My dad, who was a captain in World War II, told me more than once that if you want to estimate the range of a target and have no sophisticated equipment for doing so, just ask everyone in your platoon. The estimates you get will vary wildly, but the average will be remarkably close. I think you’re also supposed to throw out the lowest and highest estimates before taking your average. I can’t say for sure this works, but we clearly did win the war.
Anyway, last week I told you about the Albert Einstein autographed letter I had bought on the subject of infidelity (he was against it, but counseled his colleague not to let it make her crazy), and asked you to take a wild guess at what you thought it might be worth — to you, and/or what it would bring at auction.
I had so much fun with your responses! It was more evident than ever that most of you are a lot more interesting than I am, even if I’m the one who happens to be holding the mic.
Not to say you know the first damn thing about the autograph market.
But I thought I would share some of the responses.
Representative of one batch was this, from Brian Buonamici, with whom I agreed every step of the way until he finally blurted out his price:
“Regarding your question as to how much the Einstein letter is really worth, I feel compelled to take the conservative easy way out and say it is worth whatever a buyer is willing to pay for it – which will probably prompt you to mention something about the volatility of illiquid markets. However, such an answer would not be in the spirit of the experiment so I’ll give pricing it a whirl. Please keep in mind that I am the farthest thing from an expert in this sort of thing.
“There are a couple things I would consider. First, as it was signed “A. Einstein,” there is the off chance it wasn’t good ol’’ Albert but a relative named Alfred, Ann, etc. But I’m assuming that you have some sort of certificate of authenticity so it’s probably a moot point. Second, it’s in German. My knowledge of German goes about as far as “dopplebock,” so the letter could be about which of the seven dwarves had the best love life for all I know. The fact that it was handwritten and not a copy makes it one of a kind, this would hopefully add to the value. But probably the most important factor is the fact that Mr. Einstein’s contributions to society at large are almost immeasurable — which means, unfortunately, it probably couldn’t fetch more than the latest coke-snorting, wife-beating, sports hero’s used sweat socks.
“I’d put it somewhere around the $50 – $75 dollar range.”
Oh, Buonamici! More aptly be thou called Malamici, so cruelly dost thou appraise my treasured leaf! (I paid a great deal more than $75 for this baby.)
More to my liking, for reasons that will become clear, was Ken Powell’s astute, albeit incomprehensible, assessment:
“Seeing as the letter is from Einstein, its value must be related to a physical constant. Clearly the rest mass of an electron (mc2) or the rest mass of a proton (mc2) is the relevant constant. Given that the topic is infidelity, the electron is unquestionably more relevant (cf Heisenberg’s uncertainty principle). The rest mass of an electron is half a million ergs. An erg is one ten-millionth of a watt-second, or about 2.8 x 10-14 kilowatt-hours. A kilowatt-hour is worth a nickel or so (depending on where you live). So, each electron in the paper is worth 1.4 x 10-13 cents or so, if you could convert it to energy and sell the energy in the US market. You haven’t told me how big the paper is, but let’s say that it weighs about a tenth of an ounce — slightly less than an 8.5 x 11 sheet of paper. Less than 1/1835 of the paper’s mass is made up of electrons, so there is about 10-5 ounces of electrons, i.e. 0.3 milligrams of electrons, or 3 x 1023 electrons. With each electron worth 1.4 x 10-13 cents, the note is worth 4 x 1010 cents, or $400 million. Sounds like you got a deal!”
Throwing out the lowest and highest estimates left us with estimates like these:
David Philip Gladstone: “I bid $2,000 Canadian.”
Steve Citrin: “Thanks for printing it. In fact I even printed out a copy, and saved it in my office. I believe it could be appropriate to many of today’s frustrating experiences and not just infidelity. I feel it would go for about $5,000 at auction. It’s advice well taken from the world’s great thinker. If Jackie Kennedy stuff sells-this is worth five big ones.
Tim (a surgeon): “I think that he may be the smartest scientist on the face of the earth, but his advice on infidelity was poor at best. Because of this, I think that it would be worth something because it gives a glimpse into his personality. My guess, which is a wild stab in the dark, is $500. I am sure it would probably go for much higher though.” [If so, isn’t your guess “much higher than $500?”]
