Letter From George
February 14, 2001


Once upon a time there was a tribe of natives living on a South Pacific
Island. The economy consisted of fishing, hunting and tending various
fruit trees.

One day a fisherman discovered a pretty but fragile blue shell washed up
on the beach. When he brought it back to the village, his amazed
friends offered him fish and barter goods in exchange for it. The price
was finally settled at two small fish and a wicker basket. The buyer
was the envy of the entire village, and he used the shell as a dowry to
take a lovely young woman as his bride.

The fisherman frequently walked back along that deserted stretch of
beach in search of more blue shells, and he occasionally found one.
Over the coming months about 60 more blue shells were discovered and
entered the local economy.

The economy started to boom. Ambitious businessmen built canoes and
sold them for three blue shells. Because these new canoes allowed more
fisherman to be on the water, the village haul of fresh fish increased
nicely. Others who had found blue shells used them to hire men to plant
more mango trees. The entire village benefitted from an increasing
supply of Vitamin-C-rich fruit.

Blues shells became all of the rage, and their price steadily increased
from two small fish and a wicker basket to two medium fish and three
small fish. But few owners wanted to sell. Only one or two blue shells
would come on the market every month, and these were soon fetching three
large fish, two small fish and two wicker baskets.

As the years went by, more and more blue shells were discovered;
however, because they had continually gone up in price, they were always
hoarded. Few entered the market, even though they were merely
decorative and had no real use. They were too delicate to use to scape
hides, too small to haul or store fresh water, and they didn't even pay
a dividend (Gee, am I too obvious?).

But many of families in the village considered themselves rich. Some
families owned as many as 150 blue shells, which at an average market
price of four large fish each, meant they owned the "equivalent" of 600
large fish! Expensive parties and lavish gifts to the volcano god were
therefore common among the village elite. Stores of dried fish rapidly
dwindled among the wealthy, but few worried. Just one blue shell could
now fetch as many as five large fish.

And then a strange thing happened. Just by coincidence, five different
sellers tried to sell a few of their blue shells on the same day. Their
weren't enough buyers, and if it weren't for a fish broker who stepped
in to seize what he perceived to be a great bargain, not all of the blue
shells would have sold. As it was, the average price fetched by a blue
shell that day was just three large fish and one small one. The final
shell closed at just two large fish and two small ones.

By that evening, the result of the day's auction was the talk of the
village. In the morning, over a dozen sellers showed up to sell their
blue shells. At first, the blue shells were eagerly snatched up at
"bargain prices" by young men seeking dowry gifts for the families of
their brides. But by 11:00, their were more sellers than buyers. The
price began to plummet. By the end of the day, blue shells were
fetching only one large fish apiece.

The next morning the market broke for good. No one wanted blue shells
anymore. What were they good for? They were useless as tools, and they
paid no dividends.

The moral of the story is this: Not everyone can sell a blue shell for
five large fish. The only one who can get five large fish is the one
who is selling when everyone else is hoarding.

Got stocks? You may not be as rich as you think you are.

Warm Regards,

George Blackburne, III, Esq. President and Chief Procrastinator

You can reach George at 219-941-2333
Or you can e-mail him at george@blackburne.com

Prior Letter from George


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