1RARE AND TANGIBLE ASSETS

BY ROBERT WILLIAMS FOUNDER

2RARE AND TANGIBLE ASSETS

DEAR FELLOW ALPHAS,

I RECENTLY BECAME THE PROUD OWNER OF AN OUT-OF-PRINT BOOK THAT FLOPPED UPON ITS ORIGINAL RELEASE IN 1991 – MARGIN OF SAFETY.

THE BOOK WAS AUTHORED BY ESTEEMED HEDGE FUND MANAGER SETH KLARMAN AND ORIGINALLY SOLD FOR $9.95. BUT THE COPY I BOUGHT COST $2,500!

WHY WOULD I DO SUCH A THING? BECAUSE SINCE THE BOOK’S ORIGINAL RELEASE, KLARMAN HAS AMASSED THE GREATEST TRACK RECORD IN THE HISTORY OF INVESTING. THROUGH GOOD MARKETS, HE WON. THROUGH BAD MARKETS, HE WON. STRAIGHT ON THROUGH THE FINANCIAL CRISIS, HE KEPT WINNING. (HIS ASSETS HAVE TRIPLED SINCE 2007.) NOW, HE’S A BILLIONAIRE – ALL THANKS TO THE SECRETS HIDING INSIDE HIS BOOK.

ESTIMATES SUGGEST THAT ONLY 350 COPIES REMAIN, AND KLARMAN HAS NO PLANS TO EVER RE-RELEASE IT. BY MY THINKING, THE BOOK SHOULD STEADILY APPRECIATE IN VALUE OVER THE COMING YEARS, REGARDLESS OF WHAT THE STOCK MARKET DOES.

THIS INVESTMENT WAS MY FIRST FORAY INTO A GROWING ASSET CLASS KNOWN AS RARE TANGIBLE ASSETS (RTAS).

RTAS, LIKE MY BOOK, AREN’T CORRELATED TO ANY FINANCIAL MARKET. THEIR VALUE (HISTORICALLY SPEAKING) INCREASES AT A RATE EVEN FASTER THAN STOCKS.

3RARE AND TANGIBLE ASSETS

In contrast to financial instruments, such as stocks and bonds, tangible assets are actual physical items. They’re also sometimes referred to as “hard” or “real” assets. Most investors think this asset class is comprised of rare items in only five categories:

1. Coins2. Stamps3. Books4. Art5. Memorabilia and autographs

While immensely valuable, none of these five mainstays are worthy of our True Alpha attention. Why? Because a fundamental problem exists – these assets are perfectly efficient.

What I mean is, the market knows exactly how to price them. You see, you’re never going to buy a Van Gogh painting at a bargain-basement price. Nope. You’re going to pay exactly what the market dictates for such a valuable work of art.

For example, at this very moment on eBay (EBAY), Van Gogh originals are going for upwards of $250,000. First-edition Harry Potter books are auctioning for $5,000. An 1859 Indian Head penny is fetching $3,500. And a 1997 game-worn, autographed Michael Jordan jersey is going for $1.5 million.

Can you appreciate my point?

The market for these types of traditional RTAs is set by brokers and dealers. In fact, so much information exists around these investments that prices can be calculated down to the nickel. This makes it tremendously hard to gain an edge.

But do you really want to own shares of a perfectly priced company? That is, stocks that are trading for exactly what they should be trading for. Yeah, I didn’t think so!

We’re True Alphas, and we don’t have to play by the traditional rules.

That’s why in this report I’m going to reveal three unconventional RTA investment choices.

A word of warning... My three recommendations will likely shock you. But if you follow my instructions to a T, you’ll make a lot of money in the coming years.

4RARE AND TANGIBLE ASSETS

RTA PICK NO. 1: VINTAGE VIDEO GAMES

Modern and attainable RTAs are gaining popularity and demand all the time. The best part about these “new” assets is that not everyone knows their value, so the market is severely mispriced!

For instance, a few decades ago a video game by the name of Air Raid was released for the Atari 2600 gaming system. It was an average-priced Atari game cartridge and sold in stores for around $27.97, which was the going rate in 1982.

Unfortunately, the game wasn’t well received and quickly fell into obscurity – traded away to friends for something better, or even thrown away.

These days, surviving specimens of this game are quite rare. Couple that with rising interest in gaming history and collectibles, and Air Raid is now one of the most sought-after Atari 2600 games in existence. The cartridge alone has been sold for $5,000 to $6,000!

And if you’re lucky enough to have the original packaging and instructions, you’re in for a treat. There are two verified sales of over $31,000, or a 110,733% return if you purchased it at full price in 1982. Try finding that in the financial marketplace!

AN UNTAMED MARKET

The best part about old game cartridges is that we aren’t looking at a perfectly priced market scenario here. It’s not uncommon for old cartridges to be unearthed when cleaning out a forgotten storage unit and then sold at double what collectors have previously appraised them for, if in good enough condition.

