A 10-Year-Old, A Basketball Card, & Facebook- What's it Worth?

As a six-year old boy I was turned on to the world of basketball- the NBA to be exact- by my basketball loving dad. I was immediately drawn to the high-flyer sticking his tongue out with the cool shoes. Now, mind you, this was before Michael Jordan had won any championships (he wouldn't win his first title until a year after I started following the game), but the hype machine had already been built around him. There were the nightly outbursts of prolific scoring, the Nike contract and hip signature shoe line, the suits in post-game interviews, the on-court swagger, and the grafity-defying dunks. Of course the dunks!

Of course he went on to win six NBA championships and countless other awards as the league's most valuable player both on and off the court. He became a one-man brand with a Midas touch. Even when he was failing miserably in his attempts to play Major League baseball for one year, he was still golden. Hype justified? Obviously a yes...but what is the intrinsic value of hype? What do all the awards, trophies, accolades, and shoe commercials add up to for me as a consumer of not only basketball as a product, but Michael Jordan as a person?

Naturally, as a young boy with an escalating affinity for sports, I started collecting trading cards. For my birthday one year I asked for a specific Michael Jordan basketball card. I still remember to this day the sheer excitement I felt when I opened up a present from my parents and saw that magnificent piece of printed cardboard. There was nothing spectacular of flashy about the card. MJ wasn't soaring over anyone or even setting up for a shot in the photo. But it was my hero on the exact card I'd asked for. As I grew older I got more involved in collecting cards and began trading with my friends. Naturally, I was a little entrepreneur (as were my card-trading friends) and I only traded on value. If someone wanted one of my cards, they would have to at least give me a card that had the same monetary value...except, of course, for my 1988 Fleer Michael Jordan. The thing about that particular card is it wasn't particularly valuable. If I recall, it had a going value of somewhere around $35 (and, upon investigation the card is now available for as low as $12.50!). I had countless friends offering me cards that were at the time worth far more than that; some upwards of $100. Obviously missing the point of entrepreneurship, my response each time was a resounding NO! Michael Jordan was my first hero and I wasn't willing to let any part of him go.

Contrast that with the Facebook IPO fiasco, as detailed here in this excellent piece. The company saw itself as one of the time-tested big boys. and valued themselves to be a $100 billion company. Hype set in months before the initial offering with people marking their calendars for their chance to cash in. The sappy line from Field of Dreams says "if you build it, they will come." Well, Facebook built it and they sure did come running. They ran right into record highs for trading volume on the first day of going public. And just as
quickly as it had been bought, it began to drop. And it continued to drop. In fact, it's still dropping and to date has fallen 15% from its initial $38 per share price. Overnight the company went from the darling savior of the stock market to the whipping boy of pundits and, now, the judiciary system.

What went wrong? Well, there are many possible explanations, but none more obvious than the sheer fact that the company and its underwriters overvalued themselves. Sure, they had a track record of tremendous success. Facebook is an international icon synonymous with internet success and money-making opportunity. Their product is largely unrivaled in the still-in-its-infant-stages world of social media. Their hoodied founder has graced magazine covers and spawned a hit movie. The hype was in place long before this IPO, but in this case hype was used to portend even greater earnings. Hype was the catalyst making it all work.

Except, hype can also be fleeting. And, more importantly, hype in the business world is grounded in the here and the now. There's a reason why Warren Buffet, one of the most successful investors in this world's history, doesn't own a share of Facebook stock. He's a man who's built his empire on a simple premise: investing in the tried and true, the necessity. In the tech and web world, today's big thing can be tomorrow's has-been. There's no guarantee that Facebook will remain viable in the social media realm in even four or five years. Tomorrow's next big thing can swoop in at any moment and devour it, leaving it to be a 10-year footnote in business class text books.

See, as children with simpler agendas, we buy into hype as well. Just like as a 6-year-old I became entranced with an areal acrobat who wore the number 23 on his journey, we all buy into hype of some sort. Just like the eager investors with hungry eyes waiting to pounce at opening bell. Just like voters running along the campaign trails of their party's candidate. Just like teenie-boppers awaiting the latest Justin Beieber record (or in their case, digital download). No matter how counter-culture, hipster, trend-setting, in-the-know we all might claim to be, the fact is that at some point you and I have bought into hype. And we will buy into hype again in the future, regardless of what Public Enemy tried to teach us.

 The trick, then, is to be careful with what we're actually doing with that hype. Are we buying it and trading it like stocks, overvaluing the reality? And what are we hype are you buying in the first place? There's certainly no problem with a 6-year-old boy buying into hype and finding a childhood hero. There's no problem with an adult buying into the hype of a political candidate they believe in and seeing that person champion the causes they have personal stake in. There's nothing wrong with buying into the hype of a new band and discovering a personal favorite that will last into your waning years. There is not a problem with buying into hype when it's attached to sentiment, because you can't overvalue sentiment. You can't overvalue childhood heroes or adult ideals and beliefs. You can't overvalue spending time with your kids or with loved ones. You can't overvalue family and friends. You can't overvalue your dreams. You can't overvalue emotions like love and comfort.

You can, however, overvalue money. You can overvalue stocks and corporations. You can overvalue your devotion to work or the time you spend with people who aren't invested in your life. You can overvalue your knowledge and your own self-worth to those around you. ...and most importantly, you can overvalue  negativity and the ideals that buy stock in it (hatred, bitterness, jealousy...). If you buy into the hype of the right things, they'll last you a lifetime. If you buy into the hype of the wrong things, they'll be gone before you know it and you'll be stuck with huge losses.

I still have that Michael Jordan basketball card...and I wouldn't trade it for 5,000 shares of Facebook stock.

What do you overvalue in your life? What do you undervalue in your life? Is it time to buy or sell certain stocks in your life?

*Update: Facebook stock has continued to fall as detailed here.