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Jamie Powell from the Financial Times’ (free to read with registration) Alphaville site is following a trend I find both fascinating and extremely important for investors – cultural transmission. In short, the audience fragmentation caused by new technology means that the products and intellectual property that was valued in the past matter little to new generations.

In Mr. Powell’s column, “Warner Music’s worried about weakening cultural transmission,” he details the music industry’s concern that musical tastes are no longer being handed down from generation to generation. This implies that the copyright value for Warner’s catalogue – it includes Led Zeppelin, Neil Young, REM, Van Halen and ZZ Top – will steadily decline as younger people avoid their parents’ and grandparents’ favourites.

Warner executives are also worried that no new dominant artists are arising because the audience is so fragmented.

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The music industry is suffering from a decentralization of power and influence caused by the internet that is likely to affect all major brands and their stock values.

In music, radio stations and print media, like Rolling Stone magazine, were the arbiters of artist success. The rise of iTunes first, then streaming music, left these entities with a fraction of their previous influence. The audience, with limitless musical choices at their fingertips on Spotify, followed their own tastes rather than gather behind a few, dominant artists.

The rise of video streaming creates similar problems for companies, like General Motors, Nestle SA and Proctor & Gamble, who used mammoth broadcast television advertising budgets to build their brand values. Like radio stations, broadcast television has lost its primacy, and the ability of advertising to affect consumer behavior has fallen accordingly.

Warren Buffett’s emphasis on stocks like Coca-Cola, where a strong global brand acted as a competitive moat protecting revenue growth, was famously lucrative. But Berkshire Hathaway’s steep losses (so far) on its acquisition of The Kraft Heinz company are a potential sign that the era of big brands demanding premium stock prices is coming to an end.

-- Scott Barlow, Globe and Mail market strategist

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

The Rundown

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Investors are due for a reality check: Upheaval often foreshadows deeper economic challenges

So why are share prices ignoring this tumult and climbing higher? The nonchalance appears to stem from a questionable reading of market history. In particular, it reflects the lessons of 1968, when riots and assassinations rocked U.S. society in the run-up to a presidential election. As cops and protesters clashed, Wall Street did just fine. The S&P 500, with dividends, returned 10.8 per cent in 1968. The simple lesson appears to be that pandemonium in the streets doesn’t matter. Look more closely, though, and the lesson doesn’t seem so clear cut. Ian McGugan has this analysis.

Also see: As mayhem erupts, markets keep moving higher. What are investors thinking?

The surging loonie has aligned with the stock market – and that’s a reason for concern

Widely perceived as a “petrocurrency” for its close association with energy prices, the loonie has recently dislodged from crude oil to align itself with the stock market. But if, as many market observers fear, the stock market has priced in too much optimism, the Canadian dollar would share that risk by association. Tim Shufelt reports

2% is a great return right now, so stop trying to do better with your cash

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The pandemic has turned a 2-per-cent return from an online savings account into a financial coup. Rob Carrick has this message to everyone who seeks a better return on cash: It’s not out there. In fact, 2 per cent is so good it probably won’t last long. Grab it up while you can.

Still buying lottery tickets? Try Canadian oil service stocks instead

Baron Rothschild, the 19th-century investment banker, suggested that investors should “buy when there’s blood in the streets – even if the blood is your own.” As Robert Tattersall looks at the small-cap portion of his portfolio, the red ink is deepest in the oil-services sector. Although the overall market has enjoyed a robust recovery in the past few weeks, this has not extended to the energy sector, especially the small-cap service companies. They continue to trade close to their recent low points. And as a value investor, he’s seeing an opportunity.

Others (for subscribers)

Wednesday’s analyst upgrades and downgrades

Tuesday’s analyst upgrades and downgrades

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Wednesday’s Insider Report: CEO cashes out US$1.6-million as this Canadian large-cap stock nears a record high

Tuesday’s Insider Report: CEO invests over $800,000 in this depressed stock

Number Cruncher: Ten U.S. stocks with the financial flexibility to withstand a second downturn

Number Cruncher: Are there any bargains left among the 10 top TSX gold stocks?

What’s up in the days ahead

Dr. George Athanassakos reveals a stock pick from his investing students that fits the strategies of Warren Buffett.

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

More Globe Investor coverage

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Compiled by Globe Investor Staff

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