When Good Words Go Bad

More than four years ago – when Epsilon Theory was still young – Ben wrote a marvelous note that

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  1. I think part of the answer is simply how Wall Street marketing and sales function. It starts with a trade / strategy / idea / trend that is working (and, if being sold to retail, has been working for a looooong time). Then, a bunch of products and strategies are thought up / created to sell the idea with, simultaneously, a marketing “hook” being created (if someone hits on a really good idea like a snappy acronym) and, then, let’s just say it, Wall Street sells the hell out of it.

    They did it with BRIC (I believe many [many, many] structured products made it into retail 401k accounts tied to the BRIC acronym in some way) and FAANG. And they’ll continue to do it - and this might be the reason FA[A]NG is dying - until the trend fails and the story doesn’t sell. I’ve never seen Wall Street quit selling an idea that has a lot of takers, but it does quit when the idea / trade / strategy is stumbling and investors don’t want to hear the story anymore (especially when their portfolios are already bulging with several version of the strategy already).

    Heck, like skinny suits, acronym investments might feel so “2010-2020” (or so) looking back from 2030 one day.

  2. Avatar for rguinn rguinn says:

    Yes and yes. Part of the coyote’s bit is absolutely a cycle of package and repackage, I think.

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