It's a small (business) world, after all

By DAVID MOON, Moon Capital Management
April 8, 2007

I took my family on a spring break vacation a couple of weeks ago ' and I encountered some pretty valuable business lessons.

My teacher was a rat. A most famous Rat.

Along with apparently a third of the earth's population, we visited Disney World during spring break.

The hidden becomes obvious when the surrounding elements are pushed to the extreme. A rat park seemingly filled with 2.3 billion people is extreme.

Here's what I learned.

People will do the craziest and most unexplainable things if others are doing it. I saw grown men wearing fanny packs and Mickey Mouse ears.

I've also seen grown and presumably intelligent men buy silly investments simply because other people were buying them.

I learned that lines are always shorter on the left. Or lines are always longer on the right.

The only possible explanation I can offer is that since most people are right-handed, they naturally tend to the right. And if my observation is accurate, people are more likely to do what is comfortable and natural than what is in their best interest.

Think about that the next time you hold onto some stock simply because your grandfather owned it.

One day at Epcot Center, there was a long line near the popular Soarin' attraction. I asked the last person in line if, in fact, it was the line for Soarin', to which she replied, 'I don't know. We just saw the line and got in it.'

I am not making this up.

After a bit more research, I discovered that the line was for ice cream treats.

Lesson: not only are some people ignorant, some of them know it and don't care.

Monopolistic pricing was obvious at Disney World. With a captive audience, you can charge $7 for a beer or $8 a page to send a fax.

I was also reminded that with slick packaging, you can sell almost anything. The gift shops at Disney featured a lot of nice products. But they also sold plastic junk that had nothing to do with any Disney character or other Disney-related corporate entity.

One example: little plastic things with string spinning through them. Adorned with a mouse sticker, these useless, temporary toys were hot items.

I've seen plenty of partnerships, stocks and private equity placements sold that way, too. Fancy sticker, little substance.

I spent a week and more than a few hundred dollars eating horrible meals and standing in lines for dozens of hours. I was ready to punch the next cast member who put on a fake smile and told me to have a 'magical day.' I did all of this for my kids.

What did my children enjoy most? You guessed it: the hotel pool.

We could have gone to the Baymont Inn at Strawberry Plains, played in the pool and ridden a bus to the Knoxville Zoo each day ' and told them it was Disney's Animal Kingdom Lodge. They would have been fine.

In life, as investing, lessons can be very expensive.

Thanks kids. Thanks Mickey.

* * *

Last week I reported all sorts of outrageous things, including the fact that I would quit writing this column because it was no longer fun. The entire column was an April Fool's joke.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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