Sunday, April 8, 2012

Money – Knowing the price of everything, and value of nothing

So, I recently sold a book on Amazon Walk Like a Giant, Sell Like a Madman.  I picked up the book at the library for $0.25.  I immediately put it up for sale.  I determined that $2.48 was a decent price for the book.  I sold it in about 2 months and received $0.87 after commissions and shipping.  This is a 248% return on investment.

Have you ever known someone who knew the price of everything?  They know how much everything costs according to price tags.  Knowing prices is not very important.  Any fool can tell you how much something costs if a price tag is hanging from it.  But what is the value?  That is another question that requires thinking, research, and experience.  Some of the wealthiest people in the world know that question.  If you asked Warren Buffett…I am sure he would tell you how important it is to understand value.  Many people who are appraisers are very wealthy.  If you like the show Pawn Stars they are very knowledgeable when it comes to how much value something has, and how long it will take to sell the item.

The thing I like about the show is that many times there is a history lesson involved with what they are buying.  One big example is that I never knew that John Hancock was president prior to the Declaration of Independence.  You would think that this would be more important to know then the fact he wrote his name big.

My point is this…find out something you like doing and see if there is a hidden market for it.  My friend Jamie has a keen understanding for how much BMX bikes and bike parts cost.  He buy, sells, and builds those types of bikes.  He makes decent side money doing it.  You can easily figure out with a computer whether or not one of these hundreds of library books that were being sold for a quarter could be bought and sold profitability.  It would take time, but this is why experience costs more money.  Experience such as E1 verse E4 or O1 verse O4 costs more money.  Everyone has to start somewhere…don’t be ashamed to start at the bottom.  Everyone starts at the bottom in the learning process.  Some people, just learn faster than others.   

Understanding how to make money in business is quite simple.  Buy low, sell high.  This is true with the stock market as well.  Some people are more successful doing this than others.  If you figure out a way to make much, you can write a great book about it after you are successful.  Everyone loves a great story.

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