Earlier in the day, I was considering simply posting a note stating that I would get around to this week's entry tomorrow, given the stat holiday. However, I have now changed my mind, as I am completely paralysed from the gargantuan feast of epic that we had for Thanksgiving.
On the investment side this week, I bailed out of a small position (around $10k) that I was holding in the materials sector last Monday, realizing a respectable 20% profit that only took 3 months.
The rapidly developing foreclosure fraud issue in the US, and a rally that appears to represent a complete separation of the market from any semblance of fundamentals has caused me to pause. After all, I am not interested in speculation, I am interested only in value investing. I no longer see any opportunities in the latter, though there are plenty of bandwagons to jump on for those interested in the former. Discouragingly, I see some very strong similarities in the market right now to late 2007.
On another note, I find it rather interesting to consider the concept of relative costs. For the sake of argument, let's say you have a net worth of $100,000 (makes the math easy). You take your wife (and, lol)/or girlfriend out for a fancy dinner – that is, you skip the Red Robin and head to the essence of middle-class luxury: Earl's. You both have a couple of cocktails, share some calamari, both have steak, and share a dessert. You get the cheque, add the tip, and it comes to $100. You have just spent 0.1% of your net worth on one meal.
Now, let's say that Bill Gates (net worth: $54B US) takes his wife out to dinner. Let's also say that he takes her to one of the most expensive restaurants in the world, where, after I did some Googling, it seems it costs about $700 for two to dine, excluding tip and alcohol. To make the math easy, let's round this up to $1,000. This works out to 0.0000019% of his net worth.
To put this into perspective, for Bill Gates to spend the equivalent amount on dinner that we have just spent at Earl's, he would have to relieve himself of $54,000,000. This means he could buy a new Gulfstream G550 private jet ($50 million), use it once JUST to go to dinner -- and then crumple it up and toss it out -- and then buy a new single-use Bugatti Veyron to drive back home. He would still have about a million dollars in change.
My point is, there becomes a point where one attains an amount of wealth beyond which it is pointless to compare any expense to the average person. If we take the $1,000 cost of the most expensive restaurant meal to determine what this value is, it works out to a million dollars.
When you look at it in terms like that, becoming 'wealthy' doesn't seem that far out of reach.
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