Blessed by the Potato

Netbug asked how to invest in lab-grown meat (as well as a number of other emerging trends). I think that top-down investing is very difficult to do. You can be right overall, but so many factors can prevent you from making money on the call:

1. The profit source isn’t where you think it is. Maybe only private companies are in the area so you can’t invest, or maybe it’s not the guys with the mines that make money in a gold rush, but the guys selling pickaxes and lanterns (or not the guys selling 3D printers, but the stodgy old chemical supply companies with the polymer supplies).

2. The sector moves ahead while companies stumble and fall behind. The airline sector is an interesting one: you could have foreseen an age where people fly all across the globe, hundreds of flights into every major city every day of the week. And if you tried to invest in the airlines as they were founded you likely lost money on that vision. They have gone bankrupt with notorious regularity. People still fly, new airlines emerge (and old ones reorganized and brought out of bankruptcy), but that knowledge hasn’t been very profitable.

Similarly with cell phones: the omniconnected world comes closer every day. Everyone has a cell phone. People are disconnecting landlines in favour of cell phones, something that might have been unfathomable 20 years ago with the spotty service, high cost, poor voice quality, and miserable battery life of early cell phones. Yet even though the vision of a technological future you had may be coming true exactly as you pictured it (right down to that prophetic dream you had about touchscreens), it’s unclear how you should have invested in that trend. Motorola had it’s rise and fall, as did Nokia and then RIM. Apple could well be next. The carriers have done fabulously well in Canada and the US, but some European ones have barely paced their indexes. Cisco was meh while Nortel blew itself up. Maybe you would have been lucky enough to spot Qualcomm in the early nineties (though if you didn’t think about it until the late 90’s you were too late).

3. The market prices in expectations, so not only do you have to be right in your vision, but you have to be one of the few to see it (or at least one of the first). Converting a portion of our vehicle fleet to run on natural gas makes sense for emissions and because of the huge differential the past few years (and projected to remain so) between the price of NG and oil. However, everyone already knows this, so the price of Westport Innovations is through the roof. For many years pharmaceutical stocks had outrageous multiples as everyone counted down the years until the baby boomers’ health started failing.

Enough people have asked me how to invest in certain trends and I’ve banged my head against enough walls trying to figure it out that I have to throw my hands in the air and say I can’t do it. I’m just wired up to be a bottom-up investor (and at least partially as an indexer). But I also think it’s just an inherently harder problem, with more moving parts to spot.

The best macro idea I’ve had has been the Canadian housing bubble. The evidence is there, and it’s contrarian enough that it’s not priced in to a large degree. The problem is I can’t think of what to go long on for that bet, and there aren’t any good hugely asymmetric payoffs like subprime CDOs. The best I’ve got really is to short a few stocks, and the timing is just too hard to call for a straight short or expensive, illiquid put.

Was just reading a WHO report today (as one does) when I came across this graph on the global burden of disease — external causes:

WTF is happening in Europe? For most places “poisoning” is a tiny little sliver of external cause, but for European males (and largely just males) it’s like 10% of disability-adjusted years of life lost, up there with car accidents. This big chunk of deaths, from poisoning. I know poison was an old hazard of courtly European life, but in this day and age? Why are there no in-depth reports about this apparent European male poisoning epidemic? Wayfare suggested that it was due to all the grody unpasteurized stuff they eat over there (surely poisoning must include food poisoning?), but then… why just the men?

Oh no, I’ve asked too many questions already, haven’t I?

Umm… I’ll make my own dinner tonight, thanks for offering though.

I’ve written a lot about personal finance, investing, and saving lately. I’ve joined or led letter-writing campaigns for tax sanity, landlord-tenant reform, and internet competition’s usage-based-billing issue. But now it’s time to mobilize around an issue of true national importance: the distinct lack of Cherry Coke Zero in our stores.

It’s quite frankly ridiculous that Canada doesn’t have Cherry Coke Zero available*. It’s 2013, we’re supposed to be living in the future here, not like savages with nothing but plain Coke Zero on our grocery store shelves. It’s particularly disturbing because so much of Coke’s advertising is Canadian-derived: polar bears, Santa, happy people not shooting each other (go ahead and check, hardly any Coke ads feature gun violence, it’s extremely Canadian), and frosty glasses with condensation (wait, that one isn’t Canadian, but does happen here**). Though created in America, Coke’s second home is clearly Canada — and we are beyond a doubt Coke’s muse — yet we get tossed aside on flavour selection like unrepentant Pepsi fanatics saving up for a Harrier jet.

