"RicodJour" wrote in message
...
On Nov 3, 3:23 pm, "
wrote:

Book value and market value are two different things. Market value
is what counts for net worth. The price of the gold, stock etc
today, not what was paid for it 5 years ago.

Again, that's a theoretical valuation, and, yes, it is pretty much
standardized in accounting. But there's a big but in there. People
do have a tendency to exaggerate, Trump for one example, and it's also
neglecting the liquidity factor. Limitations and gross markdowns due
to an urgent need for cash flow can reduce anyone's net worth by a
huge factor. Rich people and most businesses go bankrupt because of
those limitations.

I'm not really arguing against you, I'm just saying that someone's
'net worth' is a standardized delusion, much like most of what happens
in the stock market. A more realistic valuation would use a
statistical model and would factor in liquidity and risk. As that's
obviously too complicated for most purposes, people end up using a
theoretical number at some fixed point in time, which allows us to go
"oooh!" when we see the Forbe's 400 list.

------------------------------------------------------------------------
And then there are guys like Bernie Madoff who bring new meaning to the
question:

"What's my investment worth?"

"Book value or real value?"


--
Bobby G.