When Old Is Desirable
Antiques Roadshow is a fascinating look at what is valuable and what is junk. Old items are examined and valued by experts. Some of it is junk worth less than $10. Some of it is surprisingly valuable. Flaws may not matter, if the item is rare and in high demand. One item I saw recently was a Navajo chief’s blanket. The owner was a poor farmer. He was stunned to learn that his blanket was worth $500,000 and recently was valued at $1,000,000. Remember, we are talking about a blanket. It may be old and worthless, but it can be old, rare, and valuable.
The same can be said for companies. Some are old and they are on their way out. Car rental companies can seem like a good investment, but recently the Covid-19 pandemic caused Hertz to lose cash flow. Their huge debt loads brought them to bankruptcy.
In January I did a post about Intel. Like many “old” companies, Intel has been called into question as a good investment. Sadly, some view a company from the “good old days” perspective, and miss the opportunities that an old company has. It seems odd to be calling Intel old, because it was founded in 1968 when I was a junior in high school. For younger people of the Apple generation (AAPL was founded in 1977), INTC seems like a dinosaur technology company. Other companies that seem to be dinosaurs are IBM and Cisco (CSCO). It is a mistake to classify old as tired or end-of-life. Are there risks associated with INTC? Certainly. What investment doesn’t have risk? Even cash, CD’s and bonds all have risk.
I’ve read many articles in the past 4-5 years that have declared the end of the glory days for Apple, IBM, Cisco, Microsoft, and Intel (AAPL, IBM, CSCO, MSFT, INTC). The problem with some of the analysis is that it is based on an incomplete understanding of the transition of the old business to newer models. Microsoft, for example, is a much different business today than it was when I was using MS-DOS and Windows for Workgroups. Microsoft’s demise was exaggerated. The same is true of IBM, CSCO, AAPL and INTC.
In the interest of full disclosure, I own 530 shares of INTC and Cindie has 100 shares she inherited from her mom. We have skin in the game. Therefore, I watch for changes in a business to see if I need to consider selling some or all of my shares. Based on the following information, I have no intention of selling.
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Here is the link to the full Seeking Alpha article: INTC