Value vs. Asset

The other day I had a conversation with a guy I’ve never met over the concept of value.

Recently my mother moved into a medical care center (nice term for nursing home). This left me with a garage full of her stuff; many of them are antiques. Several items are from the 1800’s and were hand made in Pennsylvania. I’ve commissioned a few to a dealer in Denver and am trying to sell others on my own using the usual venues of Craigslist and eBay. The dealer told me that if I were on the East Coast, they would probably move quicker and sell for higher prices than they will here. A clock dealer told me that the 18-hour clock made in upstate New York might have sold for around $500 a few years ago, but now the market might only yield $150 or so.

Which brings me back to the conversation around value. It all started with a mirror that I’m trying to sell, rather cheaply, on craigslist.

“The value on this mirror is around $400,” said the fore mentioned guy.

“It’s only that valuable if someone is will to pay that much,” I explained.

“Yeah, I know. I’ll probably just hang on to it until it goes up,” he said as I pictured his home cluttered with “valuable” antiques awaiting their day.

“Maybe you should keep it,” he suggested.

“No. It doesn’t go with the rest of my furniture and I’m trying to decrease the amount of stuff I have now. The little bit of cash now is worth more to me than the $400 maybe someday,” I explained.

“What about sentimental value,” he asked.

“It doesn’t mean that much to me. That’s why I’m selling it,” I said.

“I think you should keep it. I can’t take it from you,” he said and we hung up.

I didn’t even get the measly $40 for the mirror. Thus, the subject of value has been high on my radar lately. Just because something is valuable, doesn’t mean it has real value. Valuables aren’t necessarily assets.

People often confuse valuables with assets. Value is a subjective measure of worth. Assets have exchangeable worth that can be converted to cash. A house, stocks, land, or even a car are more easily converted to cash than my mother’s antique furniture.

Not to discount things that are of personal value.  What about those valuables? How do you protect them when you want to hold on to them? What do you do to sell them?

If you’ve got an expensive piece of jewelry or even an old mirror that you’d like to protect against fire or theft the best thing to do is add a rider to your insurance policy. Get the piece officially appraised and store the appraisal document separate from the item in a fire safe box or safe deposit box.

Selling the item is a complicated venture. It relies primarily on timing. You’re probably more likely to want to sell when the market is down, because that’s when we all need money. But, as you know, when the market is down so is your item’s value and there are a lot fewer potential buyers.

It’s not that different from how the stock market works. Except stocks won’t clutter your basement or garage. Hold on to your low stocks and their value is likely to rebound after time. Skill comes in recognizing when you’ve got a dogging stock that it’s best to sell at a loss rather than wait for the rebound. Still, sometimes it’s not that clear. Your 401(k) or investment portfolio could be dragging you down for months, but you might stick with it because the standard advice tells you to just hold on. Sometimes this strategy works, sometimes it doesn’t. Often it helps to get some perspective through an objective opinion. That’s when a financial advisor comes in handy.

I wasn’t a big believer in advisors. Then I lost a ton with the recent downturn.  An advisor helped me reallocate my 401(k) and stop the leak. That was over a year ago and though the economy hasn’t rebounded as we all hoped, it’s time to take another look at my investments. Maybe they’ll out perform my garage of stuff.

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