It’s time to do something about that. I have laid out a plan of action to bring Cherry Coke Zero to thirsty Canadians everywhere***. First, I will ask, politely. That is the Canadian way. Below I’ve pasted the letter that I have sent to the public contact address**** on Coke’s website.

Coca-Cola Canada
335 King Street East
Toronto, Ontario
M5A 1L1

August 9, 2013

To Whom It May Concern;

Cherry Coke Zero is, simply put, a wonderful beverage. Whenever I’m in the US it seems to be the only thing I drink. Like many Canadians, if I’m driving south of the border and don’t have a restrictive baggage allowance, I’m sure to bring a few cases home. They quickly run out though, and I am left wondering: why doesn’t Coca-Cola sell Cherry Coke Zero in Canada?

Presumably your market research has indicated that the Canadian market lacks the demand to make introducing a new flavour of Coke worthwhile. I don’t know what methodological errors your market research people made, or if the lack of Cherry Coke Zero was merely an oversight and the market hasn’t actually been studied yet, but I assure you that the demand is there in Canada, with many vocal proponents of the flavour.

Indeed, three of the top ten Google search results for “Cherry Coke Zero” are of Canadians discussing where to find and buy the product they love. The biggest buzz around the few Freestyle machines in Toronto is that they are a way to get an occasional taste of Cherry Coke Zero without taking a five-hour drive. The multitude of other flavours do not merit a mention.

The question pressing on my mind is: what will it take to convince Coca-Cola Canada to bring Cherry Coke Zero to Canadians? My sincere hope is that nobody has thought to simply ask before now, and that this plea alone will soon bring 12-packs of the delicious nectar to a grocery store near me. Please offer Cherry Coke Zero in Canada. If merely asking is insufficient, what would sway the leadership team? Masses of people would be eager to sign a petition; hunger strikes are not really the forte of myself nor my fellow Cherry Coke Zero aficionados, but we could try. Do I need to petition the heads of Loblaws, Sobeys, and Metro first?

I hope to hear exciting news about changes to your product line-up soon.

Sincerely;

If that doesn’t work, I will bring out the memes. Naturally the first will be the Futurama’s “shut up and take my money!” one. If that doesn’t work, there will be more, possibly with cats, likely with polar bears*****. I’ll give that a few months to work, until it’s nice and snowy, setting the scene for the final stage: unleashing polar bears on King street. I haven’t yet secured a loan from the Toronto Zoo for the bears, as there’s a lot of paperwork and they’re not satisfied with my proposed display of setting them free to run amok until our beverage demands are met, as the swimming and other environmental enrichment components are not up to their standards. As a backup I’m trying to see how many Cherry Coke Zero fans are among the polar bears swim club ranks.

* – with the exception of expensive single-serve Coke Freestyle machines at select fast food restaurants and movie theatres. A few weeks ago I paid $3 just to get a single-serve Cherry Coke Zero at Hero Burger. PS: Hero Burger your prices suck.

***** – it’s the internet, it’ll be cats. Maybe at best, cats in itty bitty polar bear costumes.

“What happened to the towel?”

“I used it every day for a week and a half and then it didn’t come fully dry. Now I have a new towel.”

“Yes… but it was in a ball in the bathroom and now it’s gone. Where did it go?”

“I put it in the laundry hamper.”

“That’s what I wanted to know, not the history of it… why would you give me the whole life story of the towel?”

“Seemed like the right response.”

“I don’t know how I could have more precisely asked that question.”

“Our daughter is going to be so good at robotics.”

When searching for industry data reports for a project I saw one on socks and couldn’t help but download it.

“Clothing and textiles” too broad for you? Well, you’re in luck my dear, as the US Census Bureau separately tracks sock production, shipments, and inventory levels. Yes, you can obtain and analyze data on trends in mens’ socks, womens’ socks, and infant booties, broken down by material (are wool socks making a comeback against cotton and man-made fibres?) with quarterly resolution.

“Ah-ha!” you’re thinking, if you haven’t fallen asleep entirely, “This must be some historical throwback, like how the US patent office has those categories for patents on shoeing horses and mail delivery by train car that you talked about before.” And while that is a perfectly reasonable hypothesis, this granularity in sock production data collection started in 2004 as annual data. Then, with what must have been tremendous demand for information on how a nation kept its feet warm, dry, and blister-free, the Census Bureau started collecting quarterly data in 2006.

The world truly is a ridiculous place.