CSotD: The Sweet Ride
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I'm going to assume that Wiley only stumbled into the news cycle today by happenstance, since "hotcakes" and "cupcakes" aren't the same thing, and that it's only barely possible to riff on an April 17 news story 11 days later, given deadlines.
In any case, I don't know about investing in hotcakes, but, if you invested in cupcakes, there's a spot for you under that bridge.
Not everyone agrees that the party is over, of course.
For those who missed the back-and-forth between Jon Stewart and TV stock guru Jim Cramer, or who saw it but miss it now, Yahoo! Finance has a contrarian story saying that the cupcake bubble has not burst, though, of course, they call it a "craze" rather than a "bubble" because, well, investment gurus in denial don't use the term "bubble."
Which is also when they quote people who say things like, "local cupcake shops that focus on being different and unique will continue to draw customers and make a profit."
Note that being different is not enough. You also have to be unique. It's that combination you need to focus on.
And "local" is important, of course. For instance, you can still make a pretty good profit selling buggy whips in certain parts of Pennsylvania.
I'll admit my own financial analysis has more than a tinge of "from your lips to God's ears" in it. I'd love to see the cupcake bubble burst and, while I realize this is a very silly and unscientific analytical piece, it made me smile.
I'm a recently-diagnosed diabetic on a diet, which makes me like someone who just quit smoking or found Jesus or whatever.
Insufferable.
But that doesn't mean I'm wrong, and I'd have thought these things were disgusting anyway.
One of the reasons to have young grandchildren is to stay current on stupid TV you would otherwise miss, and they recently turned me on to a completely insane television competition in which two women were competing to see who could make the most cloying, bizarre cupcakes and display them in the most garishly tacky custom displays.
It was like "Honey Boo Boo meets the Iron Chef."
What they came up with, to the delight of the experts you never heard of until this show came along, was evidence that there is nothing so disgusting that it can't be sold to people long enough for someone to grab a bunch of money and run out the door.
Last summer, there was a custom-painted cupcake van parked almost daily on the village green here. Now, I could see it making the circuit of the county fairs, since fair food consists primarily of fat, grease and sugar in various combinations, but I guess this was someone who didn't want to be a full-fledged carny and had been sold on the idea that you could sell enough cupcakes in your own neighborhood to pay off a custom-painted van with a workspace and flip-up-flip-out food counter on one side.
Even at gourmet cupcake pricing, that's gonna take a lot of cupcakes.
The great thing about all this ephemeral franchising is that it's not the same as a Ponzi scheme, because you're not paying off old investors with the money from new investors. You're not paying off the old investors at all: The trick is to just choose a craze that will remain aloft long enough for you to get your money and get out and then do so.
You just have to be careful how you explain the potential upside of cupcakes, or emus, or chinchillas, or whatever nonsensical commodity you're selling, so that you aren't actually lying or making the sorts of specific projections that the SEC frowns upon.
Which I think is easier to do if you are selling the actual custom vans or emus or chinch cages and whatnot than if you are selling stock in such things, given that most states have underfunded their attorneys general to the point where ripping people off is much less risky than it was 20 years ago, as long as you don't drag the aforementioned SEC into things.
And, in a related bit of synchronicity, Alex Hallatt has what I assume is a serendipitous hit over at Arctic Circle:
Which is to say, I'm assuming that, when she penned this strip, she wasn't aware that a study was about to be published showing that one soft drink a day raises the risk of developing Type 2 diabetes by 20 percent.
And, of course, just as hot cakes aren't cupcakes, diabetics and defibrillators aren't an exact match either, though heart disease and diabetes are pretty good friends.
She may also have been riffing on a KFC promo that recently re-emerged in some on-line places, in which they donated to diabetes research if you bought a giant soda. The actual promotion was two years ago, and was justified with the explanation that the donation was for juvenile diabetes research, which is Type One diabetes, which is congenital, and not Type Two, which is the kind you develop by eating too much sugar.
Type One is the kind that five percent of diabetics have. The rest have the kind you get from drinking big sodas and eating cupcakes that are 60 percent frosting.
As for whether you should invest in sugar-based crazes, I feel like Don Corleone discussing the drug trade. I'm not denying that there's money in it; I'm talking about whether it's the sort of business we ought to be encouraging.
The money's there, however, and cupcake batter isn't nearly as apt to explode as meth batter.
I see that Krispy Kreme stock is back up, so, if you'd bought that after the craze faded, you'd be sitting pretty right now.
And speaking of sitting, here's some more advice: If you are making money on cup cake and Krispy Kreme stocks, shelter it by taking about half your investment out and investing it in a subsidiary business sector that is sure to show growth in the future. Though it is also going through a rocky point at the moment.
Or put some money into this Pacific Rim company, which is going to be absolutely huge! Check it out:
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