Isn’t Value in the eye of the beholder?


I recently watched an old TV interview with Nicolas Hayek, the legendary founder of Swiss watchmaker Swatch, who passed away in 2010. Hayek built Swatch into a global powerhouse which includes the Omega brand promoted in the James Bond movies. Hayek was even involved in the creation of Mercedes-Benz Smart Car.

He was an amazing entrepreneur who loved engineering. He believed in the pride of designing & building physical things that people use and get real value from, such as watches and cars.

Anyway, let me get to the point. Hayek was asked to offer advice to young people on how to succeed in business. His advice was that they choose careers where they build things instead of becoming stock traders who buy and sell stocks & create no real value.

This is a pretty common belief held by a lot of people. After all, America is finding it harder to compete globally due to fewer technology and engineering grads on its shores.

All this got me thinking about the word “value.” What is value, really? 

Businesses all over the world claim they offer value for the customer’s money. But who decides what value is? Isn’t it the customer? For example, even if I bought a brand new Harley Davidson motorcycle for $1, I consider it to be of no value to me. Why? Because I’m not a motorcycle rider or enthusiast. To a rider, that’s huge value for their money.

Well, if I want to buy a stock at $1 a share, and someone (who bought it at $0.50) sells it to me for $1, I have received value. Why? Because I got what I wanted. And isn’t that what value ultimately is? The recipient gets what he wants whether it be a stock, car, motorcycle, watch, or intangibles like peace of mind, convenience, or a sense of security. Aren’t intangibles valuable too?

In the interest of full disclosure, I do not work on Wall Street or in the financial services sector. However, I do own businesses that invest in stocks, domain names and websites. But I don’t want to join the crowd and vilify the finance folks for ripping off the masses and not creating value without actually giving this some thought.

I believe value is when the customer gets what he or she wants. If a stockbroker or investment manager gives his client what the client asked for, isn’t that value? If a trader sells a stock to another trader at the price the buyer wants, isn’t that value?

Like beauty, isn’t value in the eye of the beholder? What is value to you?