It is one of the stories I tell my children over and over again, I think they enjoyed it the first time, on the fifteenth, maybe not. By this time though, I think they understand the story behind the story. It was great to see our friend at Charles Schwab, Brad Sorenson, mention the same event in his recent article, Jazzercise, Beanie Babies...and Other Fads.
On Tuesday, July 7th, 1998, the 69th Major League All-Star Game was held at Coors Field, home of the Colorado Rockies. It was to become, and remain, the highest scoring All-Star game in history. There were 21 runs on 31 hits and present were names like: Clemens, Alex Rodriguez, Barry Bonds, Mark McGwire. Those names alone can get your mind reflecting on greed, cheating, lying and steroids. Lots was happening in 1998, was it any different than any other year? I guess greed rears it's head in every year. But remember that 1998 was also the year that Bill Clinton denied he had "sexual relations" with former White House intern Monica Lewinsky.
Anyway, the craze sweeping the nation in 1998 continued to be Beanie Babies. These were small stuffed animals launched by Ty Warner in 1993, later to become Ty, Inc.. Nothing really compares to this craze. Collectors saw these instruments as a means to speculate on the future value of the stuffed toys. The Beanie Babies were not carried by large stores and there was no advertising or marketing program backing the toys. In the early days, it was reported that Beanie Babies were 10% of eBay's sales. Average selling price was north of $30 each, about 6 times the retail price. Income for Ty Warner, at the peak of the 1999 bubble, was $662M, this was more than Mattel and Hasbro...combined. Like any bubble, the decline was swift, devastating, and took no prisoners or showed any compassion for greedy speculators who lost everything as the 'rare' bags of plastic pellets became worthless overnight.
On Tuesday, July 7th, 1998, the 69th Major League All-Star Game was held at Coors Field, home of the Colorado Rockies. It was to become, and remain, the highest scoring All-Star game in history. There were 21 runs on 31 hits and present were names like: Clemens, Alex Rodriguez, Barry Bonds, Mark McGwire. Those names alone can get your mind reflecting on greed, cheating, lying and steroids. Lots was happening in 1998, was it any different than any other year? I guess greed rears it's head in every year. But remember that 1998 was also the year that Bill Clinton denied he had "sexual relations" with former White House intern Monica Lewinsky.
Anyway, the craze sweeping the nation in 1998 continued to be Beanie Babies. These were small stuffed animals launched by Ty Warner in 1993, later to become Ty, Inc.. Nothing really compares to this craze. Collectors saw these instruments as a means to speculate on the future value of the stuffed toys. The Beanie Babies were not carried by large stores and there was no advertising or marketing program backing the toys. In the early days, it was reported that Beanie Babies were 10% of eBay's sales. Average selling price was north of $30 each, about 6 times the retail price. Income for Ty Warner, at the peak of the 1999 bubble, was $662M, this was more than Mattel and Hasbro...combined. Like any bubble, the decline was swift, devastating, and took no prisoners or showed any compassion for greedy speculators who lost everything as the 'rare' bags of plastic pellets became worthless overnight.
"Glory" Ty Beanie Baby MCI Communications in 1998, continued to make a very big push in getting its name out in public view. Sponsoring an Indy Car Racing Team who's driver was "Mad" Max Papis. They also sponsored the 1998 All-Star Home Run Derby. Jacked up batters attempt to knock, excuse me, bean bag pitches out of the park. Because I was working for MCI in Denver at the time, I was offered ONE, not two, ticket to the All-Star game. I knew that would not fly on the home front, so I offered it to an out of town member of the MCI Marketing team. Played for a patsy by (probably just trying to suck up to this corporate delegate), let's just use his initials EK, it was greed at its very best. A few years later, we learned of this twisted plot.
EK had arrived in Denver, the previous Sunday night, in anticipation of getting a free ticket to the game. He was in Denver under the premise of helping to close some deals. He worked the office staff, all day Monday, with a smile and delicate intimidation. What was his ultimate agenda? Get the company to pay for his travel, get a free MCI ticket to the game, secure the much coveted Beanie Baby "Glory", of which one was given out at the gate to those attending the game, and immediately sell it on the open market. Not sure he ever helped close any deals or even called on one client.
EK had arrived in Denver, the previous Sunday night, in anticipation of getting a free ticket to the game. He was in Denver under the premise of helping to close some deals. He worked the office staff, all day Monday, with a smile and delicate intimidation. What was his ultimate agenda? Get the company to pay for his travel, get a free MCI ticket to the game, secure the much coveted Beanie Baby "Glory", of which one was given out at the gate to those attending the game, and immediately sell it on the open market. Not sure he ever helped close any deals or even called on one client.
Executed to perfection. The only heist that compares is James King and the Denver Father's Day Massacre. In and out, free and clear. Wait, sorry, James King was never convicted. To date, no one has been, and the money never recovered. EK immediately sold "Glory" on the street for a reported $350 and left town the next morning. Never an offer for a split, good bye or a thank you. As a matter of fact, MCI was sold to WorldCom, also in 1998, and EK vanished into the ether. I can only hope that EK is in a cell with Bernie. Wait, it wasn't my $350 anyway, and this lesson is worth much more than $350.
Bernie Ebbers - got 25 years So, our friend Brad Sorenson at Charles Schwab sold his Beanie Baby immediately following the game. Never one for fad investing, Brad wanted to cover his game expenses and then some. In his article, he warns of fad sectors in the market. What are today's fad sectors? We won't know until the trend reverses. What segments might have fad potential? Social networks, whose income is based primarily on advertising revenue, may be just a fad.
I don't understand them. Not a member, never will be. Not investing in them. I go for companies that actually make money, that have profits, and are set to sustain themselves for the long run.
Last time I checked, Bernie was still in jail. "Glory" was listed on eBay at $5.99 with zero bids and the fad sector was making a comeback. Be careful, pay attention to revenue streams and profitability potential. When things become popular, use it to your advantage. Like EK, get in, get out, leave the others behind.
You invested in the fad sector? What companies do you think fit that profile? I'm gearing up to tell my story for the sixteenth time. Sua Sponte.
Bradford C. Bruner for Sua Sponte Wealth Management
I don't understand them. Not a member, never will be. Not investing in them. I go for companies that actually make money, that have profits, and are set to sustain themselves for the long run.
Last time I checked, Bernie was still in jail. "Glory" was listed on eBay at $5.99 with zero bids and the fad sector was making a comeback. Be careful, pay attention to revenue streams and profitability potential. When things become popular, use it to your advantage. Like EK, get in, get out, leave the others behind.
You invested in the fad sector? What companies do you think fit that profile? I'm gearing up to tell my story for the sixteenth time. Sua Sponte.
Bradford C. Bruner for Sua Sponte Wealth Management
