This Lazy Woman’s Investment Method Part 2: A Whole New Index

I had to get this out of my head before cephalic explosion occurred.

This past Sunday was a day in Book TV infamy for me—three book author sessions in a row that I was interested in. Boy, I wished I had popcorn for that, but I was too lazy to get up and make some. I took notes instead. It was Sunday, after all—my day off.

Anyway, one of the authors included was Richard Florida, a man I had not previously heard of until that fateful day. He talked about the arrival and the flight of “the creative class” and I was thoroughly intrigued—enough to go look him up on Amazon and Google, and spend an entire evening immersing myself in all that was Richard Florida, publicly accessible.

The creative class doesn’t include just artists and hippies, but rather those who possess the soul and lifestyle of idea, free thought, and independence. In fact, the creative class, according to Richard, encompasses about 40% of our labor force—it includes the idea people from all industries and occupational fields.

In Richard’s mind, the labor force of this country is divided this way: white-collar idea people, and blue-collar production people.

He even went so far as to research, with the Carnegie-Mellon Institute, just where the “creative class” lived and worked, and from there, made an “creativity index” of places in this country that are anywhere from amenable to hostile toward this class. This creative class index encompasses more than just idea havens—it also includes the things that allow for and detract from creative acceptance. He calls them the Three T’s: technology, talent, and tolerance. All three T’s must be in place for a locale to become a creative and economic mecca.

Now for the investment part—seeing that all three T’s are necessary for an economic mecca to emerge in this country and elsewhere, I went to his website and consulted a map containing the creativity index, and each metropolitan locale’s ranking. I then started thinking seriously about how this information could be put to investment use, i.e., real estate, utilities, corporations, etc. Then I considered market price for those areas at the top of his charts.

Seeing that the top 10 creative meccas had already priced me out (as well as much of the public—think “market peak” here), I went for the second group of 10, and the third, and so on. Richard’s site even included a regional breakdown of the creative index, so I could hone in much better on up-and-coming areas with an eye toward market price. When I find an area that fits my criteria of affordability and future economic draw, I’ll then begin to put chips down and wait. The crowd isn’t here yet, but they will be in about 10 years or so.

At this rate, who needs Wall Street? Just reading the right books and synthesizing data for hidden clues can lead you to riches that ordinary people would just read on by.

Richard’s newest book, The Flight of the Creative Class, deals with how the creative are fleeing to meccas outside the U.S. because the three T’s existing together are in short supply here, and those places have priced people out of their own markets as well (not to mention the glut of idea people that already exists in those places). New Zealand, Canada, and other places are becoming the “new” creative meccas, because the three necessary T’s are in abundant supply, and the areas are sparsely populated with idea people, so these countries are eager to import the creative juice they need.

In my mind, the three T’s will also serve as the backbone of the global economy in as far as telling people where their best job opportunities lie. If there isn’t technology, or talent, or tolerance (lifestyle, ethnic, and religious) co-existing, there will be no economic engine. Think of it as a footstool: all three legs must be there and in perfect order, or the whole thing will collapse.

If this man’s books serve to tell one person about the future employment picture, it serves to tell me about where to invest my money to profit from the future employment picture while minimizing my risk—as the index adjusts, I can adjust my holdings. That’s following creative demand on a global scale. Richard Florida puts a whole new spin on index investing, doesn’t he?