What Quinoa Can Teach The Markets

Tyler Durden's picture

It is human nature to follow fads, no matter how strange or cultish they may seem. Anything from Beanie Babies to cupcakes to even tech IPOs fall into this category, but, ConvergEx's Nick Colas asks, why do some of these trends manage to stick around while others die off? We might laugh now at bellbottoms and the so-called “grapefruit diet”, but at one point in time these were both fashionable – and profitable. So what does it take to make a fad last? Colas looks at a number of quirky trends past and present and importantly for market participants, finds lessons that extend directly to investor psychology and discipline.


Via ConvergEx's Nick Colas,

Note From Nick:  In today’s note Sarah addresses the psychology of short-lived trends, the humble avocado, and the challenge of investing.  If you have a set of Crocs in your closet, or went to prom in a leisure suit, or are waiting for headbands to come back, please read this note. Please…

Remember when pet rocks were “a thing”? What about lava lamps and mood rings? Bellbottoms and “leisure suits”? If you need something a little more recent to test your memory: how about MySpace and Furbies?

Feeling nostalgic (or more accurately, embarrassed) yet? Don’t be. Consumer research and psychological studies across the spectrum of sectors and disciplines tell us joining in on a fad is a natural and expected human behavior:

First and foremost, following fads is part of human nature from an evolutionary perspective. According to a 1982 paper from Dr. Karl Dieter Opp, we learned to follow trends early on because certain behaviors had been tried and proven to pay off. This goes as much for a caveman’s technique of hunting in groups  - for which the “pay off” was most certainly survival – as it does for stilettos or yoga pants in 2013. The payoff isn’t as tangible, maybe, but psychic rewards can feel good too.


Societally speaking, we tend follow trends because of the positive feedback we get from conforming.  A paper from Princeton University by B. Douglas Bernheim proposes that societies condone certain behaviors, rewarding and giving high societal value to some while shunning others. We choose to imitate particular behaviors, therefore, based on these expected rewards and responses. In layman’s terms, that’d be equivalent to someone saying “I like your jacket” – your behavior is validated, and you are probably going to wear that jacket again.


Perhaps most importantly, some researchers suggest that the main reason we follow fads is to simplify decision-making. According to a 1998 paper titled “Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades” by Bikhchandani, Hirshleifer, and Welch, we follow others’ direction because we assume they have made the best possible decision. We assume that they faced the same decision we do, with the same information, same alternatives, and same costs/benefits. By following an example, we eliminate the process of weighing the decision for ourselves.

This is the same part of our brains that encourages us to buy the latest fashion trend or to jump on the bandwagon in the market. Our natural reaction is to assume a stock is worth buying if everyone else is doing it; clearly someone knows something good about it, and you don’t want to miss out on a good opportunity. Just like you didn’t want to miss out on the chance of a well-priced sea-monkey colony 10 years ago. The difference is, while we might be willing to admit we made a mistake with the sea monkeys (we did), it’s a lot harder to convince ourselves that we botched an investment.

So if our nature is to buy into fads that might fail,  how do we teach ourselves to avoid this pitfall? Behavioral finance research gives the following advice to avoid the “sunk cost fallacy”, or loss aversion:

Know when to let go. You don’t have to be committed to a stock forever just because you feel you’ll have wasted money if you sell lower.


Don’t stress. Everyone makes mistakes, including experienced, professional investors such as yourself.


Separate yourself from your caveperson emotions and think independently. The old saying “Sunk costs are sunk” is painful but accurate.  Bad decisions today don’t need to be an even worse decision tomorrow.

Easier said than done: every investor can be headstrong enough to deny that he or she has made a mistake. So to bring this subject closer to home, we want to put it in a more relatable context: how we react to fads. As we’ve said, joining in on a fad is only human – whether it’s the newest toy, fashion, or market trend. But it’s also pretty common to regret jumping on the bandwagon later on.

There are some exceptions, of course.