For instance, another Atari 2600 game, Red Sea Crossing, wasn’t even in the record books. It was completely forgotten about for 24 years until it resurfaced in 2007. It was so rare, even seasoned collectors doubted its authenticity!

Once verified, however, it sold via eBay auction for $13,877.78, or a cool 39,607% return if purchased at full retail price in 1983!

If you’re into this asset, keep an eye out for any of the Atari 2600 cartridges on the next page. They are by far the rarest and least-traded.

5RARE AND TANGIBLE ASSETS

Even if you find a game that isn’t on the list, you should still consider purchasing it if it’s in good condition – especially if it has the original box and instructions included.

My official recommendation is to look for an original shrink-wrapped copy of Cosmic Commuter, made by Activision.

Formed by ex-Atari employees, Activision was the first third-party game developer in history and is still in business today as Activision Blizzard (ATVI).

If you see a mint condition copy of Cosmic Commuter for $200 or less, buy it! By my

6RARE AND TANGIBLE ASSETS

estimates, it could be worth more than $1,000 in five years. And you’ll have paid a bargain price for such a rare piece of gaming history.

RTA PICK NO. 2: PRECIOUS VINYL RECORDS

Perfect sound quality be damned, there’s nothing better than the warm snap, crackle, and pop of vinyl. It’s no secret that vinyl is making a comeback, but the numbers say this is more than just another aspect of the nostalgia trend.

CD and digital album sales declined by 14.9% and 9.4%, respectively, last year. Vinyl sales, however, enjoyed a 51.8% increase, according to the 2014 Nielsen Music U.S. Report.

I think it’s time we strategically get a piece of the action.

Our target is Pink Floyd’s acclaimed 1973 classic Dark Side of the Moon, which has spent an amazing 861 weeks riding the Billboard 200 album chart. That’s over 16 (non-consecutive) years! The album currently sits at No. 145 on the charts.

Now, since the album itself isn’t rare enough to fit this asset class (plenty of copies are available on eBay) we must go a step further.

I’m talking first-edition presses of Dark Side of the Moon with the solid light-blue prism on the label. Industry insiders call it the “Blue Triangle” edition. Subsequent pressings have a different, black prism with a blue-glowing inner edge.

If you’re serious about building an RTA portfolio, I recommend buying any Blue Triangle editions of Pink Floyd’s classic album for $250 or less.

The stock market won’t be able to match this album’s valuation ascent in the coming years. Especially considering the debt troubles plaguing most of the world.

Just make sure you’re buying an authentic.

7RARE AND TANGIBLE ASSETS

VINYL’S VALUE INDICATOR

Fortunately there’s an indicator on most vinyl records that will let you know if you’re holding an album worth $20 or $20,000. It’s called the matrix or “stamper” number, and it’s an alphanumeric code located between the final band on a record’s side and the label.

Whenever I’m hunting for valuable vinyls, I keep www.discogs.com at the ready on my smartphone. The site allows you to search the matrix number, letting you know exactly how much money you could be holding before you leave the record shop.

So, if the Pink Floyd album you found had a matrix number of SMAS-11163, for example, you’re already down 150%. According to the Discogs database, a copy from that pressing recently sold for a disappointing $5.

But, if the matrix number stamped on the album was SHVL 804 A-2, I recommend you buy it immediately if it’s priced under $300. Because you just found a U.K. first press of Dark Side of the Moon that could be worth anywhere from $500 to $1,100!

Don’t be afraid to push those mustached hipsters aside and dig into your local flea market record bins. A treasure could be just a flip away.

RTA PICK NO. 3: ANCIENT MOBILE PHONES

Michael Douglas won the Academy Award for his role as Gordon Gekko in the 1987 smash hit movie Wall Street. With his infamous assertion that “greed is good,” Gekko’s character is now viewed as the archetype of 1980s excess.

In one of the most memorable scenes in the movie, Gekko calls his protégé, Bud Fox, from a cellphone bigger than a football. Cellphones from that era have been dubbed “brick phones.”

8RARE AND TANGIBLE ASSETS

The cellphone in question – a Motorola DynaTAC – took roughly 10 hours to get a full charge, and it delivered a whopping 30 minutes of talk time. It could also only store about 30 phone numbers. Yet when it was commercially launched in 1984, the price tag was a hefty $3,995. That’s the equivalent of an iPhone selling for $10,000 today!

So how much is that old mobile phone sitting in your drawer worth? Probably more than you think. Brick phones from the 1980s are coveted by collectors. And prices will only go higher from here as the mobile revolution continues to evolve.

My recommendation is to buy any Motorola 8000 series brick phones that you can find. Be happy to pay $200 or less for them, and then watch their values soar above $1,000 within the next five to seven years.

They’re rare, of course. In fact, only one to three such brick phones will be auctioned on eBay each month.

Oh, and here’s a handy guide for valuing various other vintage cellphones.

Well, I hope you enjoyed True Alpha’s foray into RTAs.

Onward and upward,

Robert Williams

Founder, True Alpha

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