Wednesday, December 19, 2012

Make Money From Feminism

It isn’t often that investing articles touch on social trends, but if you want to invest in equities, you need to keep an eye on these things. In this article I’m going to focus on what I think is an increase in hypergamy caused by various factors. Hypergamy is defined as the desire to marry above your perceived class or social status. It is most commonly exhibited by women and it is increasing. If you disagree with the last two statements then I will save you some time. Don’t read any further because this article isn’t for you nor will you want to invest in the stocks I suggest on this basis.

Nothing New

Frankly I’m not arguing anything new here. Hypergamy has always been with us. I’m not going into the evolutionary psychology or the arguments why it exists. What interests me is why it appears to be on the increase. Now I know you all like a chart or two so here is my effort. I’m going to keep this simple.

Here is what might be called the ‘normal’ state of affairs. In reality there is no norm but for arguments sake let’s say this might be 1950’s USA.

There has always been a desire for hypergamy in women which creates a kid of ‘hypergamy gap’ that means women are looking to marry someone above their status. Here we can see the gap. The areas I’ve labeled are those of men and women theoretically left without a partner thanks to hypergamy.

Of course in this period there would have been a lot more social pressure for a woman to find a ‘good man’ and for a man to shape up because Olivia Newton John et al needs a man. In other words there was more cultural pressure on these gaps to close.

You Go Girl

My argument here is that for myriad reasons there has been an increase in the perception of value (I’m choosing my definition carefully) that women have. I’ll get onto the possible reasons why in a moment.  First I want to schematically depict what I think is happening now

If I'm right the gap has got bigger because the perception of value in women has increased. Note I am not talking about actual value I’m taking about perceptions. In addition social pressures are actually encouraging women away from marriage.

I need not articulate how divorces, single parenthood and the numbers of single people are on the increase in the West. This is common knowledge.

What Has Changed?

I think it is self-evidently true that there have been significant changes in society over the last few decades or so. Some of them are part of a political agenda and others are inexorable changes in the structure of the economy.

  A few view points on the situation in the West.

  • Feminism
  • Social welfare
  • Law
  • Social networks
  • Government Policy (quotas etc)
  • Structural Economic Shifts (manufacturing to services)

I believe that the true test of feminism’s advance (from which many good things have been achieved) will be when women look to marry men of perceived lower value.  As unpalatable as it sounds to some, there is no harm in it. I think this is what the body of feminist literature should be aiming it right now because otherwise the women in the right hand side of the curve may not find a partner. Unless of course if the feminist agenda is to ensure that some women remain barren and men childless just to prove an academic point.

In addition the expansion of social welfare has created a scenario where some people are actually incentivized not to get married or work because they will lose benefits. It gets worse. In some cases the incentive is to have kids out of wedlock because it brings more benefits. In my opinion things like child and housing benefit -as well as housing policy itself- have significantly affected matters in the UK.

Neither are trends in law helping matters much. Consider this high profile case where a famous footballer was obliged to pay a large portion of his future earnings to his wife. I know more than a few men in the UK who have been financially ruined by divorce. I don’t know any women in the same situation.

Perhaps the most interesting point here is that of social networking through things like Facebook (NASDAQ: FB) or Twitter. To explain what is happening consider here consider the famous jam consumer experiment. Consumers buy more when faced with fewer options but they always want more of them. In other words, they follow behavior which is not optimal in terms of making a decision.

Now consider what happens when women spend time on Facebook ‘networking’ or tapping away on a smart phone. Their perception of their chances with- their very own high value George Clooney- go up just because they are ‘connected’ with him. Their perception of value goes up just because 50 people ‘like’ their new hairstyle. Lots more jam out there but nobody is buying anymore. The nice guy they met at the gym last week doesn’t get his text answered just because some guy they like has changed his FB status to single. Social networking is creating the illusion of choice. A similar argument could be applied to men and an increase in their perceptions of an abundance of choice. No matter, the conclusion is the same.

All of these things add up to increase the social pressure on women to increase the hypergamy gap. The simple thought that it could be reduced by women marrying ‘lower value’ men seems to escape the mainstream media. It is never discussed. There seems to be a tacit assumption that women should always marry above themselves and men below. Why?

How to Make Money Out of All This?

If I’m right about these trends continuing than you can bet that single people will have more pets as an emotional replacement so expect PetSmart (NASDAQ: PETM) to do well on a long term basis. Indeed pet ownership does seem to be on the increase.

Another angle would be to assume that increasing numbers of wealthier and older single women will mean more cosmetic surgery so Botox manufacturer Allergan (NYSE: AGN) or the maker of rival treatment Dysport, Valeant Pharmaceuticals (NYSE: VRX) will be beneficiaries. If there are more older women who are incentivized to undergo plastic surgery in order to keep looking for a partner than companies offering aesthetic treatments will surely benefit. You can see my view in the disclosure section at the bottom.

It will also mean that more childless women of a certain age will have more discretionary income so things like Louis Vuitton, Richemont or Coach (NYSE: COH) might expect favorable long term trends as a consequence. If a large part of the populace is shifting its income spending from raising children then it is safe to assume that that income will go towards luxury items that are traditionally bought by women.

In conclusion, if these trends continue -and you don't have to agree with me over the causes- then there will be some fundamental changes in spending patterns. It is an investor's role to spot them at invest in them. It is not an investor's role to ignore them because he/she wishes they were not true