🗞️The Wrap: Hometown
How our address may influence our portfolio composition, the correlation between RVs and recessions and an invitation to the greatest crossover in pop culture history: stocks and sneakers.
No Place Like Home
I came across this data on geographical biases in investing and it got me digging a little deeper.
Investor allocation by region – Likelihood owning stocks in an industry vs. national average
The data may be a few years old (2015) but the results would still be similar. It makes sense, investors want their money in companies they know! A tech bro in Menlo Park has a better idea about Fastly than Ford. Similarly, a hardened blue-collar steelworker in the rust belt understands the ins-and-outs of the iron supply chain.
It’s more than a quirk though. It does bring forward an interesting behavioural bias which may affect our decision making. While there may be some benefit from industry knowledge, it’s easy to over-allocate to what we think we know. Yes, I’m talking to all us Aussies with a little more Atlassian than should conservatively sit in a properly diversified portfolio. Think of all the Packers fans who have missed out on the Nasdaq’s stellar run over recent history!
You do you, but be aware of the underlying, sometimes unnoticed, forces can affect our choices.
Interestingly, after Elon Musk announced Tesla would be assisting South Australians with their energy shortages a few years ago, SA Stake customers became massively over-represented in $TSLA trade data.
Let’s put the correlation and causation fun police to the side for a minute and look at one of the more interesting macro trends around. RV sales have been a great indicator in predicting recessions. In all of ‘90, ‘07 and this year, recreational vehicle sales dropped before we hit those dark “two consecutive quarters of decline growth”.
It may sound like BS but Bloomberg spells out why the data may be more than just a weak R². RVs are a luxury discretionary good; just like jet skis or Louis handbags. Such sales act as a good barometer for the wider economy. Click here for a deeper explanation of the indicator published as sales dropped 20% last year. While last year’s sales figures in no way predicted Covid-19, some economists say the drop was tied to a “quasi-recession” in the manufacturing industry.
So what are figures telling us now? Well, camper van companies are outperforming other stocks as sales boom. Camping World (CWH) CEO said that early May featured their best weekend in company history. Perhaps people just don’t want to fly or maybe it is a sign that the real economy isn’t doing too bad after all.
Sneakers, Stocks & Speakers
Stocks and sneaker markets are more similar than you think. Home to some of the world’s most iconic brands, influenced by global trends and subject to supply and demand.
In partnership with sneaker store Butter, we’re hosting a live panel event and webisode to discuss the confluence of both worlds. Hear from Matt our Founder (and self-professed sneakerhead), and other leading trading and sneaker experts.
If the shoe fits, and this sounds like your sort of thing, read more and register for free here.
What We’re Listening To | Talking Global Economics with WSB
We’ve recommended the We Study Billionaires Podcast in the past but this is one episode that needs special attention. Some of the smartest minds in markets sit and discuss pretty much every question we have about what’s going on. What impact does all this stimulus have on the USD? Why is gold steady despite this same stimulus? How might we expect to see inflation unfold and why does a pandemic specifically lead to a higher risk of inflation?
They make the secondary and tertiary connections that mainstream reporting options don’t quite cover. While it is a little complex – I only understood a fraction of what was said – it’s a worthwhile listen
What flies when it’s born,
lies when it’s alive,
and runs when it dies?
Best Buy | Corelogic (CLGX) + 35.3%
Always nice to have a surprise takeover bid push your stock up 30% overnight. This trader bought into the cup and handle completion pattern and was soon after rewarded. Interesting to note; the bid was at $65 a share and $CLGX is at ~$68. This may indicate that investors believe a 2nd bid may be coming.
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