  • 10 years ago the iPod was all the rage, and in 2013 its evolutionary product – the iPhone – still holds center stage.
  • Ugg boots first debuted around 2000 and are still going strong.

So-called “superfoods” – the topic of discussion today – are still on the rise after first gaining popularity in the mid-2000s (charts from Google Trends above). Unlike some fad diets or exercise trends, superfoods have gained some real traction that has lasting potential. 10 years ago, you weren’t likely to find kale or Greek yogurt in anyone’s fridge at home, much less chia seeds or quinoa in their cabinets. And yet there they are. What is it about the superfood fad that’s made it outlast trendy diets, weight loss supplements, and even Beanie Babies and bellbottoms?

At the most fundamental level, superfoods share a few key elements with successful fads like the iPod and Ugg boots. Good endorsement is one, of course, but even the best ad campaigns can’t prop up a failing product. Instead, there are a few key elements superfoods have that enable them to succeed, all of which we can attribute to learning more about long-term investment:

1.      Simplicity. All of us have seen one version or another of the “get thin quick” diet, where you’re promised 3+ inches off your waistline within a month if you stick to the rules. The Atkins diet, the “Master Cleanse”, Nutrisystem, and weight loss pills are all iterations of this concept. Just eat no carbs – or no solid food, or only the food we give you – and the results are there. Notice something here? All of these trends also require quite a bit of effort on the part of the consumer: rules and exceptions and prohibitions must be observed. It’s no wonder many of them fade out after a while.


The message of a superfood, though, is perfectly simple: eating this is good for you. Nowhere on an avocado or a can of lentils will you see any phrase relating to a “superfood diet”, let alone that the product is a superfood at all. Moreover, superfoods are not exclusionary: choosing to buy a bag of pistachios alongside a bag of potato chips is not off limits. Nor does buying turmeric necessarily mean you’re obligated to buy chia seeds. Superfoods are independent. The same concept goes for the iPod and Ugg boots: they are utterly simple, non-chaotic, functional products. And that’s part of the reason they’re so successful.


The market lesson here: keep it simple.  Peter Lynch of Fidelity fame used to say that if he couldn’t describe a business to his six year old, he wouldn’t buy the stock.  Part of Warren Buffet’s folksy appeal comes from his message to buy businesses you understand.  To borrow from Gordon Gekko: Simplicity, for lack of a better word, is good.


2.      Reach and affordability. Superfoods, unlike many fads gone by (remember the “Snuggie” blanket? Neither do I…), catch the entire population in their net: they are accessible at virtually any food market you walk into, regardless of whether it is a health/organic food store or not. Kids, adults, teens, you name it – all of them are the target market of a superfood.


And anyone can buy a superfood. Avocados range from $1-3, quinoa from $2-5, and nuts are usually about $3/lb. Consumers of virtually any income level are capable of buying superfoods at their local grocery store.  They will probably buy them more than once. When we extrapolate this affordability concept to the iPod and Uggs, remember: “affordability” is in the eye of the consumer. $100-200 is the sweet spot for iPods and Uggs, but it’s doubtful any avocado would go for that much. Rather, consumers buy these products because the perceived benefits – in the case of superfoods, more vitamins, minerals, omega 3s, etc. – outweigh the costs.


Market lesson: look for the right mix of market reach and affordability. Business models have to provide actual utility to their customers in order to thrive.  That utility can be expensive – think Tiffany jewelry – or affordable, such as Wal-Mart.  Either way, as with superfoods, the consumer has to feel they are getting real value.  Anything else is a Snuggie.  Whatever that is.


3.      Popularity. According to research from Jonah Berger and Gael Le Mens at Wharton, the quicker a fad is picked up the faster it is doomed to fail. To rework an old phrase, “the quicker they rise, the harder they fall”. Kids’ toy fads are probably the best retail example of one of these fads: sillybandz and webkinz only lasted about a year in the spotlight, according to Google trends search data. They rose quite quickly, as any parent could probably tell you, but (as the Berger and Le Mens research predicts) fell out of fashion just as fast.


