My six-and-a-half-year-old son was busy building a Lego creation of sorts when he tried to tell me the cost of what he was making.
"What comes after a million?" he asked. I replied: "A billion."
He then said: "Oh yes, the price of this [his latest creation] is five billion," adding that the "chompy" he made earlier was worth four thousand.
Two friends of his, he said, wanted to buy his "chompy". But he had decided to sell it to his friend, who had fewer Lego pieces, at the price of four thousand. And if he did not get it, he would not sell.
I have no idea what the currency or unit of payment could possibly be, but I was struck by the idea that this little person had made a decision regarding the value of something.
He had decided that a piece he had created – that he was very attached to and loved – was worth something very specific. To him, at least.
Whether he would ever find a buyer at the price he had set is another thing entirely.
This is what valuation is: an emotional, complex process. Whereas pricing is based on time-based comparisons, which in the case of pricing the "chompy" would mean the cost of the Lego pieces plus the value of the amount of time spent creating it.
This incident occurred a day after I listened to an analyst talk about much-anticipated launch of Twitter's public share offering, a day before the listing. The analyst talked about valuations and how they come about.
This expert said one way of doing this was to think in terms of buying a house. For example, you would look at other houses in the neighbourhood and see where the one you want fits in, and get a feel for whether the asking price, or the valuation, is reasonable.
The analyst's overall message was that Twitter's shares were being priced by comparing them to those of its peers – companies such as Facebook, which was making money when it launched its initial public offering in 2012. Twitter, on the other hand, has been losing money.
The long and short of it is that the analyst believed that Twitter was overvalued at its asking price of US$26 a share. The interesting point for me was looking at valuation versus pricing, and how they come about.
Let's go back to the example of buying a house:
The right pricing for you depends on your comparison of what you want with prices of other similar properties.
The valuation is different. It includes how much you think a property is worth to you. This could be because of the layout, the way it looks, or some other distinctive feature, or anything of importance to you such as its location. Other considerations include how far it is from your workplace or your children's school. You are more likely to accept paying a higher price for a property that is of great value to you and your lifestyle.
Meanwhile, a friend said she made an offer for a set of second-hand curtains she saw. Her offer was not based on their value but on what she could afford.
She did not think she would be getting those curtains because the seller wanted a higher price.
So my friend has to shop for less expensive curtains, and the seller of the curtains she wanted has to wait, or hope, for a higher offer.
But who knows? If the seller does not get a better offer by a certain time, my friend might have them hanging in her home, and she would have kept to her budget.
The bottom line is that any asset is only worth what a buyer is willing to pay for it.
And what we're willing to pay needs to factor in what we can afford, not just how much we want or need it.
Remember, your next big must-have item will be superceded and its value eroded with your circumstances and changing priorities.
We have all bought a "chompy" or two in our lifetimes, but resist those emotional temptations, or else it might be curtains for your financial wellbeing.
Nima Abu Wardeh is the founder of the personal finance website www.cashy.me. You can contact her at nima@cashy.me
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Results
5pm: Handicap (PA) Dh80,000 1,400m; Winner: Faiza, Sandro Paiva (jockey), Ali Rashid Al Raihe (trainer).
5.30pm: Handicap (TB) Dh90,000 1,400m; Winner: Greeley, Connor Beasley, Helal Al Alawi.
6pm: Emirates Fillies Classic Prestige (PA) Dh100,000 1,600m; Winner: Marzaga, Jim Crowley, Ana Mendez.
6.30pm: Emirates Colts Classic Prestige (PA) Dh100,000 1,600m; Winner: Jawaal, Jim Crowley, Majed Al Jahouri.
7pm: Wathba Stallions Cup Handicap (PA) Dh70,000 1,600m; Winner: AF Ashras, Tadhg O’Shea, Ernst Oertel.
7.30pm: Handicap (PA) Dh80,000 2,200m; Winner: Somoud, Richard Mullen, Ahmed Al Mehairbi.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
End of free parking
- paid-for parking will be rolled across Abu Dhabi island on August 18
- drivers will have three working weeks leeway before fines are issued
- areas that are currently free to park - around Sheikh Zayed Bridge, Maqta Bridge, Mussaffah Bridge and the Corniche - will now require a ticket
- villa residents will need a permit to park outside their home. One vehicle is Dh800 and a second is Dh1,200.
- The penalty for failing to pay for a ticket after 10 minutes will be Dh200
- Parking on a patch of sand will incur a fine of Dh300
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
What is a Ponzi scheme?
A fraudulent investment operation where the scammer provides fake reports and generates returns for old investors through money paid by new investors, rather than through ligitimate business activities.
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
