Tuesday, July 12, 2005

A Bubble Test

When you buy an asset purely on the expectation that someone exists that will pay more than you, you are speculating and not investing.


“So investors can begin an informal test for bubble conditions by examining their own motives for buying a stock. If we are working from some reasoned appraisal of what the company might earn in five or 10 years, based on a study of its business model, we can hope we are on solid ground. If it's because ``they're talking about a price target of $500,'' probably not.

So too with houses, which in their essence are places for people to live in, not price-appreciation vehicles. It's a reasonable certainty that people will always need a roof over their heads; price appreciation is a wish, not a need.”



Anonymous Employee Appraisal said...

I hope I can make it back to read the posts again.Sincerely, Adrianne hotel appraisals

Monday, February 06, 2006 9:39:00 AM  

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