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David Bowie was a financial pioneer in addition to a musical legend. In 1997, Mr. Bowie sold the rights to the future revenue generated by his back catalogue of 25 albums in a US$55-million bond issue.

According to Jamie Powell of the Financial Times, however, social trends are devaluing previous cultural achievements to the point that suggests a deal like Mr. Bowie’s might never be possible again.

In “The death of cultural transmission”, Mr. Powell details Vivendi’s plan to sell half of its ownership stake in Universal Music Group, which owns the rights to the music of the Beatles, the Rolling Stones and U2. Analysts have placed values on the transaction ranging from UBS’s €22-billion ($33-billion) estimate to JP Morgan’s €44-billion.

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Mr. Powell noted that previous generations were indoctrinated with the music of their parents by, for instance, the latter’s monopoly on the cassette player in the car and the family home stereo system. The author believes this process is changing and media preferences aren’t being handed down from generation to generation anymore.

“As Alphaville mentioned before, we loved The Beatles because we had no choice. By the time we were adults, the songs were scratched into our souls. Smartphones, and readily accessible digital media, might have changed this. Cars now regularly feature television screens in the back to [whisk] children away to Frozen lands, so parents can listen to Bon Jovi, or bicker, in peace.“

The trend goes far beyond music. The variety of movie and television content available through streaming , and the options to view them on, mean parents and kids are rarely watching the same thing at the same time. Or watching the same things ever.

I’ll add a more personal example. Every year, a former work colleague and I watch the Barrett-Jackson classic car auction. The bidders are rarely suit-wearing Wall Street employees. They are far more likely to be trucker cap-wearing owners of auto repair franchises or a string of warehouses. For us, the prices paid at the Barrett-Jackson auction have been an effective if crude indicator of Middle American financial health.

Like Mr. Powell and The Beatles, I was taught to love cars – late 1960s Ford Mustangs in particular. But if Mr. Powell is right and the generational transfer of nostalgia is ending, then the auction prices at Barrett-Jackson will become useless as an economic indicator and the valuations cited on Antiques Roadshow will steadily decline.

There will be a cultural impact of these trends, either good or bad depending on each person’s point of view. In terms of certain investments, the effects would be unequivocally negative.

We’ve discussed the possible negative effects on music royalties, and the companies like Vivendi that own the rights. The same concepts threaten television programming – the days of shows like Seinfeld earning hundreds of millions of dollars in syndication could already be over.

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In theory, no company dependent on any form of media is safe if the ‘younger people don’t care about anything older than themselves’ tendency gets strong enough. Fine art could eventually be met with more apathy than bidding interest at auction. Memorabilia of any kind – china sets, toys, dolls, hockey cards , all of it – is definitely at risk.

There will always be consumers willing to acquire objects and properties with, to them, historical significance. The extent of the interest is the issue – prices for anything nostalgic will fall if it becomes a niche market. I can’t help thinking something significant will be lost if the culture of the past is completely discarded, but I’m not part of the age groups, raised on personal devices, that will determine these things.

-- Scott Barlow, Globe and Mail market strategist

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The Rundown

Gary Shilling: Five ways to recession-proof your portfolio

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A. Gary Shilling takes a look at the dramatic shift in the markets over the past number of months and gives five ways his company are positioning their portfolios with the potential of a recession on the horizon.

Note: A. Gary Shilling, the president of A. Gary Shilling & Co. Inc., will be the keynote speaker at The Globe Advisor Forum held at The Globe and Mail Centre in Toronto on Thursday, April 11 starting at 1 p.m. For more information and to register click this link.

The lazy way to investing success

To succeed at investing, you need the right personality traits – laziness, cheapness and humility. Oh, sure, it is also nice if you happen to possess an expert knowledge of the market, a detailed understanding of various companies and a discerning grasp of economic trends. All those things can help you achieve good returns. But don’t sweat it. Laziness, cheapness and humility will get you most of the way there. Ian McGugan explains what all this means (for subscribers).

The truth about timing the market using yield curve inversions

A spectre descended on the market just as the ghost of the Christmas correction was starting to fade. It came in the form of a yield curve inversion and brought with it visions of recessions and ruination. But before you flee in terror, pause to take a look at the historical record and you’ll get a better sense of the potential danger that inversions pose. There have been seven recessions in the United States since 1969 according the National Bureau of Economic Research. Inversions preceded those recessions by between five and 16 months based on grouped monthly data from Federal Reserve Bank of St. Louis. Norman Rothery takes a look at how accurate a yield curve inversion is at predicting a recession (for subscribers).

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Land of oligopolies: A compelling case for a heavy weighting in Canadian stocks

Canadian investors are consistently told that the domestic stock market is full of pitfalls. The professed shortcomings of the Toronto Stock Exchange are by now sorely familiar – it’s overly exposed to natural resources; it’s a poor approximation of a diversified market; it has too little representation in consumer, health care and technology names; and it has woefully underperformed the U.S. stock market over the long term. That consensus has nurtured an inferiority complex of sorts, whereby minimizing exposure to Canada is seen as the first step in building a sound portfolio. But there’s an underappreciated segment of the Canadian market, separate from resources, that has generated superior returns and with less volatility than foreign alternatives. And it’s growing steadily. Welcome to the land of oligopolies. Tim Shufelt reports (for subscribers).

