Comments on: This and That: The Age of Frugality

By: brad

brad — Fri, 15 May 2009 14:52:42 +0000

@Phil: According to a recent presentation I saw at a conference two weeks ago, WalMart is the world’s eighth largest trading partner with China. It is the largest private consumer of electricity in the United States, and the #1 seller (and thus buyer as well) of groceries, toys, and furniture. Its supply chain counts 60,000 companies worldwide. There are lots of amazing statistics about Wal-Mart.

By: Alexandra

Alexandra — Fri, 15 May 2009 13:17:54 +0000

I’ve been reading a lot of consumer data recently and what stands out is that the “move to frugality” is more about belief and declared values than about actually saving. “Frugal is the new cool” seems to be the message – whether Canadians or North Americans *actually* increase their savings rate remains to be seen.

There’s a lot of “I intend to save more” messages – but we don’t have any data yet on savings rates, just savings intentions!

By: Phil S

Phil S — Fri, 15 May 2009 13:13:10 +0000

The societal shift to frugality for the future due to economic recession is very weak. If the thesis were true, then the “me” generation would never have happened because the Great Depression would have made everybody frugal. But in the short term, a lot of people down state side will become frugal out of necessity, but only out of necessity.

By the way, in my own experience, I found a huge difference in regional attitudes. I’m originally from the maritimes and moving to Ontario was a culture shock as many people back home were always frugal whereas in Ontario it always felt that it is all about “bling” and keeping up with the Joneses. In addition, I spent a few years living in the American midwest and the midwestern “rust belt” values were also quite frugal – how do you think Walmart became such a powerhouse? If everyone state side shopped at Neiman Marcus, then Walmart would be nowhere.

Yesterday on BNN, they discussed Walmart’s Q1 results. Walmart, system-wide, now generates $1 Billion USD of sales PER DAY!!! Over $90 Billion in sales per business quarter. I found those numbers astounding and downright mind-boggling and it leaves me wondering what their market share of total retail activity might be? After all, beyond them, you still have the Targets and Canadian Tires of the world also generating lots of sales.

By: Canadian Capitalist

Canadian Capitalist — Fri, 15 May 2009 13:09:10 +0000

Michael: I’ve read the “Boys will be Boys” paper that Zweig’s article refers to many years back. It found that men churned the portfolios more often than women and as a result underperformed the benchmarks. The more they traded, the more the under performance. No surprises there. I don’t remember if the paper looked at relative risk levels of the portfolios.

By: WhereDoesAllMyMoneyGo.com

WhereDoesAllMyMoneyGo.com — Fri, 15 May 2009 13:02:45 +0000

Thanks for the mention CC – have a great long weekend with the family!

By: Michael James

Michael James — Fri, 15 May 2009 12:27:34 +0000

Thanks for the mention. I missed the qualifier “risk-adjusted” in the Zweig article comparing risk-adjusted returns of men and women. You’re right to question whether women take enough risk in investing. If women’s returns were actually better, then the qualifier probably wouldn’t be there. I guess we have to dig through the research papers to see what is going on.

Risk-adjusted returns are mostly nonsense. For various reasons, investors rend to underperform the index with the equity part of their portfolios. On a risk-adjusted basis, they would be better off piling all of their money into short-term government debt. But, this is obviously a silly strategy for long-term investment.

By: Million Dollar Journey

Million Dollar Journey — Fri, 15 May 2009 12:20:29 +0000

Thanks for the mention CC!

By: Four Pillars

Four Pillars — Fri, 15 May 2009 12:03:53 +0000

Thanks for the link – have a good weekend!