The Value of Mispriced Assets

The Wealth Equation Episode 3

Summary:

     In this episode of The Wealth Equation Podcast, your host, Maurice L. Wilson, discusses the value of mispriced assets and how to find them. He begins by defining assets and value, saying that “an asset is something that grows in value, generates income, or both” and “value is a fair return for something exchanged.” He then explains mispriced assets, using education as an example.

     Maurice talks about how to find mispriced assets, identifying the mispriced assets in the last two recessions: dotcom companies and houses. He explains that during the current pandemic, the mispriced assets are basically everything! However, there are three areas that are faltering the most: entertainment, travel, and fine dining. Maurice goes over the stock market and its role in identifying mispriced assets. An investor does not have to enter blindly into a sector of business if there are publicly traded businesses in that sector.

     At the end of the episode, Maurice advises investors on how to discover companies that are struggling from the pandemic and invest wisely in them. In the space of one morning, an investor can take a look at the Wall Street Journal to find the companies that are faltering, search for privately held businesses in the same sectors, and start conversations with those businesses about investment — taking on a silent partner or having a new majority owner, for example. If you find an asset that is mispriced due to the pandemic but will return to its pre-pandemic value in the future, then you have found a valuable asset at a great price.

 

Key Quotes:

“An asset is something that grows in value, generates income, or both.”

“Value is a fair return for something exchanged.”

“In the last two recessions, the mispriced assets were obvious. In the dotcom bubble or the technology meltdown, the mispriced asset was the dotcom companies themselves… In 2008, the mispriced assets were houses.”

“The stock market is merely a public record of a business.”

“There are about three areas that are faltering due to the pandemic: entertainment, travel, and fine dining.”

“The investor needs to be able to determine: what is the actual value of that mispriced asset?”

“If you can find an asset that is mispriced as a result of the pandemic, but will return to its pre-pandemic value in the future, then you have found a valuable asset at a great price.”

 

What We Covered:

0:33 – Introducing the topic: the value of mispriced assets and how to find them

1:30 – What is an asset?

2:24 – What is value?

4:44 – How to find a mispriced asset and the mispriced assets of recessions

7:44 – Three areas that are faltering due to the COVID pandemic

10:00 – Steps a prudent investor can take

 

 

Connect with Maurice:

https://www.wilsonwealth.com/

https://www.linkedin.com/in/mauricewilson