Personal Finance 

3 Money Lessons from Pawn Stars

Email  Print Print  

Pawn ShopWhat do you get when you take the knowledge of Antiques Roadshow, the excitement of pseudo-reality television, and the myriad of characters you’re likely to find in Las Vegas? The History Channel’s Pawn Stars. The show focuses on a pawn shop in Las Vegas and the four folks who work in it – The Old Man (Rick’s dad), Rick Harrison, his son Corey Harrison, and Austin “Chumlee” Russel. While the majority of the show focuses on items people are looking to pawn and sell, you do get a little added flavor from the cast of characters.

It recently appeared on Netflix in the Instant Watch category and I started catching up on the ones I had missed. I wouldn’t call it compelling television but it’s fun to learn about some of the history behind the pieces (the historically valuable ones anyway) and I’m never bored watching it. That said, there’s a lot you can learn from the show because, in a sense, it’s a lot like investing in anything else!

Find an Expert

One recurring theme you’ll find throughout the show is that you always want to bring in an expert. From the very first episode, when Rick brought in the cannon expert, to probably the show’s last, they will always be an expert. Rick is knowledgeable about a lot of history but he always calls in an expert when it’s a big money deal or something esoteric.

The lesson from this is that it’s important to know your limitations and call in the experts (not just one, like in this show, but call in multiple experts when you can). Whether it’s “calling” them by reading their books or actually physically calling a person, the key is to consult with someone who knows more, who has seen more, and has a better understanding of the environment than you.

For example, I “call” on experts when I invest in a mutual fund. I buy shares in a Vanguard S&P 500 fund because I trust their experts’ ability to follow the S&P 500 index better than I can. Could I do it myself for cheaper? At $4.95 a trade at TradeKing, I can probably beat the 0.17% expense ratio in the very long term (since my trades will cost $4.95 each and the 0.17% with taken each year, assuming the index doesn’t change too much).

Learn to Walk Away

When someone brings an item into the shop, often times they aren’t entirely sure what it is. They bought it at a garage sale, it was passed down to them, or they found it in a dusty corner of their attic. Sometimes the item is authentic and rare, sometimes it’s a replica and worthless, and someone it’s authentic and rare but the owner tried to clean it and made it worth less. When they discover the item isn’t what it is, or there’s some question to what it is and an expert can’t help, they walk away. They have so many deals to get to that they really can’t spend too much time on stuff that isn’t worth their time.

You can apply this principle in your own life. If, after you invest a lot of time researching and learning about something, you discover that it’s not what it appears to be, walk away. It’s the idea of sunk cost. It stinks you spent all that time but don’t let that force you to do something you otherwise wouldn’t. Also, if it smells fishy – always walk away. There will always be other opportunities.

Money’s Made on Buying

There are two sides to every pawn store transaction – the buy and the sell. The show focuses entirely on the buy side, when Rick buys an item from someone who brings it in and spend no time (at least in every episode I’ve watched) on the selling of the item. One theme you’ll recognize is that Rick often talks about reselling the item and how the price he offers has to be low enough that he can make money on.

Whenever you’re talking about investments, it’s always about where you buy the asset, not where you sell it. Whether it’s a Pawn Shop or Warren Buffett, who looked for cigar butts in his investments, your profit is in how much you pay for the item. So, when you are looking to invest something, whether it’s shares of Apple or a house, pay special attention to its value and how much you pay for it. Whether you profit largely will depend on that price.

Are you a fan of the show? Learn any lessons or just want to share your favorite moments?

(Photo: auvet)

{ 11 comments, please add your thoughts now! }

Related Posts

RSS Subscribe Like this article? Get all the latest articles sent to your email for free every day. Enter your email address and click "Subscribe." Your email will only be used for this daily subscription and you can unsubscribe anytime.

11 Responses to “3 Money Lessons from Pawn Stars”

  1. DIY Investor says:

    I really like the advice of reading books by experts. Young people who can spend a weekend and read a book on investing by experts (for example “The Elements of Investing” by Malkiel and Ellis)can get advice worth, literally, hundreds of thousands of dollars.
    The advice can enable them to retire 3 or 4 years earlier than otherwise.
    The show also subtly brings in the concept of diversification. Rick places a bit of a premium when he comes across a unique item. i.e. something he doesn’t have in his portfolio.

  2. STRONGside says:

    Yeah, I like the show a lot. One of the things I have learned from that show is that it does not take much to separate yourself from the rank and file “junk collector” to be something special.

    My parents are big into buying and selling antiques, and they have found that a little knowledge will go a long way. Information and knowledge is power, and that can be easily translated into personal finance. Just like the “bring in the expert” point, understanding how to invest, and understanding how to create a budget will pay off huge dividends in the long term.

    Take a little bit of time now, learn and perfect your craft, and you will notice a big ROI in the near future.

  3. saladdin says:

    You make your money on buying. To bad people didn’t realize that with houses. This applies to cars too, not as an investment but losing in depreciation. People buy on monthly payment then realize 3 years later when they try to sell they are so upside down they are stuck.

  4. I do enjoy the show, but what I have a hard time understanding is why people sell their items to Rick at the pawn shop for, generally, ~50-60% of what the item is appraised at. I could understand if these people were hard up for money, and they needed what the store was offering really fast, but many of these people seem reasonably well off. If they have the time, why not take their items to auction or sell on ebay or whatever?

    • skylog says:

      i have not seen the show that often, but that also bothered me. i get that it is the old it is only worth what someone is willing to pay for it comment, but it would seem that perhaps many of the people could do better elsewhere.

  5. adam carolla fan says:

    huge fan of pawn stars here!

    “money’s made on buying” – truer words were never spoken.

    a couple of years ago, an old roommate of mine was still making payments on his 1998 ford mustang. i once looked at his invoice on the loan, and was aghast at how much he’s paid in interest over the years. he thought he was kickin ass and takin names with a relatively inexpensive per-month car payment, but ended up being a sucker.

    btw, he was an crappy roommate, so haha.

  6. Evan says:

    LOVE PAWN STARS – Even wrote a similar post except I included:

    Value is Different than Worth

  7. Wilma says:

    Only saw the show once. I like how you compare investing with this show. From shopping to investing to saving to every thing else in between you always have to be vigilant. What you know and how you apply it greatly impacts how things go for you going forward.

  8. Shirley says:

    We have watched this program several times and are amazed at some of the real finds. I too, like Wilma, enjoyed the way you have created the analogy to investing.

    Bringing in an expert opens many options and lends stability and credibility to further negotiations. “Let the buyer beware.”

    Being willing to walk away when you don’t fully trust or truly understand a buy may cost you a little bit right then, but not near as much as it’s likely to cost in the long run if you don’t. “There’s nothing more surprising, and nothing to compare, with stepping in the darkness on a step that isn’t there.”

  9. Strebkr says:

    My parents were in Vegas not to long ago and went to this place just to check it out. They said it was pretty cool.

Please Leave a Reply
Bargaineering Comment Policy

Previous Article: «
Next Article: »
Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
About | Contact Me | Privacy Policy/Your California Privacy Rights | Terms of Use | Press
Copyright © 2016 by All rights reserved.