Famous For Being Famous

What makes art great?

The Mona Lisa was a relatively obscure portrait in the Louvre until it was stolen in 1911 by an Italian carpenter, who tried to sell it to an art gallery in Florence. The French were outraged, while Italy hailed the thief as a patriot who wanted to bring the painting home. Newspapers around the world put the Mona Lisa on their front page, insuring its global fame. The image came to represent Western culture itself.

There’s a certain subjective quality to what makes something a classic. Mark Twain’s definition—a book everyone wants to have read, but no one wants to read—rings true. People go to art shows or listen to music or read books because other people think the work has value. After all, who can really tell the difference between the composers Rameau and Couperin?

This has implications for investments, at least in the short run. John Maynard Keynes likened equity pricing to a beauty contest, where we don’t choose the most beautiful contestant, but the one we think other people will think is the most beautiful. So some investors look for “momentum plays,” where a stock is gaining favor and becoming more popular. Eventually, the equity becomes priced to perfection, and falls at the first sign of trouble.

In the short run the market is a voting machine. Sentiment can shift with the winds of fashion. But in the long run, it’s a weighing machine. Quality eventually wins. After all, to become famous, the Mona Lisa had to get into the Louvre in the first place

Douglas R. Tengdin, CFA

Chief Investment Officer

By |2017-07-17T12:34:17+00:00May 29th, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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