The principle of “Borrow from the best” lives deeply inside the walls of many stellar corporations, well illustrated by two of the most dominant brands in the world-Microsoft and Wal Mart. DOS was the operating system licensed by Microsoft for IBM personal computers, but Bill Gates didn’t write that program-it was purchased from someone else. Microsoft took an existing idea and made it a dominant product, diffusing personal computers to the masses. At Wal Mart, Sam Walton was famed for plucking ideas from employees, competitors, and books and rolling them out fast. When a reporter asked him about borrowing ideas, he acknowledged the importance of this practice, but he added, “I always try to improve on them.” The way great brands roll over everyone else is by incessant borrowing from the best-perfecting wheels, not inventing them.
Baby Boomers Rule! It’s a simple statement with profound ramifications for marketers.
Just ask the Rolling Stones, Elton John, and Bruce Springsteen, all of whom have achieved market success in part because of their connection to the largest demographic segment in the United States. Once popular with this nostalgic, massive, and lucrative market, bands that evolve to stay relevant and remain top shelf performers can ride the boomer wave to sustained profitability. Brands, such as Coke, have done the same.
Not only do baby boomers dominate the demographics of industrialized economies, they sit poised at the driver’s seat of financial demand. In defiance of the Rolling Stones’ admonition, baby boomers get satisfaction because of their freedom to spend on things they want.
The reader may wonder why all this hocus pocus, involving an apparently “personal guarantee” by our Secretary of Transportation, and a higher cost to the taxpayer in the end. The chief reason for the indirection has been the debt limit imposed on government borrowing by the Congress. Apparently guarantees by the government are not regarded as debts-a semantic windfall for shrewder investors. Perhaps the chief impact of this situation has been the creation of tax free Housing Authority bonds, enjoying 94 The Intelligent Investorthe equivalent of a U.S. guarantee, and virtually the only taxexempt issues that are equivalent to government bonds. Another type of government backed issues is the recently created New Community Debentures, offered to yield 7.60% in September 1971.
3. state and municipal bonds. These enjoy exemption from Federal income tax. They are also ordinarily free of income tax in the state of issue but not elsewhere. They are either direct obligations of a state or subdivision, or “revenue bonds” dependent for interest payments on receipts from a toll road, bridge, building lease, etc. Not all tax free bonds are strongly enough protected to justify their purchase by a defensive investor. He may be guided in his selection by the rating given to each issue by Moody’s or Standard & Poor’s. One of three highest ratings by both services-Aaa (AAA), Aa (AA), or A-should constitute a sufficient indication of adequate safety. The yield on these bonds will vary both with the quality and the maturity, with the shorter maturities giving the lower return. In late 1971 the issues represented in Standard & Poor’s municipal bond index averaged AA in quality rating, years in maturity, and 5.78% in yield. A typical offering of Vineland, N.J., bonds, rated AA for A and gave a yield of only 3% on the one year maturity, rising to 5.8% to the 1995 and 1996 maturities.