The adoption speed of superfoods, by contrast, was years in the making. Dieticians began to identify certain foods that had “more bang for their buck”, or a disproportionate amount of fiber or protein or vitamins for their size or composition. Soon you could find lists of superfoods on the web; next television hosts were doing “top 10 lists” of their favorite superfoods. The movement wasn’t advertised like a diet or weight loss plan, and the trend caught on relatively slowly. The same happened with the iPod and Uggs: not everyone owned them at first, but with some organic growth in the consumer base they became the successes they are today.


Market lesson: anything that comes from nowhere is likely to return to its place of origin. Business models which rely on a one trick pony – no matter how good the trick might be – are at great risk for new competition or the quick shift of consumer tastes elsewhere.  Remember the huge crowds at the iPod launch in 2001?  There weren’t any – the room at Steve Jobs’ 2001 presentation is half full.  Check out the link at the end of this note. 


4.      Psychological positivity. Finally, superfoods have managed to stick around partially because of how the consumer reacts to buying them. Purchasing a superfood is cognitively positive: the consumer is going to feel better about him/herself for choosing this over, say, a burger. Moreover, that’s a feeling that, if repeated, is likely to last.


Market lesson: The old line about a good investment being a large castle surrounded by a wide moat comes to mind.  Competitive advantage drives valuation as much as earnings.   

The majority of these “lessons”, of course, are for investors looking for long-term investments. If you only want something for the short term, it’s probably best to focus on the popularity point here: just know that the quicker it rises, the quicker it’s going to fall, so sell when you can, not when you have to.

The bottom line is that we are sometimes blind to our own trading (and fashion) mistakes in the moment, but we are not preordained to make the same errors in perpetuity.  Superfoods are an example of how a ‘Fad’ can be productive, harnessing our group instincts to a healthier life.  And the lessons from quinoa, avocados and Greek yogurt can apply to better investment decisions as well.

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The Gooch's picture

Quinoa keeps the pipes clean.

Zer0head's picture

Warren  Buffett, everyone's favorite uncle, quietly nukes 700 jobs in a tiny Canadian town

meanwhile William Johnson, who orchestrated the sale of  Heinz,  puts a cool $200_ million in his pocket



The Gooch's picture

THose 700 workers should pool their skills and resources. Take over the plant and make a better product to be distributed locally / regionally.

Heinz just lost McGolden Arches.


W74's picture

Pool Resources?  You know, because Canadians save so much more of their incomes than Americans do.

Of course if they could actually pull it off it would be a triumph for ordinary Am...Canadian Workers.  Plus, you know, losing the house sucks.

W74's picture

They could move the plant to Detroit just a few miles to the northwest (yep, actually south of Detroit for those who think all of Canada is a frigid wasteland).  Not gonna be good for homeprices in the area; All of Canada is in a massive bubble.

VD's picture

been eating quinoa, millet and amaranth for years; chia seeds are excellent for shakes esp pulverized. these trends are actually fantastic, but unfortunately the indigenous peoples are being priced out of their native food-stocks (e.g esp. quinoa). and quinoa has extremely high protein and calcium... etc etc etc



DoChenRollingBearing's picture

My Peruvian father-in-law (92) was born in the mountains of Peru.  He does not eat quinoa, says it's "chicken feed".

LOL, but my wife and I enjoy quinoa up here.



Here he is on the front page of a Peruvian newspaper, still protesting.  All those guys want the pensions they were promised.


DaveyJones's picture

"All those guys want are the pensions they were promised". - the theme song of the new millenia

cool picture

Tipo anónimo's picture

Got that right - lots of friends that were force-fed that at home won't touch it and couldn't care less that the price has skyrocketed.  Others though, are definitely suffering.

walküre's picture

I wish I could feed quinoa to my chickens. Unfortunately nobody would pay me for back for that input on their eggs or their meat. My bank is the barn and when the barn stops paying a pension then we're all fucked anyway.

