Originally posted by AndrewPKYap:
Who says that the real value is $120? Is there such a thing as "real value"? Is the real value the value that is real today or real tomorrow? Is the real value the NTA of the stock? Is the realy value a PE of 10 or 11 or 12?
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Value (economics)
From Wikipedia, the free encyclopedia
The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods which can be exchanged. From this analysis came the concepts value in use and value in exchange.
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I think you know what im driving at ...
by the way, i thought the article about value in use was a pretty good one ...
The money did not go anywhere, it is just that the money ppl have does not exist in the first place. For example, I buy a house and at 1million, then I sell the house the next year at 2million, so everyone on believe I am now 1million richer. However throughout the transaction, no one sees the 1million dollar flowing. I sold my house to one person and he gets the bank to perform the transaction through paperwork which the bank believe he has. The person who bought my house has 2million in his bank account earned the money from his business. His business earn that 2million from a client who actually borrow the money from the bank. The bank lend the money to that person by adding the money to his account. but in fact the bank does not have enough money. Everything is via paperwork. Then one day I want to see 2million cash which I have not seen before, so I ask the buyer to give me cash. He then withdraw from the bank. The bank then give him the money. But running out of cash the bank seek back money from the the house buyer's business client. he could not return the money, he declare bankrupt. Everyone realise the situation and start looking to see if they have the real money. When eveyone wants to see money, the bank have to get back the loan money to customer which they claim to have but do not have. And the cycle goes....
Conclusion, the money did not goes anywhere. We just realised we do not have that much money in real life. And stop dreaming if we think we are rich.