Taxi Medallions have been one of the best performing assets over the past twenty years: http://www.dailyfinance.com/2011/11/16/the-best-investment-on-wall-street-a-new-york-city-taxi-medalli/
However, you as an investor, must require a very high discount rate when you depend upon government licenses. If Uber makes inroads?http://www.bizjournals.com/sanfrancisco/print-edition/2013/05/17/uber-takes-the-pain-out-of-hailing-a.html?page=2
Then:
“Value” investors may flock to the seductive yield: http://seekingalpha.com/article/2246123-medallion-financial-hail-this-high-yield
But csinvesting.org readers know their history when technological change or a catalyst for regulatory change Airline_deregulation upends an incumbent, then the plunging price becomes a value trap versus an opportunity. Reflexively reaching for this 8% yield by not turn out well.
Of course, the future is uncertain, but after a five year bull run, failure to advance after last quarter’s earnings beat and pricing pressure from UBER, then Medallion Financial Corp (NASDAQ:TAXI)’s high valued medallions may become less so. The government is placing an artificial restriction to keep supply low while boosting prices that hurt consumers’ choices and pocketbook. I wonder how this fight will turn-out? I will be watching this unfold.
What do YOU think?
via CSInvesting
