Ask a wealthy American what stocks she likes at one of those apocryphal cocktail parties that authors seem convinced are raging away behind our backs, and you’ll get a long list of favoured companies, pros and cons, and a hot tip for the next big thing on Nasdaq.
Ask a posh British chap what shares he owns, and the answer will probably be “oh, Mummy’s old Chippendales”.
For some reason, most Britons who venture beyond cash and property at most lob money into a pension, without much thought of where their money is actually invested.
Of course there are exceptions – those of you reading this article, for starters! And The Motley Fool among other websites and publications desperately duke it out for the attention of the rest.
But even when Brits are enthusiastic about equities, it feels to me like most British investors are more likely to be interested in funds and star fund managers, such as Neil Woodford, than they are in owning a little piece of particular companies.
Why is that?
Bigger! Better!
It’s a question we’ve thought about at The Motley Fool. Our parent company hails from across the pond, after all, where it seems every other investor wants to be Warren Buffett.
And I’ve heard many theories to explain the cultural difference over the years, from a greater risk appetite in the States that’s maybe a legacy from its frontier spirit to differences in the level of welfare provision, to our reticence as Brits to discuss money at all.
Yet I wonder if there’s a much simpler explanation – that the American markets are chock full of massive, exciting, and world-revolutionising companies.
In contrast, our own national champions are, well, boring.
American beauty
You see, they know how to make companies people will be desperate to own on the other side of the Atlantic.
Just consider the hullabaloo that surrounded the recent floatation of Snap Inc – the parent company of Snapchat – on the US Nasdaq market.
Snapchat is possibly the most popular app with teenagers and Millennials in the Western world right now. In the aftermath of its IPO, traders decided that popularity was worth a valuation of well over $30bn, despite Snap’s current loss-making status. $30 billion!
Other high profile and super-exciting US companies include:
Amazon – A revolutionary global online retailer that you probably use yourself.
Apple – Currently the largest listed company in the world, the iPhone and Mac maker boasted ownership of the world’s most valuable brand for five years in a row.
Alphabet – Now owns the world’s most valuable brand – Google – having stolen the title from Apple. Google does this neat thing on the Internet that you might have seen. An advertising juggernaut, Alphabet also owns YouTube and has numerous sci-fi sounding projects in the works.
Tesla – The world’s sexiest electric carmaker, Tesla has revolutionary aims to replace the entire fossil fuel and combustion engine combo the globe runs on.
Facebook – Very close to reaching two billion members worldwide, it also owns the wildly popular app Instagram. Most people now spend several hours a week engaged with these platforms.
I could go on. Note that with the exception of Tesla, these exciting outfits are also among the largest companies in America. They are not small and edgy start-ups.
Now, what would be a big, bold British company that would not look out of place on that list?
Not one springs to mind?
Take your time! I’ll be just over here.
Nice weather we’re having, hey? Early spring perhaps?
Okay, you get my point.
Where’s our own Amazon?
Sadly, in the UK our biggest companies are oil producers, banks, drug makers, and tobacco firms.
None of these sectors are exactly flavour of the month with the public, and they’re also not the kind of companies to get teenagers excited about investing.
True, our top ranks do include Unilever (LSE: ULVR), Diageo (LSE: DGE) and Reckitt Benckiser (LSE: RB), who boast popular household names in their line-ups such as Ben & Jerry’s, Johnny Walker, and Nurofen.
But their corporate names are largely unknown to the public. The average person might as soon guess Unilever and Diageo were characters from a Samuel Beckett play.
Buy American
Don’t get me wrong. I’m a fan of the UK stock market, and as fond of our boring behemoths as any birdwatcher would be gushing over a Little Brown Job.
I own shares in some of them. I also happen to think dull can be profitable when investing. Those US tech giants I’ve mentioned mostly trade at high P/E ratios, and their stories are very well known. As an investor you therefore have to swallow big growth expectations – expectations shared by the public at large, as much as by investors – and such leaps of faith can only mean risk.
What’s more, Apple is the only one of the US firms cited that pays a dividend. In contrast, pretty much all the big UK companies deliver generous payouts most years.
So our companies do have their attractions.
I’m simply saying that the popularity of directly investing in shares in the US might not have anything to do with a founding vision of a nation of shareholders, or a more everyday capitalistic mindset, or even the fact that Wall Street was better propaganda for the US market than pre-footie Adrian Chiles waffling on about Marks and Spencer (LSE: MKS) on the old BBC2 lunchtime show Working Lunch was for our own.
It might instead just be that when you see a company explode into global consciousness, watch it grow rapidly into a valuation of hundreds of billions of dollars, and wonder how you ever got by in your own life without it, that company is almost certainly going to be American.
Depressing, I admit. But as my own share ownership disclosure below shows, I say if you can’t beat ’em… I await my investing cocktail party invite with baited breath.
