The G.O.A.T.

I have made a Super Bowl prediction every year since 2007 when I began keeping track of an obscure data point that should be a prop bet, and it’s on an 11-year winning streak. Take the OVER on avocados.

For the real degenerate free-market types (hand in air), I suggest parlaying that total with the disruptive forces of capitalism side action.

Who says learning about the economic Law of Comparative Advantage cannot be deliciously entertaining? Let’s slice into the estimated 139 million pounds of avocados consumed this Super Bowl Sunday in the United States.

It was on February 1, 2007 that I began this page of my Trading Diary to celebrate the end of a 94-year ban on Mexican avocados being imported into the United States. I celebrate it again and again with every table-side hacked guacamole, and all of the spices of free trade. Here’s why.

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Around the turn of the century, Carl Schmidt went to Atlixco, Mexico in search of different avocado varieties. He smuggled several seeds back home and planted them. In 1913, a great freeze devastated California farmers. Among the few trees to survive were Schmidt’s. It is reported that the surviving variety was called “Fuerte” and those seeds taken from Mexico provided California a tree that could thrive in the local climate. The U.S. avocado industry was born. In 1914, the U.S. banned all avocado imports from Mexico, claiming a fruit fly was a risk to California crops. Hmmm.

In 1926, a mailman named Rudolph Hass purchased a tree as a seedling in California and planted it in his front yard. The mother tree was patented in 1935 and all Hass avocados can be traced back to grafts made from this tree which lived for 76 years in that yard.

Years of trade wars have been fought over agriculture. It was not until 2006 that Mexico could export into 47 states, the only “protected” holdouts being California, Florida and Hawaii. The following year, the ban was lifted for those three as well. When I originally recorded avocado notes in my diary in 2007, the price of one Hass avocado was $2. Eleven years later I bought one for half as much and total Super Bowl consumption has almost tripled.

The Law of Comparative Advantage stands the test of time for a reason. This economic law practically sets forth that you should buy from low cost efficient producers wherever they may be, that make something better than you do. And, in exchange sell to them what you can provide more efficiently and better than they can make at home. Focusing on natural strengths instead of artificially protecting weakness allows both to benefit. Many politicize the risk of a job being lost in this arrangement. Better time would be spent finding a craft to do uniquely well. I believe it was the great Thomas Sowell who said the most dangerous word in the English language is…fair. I note that capitalism’s historical record lasts longer than any government – it is the G.O.A.T. - the greatest of all trades.

And that was before capitalism’s current league MVP Jeff Bezos got his knife out. After Amazon bought Whole Foods, the first headline on price reductions was the avocado. Why in the world get into the grocery wars, many wondered? Click here to see the first few hours of shots being fired among traders.

Here is how Bezos has done attacking prices of traditional retailers with better efficiency instead.

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Customers will benefit yet again from the competition made possible by the G.O.A.T. If you like cheaper avocados of the highest quality, could I interest you in better healthcare delivery? That is next. The one market most vulnerable for capitalism’s best play sheet – transparent pricing. The future is astoundingly bright and we keep getting surprising reminders all the time.

There are huge and scary bumps along the road of relentless progress. Just do not let anybody distract you from the best bet on the board - backing the greatest quarterbacks of capitalism you can find, so you can focus on your craft.