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Bread is the New Cigarette

This past week I had the pleasure of listening to a presentation by my friend Monty Bennett, who is the very successful CEO of Ashford Hospitality, a NYSE-listed REIT, during which he and his partners described their newest product offering – a real estate securities hedge fund.  I’d say they made a very compelling case, but that is not why I write today.


I was seated beside an old friend and former colleague Chuck Rosenzweig and observed to him halfway through the luncheon that none of the 20 people in attendance had touched their roll, which, by the way, looked quite yummy.  Chuck responded that bread seemed to have become the new cigarette in our society, something that is déclassé to consume (ok, he didn’t use that word).  It was a very interesting observation, and one that I believe is worth pondering upon some more.  I must admit to loving bread.  It is easily among my favorite foods.  And yet, in the interest of managing my waistline, I have disciplined myself to limit its consumption to a once-per-week treat.  I suspect that like cigarettes, people have responded to bread’s impact upon their bodies by shunning it.

This is interesting, but what I find more so is the observation that trends necessarily change and this has significant and often unexpected impact upon others.  Poor bread bakers!  I remember so fondly going to the bakery with my mom when I was younger.  I suspect that thrill won’t be had by many kids born today, but maybe they’ll not have to battle weight as I have.  What other businesses are on their way out, I wonder?

I make my living in real estate and finance, and understanding trends is a critically important component of what I do.  Amazingly though, I find that too large of a percentage of people in those businesses rely too much upon past performance when projecting future expectations.  I wonder, for example, that with young people’s declared preference for Brooklyn, Tribeca, and the Flatiron districts of New York, what will valuations for residential real estate look like on the Upper East and Upper West Sides of Manhattan in 5-10 years, or in 20? The same question applies for the value of office buildings in the midtown corridor of Manhattan given the shrinking of jobs in banking and those industries that service banking, and the surge of tech and other younger industries run by people who have little sense of nostalgia, and the exciting upcoming Hudson Yards project that promises to move Manhattan’s center of gravity to the far west side.

What businesses or investment strategies will go the way of the bread baker?   And, remember, the bread baker has always made a very tasty product.

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