Memorabilia as an investment

[JustinD]

Originally Posted by Peter_Spaeth

https://www.investopedia.com/article...nsic-value.asp

I think Adam is conflating the risks of common stock ownership with the concept of intrinsic value. That there are appreciable risks does not mean there is zero intrinsic value.

I think there is a basis for discussion if you defer to the some of the reasoning for the .com crash. When a vast percentage of value of a company is speculative, you can lose your entire worth in a few minutes. Depending on your valuation model, the beta for technology can be huge (as in the AI excitement in the current market).

Case in point, Dan Gilbert who I worked for well over a decade, made a fortune taking advantage of the situation to fleece Intuit for a massive fortune. He is easily the smartest guy I have ever met and I sat for lunch with Buffett while I worked for him. Nothing he does is not planned 6 years down the road.

When they came to buy his mortgage company in 1999 he absolutely knew already how it would work out and took the 370 million. They changed the name to Quicken Loans and it was a success, becoming the face of Intuit to many. It slowly warped the investor perception of Intuit as a tech stock and moving it into the financial sector in the market.

You would think this would be good…well far from it. With tech stocks based on intangibles like innovation, licensing, etc. It became a financial which is largely holdings and earnings. The stock dropped as people devalued it as now it was based on physical and not intangible intellectuals. It was a disaster.

In order to realign into tech and change the perspective they needed to dump a strong asset and dump it fast. They called Dan and asked if he wanted it back. He absolutely knew he had them by the short and curlies to have a quick buyer.

In only three years, he bought it back for 64 million dollars. Netting 306 million to lend the company to them as he continued to run it. That move provided the extra liquidity to make further investments and continue to amass billions and the number one mortgage company in the country for years and still the second during this high interest market.

Sometimes minimal intrinsic works for you, sometimes it doesn’t.