People are often heard saying how they wish they had put their money into this or that. And while it is no good crying over spilled milk, you should always try to learn from the lessons of today in order to make better decisions tomorrow.
Nevertheless the single hardest thing to ever get over is actually not doing anything at all. American journalist Sidney J. Harris once poignantly said, “Regret for the things we did can be tempered by time; it is regret for the things we did not do that is inconsolable.” It is for precisely these reasons that we decided to look back ten years and ask ourselves, “If we had 500,000 USD to play with then, what would our return look like today?”
Therefore through this exercise of looking at the relative returns on investment we can see that despite the dot.com bubble bursting, Enron’s collapse, 9/11, the Russian financial crisis, subprime loans and now the credit crunch, in the end, in order to maximise your potential, it is best to act your wage and determine your own threshold of risk.
ZIAD TAHA
1)
If you had bought a Sunseeker Superhawk 48 with your best friend
In 1998 for 351,650 USD each (703,300 USD total)
It would now be worth 93,700 USD each
Buying a boat is never a good investment. You have taken a hit of well over quarter of a million dollars, but that’s not even including all the money you spent on maintenance, servicing and fuel. Next time you splash out on a vessel know that if it is smaller than 30m, it will lose most of its value within ten years. If it’s between 30m and 50m, you’ll likely lose about half the value or less but if you buy one over 50m then you can probably sell it for more than you paid. Think bigger.
2)
If you had bought Four Steinway & Sons Model B grand pianos
In 1998 for 102,400 USD x 4 = 409,600 USD
They would now be worth a total of 588,800 USD
You have made a good aficionado’s choice. The Model B is a piano designed for spacious homes, smaller recital halls and professional recording studios. If you did not already know, it is slightly smaller than the top-of-the-line concert pianists’ favourite, the Model D. Now, the reason Steinways are a good choice is because they are built to an unrivalled standard and are therefore known to hold their value well. Furthermore because the prices of new Steinways continue to climb, the second-hand market remains even stronger. Just make sure to maintain your pianos well to get the best resale value.
3)
If you had bought a ten year U.S. Treasury note
In 1998 for a nominal value of 500,000 USD
It would now be worth 814,447 USD
Returns on U.S. Treasury note rates and Treasury bill rates may be lower than other securities of the same maturity, but they are among the safest in the world. The notes and bills are backed up by the government of the United States and are considered nearly risk-free investments. The securities do have some risk, but this is mainly related to whether you are able to sell them at a profit before maturity. You made 314k USD of profit from the 1998 T-note yield of 5 per cent. Certainly T-notes are a valid part of a portfolio, but nothing to write home about.
4)
If you had bought 1,615 ounces of gold
In 1998 for 499,761 USD, at 309.45 USD per ounce
It would now be worth 1,475,141 USD
Buying gold is considered the ultimate safe investment in times of uncertainty. And though you would have made next to nothing for quite a time, the past year has been very kind to precious-metals’ investors. Gold even briefly topped 1,000 USD per ounce in March before subsequently falling due to the global downturn and the inflation shock. This resulted in fewer people buying fewer goods meaning a lower demand for commodities. Nevertheless, many are saying that gold could reach new heights very soon. Whatever the case, you have still made 975,380 USD so get out there and enjoy your profits.
5)
If you had bought 80 m2 of land in Riyadh, KSA
In 1998 for 480,000 USD
It would now be worth 2 million USD
Saudi Arabia is a great real estate market. This is due to many factors including population growth leading to an increase in demand, escalation in money supply, growth in the aggregate income of Saudi households all combined with peace, security, political stability, great roads and a prospering oil based economy. Land around the Sheraton, between Olaya and Mecca Road, in Riyadh was worth roughly 6,000 USD per square metre back in 1998. Today it is selling for about 25,000 per square metre. That means your 80m2 plot has made you 1,520,000 USD in profits. Pat yourself on the back and feel good about your play.
6)
If you had bought a two-bedroom apartment in Solidere, Beirut.
In 1998 for 450,000 USD
It would now be worth 2.3 million USD
The Lebanese real estate sector has a proven track record of continuous growth no matter what the situation in the country. Over the past few years, this sector has continued to prosper with unsurprising vigour. As a result real estate prices have continued to climb, spurred by individual Lebanese expatriates in addition to Gulf investors. Although construction projects outside the downtown area have continued apace, the Solidere area offers a more liquid market for when you wish to sell. These particular prices are for a 450-square-metre apartment that sold in 1998 and again recently this year. But you will need some good luck finding a new reasonably-priced flat.
7)
If you had bought the domain name www.fund.com
In 1998 for 100,000 USD
It would be worth 9,900,000 USD
The good old days of snatching up domain names on the cheap may be over but the new owners of fund.com paid vast amounts. It is certainly the tip of the iceberg because most transactions take place well below the water line. It is still possible to make money from a good domain name, but don't approach them as a get-rich-quick scheme; that kind of luck is unusual. A few golden rules to stick to are: the snappier the better, avoid abbreviations (as you will be sending free traffic to the correctly spelled address); and buy the variants such as the .net and .org. Great work.
8)
If you had bought 35,000 shares of The Arab Bank
In 1998 for 493,654 USD at 14.10 USD a share
They would now be worth 124.4 million USD
If you invested sizeably in this equity then you deserve to speak after Warren Buffet at the next Davos Forum. The stock split in 1998 and again in 2004. In 2005 the nominal value was changed. Then in 2006 each share received another and in 2008 each two shares received an additional one. Basically if you had 100 shares, each worth 10 JOD back in 1998, today you would own 12,000 shares, each worth 21 JOD! Incredible play; pat yourself on the back and enjoy your retirement, there is no need for any more investments for the rest of your life.
