Reminiscences Of An Ebay Operator

As our investors are aware, we relocated our company to Phoenix, AZ in July of this year. After buying a home a couple of months ago, my wife and I have been getting down to a few of the last remaining boxes. She is getting our house ready for Christmas (my favorite time of the year) right now as well. She brought me a box of ornaments that my mother has given to us over the years. This box is full of ornaments that we’ve never opened. My wife let me know that I need to get rid of them. I’m an economic minded person at heart, so I decided to check what I could sell them for on eBay (EBAY). Yes, it was interesting to see the Harry Potter and Top Gun ornament with value above what my mother paid for them. It was more interesting to see how many sold for below what she bought them for. What a great way to look at what is going on in equity capital markets!

The retail price of many of these Hallmark ornaments was $15-20 when they were originally purchased. The most interesting of them all is a Hallmark Heat Miser ornament. The character is from the movie The Year Without a Santa Claus. This ornament retailed for $14.95. eBay says the average selling price for this item is $74 before they take their fee of 10%. So, the best potential return of these ornaments has been 495% from a period of about four years ago. This sounds great, and most investors will leave it at that and tell you about their winnings. You may know people who tell you about the money they won.

Charlie Munger teaches us to invert the situation to see how it looks on the other side. Inverting this situation would have you look at all the other ornaments. To pull another one out at random, I looked at the Disney Hallmark Sofia the First ornament. It originally retailed at $14.95, just like the prior one. eBay says that the average selling price is $15. Here we are, years after the acquisition, hoping to get $15 before eBay reduces that by 10%. To summarize, you’re excited to only lose 10% of the value years later.

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