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Meteorites as Investments? . . . Well, Maybe.

Hello Everyone, 

Okay, you saw the subject line and you made it this far without hitting
delete.  You must be interested in reading this  ;-).

With the recent discussion of meteorites as investments I have decided to put
forth my 2 cents worth so remember, you get what you pay for!

I think meteorites are a possible investment but there are other, more
"proven," investments.  My stock portfolio has grown significantly over the
past five years.  The US stock market has done quite well, better than any
other time in history.  Will this bull market last indefinitely?  No, of
course not!  Stock values will recede and P/E ratios will come down out of the
stratosphere.  But, and this is the fundamental difference between meteorites
and stocks, after stock values recede, they most certainly will rise again.
How do I know that?  Historical precedent.  They always have in the past.  If
the time comes when the stock market as a whole does not recover from a
pullback in valuation then we all will have much more to worry about  than the
price of newly fallen meteorites!

In other words, stocks represent a good long-term investment because stocks
have held up to the test of several business cycles.  Up-down...up-down...up-
down.  What does the smart stock invester do when the market plunges . . .
sell his/her stock?  No!  the smart invester buys more stocks?  That is the
time when blue chip companies are the best value.

Now, lets look at meteorites.  Has the price of these "collectables" stood the
test of the business cycle?  No.  Overall, prices have risen but they have not
pulled back, then recovered in a predictable manner the way stocks have.  No
cycle.

Similarly, what would the typical meteorite "investor" do if the prices of
meteorites did plumet.  Buy more the way a smart stock investor would?  I
don't know.  I am not inclined to believe so.  I think the typical meteorite
"investor" would panic, sell, and bemoan the fact that he/she was misled into
thinking that meteorites were a "good" investment.

As collectibles, there is another fly in the ointment with meteorites.
Consider the person who is the passionate collector first (like me!) and
"investor" second (not like me).  When the meteorite market (um, sounds like a
website ;-) tops out does the passionate collector sell his/her most treasured
specimens (presummably many of which may have increased in value).  Not
likely.  Even if they doubled in value overnight, I would not sell my most
treasured specimens.  Why, because I am emotionally attached to them.  

In my opinion, most meteorite collectors become attached to their treasured
pieces,  for various reasons.  They do not want to sell them or trade them.  I
have a piece of Sikhote-Alin shrapnel I am looking at as I type these words.
I paid $40.00 for it.  I would not sell it if I were offered $100.00 for it
(go to $120.00 and I'll entertain the thought - just kidding ;-).  I really
like the shape and texture of it. One end has an almost perfect 90 degree bend
in it.   Don't get me wrong; I'm not planning to divorce my wife and marry it
or anything, but I like it a lot!

You see the difference?  A good investor does not become emotionally attached
to his or her investments.  When I decide to sell a stock or shares in a
mutual fund I do so with the cold calculating eye of profit and loss.  I
sometimes cut losses.  I do not miss the investment.  The decision is not
based upon emotion; it is based upon reason.  Of course I have occasionally
sold a stock at a loss only to watch it turn around (thank you, Intuit) but
again the decision is not emotional.  Soon after I started collecting I bought
a beautiful (how many investors use the term "beautiful" to describe their
investments?) individual Gibeon.  I subseqently sold it and have regretted it
ever since (it weighs 635 grams with a very nice thumbprint if you think you
might have it ;-).  These are not the words of an "investor" and I think many
collectors feel that way.

So in sum, for the reasons cited above and others (illiquidity, for one), I
think meteorites should more properly be placed in the catagory of
"speculation" rather than "investment."  Can one make money buying and selling
meteorites?  Sure, dealers do it.  For the average collector, buy/sell/trade
meteorites because you enjoy them.  Buy/sell/trade other more "proven"
investments such as stocks and mutual funds (I really like the Vanguard Index
500 fund) if you want to increase your chances of making money over the long
term.

 -Walter

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