In my opinion they should not. Anything that is sold in any marketplace is, despite the valuation an expert may put on it, only worth what someone else will pay for it – be it property, a car, jewellery, company shares, a work of art or an antique table.
What changes this is the situation of the potential buyer.
A house might have enhanced value to a family with children because of the school catchment area it is in. A collector may have a near-full set of objects with one missing, with that missing item potentially worth more to him or her than someone else starting a similar collection.
Someone who has an uncovered bear position in a company’s shares will probably pay more for the shares in a rising market to minimise his or her losses than another who is attracted only by the dividend.
What the seller has paid in any market is their business and may turn out to have been a shrewd investment at the time.
Of course, as your report concludes, transparency and promotion of the marketplace is key.
Mike Sparks
