Stupidest Investment Idea Ever

You know your investment idea sucks when Arthur Laffer “loves” the idea:

Nashville-based LocalShares Inc. announced Friday that the nation’s first city-centric investment fund — made up entirely of Nashville-based public companies — will begin trading on the New York Stock Exchange starting Aug. 1.

The fund will be listed with the ticker symbol “NASH” and the initial price will be $25 per share.

The exchange-traded fund, an investment model in which assets such as securities and commodities are traded on stock exchanges much like stocks, will allow investment in a portfolio of Nashville public companies. Qualified companies must be based in Nashville, traded on an exchange, have a minimum of $100 million in market capitalization and at least 50,000 shares traded daily. More than two dozen such companies operate in Nashville, including retailers Dollar General Corp. and Tractor Supply Co. and hospital heavyweight HCA Holdings Inc.

I know I’m just a dumb housewife, not an investment genius like the bigwigs behind this idea, but what is the magic of having companies from diverse business sectors all lumped into one ETF just because they’re based out of Nashville? What does Dollar General have to do with HCA? The fund’s founders say:

The partners say Nashville’s position as an “it” city for business makes it an ideal candidate to launch the unique ETF.

Huh? How do you figure? So we’re an “it city,” big deal. That’s great if you want to find a cool restaurant on Saturday night but what the hell does that have to do with investments? How on earth is that supposed to affect the business performance of regional and national companies? How does that impact the market for fertilizer and equipment of the type sold at Tractor Supply stores?

I do not get this idea, not at all. I’ve dabbled in a few ETFs, but these have always been funds united of purpose: clean energy, for example. Not, “hey they’re all based out of Nashville and Nashville is a cool town.”

But economic clown Arthur Laffer thinks it’s terrific:

“I’m very excited about the concept,” he said. “It’s a beautiful vehicle for someone who wants to invest and take advantage of good state and local economics.”

This makes absolutely no sense, but then, neither did Laffer’s famous “Laffer curve,” or the time he lied to state legislators about Fred Smith moving FedEx out of state because of the estate tax. So there you go.

Hamilton Nolan at Gawker had a hilarious post about this back in June. Titled “How to Beat the Wall Street Pros in One Easy Step,” here is what Nolan had to say:

To be a successful investor, you only need to know one thing.

And here it is, the secret to beating the Wall Street pros: 1) Leave your investments alone for a long time.

I had to laugh because it’s so true. If you try to game the system or think you’ll make a killing over night or are freaking out because the market crashed (or the market is soaring), then all you are doing is losing money and probably a bunch of sleep. This is not a recipe for success.

Instead, buy a blue chip and forget about it for about 20 years.

And by all means, do not listen to Arthur Laffer. That guy is an idiot.


Filed under Nashville, Tennessee, Wall Street

4 responses to “Stupidest Investment Idea Ever

  1. democommie

    Southern Beale:

    Arthur Laffer (sorry, Artie, I just be laffin’ AT you) has stolen a beat from The Original Donald (Rumsfeldstiltskin). He’s just sayin’ that “it” is FUNGIBLE! It cuts across all consumerist demogriftics.

  2. “Laffer” should become a word in itself. As in, “That idea is so stupid it makes George W. Bush seem smart, it’s a real laffer .”

    I figure inspiring one major economic disaster should pretty well be the limit for an economist. Apparently, with the news that Obama is considering the equally brilliant Summers, they get more than one chance to destroy the largest economy in the world.

  3. Kyle

    This is pure marketing BS, like most Wall Street retail products. Even if the companies are based there, their revenues come from all over, so it’s not a targeted play on the regional economy if you think Nashville is about to experience some miraculous localized economic boom.

    Interesting fact – the Laffer Curve, the transparently-phony-but-conveniently-beneficial-to-Repuke-interests “idea” that cutting taxes raises revenues, the source of so much economic misery over the last three decades, was drawn on Dick Cheney’s dinner napkin, thereby connecting that evil vermin to yet another national disaster.

    Financial success? Find out what Republiclown ideological hack economists like Laffer, Glenn Hubbard and Greg Mankiw are saying, and do the opposite.