BeansMcGreens's picture

"My bank is the barn"


I really like that, and will use that expression from now on.  Where else can you take grubs and worms and convert them into future meat and eggs. With the Chinese able to start sending chicken parts over here for the masses to consume, home grown chickens will be the only way to go. Trying growing micro-greens for animal food, quick, easy, and good for both man and beast.

brettd's picture

Americans are priced out of corn because

we burn it for car-fuel!  


El Tuco's picture

Chia apparently has more omega 3 than salmon. 15 bucks for a big bag of organic chia @Costco

Acet's picture

If you're talking about farmed salmon, that's probably true.

Farmed fish get fed mostly farm grown vegetable and animal products so it's fat has very little Omega 3 fatty oils and whole lot of Omega 6.

Wild Salmon on the other hand is a whole different story.

Moe Hamhead's picture

I read somewhere that the people that grow it were having trouble with nutrition because of it's  popularity.

Something like-- the brokers were buying it at such a high price the locals couldn't afford to eat it.

But that may be an urban legend.

Diogenes's picture

Cupcakes? Cupcakes were a fad? Next you will be telling me nobody makes pineapple upside down cake anymore.

Miffed Microbiologist's picture

Sad to think healthful eating which I've done for years is now considered a fad. Somehow I just don't see the people of Walmart buying quinoa and causing a shortage.


EatYourCornTakeyourPill's picture

yeah these bitches on zerohedge can be retarded sometimes. Crazy debbie downers. Yoga pants, stilettos, quinoa... all a fad now because people like them. In my opinion, yoga pants is the hottest shit invented ever and quinoa is awesome too. The lesson here is that the masses aren't always wrong.

Bro of the Sorrowful Figure's picture

is the part of the brain that makes women join in on the yoga pants fad the same part of the brain that makes me incessantly masturbate to pictures of women in yoga pants?

W74's picture

Healthy eating is catching on, but only in subsets of the population, mostly White and middle class (any left?) and above.

I've been eating Kale for the longest out of any of these, but I eat healthy as a general rule.  The first time I ever heard of Acai berries was well after the spike in the graph. 

I first saw Quinoa (and pronounced it Key-Noah, having never heard the word before I read it) at my old man's house.  He's always looking into anything that can boost fiber and/or help with bowel movements.

DaveyJones's picture

healthy eating (preferably from your own garden) is the best weapon against pharma, insurance, Monsanto... and by far the most efficient investment return for your health. Along with some exercise and stress release

(That's why I come to this site - to see how evil and bad off the world is ... to relieve my stress).

Quinoa (I think) may be the only plant source with every one of the eight essential amino acids. It is a very tough plant, is cold tolerant, and can be grown in very marginal soils. The whole plant is edible. It's a beautiful plant as well.

 Eat one cup of quinoa (a single serving size), and you’ll consume:

  • 220 calories (70 percent carbs, 15 percent fat, 15 percent protein)
  • 40 grams of carbohydrates (13 percent daily value)
  • 8 grams of protein (16 percent of daily value)
  • 3.5 grams of fat (5 percent daily value with no saturated fat)
  • A glycemic load (blood sugar spike) of only 18 out of 250
  • 5 grams of fiber (20 percent of daily value)
  • 20 percent of daily value of folate (various forms of Vitamin B)
  • 30 percent of magnesium daily value (beneficial for people with migraine headaches); 28 percent daily value of phosphorous; iron (15 percent); copper (18 percent); and manganese (almost 60 percent)   
DoChenRollingBearing's picture

One cup (8 oz) is a lot of quinoa!

akak's picture

I still have never tasted chia seeds (honestly, I never knew they were good for anything more than making cheap telemarketed terracotta sheep "hairy"), but I have been eating quinoa for over 20 years, not just for the health benefits (of which I was initially largely ignorant), but because I really liked both the flavor and the texture ever since having had it for the first time in Bolivia, its homeland.  It makes a FANTASTIC side dish with salmon, another 'superfood', and something of which I also eat a great deal.

