We look at this kind of thing when we try to analyze stocks.
Buy when the price is equal or lower than value, sell when price is higher than value... something like that...
However, this appears in many of our real life situations.
Recently, one of my Facebook friends is planning on relocating. She wanted to sell her dining table and chair set for over $600 for the table and $200 per chair!!!
It was obvious she bought it at a very high price... it was one of the so called designer stuff...
And the thing that crossed my mind is... Wahahahahahahaha...
Cos... you see, I think she has some slight chance of selling her stuff...
But, I've seen such posts on Carousell and other sites. I have friends who had to give stuff away for free to get people to clear the items from their place. I had a friend who wasn't able to sell a hydraulic bed retailed at $2,000+ for $400...
If she was unable to get rid of the bed, she would need to PAY someone else to remove the bed for her. Eventually, she gave the bed away and the recipient took it away from her for free. So she was happy that she didn't have to pay the disposal company.
That's the thing about it... there's little value in something that no one wants to buy. It's like diamonds when you're lost in a desert.
It's easy to think, "Oh, I bought this designer table for $1,500 and now I'm selling it at a steep discount $600! I'm sure someone would want it..."
I have a Coach bag which used to be retailed at $800, it was a gift to my wife, and we aren't able to sell it for $400 easily. The condition is great, cos my wife hardly used it.
And that's the point... Many times, we think we bought something of value.
That bag, that car, that dining table... etc... Even that diamond ring...
But more often than not, what we have bought is just something expensive, with little value.
A diamond ring is worth only the diamond and the metal, any premium that's supposedly "designer" has pretty much no real value.
Surprisingly, a watch collector once told me that Rolex retains it's value well. If you buy a 2nd hand Rolex and wear it and maintain the condition well, it's quite easy to sell the Rolex again at near the same price.
But there's sooooo many things that we can't easily sell for close to what we paid for. Many things we'll just have to write off when we want to change them.
Example, tables and chairs, handphones, computers, beds, sofa, in-built cabinets, cupboards, almost everything at home we can't really sell them... clothes, bags, etc... Almost everything is illiquid.
Buying a second hand car... is somewhat quite ok... I paid for the car body, the COE, and some premium which I write off as the rent, services, salesman, etc... and IF I ever sell it, I'll still be able to get some form of price on the body and COE. Except that the depreciation on cars is ridiculously high in Singapore due to the COE.
So I find it quite interesting, that so many things that we buy actually have no real value but we put a price on it... a table is... well just a table to eat on. Maybe some tables look nicer. My dining table is $49. Maybe I could have bought a nicer table at $200 so that it looks nicer at home, so maybe there's some value in buying a nicer table for it to match the theme of my house... but would a $2,000 table make me so much happier when I look at it?
Is that good value?
The thing is... most of the stuff we buy are consumables. Tables, chairs, sofa... cos eventually, they will be thrown away. However we tell ourselves that it's an "investment"... it's usually not... like handbags.
There are some people who trade in whiskeys and watches... and they are able to make good money out of it, cos there's a ready market for it.
It's just that more often than not, most of the stuff we buy have no/low real value and we just pay a price on it. There's no realistic way that we're going to be able to sell it for close to the price we initially paid. Regardless of how we try to console ourselves that the item is a quality item and that there's value in the purchase. The table might be made of good quality expensive wood, but if you aren't able to sell it again when you plan to change it... then there's no real value in that wooden designer table.
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