Fred Flintstone, Archie Bunker and Yosemite Sam walk into a brokerage firm, checkbooks out. What do you sell them?
Hard question, right?
Finally, someone has addressed this glaring deficit in the mutual fund space.
The below is a brilliant idea from a marketing standpoint, as much as I detest it.
Step 1: Find a group of self-selecting people who are impervious to facts, stubborn in their beliefs and most likely financially illiterate.
Step 2: Create a product that allows them to express their emotions with their dollars – in other words, to prey on our worst trait as investors.
Step 3: Count on the fact that political affiliation leads to one of the most irrationally tenacious forms of blind devotion – thereby creating the stickiest pool of assets since the cult of Berkshire Hathaway.
Step 4: Harvest the fees from people who don’t even understand the cardinal rule of investing: Feelings have nothing to do with it.
Step 5: Buy a jetski. I don’t know what step 5 is but I feel like 4 steps would be lazy.
Anyway, here’s Reuters:
A planned index fund is hoping to “make America great again” by investing in companies that support the Republican Party.
The Point Bridge GOP Stock Tracker exchange-traded fund will list under the ticker “MAGA,” according to a filing with U.S. securities regulators this week, an apparent reference to the slogan repeatedly used by U.S. President Donald Trump.
The “MAGA” fund will invest in a group of S&P 500 companies with employees or political action committees that donate significant money to back Republican candidates for office. The data is based on public filings with the Federal Election Commission, according to the fund’s filings.
Annual expenses for the fund are at $72 a year for every $10,000 under management and it is expected to list on CBOE Holdings Inc’s Bats exchange.
Let’s leave aside the fact that Trump is no more an actual Republican than Kim Kardashian is a buddhist monk – regardless of what party you vote with or what your beliefs are, the stock market is not going to consistently accommodate these beliefs with performance of any sort.
I can’t imagine any possible way that this will be an enduring investment strategy. But it will be a great product for the sponsors. 72 basis points a year on a billion dollars worth of dumb money is just as good as 72 bps on a billion in smart money, or even average money. Makes no difference, other than the requirement here to sell your soul and pander to your fellow Americans’ worst instincts.
Go ask the imbeciles who bought fake gold coins from Glennnnn Beck because of some nonsense he scrawled on a chalkboard during the trying times of the Great Recession. Think they’re proud of that?
Now, some points below before I go throw up in an alley:
- You might be thinking “How is this any different from ESG?” Great question. The goal of ESG is to actually influence corporate policy by incentivizing corporations to become good stewards of society and the environment. It’s (mostly educated) people voting with their dollars, but trying to do so in a manner commensurate with good investing. It’s activism, not indexing. This, on the other hand, is just profiteering off of the regressive tribalism epidemic we face as a nation.
- I will be equally savage in condemning a “Democrat” mutual fund or ETF should one be launched. I have a suspicion that if both were launched on the same day, one year later the GOP version would have much more money in it, but we can’t know this for sure.
- There’s no such thing as a Democrat or Republican company – large corporations have workers whose beliefs run the gamut. Now, of course, the political leanings inside of Google will not look like those at Cabela’s Inc, but the extremes are not the story. The CEO’s leanings at a given company might dictate the corporate ethos and strategic priorities of a firm, but cannot control how all of the employees feel about every issue. To the best of my knowledge, Apple and Exxon and Citigroup and Boeing do not impose a political test during the interview process.
- I supported McCain in 2008 and Romney in 2012, so don’t @ me with your partisan hackery. This is not about politics, it’s about being a terrible investor. I live in Nassau County, Long Island. Trump Country. I love the people in my community, even when we disagree. Maybe especially when we disagree, because of the way in which we do so.
- Bigger picture, I would just say don’t be anyone’s muppet. Don’t be a caricature. Never play to type. Be your own person and think for yourself, in investing and in life. Don’t allow yourself to be herded into a pen or slapped with a label. This extends to how you put money to work. My hero George Carlin used to say that he loves people, but hates groups. In fact, here’s the full quote:
“People are wonderful. I love individuals. I hate groups of people. I hate a group of people with a ‘common purpose’. ‘Cause pretty soon they have little hats. And armbands. And fight songs. And a list of people they’re going to visit at 3am. So, I dislike and despise groups of people but I love individuals. Every person you look at; you can see the universe in their eyes, if you’re really looking.”
My partner Barry has written so much material about keeping our political feelings away from our portfolios, it could be stitched together to produce at least three books. He’s chronicled all of the major mistakes people have made while conflating the two things.
and watch this:
Alright I’m done. Be smart out there and leave your politics out of it.