My TFSA portfolio has emerged from the market turmoil in great shape

It’s been a volatile six months for the stock market. The major indexes plunged almost 20 per cent in December but then rallied back for strong start in 2019. When your money is invested in an all-stock portfolio, times like this can be highly unsettling. So, what was the overall impact on Gordon Pape’s Aggressive TFSA Portfolio? Actually, he came out of the market turmoil looking pretty good. Gordon Pape explains (for subscribers).

Smaller Canadian stock exchanges vie for cannabis listings

The anticipated rush of listings by U.S. cannabis companies has ignited a rivalry between two of Canada’s smaller stock markets as they vie to fill the void created by the Toronto Stock Exchange. The TMX Group – which owns both the Toronto Stock Exchange and TSX Venture Exchange – has a policy preventing listed companies from operating south of the border, where marijuana remains federally illegal despite having been legalized in more than 30 states. That’s made the Canadian Securities Exchange, a stock market for upstart companies, the go-to venue for U.S. cannabis companies looking to go public, bolstering both the exchange’s public profile and its listing and trading revenues. But now, the NEO Exchange has stepped into the fray, eager to grab a slice of what its president and chief executive calls a growing market. Alexandra Posadzki reports (for subscribers).

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Why we should have a tax-free option for workplace pension plans

A decade has passed since the government introduced tax-free savings accounts (TFSAs), giving Canadians a “tax-free” option to save, along with the existing “tax-deferred” registered retirement savings plan (RRSP). TFSAs are popular among all Canadians, but they are particularly suited to modest- and low-income earners. The same option could – and should – be provided to workplace pension plans. Just as some of us are better off saving in a TFSA rather than an RRSP, some workers (and employers) would be better off with a “tax-free” pension plan than a traditional “registered” workplace plan. Bonnie-Jeanne MacDonald explains her view.

Others (for subscribers)

‘Where to Invest Now?’ - Top stock picks from Goldman Sachs

Recently divorced woman has $100,000 to invest in something secure

‘Dividends don’t matter as much as they used to’

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U.S. big banks to report Q1 results with lowered expectations

Thirteen TSX stocks whose dividends appear unsustainable

Bullish on Alimentation Couche-Tard

Tuesday’s analyst upgrades and downgrades

Tuesday’s small-cap stocks to watch

Monday’s Insider Report: CEOs are buying these two rising stocks

Monday’s analyst upgrades and downgrades

Others (for everyone)

The Globe’s stars and dogs for last week

Pinterest sets conservative IPO price range after Lyft drop

Activist investor Daniel Loeb’s hedge fund building Sony stake: source

Globe Advisor

Avoiding the next ‘sure thing’ investment that’s not

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Ask Globe Investor

Question: Can you explain why eligible dividends are “grossed-up” by 38 per cent and taxed at one’s marginal rate before the dividend tax credit (DTC) is deducted? Why not just apply a lower tax rate to the actual dividend and achieve the same thing? This has always puzzled me.

Answer: The reason dividends are grossed up is to approximate the amount of pretax profit the company would theoretically have to earn in order to pay you the dividend. For example, a dividend of $100 is assumed to have been paid out of a company’s pretax profit of $138, with the remaining $38 going to corporate income tax. The DTC essentially gives you “credit” for roughly the amount of tax the company already paid.

Here’s a quick example to illustrate. Say you live in Ontario, where the combined federal and provincial DTC is about 25.02 per cent of the grossed-up dividend. If you make $80,000 and have a marginal tax rate of 31.48 per cent for regular income, on an actual dividend of $100 you would pay tax of $43.44 (31.48 per cent of the grossed-up dividend of $138) minus a DTC of $34.53 (25.02 per cent of $138), for net tax of $8.91. Your effective tax rate on that $100 dividend would therefore be about 8.9 per cent.

Now, if you do a similar calculation for an Ontario resident with $100,000 of income and a higher marginal tax rate of 43.41 per cent, the effective tax rate on eligible dividends would be about 25.4 per cent.

Notice that, at the $80,000 income level, the effective tax rate of 8.9 per cent on dividends is less than one-third of the marginal tax rate of 31.48 per cent on regular income, whereas at the $100,000 income level the tax rate of 25.4 per cent on dividends is more than half of the regular marginal tax rate of 43.41 per cent.

In other words, as you move up or down the income scale, the tax rate on dividends is not directly proportional to the marginal tax rate on regular income. That’s why you can’t simply multiply your marginal tax rate on regular income by a fixed number to determine your tax rate on dividends. You have to go through the gross-up and tax credit calculation. It’s also why, when an Ontario resident’s marginal tax rate on regular income falls below about 25 per cent – the DTC rate – the effective tax rate on dividends becomes negative. (For more on the DTC, read my column here. For tables showing marginal tax rates in different provinces, see

--John Heinzl

Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.

What’s up in the days ahead

Looking for juicy dividends from global stocks? Rob Carrick shows you where to go hunting for them this Saturday as his 2019 ETF Buyer’s Guide concludes.

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Gillian Livingston

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