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Len Penzo dot Com

The offbeat personal finance blog for responsible people.

A Real-Life Lesson on the Importance of Recognizing Hidden Value

By Len Penzo

valueSometimes, certain extraordinary events occur that seem to defy any attempt at a logical explanation, only to be later revealed upon closer inspection for what they really are.

For instance, ghosts? They’re usually explained by light reflections, coupled with a highly overactive imagination.

Bigfoot? That’s some guy in a cheesy gorilla suit.

UFOs? Probably just ball lightning … or swamp gas.

How about Lee Dewyze — remember him? — winning American Idol way back in 2010?

Okay, okay. That one may never be explained, but you get my drift.

Meet Kyle MacDonald

The reason I bring this up is because I was recently reminded of the guy who took a single red paper clip and, through a series of savvy trades, eventually ended up with a two-story farmhouse in Kipling, Saskatchewan.

Believe it or not, to get that house for the price of a paper clip, Kyle MacDonald — a.k.a. “the red paper clip guy” — embarked upon a one-year journey that resulted in 14 trades.

First, he traded his little red paper clip for a pen shaped like a fish. Next, he exchanged the pen for a hand-sculpted doorknob. The doorknob was swapped for a camp stove, which was then exchanged for a generator, that was then bartered for an “instant party” consisting of an empty beer keg — along with a promise to fill it with beer — and a neon beer sign.

From there, MacDonald traded the “party” in for a snowmobile, which he then dickered for a two-person trip to Yahk, British Columbia. The trip was then swapped for a cube van, which was traded for a recording contract with a Toronto studio. The recording contract led to one year of free rent in Phoenix, Arizona, which then was bartered for an afternoon with 70s rock icon Alice Cooper.

The afternoon with Cooper was ultimately exchanged for a motorized KISS snow globe with a variable speed dial. (Don’t ask. Then again, if you must know…)

It was all downhill after that, as MacDonald then traded the snow globe to collector Corbin Bernsen (yes, that Corbin Bernsen) in exchange for a speaking role in the film Donna on Demand (I don’t remember it either); that role was then traded for the house.

The Moral of the Story

On the surface, MacDonald’s story seems incredible, but there is a logical explanation behind it. There is also a valuable lesson to be learned here: folks who are patient and adept at recognizing value can actually get more through bartering than by selling the same item for cash. Simply put, both bartering and patience are skills worth mastering.

For example, although most rational people figured he was completely crazy to trade a year’s worth of free rent in the heart of America’s fourth largest city for an afternoon with an aging rock star well past his prime, MacDonald saw hidden value that others didn’t — and it paid off in spades.

As MacDonald’s exercise vividly proves, over time — and multiple trades — skillful bartering can lead to payoffs with effects that might be described as compound growth on steroids.

In less than a year, MacDonald took a one-cent paper-clip and turned it into a house worth tens of thousands of dollars.

Oh, sure; you can try getting returns like that from the stock market. But I suspect you’d have a much better chance of snapping a photo of the Loch Ness monster.

Photo Credit: wetwebwork

25 Comments August 14, 2017

Comments

  1. 1

    Candy says

    It looks like I need to get on Craigslist and start bartering! I just need to find an old button or something like that to get started.

    Reply
  2. 2

    DoNotWait says

    Wow! I heard of the guy but never knew the entire story. What I get from the story is also that almost everything he exchanged was a subject of passion for someone. Passion is a priceless thing and I guess this is why he had so much great offers along the way.

    Reply
  3. 3

    Miranda says

    Don’t forget, too, that as the whole thing progressed, he received increasing amounts of attention. Media attention can also help, since people want to be part of something that appears to be “going viral”. That then makes it easier to be able “sell” what you’re doing, creating even more value.

    Reply
  4. 4

    Joe Plemon says

    Len,
    You are exactly right: bartering is a skill worth mastering. I have a friend who ran a pawn shop for years before starting his own on line business. He is close to the vest with his “secrets” (meaning, “I learned this on my own and you can too”), but he does quite well — as in 6 figure annual income.

    I have a long way to go myself; I am more prone to be the one ending up with the red paper clip.

    Reply
  5. 5

    krantcents says

    I always hear these stories and marvel as to how they are able to do it. In many ways it is a metaphor for life, risks and rewards. His risk was he could have wasted his time for nothing, instead of success.

    Reply
  6. 6

    Nona says

    This is unbelievable! I wish something similar happened to me.
    I agree with Miranda, having the attention of the media helps a lot.

    Reply
    • 7

      Len Penzo says

      Me too, Nona! Abrazos y besos!

      Reply
  7. 8

    Mr Credit Card says

    Boy – it sure must feel like you are being duped if you were one of those who traded with the paper clip guy!

    Reply
  8. 9

    sandy @ yesiamcheap says

    I remember this story. His story ran all over the place by the time he got to the recording contract. That’s when fame kicked in for the movie part and then the house. But this story still makes me want to troll Craigslist for a trade.

    Reply
  9. 10

    Jackie says

    It’d be interesting to talk to the people who were a part of the trades along the way to see if they are still happy with them, because the best trades end up with both parties feeling like they got the better end of the deal.

    Reply
  10. 11

    First Gen American says

    I wonder what the tax lawyers thought of this. It must be an accounting nightmare to try to figure out capital gains…and how would you do it when you barter. Is there some law about paying taxes on gains from bartering?

