"RicodJour" wrote in message
...
On Nov 3, 8:34 am, "
wrote:

Following your bogus ideas, no one could ever know what they were
worth without selling every last thing and turning it into cash.

That is pretty much the case. You're conflating book value with
market value with what someone would actually pay for the thing.

If Bill Gates sees that he's worth $50 billion or whatever, and
decides to cash out and tries to dump all of his MS stock, MS stock
would plummet. He wouldn't be worth his book value of $50 billion

If someone sees that a particular toy was valued at $X on the Antiques
Roadshow, it doesn't mean that they'll get that much when they try to
sell it. A dealer would pay half or less, and maybe a private
individual who wanted it right _now_ would pay more. So which one of
those is the 'real' value?

The cash you have in your pocket goes up and down in value every day,
as does your house, your car (okay, that just goes down unless it's
rare and in demand), gold, oil, food - everything goes up and down.
So even if someone sold everything and took the cash, the resultant
sum would only be their relative wealth on a particular day at a
particular time and in a particular location.

Accounting is a means to standardize bookkeeping, and a means to keep
track of the book value of wealth. It's still a book value. Arguing
that the book value is the only real value is simplifying things to
the point of error. That is what the banks did with CDOs. They tried
to separate components of a number and sell those components
individually to make more money - to create wealth. Unfortunately
there were a lot of zeroes in those numbers and components.

==============================================

Thanks for explaining that a lot more patiently than I would have. There
are so many ways to calculate value. In the case of something like a "toad"
howitzer g there's an acquisition value (what did it cost us to buy it
originally?) that's probably way different than its original projected
value. There's the cost to replace it if the manufacturing line still
exists. There are trade-in values, treaty values and foreign resale values.
There's the cost to replace it if you have to rebuild or allocate production
facilities. There's the value that it has compared to similar equipment
that might be a substitute. There's scrap value and negative value, as in
the cost to dismantle and disarm it so it doesn't fall into the hands of the
HeyBub Revolutionary Guard.

Book value is, as you say, yet another value we can consider, but it's one
that could change overnight and for a lot of people, it did. Or as that
joke went about the guy buying up all that stock: "Sell it to whom?"

--
Bobby G.