Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

New York Cabbies Get Taken for a Ride


Exorbitantly overpriced, taxi medallions are the last can't-miss investment in town.

New York City has seen the price of one thing after another plummet in the last year: real estate, stocks, consumer goods. The price of one item, however, keeps rising into the stratosphere.

That item? Taxi medallions.

The medallions -- which license owners to operate yellow cabs -- are small metal disks affixed to a taxi's hood. Those drivers lucky enough to have them are the only ones allowed to pick up passengers on the street (as opposed to those who call a central dispatcher for a car).

There are 2 classes of medallions: individual and corporation. The first, which make up about 33% of all medallions, are sold on a one-off basis, and the cab must be operated by the medallion's owner; the second, often known as mini-fleet medallions, are sold in pairs.

The price of medallions is set by supply and demand on the open market, and their prices easily rival that of Manhattan apartments. Individual ones currently go for around $570,000; the corporation ones average $750,000. Since the latter are sold in pairs, they routinely fetch $1.5 million when sold.

In 2001, the price for individual and corporation medallions was $180,000 and $199,000, respectively. Their prices have tripled since then, untroubled by the fate of New York's broader economy. They're the last can't-miss investment in town.

"The price historically appreciates," says Gary Kanterman, a broker with Jericho Taxi Brokers, located in Queens's Long Island City. "It is only affected when there is legislation that will affect the market." It therefore isn't affected by such things as the state of the economy or fuel prices: The last legislation to have an effect on the market was 1990's Taxi Commission Law, which required cabs bearing individual medallions to be operated by the owner. The price dropped significantly, but then soon rose again.

There are 13,300 medallions in existence, and the total number has remained relatively fixed for the last 8 decades, Kanterman said. This is why the price has maintained its steep upward trajectory. Though Mayors Giuliani and Bloomberg auctioned off about 1,500 medallions, it's been 2 years since any new medallions were issued.

"I believe we probably have the same irrational exuberance that Greenspan once said existed in the overall market," Kanterman said. But, he added, "There is no economic model that tells us what we can value medallions at versus where they are now. It defies formulas."
< Previous
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos