In July 1969, Appollo 11 Blasted off from Kennedy space center in Merritt Island, Florida to boldly go where no man had gone before, the moon. An entire nation, heck the entire world, was mesmerized by the nine-day round trip. Those who lived through the often turbulent world of the 1960s were quickly beguiled with the idea of space travel, and captivated by the dreams of what life could be like somewhere other than, what was then, present-day Earth. It wasn’t just adults who were taken in; the young were just as smitten. If you had asked grade school kids from generations past what they wanted to be when they grew up, you would get answers like a doctor, lawyer, fireman, etc…. But post-July 1969, the most popular answer in nearly every class was an astronaut.
Enter corporate America. They were only too happy to capitalize on children's dreams by convincing them that the first step to becoming an astronaut was to drink the same powdered drink as astronauts: TANG. Virtually every school kid in the early 1970s, at one point or another, had Tang in their lunch box. As a grade school kid back then, Bagholder never understood the fascination with Tang. It tasted terrible. Even Appollo 11 astronaut Buzz Aldrin famously said, and I quote: “Tang Sucks” - though that was conveniently left out of the marketing campaign. Not only was the taste horrid, but the list of ingredients is, well, frightening:
SUGAR, FRUCTOSE, CITRIC ACID, MALTODEXTRIN, CALCIUM PHOSPHATE, SODIUM ACID PYROPHOSPHATE, ASCORBIC ACID, NATURAL FLAVOR, ARTIFICIAL COLOR, GUAR GUM, YELLOW 5, YELLOW 6, XANTHAN GUM.
Bagholder remembers with remarkable clarity being mocked by fellow classmates for preferring to drink Milk over some lab-made concoction with ingredients it is a struggle to pronounce. The widespread adoption of Tang, despite the horrible taste & man-made ingredients, was Bagholder’s first experience with the madness of crowds. It wasn’t enough for the Tang kids to drink their drink … no … they had to exhibit a holier than thou attitude and ridicule those of us who didn’t. Bagholder, as a child, did not understand the need for ridicule, but now as an adult, well studied in psychology, the reason is clear. There were seeds of doubt deep inside the psyche of the “Tang” crowd. Those seeds were sown by the lousy taste, unnatural ingredients, and the illogical idea, that drinking Tang would make you an astronaut. By demeaning those who passed on Tang, the fragile psyches of the pro-Tang crowd were bolstered.
In hindsight, illogical ideas combined with ridicule are like a giant neon sign proclaiming madness ahead. Having lived nearly six decades on this planet, Bagholder has seen it repeatedly. Consider the Covid vaccines. Why does the pro-vax crowd incessantly demean the unvaxxed? Same reason as the Tang kids. The fragile psyches of the pro-vax crowd need soothing because there is no logic in their beliefs. The science clearly shows the vaccine doesn’t work, and the vaccinated everywhere are getting sick. Tang and the Covid vaccines are but two examples of the “madness of crowds” in action.
Nowhere is the madness of crowds leveraged more than in the investment arena. Remember Beanie Babies? There was no logic in parting with huge sums of cash for little stuffed animals, even if people’s emotional response was: “AWW…SO CUTE!”. Beanie babies were remarkable in that the crowd madness grew organically from nothing. At its peak, Beanie babies generated MILLIONS in sales. On the other hand, with a ready-made captivated market, Tang generated BILLIONS in sales.
Surveying the current investment landscape, Bagholder could point to many insane investment ideas in which crowds of people are piling in like there is no tomorrow. Tesla is a perfect example. Last year there were roughly 75 million new vehicles sold worldwide. Less than a million of those were Teslas. Yet, Tesla is valued higher than Toyota, Honda, Mercedes, Ford, Chevy, BMW, and Ford COMBINED! And it is not even close. Investing in Tesla at these levels is pure madness. Like beanie babies, the Tesla crowd has grown organically, and thus the dollars at stake are effectively limited.
To find an investment where the dollars at stake are more unlimited, you must find a ready-made, captivated audience. The moon landing was a seminal, once a generation type event that hypnotized an entire population. Bagholder would argue that the proliferation of the internet has done the same to the current generation. Just ask yourself, how many people do you know are content to live without the internet. Right, almost nobody. Like the youth of the 1960s, today's youth is captivated by the dreams of what life could be like somewhere other than present-day Earth. Unlike the 1960s, when the dream was about other planets, this time, the fantasy takes the form of Artificial worlds, NFTs, Virtual reality, and of course, the coin of that realm, Cryptocurrency.
There is no better modern-day example of the madness of crowds than cryptocurrency. All the signs are there. Early crypto adopters are quick to ridicule those of us who do not invest in crypto with barbs like: “you just don’t understand it.” The crypto bulls illogically proclaim it’s only a matter of time until their precious decentralized currency displaces the current coin of the realm - the US Dollar. Yeah, right. When one of these Crypto Bulls can explain to Bagholder how to feed his actual family with Virtual Crops from their Virtual Farm, I will buy some Bitcoin. Until then, however, Bagholder is firmly on the record stating the day will come when Bitcoin falls far enough in price, to trade on a one-for-1 basis, with Beanie babies.
Investing, and the Madness of Crowds
I do believe your Madness of Crowds theory will be brought to even new levels in the coming months with Mask Madness II: The Karen Awakens.
This gave me flashbacks of being the only little girl in grade school who didn't have Tang for breakfast. I remember pestering my mom to buy some. When she finally did, I was totally confused. It tasted like a diluted Pixie Stick . But being naïve to crowd madness, I had to pretend it was great. By the time I boasted at school, everyone else had moved onto whatever next fad had captivated them. That was
the moment I knew I would never fit in. Deep wounds, Bagholder. Deep wounds.