Did You Know That You Are Now Cool?

The renowned 70’s funk band, Tower of Power, raised the all-important question
about “coolness” in their ’70’s hit “What is Hip?” “What is hip, tell me tell me if you
think you know,” the band wailed, pondering a subject that grips many in our pop driven
culture.

How products, people, or ideas move from unknown to “cool” and back again was explored by Malcolm Gladwell, in his book The Tipping Point: How Little Things Can Make A Big Difference. He offers a unique premise whereby people he calls Connectors define what is cool for Mavens who in turn popularize the new fad with Salesmen, who take the message to the world. By this process, products, services, or fads can suddenly be thrust from obscurity to cool.

Take, for example, Crocs sandals that became the rage with pro-athletes and movie stars. These cultural icons shamelessly donned these strange pink rubber slippers. In the blink of an eye, Crocs were strangely hip. Croc kiosks offering a wide array of colors and sizes became ubiquitous in airports, malls and retail outlets to cater to kids, moms and businessmen alike.

Then one day someone ran into George, their profoundly “uncool” neighbor, wearing his neon green Crocs. For some reason, they just didn’t look the same on George — who was pale and out-of-shape, wearing shorts several dreadful inches above his knees — as they did on Kobe Bryant. Crocs were done. The complete uncool to cool and then back to uncool cycle had transpired before our eyes.

Unfortunately, investment strategies have waves of cool and uncool as well. When we started MarketRiders, we knew that our biggest marketing challenge would be its lack of cool. How could an investment philosophy that replaces the casino-like thrill investing with a sane, buttoned-up institutional method, ever compete with the daily fun and excitement of a Jim Cramer?

But Gladwell’s process seems to be taking hold and low-cost investing seems to suddenly be getting, well, cool. New websites are launching every month to tout the merits of the MarketRiders approach. Schwab, Fidelity, and Vanguard are actively swapping investors out of expensive mutual funds and into ETFs.

Cool or uncool, we’ll keep wearing our version of pink Crocs not because Kobe wears them or that our neighbor George does not. No, we stay faithful to our approach because we simply love how this pair of sandals fits.