    Good Lesson indeed and I like the story.

    Reply
  11. 12

    Karen Kinnane says

    I need some help on finding a book on a similar topic. There was a man who wanted to prove that you can still succeed in America. He moved without any cash or credit cards to a new area where he knew no one, found some shelter, scrounged stuff off the curb to sell and picked up recyclables for money, got a series of jobs, eventually bought a pick up truck and opened a small business, bought a house. He wrote a book about the experience. I scribbled the title and author’s name on a scrap of paper and lost it. I want to read this book, does anyone know the title?

    Reply
  12. 13

    Mr. Frugalwoods says

    Best part of bartering is the imputed gain from not paying taxes. I imagine if you barter for a house the tax man may take notice, but if you barter your neighbor for eggs… no one will care.

    Reply
    • 14

      Karen Kinnane says

      Technically if you don’t report income derived from bartering you are breaking United States income tax law. The government considers profit made bartering to be income.

      Reply
  13. 15

    Ray says

    A few years ago I had an older tenant that would drive through more affluent neighborhoods on rubbish day. He would wind up with many things that folks threw out. He picked up a riding mower that the only thing wrong with was it was out of gas. A wide variety of small appliances,garden and power tools as well as furniture,indoor and out.
    Once a month he’d hold a garage sale and earn enough off that alone to pay his rent and utilities.

    Most folks “would not stoop to that” and scrounge rubbish. But the lesson from this is that,like my dad taught me,is that “pride don’t spread on bread”.

    Reply
  14. 16

    Marcia says

    It’s interesting to learn that it may be worth your time to develop skills like this.

    I was at my son’s elementary school’s PTA meeting (please shoot me, oh why did I agree to be co-VP of fundraising…?) Anyway, there was a new kindergarten teacher there who suggested a “virtual rummage sale” for fundraising, instead of an “in-person” sale.

    We have an on-site sale each year.

    Apparently this teacher, for several years, has been selling items on E-bay, and easily makes $1000 a month doing so. Wow. We offered her the job. She declined. I don’t really have the time to figure out how to do this (the hard part, I would think, is figuring out WHAT people will buy and at what price – I am not a shopper, so not only do I NOT have a feel for this, it does not interest me).

    But it can be lucrative, if you can pick up donations or items at a garage sale, and if you can sell them at a higher price (and have the time and patience to do so). Similar to bartering – you have to know the value of the items.

    Reply
  15. 17

    ALDO@Million DollarNinja says

    I read about this and thought “I can’t do trade things for a year. That’s too much time wasted.” That was a long time ago and I still have nothing. The quote, “the best time to start is right now” keeps ringing in my ear.

    Reply
  16. 18

    Kayla @ Red Debted Stepchild says

    Interesting. I’ve never really tried trading/bartering, but maybe its something worth looking into.

    Reply
  17. 19

    Lance @ Healthy Wealthy Income says

    We always here about the extreme examples but there are far more people that achieve things with hard work, but you just don’t hear about them. Some folks have a talent for finding value in anything. It is time and effort and hard work. Some can do it quickly and others it takes a lifetime.

    Reply
  18. 20

    RD Blakeslee says

    Len is right: It’s important to recognize hidden value.

    But the value of acquisitions is not necessarily in terms of the speculative price it could bring if sold.

    For me, it’s in terms of its utility in my life.

    So, here’s some of my valuable stuff:

    1. Old virgin pine boards used as interior wall sheathing in a log house , reworked as wall paneling in two of my houses, one where I used to live and the other which I built where I live now.

    2. Obsolete farm machinery which is uneconomic for modern corporate-style farming but fine for its original intent: Use on a small, non-commercial farm.

    3. Obsolete commercial three-phase electrical powered woodworking machinery ca. 1900 or so. Examples: 1. A Crescent 36″ throat bandsaw, used to slab boards out of windfallen hardwood trees, long-lying in the woods, therefor well seasoned. 2. A 36 inch square head thickness planer, used to dress the slabbed boards and, when fitted with a molding cutter made from a vehicle leaf spring ground to shape on a bench grinder, use to mill trim for the house.

    All that stuff cost less than most folks spend on their monthly mortgage payment, these days. A major contribution of my stuff: I don’t have mortgage payments.

    Reply
  19. 21

    Nick says

    I’d recommend finding the hidden value in the new booming technology of cryptocurrencies.

    Reply
    • 22

      Len Penzo says

      Nope. Not for me. Cryptocurrencies will remain a speculative investment until they are tested by currency crisis. It’s not like precious metals which have 5000 years of human history validating their role as money and currency.

      Reply

Trackbacks

  1. Black Coffee: Why More Tax Revenue Will Never Be Enough – Len Penzo dot Com says:
    March 17, 2018 at 10:07 pm

    […] A Real-Life Lesson on the Importance of Recognizing Hidden Value […]

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  2. Check Out the Latest Gimmick for Disposing of Expired Credit Cards – Len Penzo dot Com says:
    January 12, 2019 at 10:20 am

    […] once in awhile, I come across something that causes me to scratch my head in utter bewilderment and ask, “Was that really […]

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  3. The DQYDJ Weekender, 9/27/2014 - DQYDJ says:
    April 13, 2019 at 8:38 am

    […] Penzo refreshed us on the bartering genius Kyle MacDonald – who turned a paper clip (with time and a keen sense of value) into… a […]

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