Rick Frey: “$5,000 – $10,000.”
Dan Eisenberg: “The letter’s practical value is matched only by that in your excellent investment guide. The similarity continues in that both sets of advice appear to be rational and easily implemented. But, alas, the unpredictable real world effects of emotion enter into the “equation,” resulting in hostile divorce proceedings and buying high and selling low, respectively. I’d guess about 1,000 bucks.”
Bert Morano: I really would need to know the condition of the letter and some comparable prices of other letters which have sold recently. But since I have none of that information, and since I cannot really understand the Jackie O. phenomenon of outrageous auction prices, I would say the letter is worth what my personal finances could afford for such a nonperforming asset — $3,500.”
Daniel Helman: “$5,000.”
K. J. Baldwin: “If all that Jackie Kennedy [stuff] is worth millions of dollars, then a letter handwritten by the smartest man who ever lived ought to be worth at least a million by itself.”
(I like the way you think, Baldwin! But I guess I should throw out your estimate before averaging, too.)
Daniel Diachun: “Not having much background information I will hazard a wild guess of $3,000. In addition, I believe that the price any one day or any one auction could vary considerably. Say an auction were held the week that infidelity had received a great deal of press — the price might go up considerably. On the other hand, say it were held the week a forged historical document received a great deal of press — the price might drop. Of course, there are endless examples. Another factor could be the letter’s last sale price. Lacking influence of other factors, items tend to maintain similar pricing from one sale to the next. (Call this “Diachun’s pricing inertia law” <grin>).
David Davis: You are an experienced collector; you know what to look for in terms of authenticity and condition. Therefore, I’m taking it as a given that you are satisfied on both counts. You’ve purchased it from a reliable source. It’s in Einstein’s own hand–in German, no less. That could have been uncharacteristic of him; he may have preferred to type everything. Although the content of the letter does not reveal anything about the theories for which he is famous (“Now that we’re good friends, Thomas, I must tell you that my theory of relativity is just an enormous practical joke. The ‘equation’ came from the back of a . . .”), it does provide wonderful insight into his character. Also, I think this letter has been the subject of a newspaper story or has been mentioned in a book review recently. That favorable notice may also bump up the sticker price. Taking all of this into account, I think the gavel probably came down on $12,500 plus commission. But, to hold such history in your hands, what a bargain! You can bet it will appreciate in value, quickly, too.”
B. Foley: “I would guess (keeping in mind I thought the Red Sox would win the World Series), that this would be worth upwards of $10,000 — and possibly more in DMarks. The target market for this would be unfaithful husbands!”
D. Brubeck: “What it is worth at auction is so unimportant, and so utterly vulgar compared to the worth of the wisdom of his thoughts. I had no idea that he had that sort of a mind. I shall search the library for books that might reveal his thoughts.” [If you’re surprised to know he had an amazing mind, wait til you see his hair.]
John Simonet: “I have no basis to make this guess at all, but I would say $10,000 or thereabout — regrettably, not to me however.”
Eric Mueller: “Maybe $500 at an auction? I don’t know what Einstein stuff is going for; aren’t these things normally priced by a very fickle, fluctuating market for collectibles?” [Fickle indeed — which is one of the reasons I like Einstein. Madonna could fade. But Einstein?]
Jeffrey A. Roesener: “I bid $2000.”
Are you seeing a pattern? Take out the crazy ones, and they all bunch in a range of $500 to $12,500, averaging about $6,500. And that’s exactly what I paid.
I think I got it cheap, but beauty is in the eye of the beholder. Let’s give the last word to Michael Welford, who wrote: “I’ll guess an auction price of $1200. But what’s the letter worth? That question is unanswerable. I’d give $20 for it.”
Tomorrow: Living in a Cave (Nicely)
Quote of the Day
That I'm their competition.~Famed hedge fund manager Michael Steinhardt, when asked the most important thing an investor could learn from him.
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