I was reviewing the late 1980s and 1990s craze of “investing” in timeshares, a type of investment that still exists to this day, in order to determine why these purported investments proved to be such disasters.
My assumption, as I approached the study, was that the ownership position would be structured so that people would have fee simple absolute (read: full owner) interest in a given property, except the slice of ownership position would cut across time rather than a percentage of ownership. Some states do make this harder to do than others, as the old English common law held that someone with any interest in land, even 1%, would have a right to full possession of the property at all times, and could limit have his usage limited by subsequent contract. Many states, between the 1960s or so, added statutes that specifically permitted title to vest via a timeshare … Read the rest of this article!
Something worth thinking about is the nature of second and third order effects and how the consequences of certain actions can be much different than what we actually intend.
Take something like tobacco investing. If you read any well-circulated article that discusses Altria, Philip Morris International, Reynolds American, or Lorillard as a potential investment, the comment stream generally veers away from the economics of tobacco investing towards the morality of tobacco investing.
You don’t have to go too far to find someone saying: “I don’t invest in tobacco stocks for moral reasons”, and the statement is usually wrapped up in a tone of smugness and moral superiority.
Most likely, that person is not having the detrimental effect on tobacco companies that they anticipate, for two reasons:
1. When you buy shares of Philip Morris International on the open market, you are buying an existing share (as opposed to a secondary … Read the rest of this article!