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PAUL NEWMAN WAS BEST known as an actor, but he was also passionate about auto racing. He took his hobby seriously, improved his driving skills and won many races, including on his “home track” at Lime Rock, Connecticut.
His wife, actress Joanne Woodward, supported her husband’s auto racing career, but also worried about him. She bought him a Rolex watch to wear when he raced. To personalize the gift, she had an inscription added to the back. It read: “Drive Carefully, Me.” Photographs show that Newman did indeed wear the watch when racing.
In 2017, the watch—which Newman had given to his daughter’s onetime boyfriend—was auctioned off for charity, and sold for $17.8 million.
It’s a watch. It will not be used by the buyer to tell time, which is the purpose of a watch. It will likely sit on a shelf. The buyer will probably show it off to his friends, bragging that he paid almost $18 million.
The more money folks have, the more they can spend. But $17.8 million for a watch? How much money would you need socked away to spend $17.8 million on a watch without flinching? I imagine you’d need at least $100 million, and probably much more.
Imagine telling your wife, “Honey, I’m going out to buy a watch today.”
“That’s nice, dear,” she says. “How much are you going to spend?”
“$18 million,” you reply nonchalantly.
She smiles, “Have fun.”
What each of us buys depends upon our needs, values and ego. For the very rich, I think their ego probably drives the vast majority of their purchases.
When you’re sitting around the country club having your cigar and scotch, you need something to talk about. Why not tell them how much money you were able to spend at a charity auction? You’re doing good. In fact, you’re able to do a very large good, as measured by dollars. Good for you.
When we invest, we want a return on our investment (ROI). The bigger the return, the more satisfied we are with our investment decisions.
Bill Gates, founder of Microsoft, has suggested that charitable donations should be approached in the same way we handle investment decisions. Not all charities utilize money effectively. Many devote large sums to advertising and administrative expenses, rather than to good work.
Whatever we do with our money, we get an ROI. Seeking the highest ROI will help us get greater pleasure from our dollars. After all, isn’t that the main reason we saved our money?
We could ask this question about a lot of things. Take baseball cards. What’s the record for priciest card – a few million? Why would anyone pay that? Why would anyone pay even $100,000? Either it’s a conversation piece, a status symbol, or as a commenter suggested below, an investment. If it’s an investment, then it’s an example of the greater fool theory.
I’ve been using Charity Navigator – charitynavigator.org – for several years now to assess a charity or to research areas where my money can help make a difference. I highly recommend it.
It’s great to give and feels even better when you know it’s going to a quality organization.
Never mind a watch, what about a piece of art that looks like kindergarten finger painting for $200 million?
It’s an investment. The art is never displayed but kept in special storage facilities to bring out for the next pseudo art lover to get taken – or maybe not if they make money.
While I agree with your observations about the ultra rich, I also think it is likely that the person who bought Newman’s watch considers it an investment that could be worth considerably more in a few years.
That is really hard to say, and I would offer the other side of the coin.
The person that bought it was a huge fan and feels some connection by having it. They will probably die with it and that is fine with them.
Not all purchases need to have a ROI