From: Dan Fabulich (dfabulich@warpmail.net)
Date: Mon Sep 16 2002 - 18:51:54 MDT
gts wrote:
> Dan,
>
> re: gum certificates...
>
> For the sake of brevity I did not attempt in my last messages to you to
> address your somewhat silly comparison between gum certificates and
> stocks.
>
> Like baseball cards or tulips, such things as gum certificates are
> classified as "collectibles." The economics of the market for
> collectibles (if there can be such an economics) is different from that
> of the market for financial assets.
>
> Unlike investments in collectibles, investments in corporations
> represent a real interest in the real assets and real profits of real
> companies. Unlike collectible items like gum certificates, corporations
> really do make profits in this world, measured in dollars and cents and
> spendable at your local grocery store.
I wish you'd stop saying "represent" but would instead say things like
"give access to". The difference is subtle, but crucial. :)
Again, in the gum certificates, the broker could have claimed that the gum
certificates "represent" the relevant bank assets. The reason it'd be
silly is because that "representation" would be totally arbitrary; nobody
would give you assets just because you had a lot of certificates.
It's not so with stocks, and that explains why stocks work the way they
do. It's the missing link in the answer, but it's also the most
important.
> Despite the fact that intelligence/knowledge/experience can buy no
> excess return above the market return, the stockmarket is nevertheless a
> good investment in as much as the economy continues to grow over time.
>
> The best investment strategy is "buy and hold," though you are unlikely
> to get this advice from a broker who relies on commissions. (Take it
> from someone who once relied on commissions before his defection.)
Amen brother! :)
-unless you love someone-
-nothing else makes any sense-
e.e. cummings
This archive was generated by hypermail 2.1.5 : Sat Nov 02 2002 - 09:17:05 MST