Subject:
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Re: Idiots, Part Deux
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Newsgroups:
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lugnet.off-topic.debate
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Date:
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Thu, 13 Feb 2003 17:31:43 GMT
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Viewed:
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676 times
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In lugnet.off-topic.debate, Christopher L. Weeks writes:
> Value is what someone is willing to give for something, not
> what's printed on the face of it or what an expert tells you it is worth. If
> someone gives you 1500 for a 1000 bond, then *obviously* it is worth 1500.
It might be useful to distinguish individually-ascribed worth from
market-ascribed worth. That $1000 bond may be "worth" $1500 to Buyer A, but
if you go on the market and say "I'm selling this $1000 bond for $1500,"
you'll find out what the value really is. Likewise, if Buyer A will only
give you $750 for the $1000 bond, but you won't sell it to him for that
amount, then the bond is worth $750 to Buyer A but more than $750 to you.
> Is $10 "worth" of stock still worth $10 when someone is willing to pay you
> only $5 or as much as $20?
$10 worth of stock when? How many shares? What's the quarterly earnings
projection for the company issuing the stock? Is it common stock or
preferred? Has the stock split recently or is it likely to do so in the
near future? All of these factors (and many others) affect the share value.
If we're trying to assign a stable "worth" to the stock, then of course
we're not going to succeed (except after total bankrupcy, of course, when
the stock can reliably be expected to remain at $0.00). If you have five
shares of a company's stock, then you have five shares whether the share
price is $1.00 or $1000.00. In fact, your shares have no actual dollar
value except when you liquidate them, at which point you can try to sell
them for any price you desire, but naturally the market will pay only what
it wants to pay.
Your phrasing (Is X-worth of stock worth X if you can sell it for anywhere
between X/2 and 2X?) kind of stacks the question. If I say "I own
$10,000.00 of Vandalay Industries stock," then all I am saying is "Based on
the current $10.00 bid price of Vandalay Industries stock, then the sale of
my 1000 shares will net $10,000." The true worth of the stock is determined
only at the time of sale (or, in a case like collateralization or when
determining the tax liability of one's holdings, at the time of assessment).
But even in that latter case, the stock is only worth the amount it nets at
the time of sale. The price at which you are "willing" to sell your stock
(asking price) and the price at which Buyer X is "willing" to buy your stock
(bid price) are not in themselves the issue; the stock is worth the price
for which it actually sells at the actual time of sale.
Dave!
PS: I would also say that tax liability and collateralization value of
stock are not necessarily the same thing as the "worth" of the stock.
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Message has 1 Reply:
Message is in Reply To:
 | | Re: Idiots, Part Deux
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| (...) And I wasn't disagreeing with that. (I might actually, in the end, but I haven't found fault with his assertion yet.) I was merely speaking to the contract's nature, as Frank pointed out. (...) Except in another note, I asked about the ability (...) (21 years ago, 13-Feb-03, to lugnet.off-topic.debate)
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