Thursday, September 6, 2012

Value is what you get, price is what you pay

Wonder who says this? What does this mean? This proverb means that each individuals perceived value on a purchase could mean differently. We may pay the same price, but we may value them differently. A stock that I bought with average yearly return of 5% could be perceived differently in terms of value to another person who gets the same return from the same stock.

It could also mean that while currently I see value in bank stocks in US, others, may see continued warning signs due to the yet to be solved real estate crisis in that country. I may think to a large extent, while Malaysian stocks are relatively expensive although with decent consistent growth (and see other places as more attractive), others may think of it differently due to the low interest rates offered by banks.

People who do not invest into stocks or anything else for that matter may still see haven in bank's deposits - and they may think of it as safe bet while stocks continue to be risky bet. Those kind of people will always say "high risk high return". Hence they go for low risk bet, which is 3% or less, currently.

Some may put their money into gold. Some into other commodities. Well, value is what you get - or perceived to be. As long as you say to yourself you want to learn by getting your hands dirty.


limchohooi said...

Cost of opportunity is also important to judge the value.

Bn911 said...

Hi Felicity, mind to get ur view on cypark? i rather interested with this stock below 1.5. Thx a lot.