Comments on: Understand This http://freetheanimal.com/2007/03/understand_this.html Expressing Our Primal Genes for Lean Health, Vitality and Attractiveness Fri, 19 Mar 2010 06:48:06 -0700 http://wordpress.org/?v=2.8.4 hourly 1 By: Mark Smoler http://freetheanimal.com/2007/03/understand_this.html#comment-4866 Mark Smoler Fri, 23 Mar 2007 14:45:29 +0000 http://localhost/animal/2007/03/understand_this.html#comment-4866 <p>I'm sorry, but I don't understand your logic. If I make 8% on a stock after taxes in one year and that puts me about 7% in the hole, that would indicate a 15% rate of inflation? Sure, you could find a commodity like gold that has gone up that much, but gold is hardly a staple in everyday life, nor as good an indicator of inflation as it used to be. Even if you pick gold, you have to pick the proper time frame. 25 years ago, gold was almost $1000 an ounce. Using that time frame, the dollar has actually appreciated over the last 25 years. Prices of electronic goods continually go down. How much did you pay for your Pentium 1 PC 10 years ago? </p> <p>While the CPI is far from perfect, it is a closer indicator of inflation that a single arbitrary commodity like gold. Look at your personal life. Does it really take twice as much money to live the same lifestyle today as it did 5 years ago? That's what a 15% yearly rate of inflation would suggest.</p> <p>It's true that if the price of an apple goes up, it's still the same apple. I won't go into long detail on how the same apple could be worth more (or less) at a different time because of demand and other reasons. However, stocks are truly dynamic and the actually substance of what they are changes over time. Stocks are primarily valued on the expected future profits and growth potential. Today, companys are making more profits then ever, thus the value of owning a portion of that company is worth more. It is, in fact, not the same apple.</p> <p><br /> </p> I'm sorry, but I don't understand your logic. If I make 8% on a stock after taxes in one year and that puts me about 7% in the hole, that would indicate a 15% rate of inflation? Sure, you could find a commodity like gold that has gone up that much, but gold is hardly a staple in everyday life, nor as good an indicator of inflation as it used to be. Even if you pick gold, you have to pick the proper time frame. 25 years ago, gold was almost $1000 an ounce. Using that time frame, the dollar has actually appreciated over the last 25 years. Prices of electronic goods continually go down. How much did you pay for your Pentium 1 PC 10 years ago?

While the CPI is far from perfect, it is a closer indicator of inflation that a single arbitrary commodity like gold. Look at your personal life. Does it really take twice as much money to live the same lifestyle today as it did 5 years ago? That's what a 15% yearly rate of inflation would suggest.

It's true that if the price of an apple goes up, it's still the same apple. I won't go into long detail on how the same apple could be worth more (or less) at a different time because of demand and other reasons. However, stocks are truly dynamic and the actually substance of what they are changes over time. Stocks are primarily valued on the expected future profits and growth potential. Today, companys are making more profits then ever, thus the value of owning a portion of that company is worth more. It is, in fact, not the same apple.

]]> By: Kyle Bennett http://freetheanimal.com/2007/03/understand_this.html#comment-4865 Kyle Bennett Tue, 20 Mar 2007 18:50:34 +0000 http://localhost/animal/2007/03/understand_this.html#comment-4865 <p><i>For example, when the price of a house goes up it doesn't mean that the house is more valuable.</i></p> <p>I bet 9 in 10 people on the street would disagree with that. 10 out of 10 of those nutjobs over at Beyerstien's who keep insisting on assessing the objective value of Billy's guitar.</p> <p>Waht do you think of Kiyosaki's CASHFLOW ideas and the game? A bunch of us have been playing after work, and it's been an eye opener. <br /> </p> For example, when the price of a house goes up it doesn't mean that the house is more valuable.

I bet 9 in 10 people on the street would disagree with that. 10 out of 10 of those nutjobs over at Beyerstien's who keep insisting on assessing the objective value of Billy's guitar.

Waht do you think of Kiyosaki's CASHFLOW ideas and the game? A bunch of us have been playing after work, and it's been an eye opener.

]]>