Old people lose money buying commemorative coins. The short of it is that one of those late night television advertisers told a bunch of seniors that these commemorative coins would appreciate in value and were a good investment. After buying them, the buyers discovered that the coins' market value was much less than they had thought.
Now, I don't want to sound heartless. Nobody wants to see anyone impoverished, especially not the elderly. But come on:
Harold Tice of Austin pulled the money out of his 401(k), his home equity and trust funds meant for his grandsons' college education to invest in the coins...And:
"I'm 75 years old, and that's all the money I have, and I can't afford to lose it..."
There's a whole lot wrong here. First off, though, did the coin sellers deceive the customers? Maybe, it's not clear. The only explicit claims that they made were that the coins would appreciate significantly, which is true, given enough time. They mentioned how supposedly during the Great Depression that the only currency worth anything was gold. I'm not sure about that argument. It's certainly true that a lot of sensible people invest in precious metals to protect themselves against economic shocks during all economic conditions.
Even if the sellers did lie, the buyers were irresponsible (to put it nicely). Did any of them get a second opinion from someone about whether this was a good idea? Did they do any comparison shopping to see if they could find cheaper coins? What were they doing speculating with money they couldn't afford to lose? Six people lost $420,000 total. That's $70,000 each on average. If you're draining your 401(k), your home equity, and your grandsons' trust funds to buy any one thing, be it US Treasury bonds or tulip bulbs, you're making a big mistake. Don't get me wrong, the coin dealers are probably jerks. That doesn't matter. Even if they were swell guys with only your best interests at heart, it's a stupid thing to do.
This also hits upon a market fundamental. Coins are just like anything else: what they're worth is what someone is willing to pay. I have a 1993 Toyota Corolla worth about $1300, according to the Kelley Blue Book. If I ask you to pay $5000 for it, and you do, well, good for me. You didn't get taken, robbed, conned, or anything else. It's entirely your choice whether to pay $5000 for it. If you then try to sell it for more, but nobody is offering more than $1300, is that really my fault? You gave me the money willingly. If you're really looking for someone to blame, go after all the people who won't pay you more than $1300 for the car. There's no such thing as intrinsic value, and thus there's no such thing as an unfair price. There's just the price you're unwilling to pay or unable to get.
¶ 1440 Posted at 01.15 PM ⇒ No Comments ( stupid people | freedom )