The fall of Facebook's shares
to 20 percent below the stock's initial IPO price doesn't necessarily
say anything about the company's long-term prospects, but it does point
to a paradox. Dull stocks often perform better than the hottest
high-tech offerings, as the AP pointed out months before the IPO. Yet, to my knowledge, there is no dull-stock index or managed fund.
Within dull industries, there is a select group that is both uninteresting and essential. These companies make things you'd never discuss at a cocktail party, yet they are indispensable for other things that you would.
For example, fashion is interesting, but sewing thread is not. In the garment industry, thread is unimportant (the highest quality thread is a tiny part of the cost of a finished garment) yet crucial (the best thread breaks less often in high-speed production sewing, reducing costly downtime).
Indeed, the Coats and Clark sewing thread firm was the largest manufacturing company in Great Britain in 1900. The industry was cited by the economist Hubert Henderson in his classic book Supply and Demand as an example of "the importance of being unimportant."
The profits of the 19th and early 20th century’s threadocracy, as it was called, were so ample that they financed the careers of the most diverse heirs in an atmosphere of cultivated leisure.
Read more: http://www.american.com/archive/2012/june/facebook-and-the-importance-of-being-unimportant
Within dull industries, there is a select group that is both uninteresting and essential. These companies make things you'd never discuss at a cocktail party, yet they are indispensable for other things that you would.
For example, fashion is interesting, but sewing thread is not. In the garment industry, thread is unimportant (the highest quality thread is a tiny part of the cost of a finished garment) yet crucial (the best thread breaks less often in high-speed production sewing, reducing costly downtime).
Indeed, the Coats and Clark sewing thread firm was the largest manufacturing company in Great Britain in 1900. The industry was cited by the economist Hubert Henderson in his classic book Supply and Demand as an example of "the importance of being unimportant."
The profits of the 19th and early 20th century’s threadocracy, as it was called, were so ample that they financed the careers of the most diverse heirs in an atmosphere of cultivated leisure.
Great, unimportant products can be massive as well as delicate. Can anything sound duller than a blast-furnace ventilation valve?The urbane art historian Lord Kenneth Clark was the grandson of a weaver’s supplier who had the idea of selling cotton thread on a wooden spool; of his parents, the second generation, Clark wrote that “in that golden age, many people were richer, there can have been few who were idler.” Friedrich Engels’s father originally sent him to England to manage a sewing thread factory he owned in Manchester. Enriched by the firm’s patent on a thread-polishing process, Engels financed not just his own writing but Karl Marx’s. Henri Cartier-Bresson’s family produced the finest thread for couturiers, still sought after on the web. Even the family of the American novelist Louis Auchincloss was tied by marriage to the Coats, and his grandfather was at one point an importer of their thread.
Read more: http://www.american.com/archive/2012/june/facebook-and-the-importance-of-being-unimportant
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