Custom knives - destined to be worthless?

[Joss]

Originally posted by Les Robertson
Hi Joss,

I can offer 10%, because unlike any Fortune 500 company, any blue chip stock and any guaranteed Bond. I offer the 10% ROI Guaranteed in writing.

There is no Fund, Stock or Bond that guarantees 10% annual return in writing.

NOTE: With the possible exception of some of those MultiMillion Dollar buy in funds.

If it did every investor in the world in todays market would sink their money into that stock, fund or bond.

Also, if you were looking for 30% you would be viewed as a Venture Capitalist. Your "in" would be several million dollars.

As for the "risk" there is none. The ROI is guaranteed. You can even have your attorney draw up the contract.

I can appreciate the level of Risk Aversion you have. So it is best to avoid investments you are not comfortable with.

Les,

I don't want to beat this to death but the stock market has been offering this amount on average over the last 30 years, and this with as close to a 0 risk as it gets (although it isn't, really). On the other hand, you / your business could disappear tomorrow for all I know (I am not talking of anything deceptive: you could be ran over by a truck, your inventory could burn down, there could be a drop in the knife business such that you'd go bankrupt, etc). This is what I mean by risk profile.

Question: can you get 10% financing from your bank? What's your WACC?

Thansk,

JD

 

[Les Robertson]

Hi Joss,

I don't want to beat this to death either.

No Stock, Bond or Fund offers 10% guaranteed in writing...NONE.

Ask all those people about their guaranteed returns starting around 9/13/01. The Stock Market today has a huge amount of Risk Aversion.

Do you think the market across the board will have a 12% ROI this year?

The questions you ask regarding risk are legitimate. The answer to all of those Catastrophic occourences is that it would be written into the contract that you would receive your entire investment back and any interest it had accrued up to that point.

I'll be those who invested in WorldCom, Enron and Imclone would have loved to have had that in writing. But the investors didn't. Why? Because Stocks and Funds do not put Guaranteed ROI's in writing.

As for money from a bank. Im not sure what you are asking. I will tell you in 18 years in business I have never taken a loan from any type of lending institutions.

I have considered a home equity line of credit being offered at 3.75%. That is mighty tempting.

Speaking of banks, what is yours paying on a Money Market and CD? Talk about a loser when adjusted for inflation! I'll bet 10% blows them out of the water.

Joss, I don't think you have to worry. I didn't really expect anyone to take me up on my offer anyway. Ive only sold 600 copies of my book...and they are only 10 dollars.

 

[averageguy]

Hi Les, since you're still here, how would you sum up the answer to my question.

Some small percentage of custom knives will always hold or increase in value but the majority will not? In fact I maintain that they will lose the better part of their value. This was my original premise.

Could you please (and anybody else who cares to respond), as succintly as possible let me know how you view this?
*And by custom knives (just to be clear), I am referring to that overwhelmingly large class of customs between $200.00 and $500.00.

 

[Gollnick]

What Mr. Robertson is proposing is a form of investment called a "Guaranteed Investment Contract," or GIC. 10% would have been a good GIC rate five years ago, and it's a great GIC rate today. So, yes, Mr. Robertson, I'll take that action. I'll have my guy call your guy tomorrow and ink it.

Bonds are similar and you can still get bonds with greater than 10%, but not insured bonds. And the ones you can are certainly junk bonds. Successful junk bond investors don't plan on actually making the full potential return on their portfolio.

Do you think the market across the board will have a 12% ROI this year?

Maybe five to seven across the board bell-to-bell for the year.

I have considered a home equity line of credit being offered at 3.75%.

Take that action.

Speaking of banks, what is yours paying on a Money Market and CD?

You've got to dig hard on their site to find it; they are obviously not proud of it. My bank is offering a whopping 1.15% for one-year CDs right now.

And money market accounts with average balances between $5000 and 10,000 are getting a whole one percent; yes, that a full percent annually!

That's why I say, if you can write a GIC at 10%, I'm there!

 

[Gollnick]

I just opened an envelope from Fidelity Funds and I'm up 14.5% year-to-date! Wow! Now, remember, these investments are not guaranteed.

S&P500 Year-to-date is up 15.95%. L&B Agg. Bond Index is up 1.1% YDT. And the 7-day money market rate is currently .78% (which is expressed as an annual rate even though it's a 7-day investment. You don't get .78% is seven days.)