You are the Dancing Queen - or the Surprising Life of Assets
For this first note, you might think that I would lead with something serious—and seriously impactful—like the debt ceiling mess or the rise of AI, and we'll get there, I promise.
But you never know when wisdom will strike, and it did on Tuesday at 8:09 AM while I was driving the kids to school. Delphine was our DJ. She put on ABBA, and she said, "You know, Papa, I am super nostalgic for when we were REALLY into Mamma Mia as a family..." (Like 6 months ago!) We "rocked out" to ABBA for 30 seconds (or whatever it is you do that's "rocking out"-adjacent when ABBA is playing), and she asked me when the song came out. The answer is close enough to 50 years ago. Let that sink in. 50 years! What were the odds, realistically, that when those Swedes got together in 1972, their music would become a permanent part of the global cultural fabric? My guess is, not super high...
So ABBA's music (along with the Beatles, the Rolling Stones, Bowie's, Dylan's, and a few others) has proven to be a surprisingly long-lasting—maybe even permanent—"asset," i.e., something that has value and that people are willing to pay for to experience. The stars had to align: unbelievable creative talent, a cultural moment that allowed for global resonance like never before, and the growth in distribution technology that just kept this thing pumping (from vinyl to tapes to CDs to MP3 and now streaming). Like I said, what were the odds?
The point, though, is that investing is all about moving resources across time and space using these things we call "assets." So it turns out, ABBA has a lot to teach us about how to think about assets:
Some assets are known quantities, with payouts that are perceived to be something you can "bank on." (Never mind the fact that banks can fail... I'm looking at you, SVB and First Republic!). People refer to those as "quality assets," and their price tends to reflect that perceived quality. You pay good money for a premium asset. And you better hope it doesn't disappoint.
Some assets are like ABBA, I guess. They seem to come out of nowhere, hit the market at just the right time, with just the right talent, and just the right amount of luck, and then little ol' nothing asset turns into a money gusher. People chase those because they're fun and exciting, and they feel like magic (and yes, greed plays a huge part in the excitement of it all). The thing, though, is that for every ABBA, there's a lot of BAAB and ABAB (We'll ignore AABB because calling yourself that would just be nuts) who didn't quite make it, so that's a game with long odds. Some would call that pursuit speculation, not investing.
And then there is the asset behind the asset. And that takes us back to the debt ceiling, AI, and all of the serious stuff. Check out our recent LinkedIn post, if you’re curious what’s behind that. ;-)