Here's Something No One Needs

Avoid investments that prey on your vanity.

One common refrain from me has been to avoid investments that prey on our vanity in terms of being "exclusive" or "sophisticated." One simple barometer of this idea is if you can't own it in a brokerage account, you don't need it. Earlier this week I started seeing the following solicitation on Twitter;

I am not including the name of the company or a link. I did not read up on what kind of fund this is, it doesn't matter. This sort of thing is neither liquid nor transparent. It is not simple and any relationship to equities is spurious at best, arguably it is more sensitive to the economic cycle as expensive art would seem to be the/an ultimate discretionary purchase.

The ad though does exactly what I have warned about, it appeals to vanity; invest like a millionaire. It implies sophistication and exclusivity.

Giving this the benefit of the doubt that it is not a scam, then arguably at best it is a lottery ticket but unlike a lottery ticket stock there's no amazing drug awaiting FDA approval or some new technology about to take off into trillion dollar ubiquity. It is the hope that someone pays more for the art than you did and while some do view the stock market that way, I am of course describing the greater fool theory, with stocks there is some sort of revenue or earnings stream that is probably growing.

There is a long list of investments you don't need and this is absolutely one of them. If you like art, I love art, then buy something you can afford and that you can be very happy looking at for a long period of time. If it happens to go up in value and you want to sell it, fine but if it doesn't go up in value or even if it drops you will have still benefited from being able to look at it all those years (in economic terms, you'd have gotten utility from the piece of art and that has some value).

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