If you think quinoa "tastes like cardboard", as I have seen some poster here say, then you aren't cooking it properly.  Just like rice, it is much better made with some chicken or beef broth, spices and/or herbs, fried onions, etc.

Oh, and for those still wondering about the pronunciation of "quinoa", as the word incorporates several quirks of the Spanish language, it is properly pronounced "KEEN-wah", in two syllables, not "Kwih-noe-ah" or "Keen-noe-ah".  (But, knowing the intense British aversion to saying the "ah" vowel sound, I have always been curious how they might say the word --- probably something like "Kwin-you-ire", LOL.)

Miffed Microbiologist's picture

Thank you for that akak. I had been pushed over the edge by 2 über asshole idiots yesterday and the response was ugly and unfitting on my part. I saw the the miss pronunciation but restrained myself feeling the discomfiture of my impropriety earlier. Your post was perfect and mine would have just added more to my voluminous shit heap to recite as I'm turned on the Eternal Spit.

I have only eaten quinoa for about five years and absolutely love it. You are correct. The key is in proper cooking. I personally have found a presoak enhances it flavor. Someone told me to soak it overnight but I have found an hour to be adequate. It's taste is sublime and texture delightful and cooks quickly.I've dressed it up and down ( made a great tabbouleh once) with great results.it has replaced rice as our preferred grain because my husband can't have wheat.

I strongly recommend adding Chia to your diet. Its a nutritional powerhouse! 30% protein, vits A,B,E and D. They contain EFA alpha-linoleic and linoleic acid and the following: calcium, phosphorus, iodine, sulfur,potassium, zinc magnesium, manganese, thiamin, silicon, niacin and copper. I only consume organic which has a better nutritional spectum than conventional.They don't have much taste but their claim to fame is the ability to produce a pudding consistency. A small amount of chia will make a massive amount.

I prepare a power shake every morning with greens, HealthForce products, zeolite, coconut butter ( fat is necessary for mineral absorption) and raw local honey. For Mr Miffed, I add Maca, Shilajit, Ashwangandha, Mucuna pruriens and Tribulus terrestris ( I had to cut back when he reported disturbing sensations and thoughts during key corporate meetings) right before serving I add a tbsp of chia. If it sits too long it becomes completely gelatinous and hard to drink. I have energy through the roof and few can keep up with me. I owe a lot of it to the chia. The other items I have listed do fan the flames in other attributes of ones life and will cause frustration if no adequate release is available so use with caution and I will take no responsibility If you choose such a dalliance. ;-)


DaveyJones's picture

nice post

edible seeds in general are an overlooked nutrition powerhouse and probably how mankind made it through. There are lots of edible plant seeds. The nutrition makes sense since this is where the plants give its all to forward life. It's so simple and productive, no wonder Monsanto wants to own and ruin it all.   

Hulk's picture

Man Davey, eating as good as you do makes me wonder how you get your minimum daily requirements of transfats !!!

DaveyJones's picture

On my way to work, I have to drive by a McDonalds - so I just roll down the window.

YHC-FTSE's picture

Thanks for the info mate. Not being a deliberate  "healthy" eater (occasional fresh fish + veg and a fruit smoothie every morning is all I manage) I would have ignored the blurb about quinoa if you hadn't posted. Beats popping vitamin pills and growing it might be fun.

My no.1 lesson on health? Regular exercise - anything that has low risk of injury and stretches the body,  like yoga or tai chi, and a cardio burn once a week. As I get older, it's a pain to keep limber, but well worth it to be able to outrun the "zombies" when the time comes. My no.2 is a good support network of friends - we're social animals after all and even fleeting happiness is cheap for the price of a cold beer and warm conversation. 

