Twisted valuation

August 21, 2011

100 years ago today a small, rather obscure masterpiece was stolen from the Louvre by a disillusioned former(?) employee.  Subsequently:

  • the painting was recovered during an attempt to sell it to an Italian museum
  • the painting toured Italy
  • a campaign started in Italy to keep the painting
  • a campaign started in France to get it back
  • parodies of the painting appeared

Result: the painting was no longer a small, obscure masterpiece.  It was an incredibly famous, larger-than-life painting.

You can read more about it in Chapter 3 of Everything is Obvious*.

Moral

Chance has a large effect on valuations.  Rationality need not play a large part.

Subscribe to the Portfolio Probe blog by Email

Latest posts

Leave a Reply

Related posts

  • The carry trade — almost wordless

    November 28, 2011

    The idea Borrow in a currency with low interest rates, lend in a currency with high interest rates. The image Photo by Patti via stock.xchng The question Am I [...]

  • Review of “Saving Capitalism from Short-Termism” by Alfred Rappaport

    November 14, 2011

    Several practical steps. Executive summary A great goal, but can it deliver? I was skeptical.  However, I've been won over -- the book proposes several specific actions that are [...]

  • Risk parity

    October 31, 2011

    Some thoughts and resources regarding a popular fund management buzzword. The idea Given asset categories (like stocks, bonds and commodities) create a portfolio where each category contributes equally to [...]