Bob Pisani: How My Obsession With a Black Sabbath Poster Showed How Irrational We Can Be When Investing


(Below is an excerpt from Bob Pisani's new book "Shut Up & Keep Talking: Lessons on Life and Investing from the Floor of the New York Stock Exchange.")

If you think knowing something about behavioral economics prevents you from doing stupid things, let me tell you about the Black Sabbath poster I bought.

I have a hobby: I collect 1960s rock posters.

I know, it's a little strange, but it's fun. It's about the golden age of rock: Jimi Hendrix, the Doors, Cream, Grateful Dead, Jefferson Airplane. The style — usually referred to as "psychedelia" — had a tremendous impact on the visual arts of the 1960s, and continues to have an impact today. The artists who created this style — Wes Wilson, Rick Griffin, Stanley Mouse, Alton Kelley, Lee Conklin, Randy Tuten, David Singer, Victor Moscoso, and Bonnie MacLean — in my opinion, are the Toulouse-Lautrecs of their day.

Most of these posters were given out at concerts at the Fillmore in San Francisco or a few other venues, then were quickly hung on walls, torn up, and thrown away. There's not a lot of copies of the early posters from the dawn of psychedelia (1966-1968), and a small community of collectors that trade these posters has grown up in the last 40 years.

During the pandemic, I displayed a few of the posters I had framed on my wall behind me when I was broadcasting.

They were an instant hit. My coolness factor on social media went through the roof. Room Rater — a Twitter site that rated the rooms of reporters that were broadcasting from their homes and apartments —gave me a 9 out of 10, then upped it to 10 out of 10.

Who knew there were so many Deadheads and old hippies watching CNBC?

How I almost lost my mind bidding on a stupid Black Sabbath poster

One day I was monitoring an online auction of rock posters. A 1976 Black Sabbath poster came up for sale. I was not a Black Sabbath fan in the 1970s. I was into Led Zeppelin and the Who, but this was a cool poster, with Ozzy Osbourne waving his hands in the air.

The opening bid was $200. On a lark, I bid $400. I figured that $400-$500 was a fair price and the auction would quickly be over.

Immediately, someone counterbid $500.

Hm. I don't really want this poster, but I'm intrigued. Who wants it?

I bid $600. Immediately, there's a counterbid for $700.

Hm. I bid again. Another counterbid.

In two minutes, we're at $1,000.

Now I'm getting annoyed. Who the hell wants this poster so badly? It's not like Black Sabbath has an intense cult of collectors, like Zeppelin or the Velvet Underground.

Black Sabbath 1976 concert poster
Black Sabbath 1976 concert poster

At least I didn't think so.

I bid again. Another counterbid, immediately.

Two minutes later, we are at $2,000.

Now I'm yelling at my computer. I don't want this goddamn poster.

A minute or so later, we are at $2,500, then $3,000.

Now I don't care what the hell the price is. I want to find out who this person is, get a meeting, roll up the poster and force it down his or her throat.

I want to make them eat this goddamn poster.

A few minutes later, I won the poster, at $3,499, plus a 10 percent buyer's fee.

Who's the idiot here?

The next day, I did something I almost never do. I called the person who ran the auction, a very respected dealer who specialized in rock posters.

It's not common to ask who the competing bidders are at auctions, but the auction was over and I had to know. Who was this person? Was I bidding against Ozzy Osbourne himself?

Who the hell was willing to spend $3,500 for a goddamn Black Sabbath poster? Who is this idiot, I demanded to know?

The dealer said, "I can tell you who the idiot was, Bob. It was you. You're the idiot who bought it."

And he was right.

What happened to me?

Collectors will tell you that to be a successful long-term collector of anything, you must be disciplined. You must know what you are willing to pay for something, and not go over that price. You cannot be carried away by the emotion of an auction. You must be willing to walk away.

I have walked away from most auctions a loser, because I wasn't willing to pay more than I thought a poster (or a comic book, another obsession from decades ago) was worth.

What did I think that poster was worth? $400-$500.

How did I know that? I had several decades of experience bidding on rock posters, and based on what I had seen I thought that was a reasonable price.

But it was all a guess, as it is with all collectibles. With stocks, at least you have the appearance of trying to figure out what the "intrinsic value" of the stock might be, based on what kind of dividend it pays, and the present value of a future stream of cash flow that might turn into earnings.

This is known as "fundamental analysis" and it is the basis for most long-term stock investing.

But there's none of that when it comes to posters, or any other kind of collectible.

A rock poster doesn't do anything. It doesn't pay a dividend, or provide a future cash flow you can try to discount into the present. It just sits there. Same story with gold, and with Bitcoin as well.

What's this poster worth? It's worth whatever anyone is willing to pay for it at that moment. It doesn't have an intrinsic value, but it does have a price.

And when you have two bidders who suddenly, for whatever reason, decide they are price-insensitive, watch out. The price can get stupid fast.

Which is exactly what happened. I bid $400 and ended up with a $3,500 poster of Ozzy Osbourne staring me in the face.

With that damn Black Sabbath poster, I violated all the rules. I lost it. Something snapped.

Why did I lose it?

I consulted Dr. Brad Klontz, a Certified Financial Planner, psychologist and a member of the CNBC Financial Wellness Council. He's an expert in financial psychology, behavioral finance, and financial planning, and he's author of several books, including Money Mammoth: Harness the Power of Financial Psychology to Evolve Your Money Mindset, Avoid Extinction, and Crush Your Financial Goals.

Bob Pisani's book "Shut Up & Keep Talking"

Brad showed me several ways my thinking had been skewed:

Competition: Cooperation is more common in relationships and competition is more common with unrelated individuals. Competition increases when supply is low and demand is high. It's possible that the anonymity of my competitor made me more competitive.

The psychology of scarcity: When we believe that we lack something we become less rational and are more prone to engaging in self-defeating behaviors to try to get it.

The Endowment Effect: We have a tendency to overvalue what we already possess. The degree to which I fantasized about already having that poster on my wall would have increased the price I was willing to pay for it.

Social Facilitation: Being in the presence of others changes our behavior. Sometimes this improves our performance and at other times it can compromise our commitment to stick to our plans, including engaging in more risky behaviors than we would have done if we were alone.

There are other explanations, including one offered indirectly by the dean of behavioral economists, Daniel Kahneman. In Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich, Jason Zweig quotes Kahneman as saying, "Financial decision-making is not necessarily about making money. It's also about intangible motives like avoiding regret or achieving pride."

Thank God I'm so rational (not)

Those were certainly factors lurking in the back of my mind. I didn't want to miss out on acquiring a rare poster (I had never seen it before), and I probably wanted the bragging rights to owning it.

All these explanations are feasible, but I still remember being annoyed that anyone was willing to pay so much for the damn poster. It was irrational!

I framed it, which cost me another $500. I had to drastically curtail my spending for a few months just to pay it off. It hangs on my living room wall, a reminder of my own stupidity and biases.

It is a pretty cool poster, though.

Bob Pisani is senior markets correspondent for CNBC. He has spent the nearly three decades reporting from the floor of the New York Stock Exchange. In Shut Up and Keep Talking, Pisani shares stories about what he has learned about life and investing.

Correction: An earlier version of this article misspelled Ozzy Osbourne.

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