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MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

It's been a bumpy ride these past few years for U.S. investors. They weathered wild swings and disappointing results in the stock market, real estate, you name it. So we have a story now about one investment that is paying off: taxi medallions. Recently, two of them sold for a record million dollars apiece. WNYC's Ilya Marritz has that story.

ILYA MARRITZ, BYLINE: Sushil Maggoo drives a yellow hybrid Lexus, and he's proud of it.

SUSHIL MAGGOO: Yeah. This is the best cab in New York City.

MARRITZ: But the most valuable part of this vehicle is the little piece of molded tin affixed to the hood. Even if you've ridden in lots of cabs, you may never have taken a good look.

MAGGOO: It say New York City Limousine Taxis Commission medallion, 2011 to 2013.

MARRITZ: A taxi medallion is a physical object that gives the bearer the right to pick up rides for hire. It turns out it's also a great investment vehicle. When Sushil Maggoo bought his in 2003, he paid...

MAGGOO: About 215.

MARRITZ: Two hundred fifteen thousand dollars. And now, it's like?

MAGGOO: Almost $700,000.

MARRITZ: The value of this medallion more than tripled in just eight years.

MAGGOO: It's unbelievable, kind of.

MARRITZ: An analysis by Bloomberg News shows individual driver medallions have increased in value by more than 1,000 percent since 1980. Fleet medallions are also up by about the same amount. Compare that to gold, the yellow metal gained 181 percent in the same period. Now, maybe you like the sound of that. Well, buying a taxi medallion is not as simple as buying gold. Basically, you need to become a driver or a taxi fleet owner to do it. But there is an indirect way to invest. Andrew Murstein is president of Medallion Financial, the only publicly traded company that makes medallion loans.

ANDREW MURSTEIN: Our company's motto has been: In niches, there are riches.

MARRITZ: Murstein's niche might make some people uncomfortable. The loans he makes are mainly to immigrants with little or no credit record and no collateral. Sounds risky? Murstein says not really.

MURSTEIN: We've lent over $5 billion to the taxi industry with zero losses. I'm not aware of a single bank in the United States that can make a claim like that.

MARRITZ: It's not that drivers never default on their loans, but medallions are so valuable it's easy to repossess and resell a medallion from a delinquent borrower. The company is built on an idea that's become an article of faith that medallions will never significantly decline in price. But why should this be so? New York's Taxi & Limousine Commissioner David Yassky says investing in a medallion is like purchasing a little piece of New York City.

DAVID YASSKY: I think people are buying these medallions because they know that the city's economy over the long run is a successful one.

MARRITZ: And for newcomers to New York, it's steady work with real rewards. But Ed Rogoff, a professor of management at Baruch College, says one factor alone really drives medallion prices.

ED ROGOFF: You know, there's nothing like having a monopoly to keep you profitable.

MARRITZ: There are exactly 13,237 taxi medallions in New York City. And since the 1930s, that number has increased only a small amount.

ROGOFF: When you limit competition, you get strong profits, and those profits get reflected in the value of the enterprise, and the value of the enterprise in the taxicab industry is the medallion price.

MARRITZ: Yet, most drivers still make a modest wage. A typical taxi driver brings home about $50,000 a year with no benefits. Sushil Maggoo says he struggled to save enough to buy that medallion eight years ago. Now, it's his nest egg.

MAGGOO: I just want to keep it for my retirement so to help me to pay my bill when I cannot work.

MARRITZ: Until then, he'll be picking up fares, so he can make those monthly payments on his medallion mortgage. For NPR News, I'm Ilya Marritz in New York.

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