I'm at an auction in Houston this morning.
These things are one of the greatest learning experiences available. I don't think you should be able to graduate from the Fort Worth ISD without going to a Richie Brothers auction. There's much to be learned there. Had I started going at age 17 instead of age 35, I'd be in better financial shape now.
So along with the monthly wisdom of Thomas Sowell, and the monthly deconstruction of the advertising in Harper's magazine, I'm going to add.....
All I Need To Know, I Learned At Auctions, with apologies to Robert Fulgham's bestseller with a similar title about kindergarten.
Lesson #1 - Nobody has any idea what anything is worth.
Things are worth what people will give for them, "as is", "where is", as the auction saying goes. Appraisals don't mean a thing, except as a marketing tool. The only way to determine the value of something is to sell it.
The Reverend Doctor Karl Marx advocated something called the Labor Theory of Value. I'm oversimplifying here, but this is the idea that things are worth the amount of labor that went into them.
Equal amounts of labor went into the latest Kanye West and K-Fed CD's. One of them sold well, and the other couldn't be given away with McDonald's Happy Meals.
The labor of Bill Gates would be worth very little in a Mississippi Rice Field. The same labor was almost priceless on the west coast.
Ditto for VHS vs. Betamax video players.
Nolan Ryan rookie year baseball cards vs. Ned Yost rookie year baseball cards.
Don't get me started on Beanie Babies, Cabbage Patch Dolls, and other now valueless, once priceless, collectibles.
So far, I've seen things sell for pennies on the dollar, relative to the original price. I've seen other things sold for 80% of the cost of a new equivalent item.
Rev. Dr. Marx lived in a fairly simple society.
Today I'm trying to buy some forklifts. I know what I think they're worth.
They're worth what people in Tomball Texas are willing to give for them on May 6, 2008. Not a penny more, not a penny less.