Originally posted by quackquackyeah, and that $400,000 was cold, hard cash. or instruments representing such. it wasn't imaginary.
It is a pretty standard definition of a destruction of unrealized wealth. For example, if a house was worth $1M and now it is worth $600,000. It is probably more accurate to say you lost $400,000 of value than to say you lost nothing because you still have the house.
but not destroyed, i guess; the seller is walking away with it.
Originally posted by quackquackA house can be overvalued or undervalued but the amount of wealth contained in the house stays the same. Except for wear and tear.
It is a pretty standard definition of a destruction of unrealized wealth. For example, if a house was worth $1M and now it is worth $600,000. It is probably more accurate to say you lost $400,000 of value than to say you lost nothing because you still have the house.
Originally posted by Metal BrainEverything in your house can be overvalued or undervalued too. But if your stuff used to be worth more and now it is worth less you have an unrealized loss.
A house can be overvalued or undervalued but the amount of wealth contained in the house stays the same. Except for wear and tear.
Originally posted by quackquackOnly if you sell it when it is undervalued. You can pay too much for anything and have an unrealized loss. The true value is unchanged.
Everything in your house can be overvalued or undervalued too. But if your stuff used to be worth more and now it is worth less you have an unrealized loss.
Supply and demand might change, but the cost of production might not. Remember Cabbage Patch Dolls? If you pay $200.00 for a doll that only costs $10.00 to make, how much is the value? I say it is $10.00 but it may be hard for me to convince that to someone that sold a doll for $300.00 to a rich guy with a spoiled child.
Just because you bought a doll for $300.00 does not make it worth that much. Production cost and market value are two different things.
1 edit
Originally posted by Metal BrainThe fact that somebody paid 3 bills proves it has a value of 3 bills. Value is not production cost. Value is what someone will pay for any given concept. Is Barbra Striesdan tickets worth 250? Not to me but they are to someone else.
Only if you sell it when it is undervalued. You can pay too much for anything and have an unrealized loss. The true value is unchanged.
Supply and demand might change, but the cost of production might not. Remember Cabbage Patch Dolls? If you pay $200.00 for a doll that only costs $10.00 to make, how much is the value? I say it is $10.00 but it may be ...[text shortened]... .00 does not make it worth that much. Production cost and market value are two different things.
Originally posted by cheshirecatstevensValue and price are not the same thing, otherwise bubbles could never exist.
The fact that somebody paid 3 bills proves it has a value of 3 bills. Value is not production cost. Value is what someone will pay for any given concept. Is Barbra Striesdan tickets worth 250? Not to me but they are to someone else.
Originally posted by WajomaI didn't say value cannot differ from person to person, obviously a book on physics has more value to me than to a construction worker, but that doesn't mean the price reflects its value one to one or that it does not have a definite value for me or for the construction worker.
Value is something to be assessed by individuals.
Forcing a particular value on your fellow man is immoral.