{"id":14688,"date":"2012-09-10T08:54:19","date_gmt":"2012-09-10T12:54:19","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=14688"},"modified":"2012-09-10T08:54:19","modified_gmt":"2012-09-10T12:54:19","slug":"art-as-an-investment-facebook-not-as-an-investment","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=14688","title":{"rendered":"Art as an investment. Facebook not as an investment."},"content":{"rendered":"

Art as a investment has its charms, (and pitfalls).<\/strong><\/span> Our investment group moved to Christie’s last Friday for a 90-minute lecture\/discussion on art as passion and investment. Things I learned:<\/p>\n

+ Of late there have been huge increases in select areas — e.g. Chinese art from the 18th century, some modern art, chairs.\u00a0 A painting that went for $150,000 four years ago sold recently for $2 million. 60 Minutes<\/em> did a piece noting contemporary art versus the S&P. It killed the S&P.<\/p>\n

+ Not all “art” goes up.\u00a0 A friend’s father collected medieval glass. He has the world’s best collection. It’s now valueless. Nobody wants medieval glass at present. It goes on sale in November in London. Says my friend, the expert, “The power of a Collection with attractive (low) estimates may well jump start this very quiet market. May in fact be a very shrewd investment. We will see… “<\/span><\/p>\n

+ If you want to play in this, you’d better fall in love with an area and become the world’s leading expert on it. Nothing substitutes for knowledge, except for occasional luck. Little is intuitive in this business. Persian rugs have plummeted in value –though you’d expect the opposite. They’re now harder to get because of the embargo on doing business with Iran. But you’d be wrong about the value of the great Persian rugs. . Apparently, the BIG buyers of Persian rugs were rich Iranians, who bought the carpets and took them back to Iran. Old English furniture has plummeted in price. People now want great contemporary stuff. You can buy a beautiful English secretary bookcase for as little as $3,000. Maybe now is the time to buy great Persian rugs?<\/p>\n

+ The Chinese are buying Chinese art. They’re newly rich and need places to invest, like you and I. A Chinese businessman recently bought a vase for $5 million. Why? the vase was not worth $5 million. But the fellow wanted to impress his friends that he was successful enough to spend $5 million on a vase. I hope he doesn’t drop it.<\/p>\n

+ Provenance is critical. You’d better know who’s owned the piece you’re keen on. Its history of ownership (called provenance) really maters. It tells you how authentic the piece is, where it’s been, etc. My simple analogy is a dog’s pedigree.<\/p>\n

+ Collections seem to be critical. You can sell one piece (through Christie’s), but a big collection of great stuff will get more excitement and do better.<\/p>\n

+ You’d better love it. It will live in your living room for a long time.\u00a0 So, it better give you pleasure. And it better be good quality. The best stuff goes for the highest prices.<\/p>\n

+ You can start collecting great stuff for remarkably little money. Instead of buying new stuff, my friend furnished his house with Federal furniture. When it came time some years later to move, he sold all the furniture for more than he paid for it\u00a0 — a much better deal than buying crap at IKEA.<\/p>\n

+ There are oodles of wonderful stories. There’s the fellow who bought a graphite on paper for $750 in 1979, which recently sold for $900,000.<\/p>\n

I loved my visit to Christie’s at 20 Rockefeller Center. In my 43 years of living in New York, I’d never visited the place. I have missed out. The place is incredible — better than most museums. And if I ffall in love with something, I can buy it. Not like a museum.<\/p>\n

Well, I did fall in love with the chairs. Of course, I know nothing about chairs, except they’re for sitting on. But the things turned me on. I got more pleasure out of looking at the chairs than I ever got shorting RadioShack.<\/p>\n

Here’s my plan: Visit Christie’s more often. Browse the collections. Go to several of their specific segment auctions — that’s where the “action” is. Watch. Learn. Enjoy. Apparently the auctions are theater at its best. One “swinging dick” tries to out-impress another one…<\/p>\n

Oh yes, be wary of “art advisers.” They’re the art world’s equivalent of stockbrokers. They’ll make you broker.<\/p>\n

Read further: “The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art<\/em>” by Don Thompson. Click here.<\/strong><\/a><\/p>\n

And also “The New Fine Points of Furniture: Early American: The Good, Better, Best, Superior, Masterpiece” by Albert Sack. Click here.<\/a><\/strong><\/p>\n

I love this chair.<\/p>\n

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It goes to auction in the next couple of weeks.<\/p>\n

Always look up in Manhattan. <\/strong><\/span>This is a sculpture I eyed on the Rockefeller Center across the road from Christie’s. I shot the photo with my trusty Canon S100 pocketable from the second floor Christie’s meeting room. Neat?<\/p>\n

\"\"<\/a><\/p>\n

Sometimes it doesn’t work.<\/strong><\/span> This was my “wonderful” list of recommended shorts from July 13’s column.<\/p>\n

Game Stop (GME)
\nFossil (FOSL)
\nIBM
\nEaton Vance (EV)
\nJCPenney (JCP)
\nJoy Global (JOY)
\nRadioShack (RSH)
\nResearch In Motion (RIMM)
\nSuperValu (SVU)
\nTerex (TEX)<\/p>\n

RSH and SVU fell. RIMM is flat. All the others are up — some quite a bit. This game is not easy. The\u00a0 key is to keep those stop losses tight.<\/p>\n

Facebook as a short.<\/strong><\/span> Henry Blodget did a piece on Facebook on Business Insider on August 31. It begun:<\/p>\n

It’s Becoming Clear That No One Actually Read Facebook’s IPO Prospectus Or Mark Zuckerberg’s Letter To Shareholders<\/strong>
\nAs Facebook’s stock continues to collapse, the volume of whining is increasing.
\n<\/em>
\nFour months ago, you will recall, Facebook was viewed as “the next Google.” Now, with no major change in the fundamentals, it’s viewed as an over-hyped disaster. Meanwhile, there is ever-louder grumbling that 26-year-old Facebook CEO Mark Zuckerberg is in over his head and should be relieved of command.<\/p>\n

As I listen to all this whining, I have a simple question:<\/p>\n

Didn’t anyone even read Facebook’s IPO prospectus?<\/p>\n

The answer, I can only assume, is “no.”<\/p>\n

Because if anyone had read the Facebook IPO prospectus, they would have learned, among other things, the following:<\/p>\n

+ Facebook’s growth rate was decelerating rapidly.
\n+ Facebook’s user-base was rapidly transitioning to mobile devices, which produce much less revenue.
\n+ Facebook’s operating profit margin was already an astounding 50%, which suggested it had nowhere to go but down.
\n+ Facebook’s CEO had a nearly unprecedented amount of control over the company.
\n+ Facebook’s CEO had set up this astounding level of control intentionally. Mark Zuckerberg knew all about how impatient public-market shareholders are. And he set up the whole company so he would never have to pay attention to their whining.<\/p>\n

In the 9 months following the IPO, insiders would be free to sell more than 2 billion shares of Facebook that they had been holding for years.<\/p>\n

Facebook was going public at an astoundingly high price for a company with these characteristics-about 60-times the following year’s projected earnings, in a market in which other hot tech companies like Apple and Google were trading at less than 15-times.<\/p>\n

Even more importantly, if anyone had read the IPO prospectus, they also would have learned the following, all of which was expressed in a letter written directly to prospective shareholders by CEO Mark Zuckerberg:<\/p>\n

+ Facebook’s social mission is more important to Mark Zuckerberg than Facebook’s business.
\n+ Facebook’s business exists to support Facebook’s product development, not the other way around.
\n+ Facebook’s CEO is an extremely patient man who does not flinch under criticism.
\n+ Facebook will never care as much about clients and shareholders as it does about its service and users.
\n+ Facebook cares about the long term, not the short term (read: decades, not months).<\/p>\n

Facebook shareholders may be annoyed by those facts, especially now that the value of their stakes are getting demolished.<\/p>\n

But they can’t say that they weren’t warned.<\/p>\n

And they also can’t say that the stock has been unduly punished:<\/p>\n

At $18, using the correct share count (2.7 billion), Facebook is still valued at almost $50 billion. And it’s still trading at ~28-times next year’s projected earnings of $0.65, an estimate that looks just as likely to be too high as it is to be too low. Meanwhile, Apple is still trading at less than 15-times projected earnings. So you can’t argue that Facebook is now “too cheap.”<\/p>\n

Lastly, if Facebook shareholders really think Facebook’s CEO Mark Zuckerberg is going to cave to their whining and step down now, all of four months after he told them that he only cared about the long term (which, again, is measured in decades, not months), they don’t know Mark Zuckerberg.<\/p>\n

Again, Mark Zuckerberg set up the entire structure of the company so he wouldn’t be forced to make dumb short-term decisions by whining public-market shareholders.<\/p>\n

And he TOLD them that he wasn’t going to make those decisions.<\/p>\n

They just didn’t listen.<\/p>\n

In the interests of “better late than never,” I’ve attached an annotated version of Mark Zuckerberg’s letter below.<\/p>\n

If you’ve already read it, here’s what else you should know about Facebook’s stock-especially Facebook employees.<\/p>\n

For Blodget’s full Business Insider piece, click here.<\/strong><\/a><\/p>\n

Everyone should have a gmail account.<\/strong><\/span> First, it’s free. Second, it’s very reliable. Third, it’s often the only <\/strong>way to receive (or send) large files. <\/strong>I don’t know why most email systems don’t allow sending your friends four or five photos. But they don’t. Use gmail. <\/strong>You can send and receive up to 25 megabytes of files in one email. <\/strong><\/p>\n

\"\"<\/a>
\n<\/strong><\/div>\n

Harry Newton who has finally capitulated. It’s time to visit a real doctor, get an MRI and figure out what’s wrong with my shoulder\/arm\/brain.<\/p>\n

Who can forget Africa? Lion kill at Duba Plains, Botswana.<\/p>\n

\"\"<\/a><\/p>\n

Zebras drinking at Mombo:<\/p>\n

\"\"<\/a><\/p>\n

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Art as a investment has its charms, (and pitfalls). Our investment group moved to Christie’s last Friday for a 90-minute lecture\/discussion on art as passion and investment. Things I learned: + Of late there have been huge increases in select areas — e.g. Chinese art from the 18th century, some modern art, chairs.\u00a0 A painting […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-14688","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/14688","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14688"}],"version-history":[{"count":0,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/14688\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14688"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14688"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14688"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}