## Wednesday, October 01, 2008

If you had purchased \$1,000 of Delta Air Lines stock one year ago, you would have \$49 left.

With Fannie Mae, you would have \$2.50 left of the original \$1,000.

With AIG, you would have less than \$15 left.

But, if you had purchased \$1,000 worth of beer one year ago, drunk all of the beer, then turned in the cans for the aluminum recycling REFUND, you would have \$214 cash.

Based on the above, the best current investment advice is to drink heavily and recycle.

At 10/01/2008 10:17 AM,  Anonymous said...

Indeed, I believe it is shown that in the times of greatest financial struggle in our country's history the consumption of alcohol actually increased.

At 10/01/2008 10:22 AM,  Fred said...

Ya go with what works. I didn't know I was doing one of those alternative investments all these years.

At 10/01/2008 10:25 AM,  qt said...

Good one :)

At 10/01/2008 10:38 AM,  Shawn said...

...in michigan, or the \$.05 states? we all know that kramer determined that taking the cans to michigan doesn't work.

At 10/01/2008 12:11 PM,  Anonymous said...

yup the 401(Keg) plan

At 10/01/2008 1:03 PM,  Anonymous said...

I think your math is off a little.

At \$20 per 30 rack of PBR you pay \$.66 a can which would buy 1500 cans with \$1000 and then you get \$75 upon recycling with a \$.05 refund.

At 10/01/2008 1:45 PM,  Anonymous said...

The \$214 dollar amount does seem high, I wonder if they used the value of aluminum by weight, and not the value of the deposit. In other words, might the aluminum in a can cost more than 5 cents?

At 10/01/2008 2:15 PM,  Thomas Blair said...

*There is approximately 14.7 grams of Al in a beer can.

*One kilogram is approximately 2.205 pounds.

*The scrap price of Al is between 80 and 82 cents per pound as of 9/26.

I calculate that the scrap aluminum from 1 can of beer is worth about 2.593 cents, so using anon's estimation of 1500 cans of PBR (Oh, the humanity!), you'd be left with about 39 bucks worth of salvageable aluminum. Further, it would weigh nearly 50 pounds and take up the bed of an average pickup truck.

But at least you'd have the beer...

At 10/01/2008 2:18 PM,  Kevin said...

No way this analysis is right!

At 10/01/2008 3:06 PM,  Anonymous said...

It's a joke, people! Please put the input-output tables away for a minute or two.

At 10/01/2008 3:41 PM,  juandos said...

Well personally I think Penn & Teller attitude towards recycling has more going for it than the actual recycling does...

At 10/01/2008 10:14 PM,  OBloodyHell said...

Ah, has anyone checked those numbers? That \$214 for aluminum sounds reeeeeeeeally suspiciously high.

Yeah, I thought so.

> It's a joke, people! Please put the input-output tables away for a minute or two.

Nope. The fact is, both the analyses here show you'd still have more money.

Why not use the RIGHT numbers?

The joke still works, and you get your point across with the truth.

That "\$214" figure is the kind of hoary crap that gets turned into an urban legend, and then it takes 3.75624 bajillion years (yes, that's the answer by my calculations) to get rid of it.

Better to use the correct numbers, esp. when they don't hurt the joke.

Respect for numbers, me boyo!!

Hint: It's what Congress, Greens, and lefties of all sorts utterly lack.

At 10/01/2008 10:17 PM,  OBloodyHell said...

> than the actual recycling does...

That depends entirely on what is being recycled, doesn't it? You just have to carefully select your recycling projects.

I mean, if your goal is to recycle a lot of beer, that's a good thing, right?

Excuse me, I want to go recycle some ham and biscuits...

At 10/02/2008 1:24 AM,  Anonymous said...

Whoa...

If the numbers are correct, I see an arbitrage opportunity here.

Assuming an average retail cost of approx 50 cents per can, an "investment" of \$1,000 in beer would provide 2000 cans for recycling.

I live in a "bottle bill" state where beer cans have a 5-cent deposit, paid by a retail buyer to the retailer and recouped upon return of the empty can to a retailer who sells that product. (Most bottle bill states have a 5-cent deposit, there are a very few states with a 10-cent deposit.) 2000 empty beer cans returned to a retailer would be worth \$100.

So if the numbers are correct, an enterprising arbitrageur could readily buy in quantity empty cans at 5 cents (people who collect discarded cans to recover the deposit would be happy to unload them on you for 5 cents a pop) and cash tme in for 10.7 cents at the recycler.

At 10/02/2008 1:30 AM,  Anonymous said...

Ah, looks like the numbers have already been crunched. (I would have, but I had no idea how much Al is in a beer can.)

If it were more profitable to take the cans to aluminum recyclers, retailers would have fewer headaches.

At 10/02/2008 7:31 AM,  Thomas Blair said...

Anonymous 1:24 (2 above me):

From my calculations (and using the scrap aluminum price as of 9/26), the salvageable aluminum is worth only 2.6 cents per can (14.7 g/can, 2.205 lb/kg, 80 cents/lb). I fail to see where the arbitrage opportunity exists in buying cans from households and reselling them to the recyclers. You'd be losing money even before you factor in transport expenses.

At 10/02/2008 12:55 PM,  TheJoker said...

You guys CAN'T be serious?

Your not debating the realism of a really funny joke are you?

Don't be lame!

Classic joke by the way good going!

At 10/02/2008 1:52 PM,  Thomas Blair said...

TheJoker,

Sure we are. Some jokes are set in a fantasy (horse walks into a bar...) and some jokes rely upon reality to form the punch line. This is the latter, so it's important that reality be reflected accurately.

At 10/02/2008 2:37 PM,  TheJoker said...

Thomas blair,

I see your point I just find it really funny.

P.S I failed Math class.

At 10/02/2008 2:42 PM,  DB said...

I suppose next we'll be debating the arbitrage opportunities that exist in all of the wood that woodchucks chuck.
db

At 10/02/2008 7:24 PM,  OBloodyHell said...

> I suppose next we'll be debating the arbitrage opportunities that exist in all of the wood that woodchucks chuck.

I find much more entertainment in the debate as to the amount of ground that a groundhog grinds if a groundhog could grind ground.

:oP

.

Sorry, old Dennis the Menace joke.

At 10/06/2008 6:12 PM,  tax prof said...

Excellent insight

At 10/26/2008 10:55 AM,  Anonymous said...

If the refund is 21.4% of the cost of the beer, then with a 5 cent deposit that means each beer cost \$0.233 or \$1.40 per six pack (\$1000 = 4280 cans of rotgut beer).

In Maine the tax on beer is 35 cents per gallon. 4280 12 oz beers equals 401.25 gallons which yields \$140.44 in taxes for the state of Maine.

The Federal tax on beer (imposed as a luxury tax in 1991) is \$18 per barrel (31 gallons) so the Feds take another \$232.98 in taxes.

So when you buy the \$1000 of beer the government takes \$373.42 in taxes. You also pay another \$214 deposit that you can get back if you haul the cans to a recycling center.

If we were to assume \$1 per can of beer, then the government takes \$87.25 in taxes and the deposit refund is \$50, not \$214.

At least when you sell stock at a loss you can deduct it, not beer taxes.