Treason Season's picture

Quinoa (I think) may be the only plant source with every one of the eight essential amino acids.

With all due respect but no not true.

"Buckwheat is also an excellent protein source containing all 8 essential amino acids..."

DaveyJones's picture

yeah, that's why I hesitated. Thanks

buckwheat is easy to grow  but, strangely is used more as a cover crop than food.

Here's it's full layout


Diogenes's picture

"Sad to think healthful eating which I've done for years is now considered a fad. Somehow I just don't see the people of Walmart buying quinoa and causing a shortage.


It's the other way around. I haven't hear the term "health nut" in 30 years but there was a time when eating right and exercising were strictly for feeble minded eccentrics like athletes and  health nuts.

It didn't become hip to be square until the 80s.

Dagny Taggart's picture

LOL - except I never sealed pet rocks or iPods in mylar bags for a longer shelf life. 

JohnG's picture

I like my lava lamp.

kito's picture

I like my parachute pants

Dr. Venkman's picture

I always ate kale with a pinch of salt (despite my non-melanin disposition) especially back when I shopped at the Food Lions in SW Virginia. I am just now learning that it's a fad.

Manipuflation's picture

The, by now, legendary Mrs. M, busted out some of this quinoa grain the other day and boiled it up.  This is the same woman, of Eastern European descent who told me that buckwheat was good to eat.  No, buckwheat tastes like shit if you ask me and you all know that I will tell you the truth.  To be honest, I could not stop eating the quinoa once she made it.  Where can I get a fifty pound bag of it?  The shit is not cheap though. 

DaveyJones's picture

you know who has the best price...Costco - and it's organic.

Diogenes's picture

Buckwheat pancakes with butter and syrup mmmm good.

Colonel Klink's picture

Fuck conforming!  I'm an individual.  Never been a fan of fads.  Fucking sheep.

I prefer to decide after looking at a situation rather than follow what the crowd is doing.

Boop's picture

Jawohl! Though fucking sheep is fun! At least after apprising the situation. Those sheep occasionally kick!

StandardDeviant's picture

"Yes! We are all individuals!"

"I'm not."


Seasmoke's picture

I will still be eating my grass fed yogurt , long after the fad is gone. Hey I'm still wearing throwback jerseys , because I was wearing them BEFORE Jay Z was selling crack.

Stuck on Zero's picture

The most incredible fad that has lasted is putting salt and pepper on the table.  Salt sure, but pepper?  There are a hundred better spaces than pepper.  How did pepper get to be number two?


Irene's picture

Nuts $3/lb?  You gotta be kidding.  Even raw, whole almonds, walnuts, hazelnuts, pecans and cashews are more than double that price.

(And yes, I know, cashews aren't nuts.)

laomei's picture

Nah, that's about right. You're just paying the markup.

Walnuts, I get for about $3 per 500g. (1lb is 454g). Everything else is cheaper.  Pecans are around $2 or so.  Cashews are about $4, but that's shelled and bagged ready to eat.  Raw is also at about $3.  And of course, if you buy more, it's cheaper.

Irene's picture

Family's in the food business and am looking at wholesale prices in the US.  You may be buying "pieces" (as in walnut pieces or pecan pieces) but not whole and raw for $3. If you're buying almonds at $3/lb, they're either shriveled up and dead or leftovers from three+ years ago.  Pieces go rancid much more quickly, thus the premium on the whole nut. 

walküre's picture

I'd like some of those cheap nuts he's talking about. Trader Joes has some good prices but even that's not anywhere close to what he's supposedly paying.

laomei's picture

Whole, not pieces, not shelled, but whole nuts.

Almonds can be had all week long for $3.40 a pound shipped.  Taking into account the sellers profit and shipping.  In volume over 5lbs with self-pickup, yea, I can get it at around $2.75 or so.


No shriveled up and dead leftovers either.