I’ve decided to dedicate a few posts this week to the topic of auctions: what kinds there are, how they work, how they’re used in business. To kickoff the fun, I’ve created a simple poll on the right sidebar: What’s the most you’ve ever spent on an item on eBay?

I’ll keep the poll open until the end of June, and if you’d like, you can leave any details about your purchase in the comments below. Assuming I get responses, I’ll be happy to summarize them and report results after the poll closes.

I’ll start. We’ve bought a total of 10 items on eBay. Most of these were replacement parts that we needed for small electronics like cell phones and computers, and their pricse ranged from $5-$50. But the most we’ve ever spent on eBay was for an Art Deco pate de verre and wrought iron table lamp from France by Rethondes.

It was not a frugal purchase: including shipping, exchange rates, an int’l wire transfer fee, and import tax into the US, the total cost ran somewhere near $700. Actually, the item originally didn’t sell because its reserve hadn’t been met, and we made an offer to the seller afterward for its reserve price, which he accepted. He listed the item for a second time for us using “Buy it now” for the agreed-upon price.

Did we overpay? Possibly. Will the lamp prove to be a good investment? Maybe not. We haven’t taken it to an expert to have it valued, but at least comparable pieces sold by dealers seem to be going for more. Besides, my husband loves the thing, it was certainly an uncommon item, and the transaction went well, so we don’t have buyer’s regret.

So now it’s your turn. What’s the most you’ve ever spent on an item on eBay?

For Father’s Day this coming Sunday, I celebrate my dad by remembering something he taught my brother and me early on. He told us that people who thought they were thrifty sometimes had a habit of focusing on saving small, everyday amounts (clipping coupons, saving cents on gas) while not doing much to save on big expenditures like cars and electronics items. They were being penny-wise but pound-foolish.

From The Dictionary of Cliches, by James Rogers:

“Overcareful about trivial things and undercareful about important ones. The literal image is of the person who fusses over small amounts of money to such an extent that he misses opportunities to save or make large amounts. But the figurative image goes way back; in ‘The Historie of Foure-footed Beastes’ (1607) Edward Topsell wrote: ‘If by covetousnesse or negligence, one withdraw from them their ordinary foode, he shall be penny wise, and pound foolish.”

I remember being told something else by my parents that seemed illogical when I was younger, that the people we saw who drove nondescript cars and dressed like average people were more likely to be wealthy than the ones who flaunted their cars and brand names, who tended to be debt-ridden. Guess Warren Buffett and Bill Gates are living proof of this!

Happy Father’s Day weekend to all the dads out there, and thanks for teaching us about financial responsibility!

Thinking about my experience with Comcast earlier this week reminded me of a simultaneously funny but perplexing story a friend of mine shared with me.

He and his family lived in Houston, TX, and had visited a fair one weekend. Being the summertime, the weather was tortuously muggy and hot, so he offered to head to a concession stand to buy everyone some drinks. His wife was several months pregnant at the time, so she and her sister both asked him to get them some water instead of soda.

Off he went to a concession stand, where he ordered one medium Coke for himself, and two waters for his wife and sister-in-law.

The woman behind the counter told him, “I’ll have to charge you $2 for the water just like it was a Coke.” He replied, “That’s fine.” The woman collected the $6 and went to get three medium cups. She took one, filled it with some ice, then filled it with Coke from the machine, and set it aside.

Then my friend watched as she proceeded to fill the next cup with ice, fill it to the rim with Coke, and then patiently empty the contents of the cup onto the ground before refilling the cup again with ice and, this time, water. She repeated this whole thing again with the next cup.

Finally, she smilingly handed him over his order as if nothing strange had just happened. He was so surprised at this behavior that he didn’t know what to say.

So what’s your most perplexing experience as a customer? Happy Friday!

CNNMoney recently featured an article headlined “Risk is back”. Was it ever gone?

In 2005, Allan Greenspan gave a speech in which he expressed concern that investors were becoming cavalier about accepting lower risk premiums and therefore paying for overpriced assets. (“Cavalier” is my paraphrasing. He’d never use a word so dramatic as that.) Greenspan continued, “History has not dealt kindly with the aftermath of protracted periods of low risk premiums.”

In finance, risk premium usually refers to the amount (%) over the risk-free rate that investors expect to gain for taking on an investment involving greater risk, such as stocks. The risk-free rate itself is a theoretical construct (nothing is actually entirely risk-free), but in practice, the interest rate on a short-term US Treasury bill is usually used. Both risk-premium and the risk-free rate come into play in the ubiquitous capital asset pricing model (CAPM), which describes the relationship between risk and returns.

Let’s see: the current rate on the 3-month T-bill is 4.8% (as of June 14, 2006). How much do you expect your investments in the stock market to return? Any ideas? How about examining historical returns? Here’s a lovely page from Stern that’s updated regularly showing historical returns on T-bills, stocks, and bonds.

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Earlier this week, the NY Times published an article entitled “Was Earning that Harvard MBA Worth It?” which summarizes some studies and the content of a yet-to-be-completed documentary that will follow a handful of Harvard MBA graduates from 1996-2026, with interviews every 5 years. I’m happy to say that most of their findings are consistent with my own recent thoughts about having an MBA degree, though I went to Michigan and not Harvard for mine.

Here are some points of interest from the article:

1. Average MBA salaries have not increased in real dollars for the last several years
2. High salaries are seen as less important for defining “success” than balance of life, respect from peers, and other intangible factors
3. Meaningfulness of job or feeling like you’re making a positive difference in the world is becoming increasingly important
4. Having an MBA from a good school can make you feel freer to take time off in your career to pursue other interests, a sort of safety net

I didn’t write much about this last point earlier, but I have to agree. I feel more comfortable having an MBA, especially as a woman who, in the future, may decide to stay at home and raise a family instead of working in corporate America, because if the day comes that I want or need to return to work, I believe having an MBA will allow me access to jobs and to return to the business workforce more easily than without one.

Sure, my work experience will be less than those of others, including many men, and I’ll have to work hard to build my career again. But being more likely to be able to be financially independent, or being able to support our family on my wages alone if I need to is also comforting. Of course, whether or not this is a false sense of security, I can’t say.

Thanks very much to my friend An for forwarding me this article!