By DAVID MOON, Moon Capital
February 10, 2008
My little girl is
growing up. No, my daughter hasn't gone out on her first date or asked if she
can have her nostril pierced. (No, sweetheart; you cannot. Either of them.)
My seven-year-old daughter engaged in a maturation rite of passage a few
weeks ago. She came by her daddy's office to sell Girl Scout cookies. In
fairness to my co-workers, I agreed to reimburse them for any of the little
diabetic neutron bombs she coaxed them into purchasing.
I was pretty busy that afternoon. The Dow
Jones Industrial Average was in the midst of a 100-point decline. I wasn't
thinking much of Thin Mints.
I should have, however, as there was an
excellent investment lesson in that guilt-inspired capitalistic sales
Girl Scout cookies cost $1.50 a box in
1984 and $3.50 now, so over the last 24 years, that's cookie inflation of 3.6 %
annually. We'll call that GSPI, or Girl Scout Price Index, to differentiate it
from the CPI, or Consumer Price Index.)
The CPI over that time frame increased
Girl Scout Cookies have been around a
while (since 1917), but gold has been around a bit longer. For thousands of
years, gold has been used as a both a store of value and medium of exchange.
Kings have killed for it. And in times of trouble, investors have flocked to
In the last 6 months, the price of gold
has increased 33% while the S&P 500 has declined.
After my daughter left the office that
afternoon, we were commiserating about the day's stock market demise, while
listening to one of the TV talking-head experts espouse the current virtues of
gold, as opposed to stocks.
Think about it, however. In 1984, when
gold was $360 an ounce, an ounce of gold would purchase 240 boxes of Girl Scout
Cookies. At today's prices (gold: $890 an ounce; cookies: $3.50 a box) an
ounce of gold is worth 254 boxes of cookies ' an increase of only 5.83%, or
Despite the recent decline in the S&P
500 and the Dow, however, the GSCPP (Girl Scout Cookie Purchasing Power) of
stocks has far outpaced that of gold over the past 24 years.
Annual appreciation in the S&P 500
from its average value in 1984 has been 9.20%, resulting in an equivalent
increase in GSCPP of 1,744 boxes, compared to only 14 boxes for
Of course, there may be historic
differences in box equivalent units (BEUs, for short), due to changes in
trans-fat content and box size.
What's the point?
If you plan to buy any Girl Scout cookies
in the future, you will be much better served by storing your earmarked cookie
funds in stocks than in precious commodities like gold.
And if you plan on buying any Girl Scout
cookies in the present, send me an email. I know a very clean-cut seven-year-old
Scout with Friday evenings free for business.
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).