Yes, but people don't sell a bedroom every year for living expenses or a bathroom for a new car during retirement. While working they can seem similar, but when retired very different. Unless you have land you can subdivide and slowly sell off.
An auctioneer is in the business of connecting someone that values a product low with someone that values it high, for a fee. That's usually a pretty good business model, especially if they don't have to buy the products themselves and assuming the risk being wrong. Similar to realtors, which unfortunately often have the problem of strong local competition.
"There’s a rational, objective value to any good, but opinions of worth will differ even among experts. Some will value a good too low and others too high." That sounds just like what most economists would say and is absurd. Opinions of worth are just that opinions, even by experts. Unless they lay their money down, an expert's opinion has even lower "value" than your own. The value has to be subjective to each individual. The chairs were either worth more to you than $1,4000 or they weren't. The value is what someone was willing to pay, ex post facto. "Fortunately, just then my wife got home and said she loved the chairs’ mellow old glow and beautifully carved crest rails. That’s the most important test of value in our household."Exactly correct. If you and your wife hated them you may have taken out to the curb for free recycling regardless of what you had paid. Regardless of an expert's opinion, they could have held no value to you. A consumer product is completely different from a product used for production. An oil field lease could be valued by the profits the oil extraction could generate. The value may be higher for a more efficient company than for one less efficient as they could generate more profit from it. If we really do switch from fossil fuels, that oil, and those leases, would have little or no value as well. That doesn't mean that people don't make mistakes in value. Everyone makes mistakes. If the chair color clashes with your table, you may suddenly value them substantially less. If the oil output or demand isn't as predicted, a company may regret spending so much. That regret may have evaporated with current gas prices...
Except that isn't actually true. You do not actually know everything about your bonds and that is probably the reason some have 'downvoted' you. Also the insinuation that Mr. Ellis doesn't understand about buying bonds. I assure you that he does, probably far better than either you or I ever will. Just because someone disagrees with you does not mean they are ignorant. Naturally, his situation and yours or mine are all different, so we may reach different conclusions about what is best for each of us. It is true that when you cash in your bond, you are handed a stack of say $100 bills. You know exactly how many you will receive and you get exactly that number. But when you look them over carefully, you will notice that the 100 has been (figuratively) crossed off and replaced with another number. It could be 98 or it could be 95. What you don't know is what that number is going to be. What you can be pretty sure of, with the current low yields, is that number will be less than 100. You will get back less than what you paid for them. This doesn't mean you shouldn't buy any bonds. Of course loosing a little money from bonds may be far better than loosing a lot of money from stocks, which can certainly happen in the short or even medium term. But in the short term, as you said, what you really need is cash, not bonds. In that case it is the medium term you really need to worry about, which is where the low yields combined with inflation really start to cause serious harm. As I tell colleagues all the time, everything has pros and cons. It comes down to a cost/benefit analysis. What is the benefit if I'm right and what is the cost if I am wrong. Not just the odds, but in real dollars and standard of living.
I'm failing to see the value of this article. Plan to retire at 55? Plan to collect social security at 62? This is a plan? There aren't any better options than this? It sounds far more like a failure to plan. I rather disappointed this article was on Humble Dollar. I thought the goal was to do better than this? I sure hope any readers don't take this as advice.
Comments
Yes, but people don't sell a bedroom every year for living expenses or a bathroom for a new car during retirement. While working they can seem similar, but when retired very different. Unless you have land you can subdivide and slowly sell off.
Post: Back to Fundamentals
Link to comment from October 1, 2022
An auctioneer is in the business of connecting someone that values a product low with someone that values it high, for a fee. That's usually a pretty good business model, especially if they don't have to buy the products themselves and assuming the risk being wrong. Similar to realtors, which unfortunately often have the problem of strong local competition.
Post: The Winner’s Curse
Link to comment from September 21, 2022
"There’s a rational, objective value to any good, but opinions of worth will differ even among experts. Some will value a good too low and others too high." That sounds just like what most economists would say and is absurd. Opinions of worth are just that opinions, even by experts. Unless they lay their money down, an expert's opinion has even lower "value" than your own. The value has to be subjective to each individual. The chairs were either worth more to you than $1,4000 or they weren't. The value is what someone was willing to pay, ex post facto. "Fortunately, just then my wife got home and said she loved the chairs’ mellow old glow and beautifully carved crest rails. That’s the most important test of value in our household." Exactly correct. If you and your wife hated them you may have taken out to the curb for free recycling regardless of what you had paid. Regardless of an expert's opinion, they could have held no value to you. A consumer product is completely different from a product used for production. An oil field lease could be valued by the profits the oil extraction could generate. The value may be higher for a more efficient company than for one less efficient as they could generate more profit from it. If we really do switch from fossil fuels, that oil, and those leases, would have little or no value as well. That doesn't mean that people don't make mistakes in value. Everyone makes mistakes. If the chair color clashes with your table, you may suddenly value them substantially less. If the oil output or demand isn't as predicted, a company may regret spending so much. That regret may have evaporated with current gas prices...
Post: The Winner’s Curse
Link to comment from September 21, 2022
Except that isn't actually true. You do not actually know everything about your bonds and that is probably the reason some have 'downvoted' you. Also the insinuation that Mr. Ellis doesn't understand about buying bonds. I assure you that he does, probably far better than either you or I ever will. Just because someone disagrees with you does not mean they are ignorant. Naturally, his situation and yours or mine are all different, so we may reach different conclusions about what is best for each of us. It is true that when you cash in your bond, you are handed a stack of say $100 bills. You know exactly how many you will receive and you get exactly that number. But when you look them over carefully, you will notice that the 100 has been (figuratively) crossed off and replaced with another number. It could be 98 or it could be 95. What you don't know is what that number is going to be. What you can be pretty sure of, with the current low yields, is that number will be less than 100. You will get back less than what you paid for them. This doesn't mean you shouldn't buy any bonds. Of course loosing a little money from bonds may be far better than loosing a lot of money from stocks, which can certainly happen in the short or even medium term. But in the short term, as you said, what you really need is cash, not bonds. In that case it is the medium term you really need to worry about, which is where the low yields combined with inflation really start to cause serious harm. As I tell colleagues all the time, everything has pros and cons. It comes down to a cost/benefit analysis. What is the benefit if I'm right and what is the cost if I am wrong. Not just the odds, but in real dollars and standard of living.
Post: No Bonds for Me
Link to comment from October 30, 2021
I'm failing to see the value of this article. Plan to retire at 55? Plan to collect social security at 62? This is a plan? There aren't any better options than this? It sounds far more like a failure to plan. I rather disappointed this article was on Humble Dollar. I thought the goal was to do better than this? I sure hope any readers don't take this as advice.
Post: Why I Won’t Wait
Link to comment from August 20, 2021