My Dumbest Investment
My dumbest investment is a weird one. In the late 1950s and 1960, a mining company aimed to profit from a cave in the Grand Canyon filled with bat droppings, a fabulous treasure of fertilizer. It built a cable system across the canyon to extract the stuff and bring it to a processing plant, where it was packaged for distribution and sale. The company experienced many mishaps and problems, though, and didn’t make me rich.
— P., online
The Fool Responds: It’s certainly an interesting story! It turns out that the U.S. Guano Company leased the cave, which was estimated to contain 100,000 to 200,000 tons of bat guano.
It was very costly to build a tramway over a mile long, and the cable reportedly broke several times. Even worse, the cave apparently held much less guano than expected. One report said, “The company had spent $3.5 million to salvage 1,000 tons of guano, which sold for 69 cents a pound.” (That amounts to about $1.4 million in revenue.)
An odd silver lining in this cloud of a story is that a U.S. Air Force aircraft accidentally flew by and severed the cable, enabling the company, reportedly, to sue the Air Force and recoup some costs. A lesson here is to consider all possible risks when deciding whether to invest in a company. Remember that estimates can turn out to be quite incorrect. ¦