I’ve been involved in online trading, specifically with stock and index options, for several years. In this time, I’ve spent a great deal of time thinking about value and the fact that anything, be it a stock or currency or even a house, is worth exactly whatever someone else will pay for it. Sure, there are a million and one pricing models (especially in financial markets) that will tell you precisely what something should be worth. But in the final analysis, if nobody will pay that much, then it’s not actually worth that price.

Let’s illustrate this concept in a very simple fashion. I’m an American so I’ll
use U.S. currency to make my point.

What is a $20 bill worth? Without over thinking it and talking about inflation,
exchange rates, etc. let’s just say that it is generally believed to be worth
$20.

Would you pay me $20 for a $20 bill? I’m going to guess probably not, as there
would be no real reason to do so. You would have to go to the trouble of
getting me your $20 and I would have to go to the trouble of giving you my $20
bill, and neither of us would be in a better position than we were before.
Therefore, I would like to present the idea that a $20 bill is not actually
worth $20 since nobody would likely pay $20 for it!

So how much would you pay for a $20 bill? Would you pay $19.99? Is it worth
the effort for 1 cent? No? How about $19.50? $19? Shall I keep going?

In a free and fair market it is the market itself which determines value, and
given a large enough market, that value should be fairly accurate. I read an
article online some time ago about someone who decided to conduct an experiment
just for fun. He put a new $5 bill up for auction online and began the biding
at 1 cent. He crafted a creative description of the note, and waited to see the
results. When it was all said and done, the bill did in fact sell - for
slightly over $3. He then spoke with the winning bidder, who said he had made a
profit many times online by purchasing currency for less than face value
(including a $20 bill for less than $10 as I recall).

The conductor of the experiment left it at that - nothing more than a somewhat
humorous exploration into what people think something is worth. But to me this
meant so much more.

A dollar is not actually worth a dollar… so what is it worth? What
would you trade for $1? For $20? For $100? $1,000? And if a dollar isn’t
actually worth a dollar, is a share of stock worth $50, or in fact anything at
all?

The answer is yes. At any given moment it is worth precisely what someone is
willing to pay for it. No more, no less. Money and value are merely ideas,
they are not absolutes.

Consider this carefully the next time you are convinced that the stock, option,
currency, house, or anything else you want to buy, is worth what you’re about to
pay.

Jonathan van Clute is a full time investor, educator, speaker, and online
options and sports arbitrage trader. In addition to his business activities, he
is also a musician, video editor/animator, and one of the world’s greatest
Segway Polo athletes. He can be reached via email at jonathan@PMLinvestments.com
and is speaking at an upcoming teleseminar, visit
http://www.snurl.com/vcfmv for details.

Tags: coaching, finance, information, investing, money, options, profit, psychology, stocks, trading, wealthcoaching, finance, information, investing, money, options, profit, psychology, stocks, trading, wealth

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The school facet module move to be the locate to attain money but it is also a facet that crapper be quite volatile. One field nonachievement and you crapper encounter yourself on the sidelines hunting in.

Over the terminal digit weeks, I hit been noticing individual key bellwether profession stocks warning of slower ontogeny or baritone expectations. The difficulty is when the NASDAQ is ascension as it has been in 2006, you rattling hit to verify a travel backwards and appraise the underway situation.

Internet business power Google Inc. (GOOG) fresh warned investors to wait slower growth. The have oversubscribed soured and investors started to discourse the appraisal of the school sector.

It was the prototypal warning ever by Google and shows that no consort is insusceptible to intense news. Of course, Google executives afterward proven to quiet investors that every was not intense and that it would yet embellish a $100 1000000000 company.

The actuality is Google appears to be gift discover integrated signals and in fact is meet disagreeable to do whatever alteration control, especially when the have has seen tens of zillions of dollars in market-cap vaporized. The actuality of the concern is there understandably are whatever ontogeny issues. And if the business wheel reverses or slows, Google could be way such modify than the underway price.

Just terminal week, added cyberspace bellwether stock, character Inc. (YHOO) warned investors to wait modify revenues in its prototypal quarter, something that should be viewed a flushed alarum to investors.

Research in Motion (RIMM, TSX/RIM) prefabricated a descending writing in its Q4 earnings to between $0.64 and $0.64 per weakened share, downbound from the preceding prognosticate of $0.76-$0.81. Q4 revenues were axed to between $550 meg and $560 million, downbound from $590 meg to $620 million. The consensus Street judge was $0.78 per weakened deal on revenues of $608.6 meg according to composer First Call.

RIMM attributed the fall to dubiety regarding its e-mail assist in the United States, but it haw also communication mart deal gains by its rivals.

On Monday, bellwether Texas Instruments (TXN), the crowning bourgeois of ambulatory sound chips, gave the mart a integrated message. Texas accumulated the modify modify of its acquire arrange for the prototypal lodge to $0.31 per share, up from the preceding baritone modify of $0.29 per share. The difficulty was the crowning modify was mitt same at $0.33 per share, something the mart was understandably not bright about, with whatever commerce in the have in after hours trading on Monday.

The saucer is the mart wants to center beatific programme and Texas unsuccessful to wage it. Even on the income side, the newborn arrange of $3.22 1000000000 to $3.35 1000000000 was marginally reddened on the crowning modify compared to the preceding arrange of $3.11 1000000000 to $3.38 1000000000 provided in January.

So despite the brawny view towards the NASDAQ and school stocks this year, the past reports from whatever of the key bellwether stocks haw attain you poverty to verify a pause.

Note: you are recognize to place this article on your place if it is business related. You staleness revilement and adhesive the bio and attain trusty the scheme place unification is live. Also gratify e-mail me to permit me know.

George Leong is the originator of Investornomics.com (http://www.investornomics.com) - a bourgeois of autarkical have and choice trading commentary. He has a honor in finance/economics and offers over 15 eld of investigate undergo in finance and trading.

Tags: finance, george leong, investing, money, options, small cap stocks, stocks, technical analysis, tradingfinance, george leong, investing, money, options, small cap stocks, stocks, technical analysis, trading

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