Loyalty's hard to come by these days. With the ability for anyone to search for the price of anything, we have devolved into a culture where younger people just reach for what's on sale or can create the most exciting experience. Those choices are roiling the whole market and are totally befuddling to many people who try to figure out the direction of stocks on any given weekday.
It wasn't always like this. Fathers bought the same thing their fathers bought. Mothers shopped for items their mothers inculcated in their brains. To deviate was to disobey or question the judgment of your betters.
Now, it's the absolute opposite. Nothing's etched in stone. Brands are something that cause you to spend more money than you should.
Some of us are throwbacks. I use Old Spice deodorant because my grandfather used Old Spice. I shave with Gillette (PG) because Pop liked Gillette.
I got an American Express (AXP) card when I got out of school because my father told me that's what you got. I use Heinz (HNZ) ketchup because my mother told me that was the only good ketchup and I buy Gulden's mustard because that's what was on our table. You need a prescription filled? You went to Marv at the local drug store. Marv would tell you if it's okay or not. He'd get anything for you and always addressed you by name
You want chocolate? That's Hershey's (HSY) . Banks? I opened an account at Western Savings because that's where my parents opened an account. Cars? I bought a Ford (F) Fairmont when I got out of school because my father drove Fords.
But all of that is now out the window. The foods I like? They have too many preservatives. The deodorant I like? Too many chemicals. A shave? Dollar Shave sends the stuff to your house. The credit card I signed up for? Paypal (PYPL) has obviated it. Who cares what my father drove or what I drove. It means nothing to them. They take Uber. My local drug store was wiped out years ago, replaced by a Walgreen's where they don't know me from a hole in the wall and I have to beg for medicines if the doctor didn't update the prescription and I have to tell them everything single time who I am and what I want. They treat me like I am an ignorant alien. Candy? You have to buy what the local guy is making, not what "the man" makes, the man being Hershey's.
And most of the things we purchase? My generation? We price shopped at a couple of places and browsed the mall for a bargain. Hardware? Sears (SHLD) has everything.
Now we search on Google (GOOGL) or buy on Amazon (AMZN) . Whatever's cheapest is fine with us. It's $24 bucks for two at the movies. That's three months of movies from Netflix (NFLX) . Why even bother buying a car. There's Uber. To mean anything, for brands that have value and staying power and for things that can't be easily valued -- like an experience or an opportunity to take pictures and change your personality -- rebrand yourself, on Instagram.
It is this environment that makes it so it is almost impossible to value things. So we spend a huge amount of time trying to figure out what's something is worth as the next generation takes over.
And frankly it is befuddling but it is vital if you are going to evaluate what stocks are going to work.
Now, first things first, Amazon and Alphabet's Google and Facebook (FB) are instrumental to what we do and what we know and who we are. In all three cases these companies are really just repositories of artificial intelligence and algorithms in the case of Amazon and Google search and in your own creativity in the case of Facebook. In fact you could argue that these companies are just big data farms filled with what you tell them to be filled with. Sure, each has a quirk. Amazon has to find a way to deliver goods to you and has created a web service that it allows others to use. Alphabet also has billions of hours of programming as well as a cloud business that can rival Amazon's web services. Facebook in many ways has it best of all. They do nothing but provide a platform, you do everything else.
That's why FANG has such staying power. Everyone's so eager to throw out the stocks but how about the companies? We may think that at any minute Apple's (AAPL) on its last legs. We may even call people or text people about that. But we call and text on Apples and it has its own ecosystem. Again, that's why we may want to toss the stock but we won't toss the phone.
Everything else? I don't want to generalize too much, but most of the stocks we buy represent companies that power the systems that get you Google or Amazon or Facebook or make your Apple work better or get Netflix to you fast. Of course there are whole industries devoted to the consumer that are still in existence. But these are almost all threatened by the lack of brand loyalty, the national nature of chains and might as well be indistinguishable: Lowes (LOW) v. Home Depot (HD) , Dollar General (DG) v. Dollar Tree (DLTR) , Nike (NKE) versus Adidas (ADS) , you get the picture.
Into that void come things that create experiences that can be documented on a Facebook an Instagram or a Twitter (TWTR) . Cruise lines are tremendous backdrops so Carnival, Norwegian and Royal Caribbean all work. Airlines take you where you have to go to document your vacations with pictures. Anything that makes you look younger is part of the package.
Now I know I am oversimplifying and avoiding so many different segments that you could argue I am being incredibly superficial. But the homogenization is pretty obvious. The banks trade together because they are beholden to the Fed. Housing trades together because they are beholden to mortgage rates. Materials trade together because they are hostage to what China uses. Health care trades together because they are bound by ETFs. Fossil fuels? They are trading together and increasingly trading down because they are wasting assets.
It is within this world that we try to distinguish among stocks and it's why so many just say go buy an index fund, it's too hard to pick. I come back and say, no it isn't, that the mores and methods of the next generation can be fathomed. They like pets, that's Idexx (IDXX) . They like protein. That's Tyson (TSN) . They like restaurants. That's Yelp (YELP) . They like trips. That's Expedia (EXPE) . They like clothes: that's what's on sale so whoever makes them the cheapest or sells them the cheapest wins. Yes I am overgeneralizing. There are still plenty of categories I am not covering that are in the S&P 500.
But the commonality? It's Facebook, Amazon, Apple, Netflix, Alphabet and some places to go and people to see. It's why we keep coming back to the stocks of these companies. It's because it's what the younger generation uses. It's what they swear by. And when we forget that we better have a darned good idea why because they are the bedrock of this new age and most everything else is either a trade or something interchangeable with a stock that's cheap or expensive depending upon the market's mood and what Wall Street cares about at that moment. Sure there's more to everything else, but that's why they have index funds for those who can't bother or simply aren't interested in finding out more than they already know.