Monday, January 13, 2014

Pawn Shops For the "Rich"

From today's NYT,

"'There are more and more people who are asset rich and have a temporary liquidity problem,' said Mr. Weiss, who at 70 retains the soft Brooklyn accent of his youth. 'They’re cash constrained. We have the capital to lend up to and beyond $1 million.'"
"High end" pawn shop really ought to be an oxymoron. What a ridiculous mania we have.

Do I need to mention that if you have to borrow at double digit interest rates to own a Rolex or a Patek, you are a poseur and you are certainly not rich? More:
"The high rates are not high enough to deter client [...] who buys, renovates and sells homes in the Chicago area. He said he had gone to his bank for loans until 2008 when the process for obtaining one became onerous. After missing out on several houses, he said, he took a couple of his Rolex watches and put them up as collateral for a loan from Ultrapawn."

Remember, when you think about your personal financial situation, compare your highest interest rate debt (if you have any) to your least important possession or ongoing spending habit. If you have debts at 25% irr and you have a Rolex or you pay $300 for football tickets, you need to sell assets and reduce spending.


Anonymous said...

It's crazy that anyone would borrow at 25% to maintain an investment in anything, much less a consumer possession. You'd have to be a better investor than I am.

CP said...

Turns out to be full of juicy quotes:

“Entrepreneurial people like to do things on the spur of the moment, and they’re probably not the best planners,” he said. “When they have money in their pocket, they like to buy luxury goods. When they don’t, they like to use those goods to get money for their next venture.”

Hmm, must not be Austrian...

Taylor Conant said...

It's a great find. To play DA's though, the company profiled has a 250 YEAR HISTORY... so either this is less a sign of the times than it appears, or this kind of thing has happened a lot throughout history for a pedigreed foreign company to be able to sustain itself in this "mindustry" for 250 years (that's older than the country itself, right?)

CP said...

That doesn't mean the pawn brokers are dumb - the customers are.

Anonymous said...

Rolex Submariner would have been a better investment than S&P in 2006.

A Christian V said...
This comment has been removed by the author.