might be a good reason why there are no businesses along Route 2 on the way to Foxwoods. But I doubt it. Any other place in the world, a big casino gets plunked down, people will be falling over themselves to profit from all the money that just falls off that place. Not in Norwich, though. People are much more passive.

What I’m trying to say is that the people of Norwich have no aptitude for making money. I’m not saying they are dumb. I’m not saying they are anti-business. Norwich leans left, like the rest of Connecticut, but there are many left-leaning places that are thriving economically. I’m saying that commerce is not in their culture, not in a town that has had the same couple of pizza places and bars for the last 30 years.

That doesn’t mean there aren’t people with money. I looked up the income tax distribution for the zip code, and there are a couple hundred people with incomes over $200,000. But they’re all professionals, like doctors and lawyers. Not businesspeople.

It’s very strange that I ended up on Wall Street, being from Norwich. Finance wasn’t something that was discussed at my house, or anyone’s house. It certainly wasn’t discussed in schools. The schools put out quite a few of the best public servants in the country (including me—I went into the military). I had no idea what trading was, never heard of it. I didn’t know it was an option that was available to me.

It’s no accident that many employees at the big banks and hedge funds in New York were born and raised in places like Summit, New Jersey, Westchester County, or Greenwich or Darien. If you go to school in those places, you hear about finance all the time, because everyone’s dad works on the Street. It’s what you know. The career path is laid out for you.

If I were given the opportunity to invest in something in Norwich, I would pass. I don’t care how good the numbers look—even if it were a sure thing. People in that town don’t know how to run a business. They are simply unskilled.

There are some people, Wall Street folks I used to work with, if they said they were starting a business, I wouldn’t even have to hear what it was. I would just write a check. They’re that good.

It’s All About Culture

When it comes to investing, I consider myself to be a kind of cultural anthropologist. I look at corporate and regional cultures. I look at national cultures, which is one of the reasons I’m so bullish on frontier markets. People in frontier Africa and Asia are desperate to increase their standard of living and will work very hard to do so.

Remember Investing 101, according to me. There are three ways a country gets richer:

  1. More people working
  2. Same number of people working longer
  3. Same number of people working harder (more productively)

There really is no magic to it.

Let me ask you a question. Let’s say you were presented with an opportunity to invest in an early-stage tech company—a company making a phone app that allows you to send pictures that delete themselves. Greatest thing ever.

“Where are they based out of?” you ask.

France.

Forget about it, you say. Wait, why? Seriously, think about it. Would you be as excited about investing in Snapchat if it were based in France rather than California? Is it because French people have a reputation for not wanting to work very hard? Is it because French labor markets are a mess? Is it because the French government isn’t really keen on having home-grown companies bought by foreign competitors?

So, it would matter if Snapchat was in France. Tellingly, Snapchat is not in France. It’s in California. California seems to have a lot of tech companies. Why?

Sure, California has lots of smart people. But so does France. What is the difference?

It’s in the culture.

California has the best culture of entrepreneurship in the world. Silicon Valley is where people dream big and execute on it. I often make fun of Silicon Valley, but it really is a special place. You can start a business on whatever crazy idea you want, and nobody cares if you fail. That doesn’t exist anywhere else in the world.

I hate to pick on France, but France doesn’t grow. And neither does Norwich. There is a very strong impulse to preserve the status quo. There is a fear of change. As an investor, when you encounter this, run the other way.

If this business were just about crunching numbers in a spreadsheet, we would all be rich. But what it’s really about is evaluating people and being a good judge of character.

That’s the most important thing in the world.

Jared Dillian

The article The 10th Man: The Anthropology of Finance was originally published at mauldineconomics.com.
John Mauldin Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules