There are few places more magical than a glittering jewelry store on a Thursday night. Such was the cast at Underwoods Jewelers last Thursday where the sparkling, golden magic of Underwood’s converged with the steadfast fidelity of Standfast Asset Management to throw a wonderful party surrounded by all that glitters.
The party marked the third collaboration between these two Ponte Vedra institutions in as many years and, as always, featured great food, great drinks and a brief speech by Ponte Vedra author and historian, Scott A. Grant. Grant is the president of Standfast Asset Management and he talked about investing.
“An investment,” he began, “is worth what it pays you.”
If it does not pay, it is not an investment, it is a speculation. Any allocation of assets that requires the allocator to sell his or her asset at a higher price than they paid for it is, by definition, a speculation.
Suppose, Grant asked the crowd, you suddenly acquired or inherited a 3-foot by 3-foot by 3-foot cube of gold; what would you do with it? The cube of gold weighs 16 tons and is worth around $1.7 billion. So, what would you do with it? Well, you would polish it and love it, because who wouldn’t love a giant cube of gold? But no matter how much you loved your gold, it would not love you back. Grant pointed out that you would immediately begin to carve off pieces from your gold to pay expenses. You would need a giant forklift to pick up the 16 tons of precious metal, a large dump truck to move it around, and someplace safe to store your gold. All of that would cost money.
The crowd, surrounded by shiny gold jewelry, imagined themselves slowly whittling away at their own hunk of gold, hoping the price kept going up. Maybe it will and maybe it won’t. Alternatively, Grant suggested, you could sell your gold and buy 25 million shares of Coca-Cola stock. Grant admitted that it was probably not a good idea to put all your eggs in one basket but pointed out that 25 million shares of Coca-Cola stock would pay you 52 million dollars a year or about $1 million per week.
The story continued with a discussion of the Coca-Cola millionaires from Quincy Florida, a town full of millionaires who made their fortune by investing in Coca-Cola stock at the suggestion of a local banker named Pat Monroe. A former Florida state representative in attendance jumped in at that point to mention he had met Banker Pat’s granddaughter and that like her celebrated ancestor she had gone into the business of advising good people on how to invest money.
In the end, everyone enjoyed themselves immensely. We all look forward to the next one!
Scott A Grant is a local investment adviser. He urges you to consult your financial adviser before investing or speculation in anything.
