On Christmas Eve, 1964, Jack Dumser put on his Santa suit and headed to the Hotel Lincoln in Lincoln, Illinois. While there, he strolled the tap room, handing out newly-minted Kennedy half dollars to the kids for Christmas. The ’64 Kennedy half Jack gave me that night was 90% silver, which makes it worth just under $9.00 today. The fifty-cent piece you have in your purse or hiding in your couch is most likely the nickel-and-copper-sandwich version. It’s value today is half a dollar, just like it says. Same coin … but not quite.
This little story brings up a point regarding perceptions of price and value. If someone knows that similar coins can have different values, they’ll look more closely before feeding the coinstar machine at Albertson’s. This is the Warren Buffett style of investing … buying something for less than it’s worth based on an analysis of the fundamentals. For a company, this requires valuing a stream of revenues, earnings, cash flows, etc. and determining its ‘intrinsic value’. Today, however, something seems off. Stock markets worldwide have had tremendous rebounds from their March lows, yet economic fundamentals are struggling to return to their mediocre February levels.
I believe these outsized moves are due to the tremendous liquidity provided by central banks and governments around the world in an effort to support their economies. In the U.S., the money supply is up 20% and it has to go somewhere. One example; lots of people love Tesla, ‘THE ELECTRIC CAR COMPANY OF THE FUTURE’. Tesla’s stock price has appreciated over 5X since March, with lots of enthusiasm but little change in its fundamentals. As of November 19th, Tesla’s market value was greater than that of General Motors, Ford, Fiat Chrysler, BMW, Daimler-Benz, Volkswagen, Hyundai, Nissan, Mazda, and Subaru … combined. These folks might be pricing clad coins like silver ones.
While 1964 marked the debut of the Kennedy half dollar, it was also the year that ‘Rudolph the Red Nosed Reindeer’ first aired on television. The stop-motion show features the song ‘Silver and Gold’ sung by Burl Ives (click here to listen). Hearing this song makes me think not of precious metals but precious memories, one of which is captured in the photo above. Pictured are Brother Bob, Jack Dumser as Santa, and yours truly. Jack passed in 2016 at the ripe age of 99. I’m adding Irish whisky to the plus column. As for Bob, having him as my younger brother has been one of the best gifts I’ve ever received. Regarding the holiday experience, the price invariably shows up in the January bills. The value of holiday memories and acts of kindness, however, can last a lifetime.
Merry Christmas, Happy Hanukkah, and Season’s Greetings.
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Copyright © 2020 - Any opinions are those of James Aldendifer and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The above situation is a hypothetical example for illustration purpose only and does not represent an actual investment. Expressions of opinion as of this date are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct.
