Investing

Post Reply New Topic

I think I would go with communism.

This is arguably true, but I don't really buy into it for lack of evidence.
The issue is not really not having enough resources, but the allocation of these resources.

Without going into too much detail, saying "capitalism bad!" because one is disenchanted with the problems it brings is like swearing off food because of one episode of diarrhea.



Profit and greed are 2 different things...just because you wanna make a profit doesn't mean you're greedy. Every business, big or small, wants to be profitable. In vaguely keeping with the original thread, investors and traders who are greedy are unlikely to make profit, because they let their emotions get in the way.

No I thought profit and greed had the exact same dictionary definition

I guess a better way to say would be I disagree with a system based on competition and greed.

What's wrong with competition?

We don't need a system based upon it, is my opinion.......there is a time and place for it, but I do not feel expecting everyone to want to join into this high stress game of fight your way to the top is a very good way to run a society.

i have about $102,000 invested in 20 stocks. it used to be $180,000 before the G.F.C.

i invested in resources and gold mining stocks (i do not see gold as a resource).

i have been hit hard. when the resource stocks go down, the gold stocks go up. people run to the "safe haven" of gold when demand for resources dwindles.


anyway, i have no real interest in economics, but my understanding is this:

the stock market is a place for investors to infuse capital into companies they believe will grow with the input of their capital.

an example is: apart from being a programmer (sole trader), i have a business which sells frozen chips (fries) and fresh chips (chilled but not frozen), and whole peeled potatoes to fish and chip shops and pubs and clubs.

i buy 10 kg bags of chilled whole peeled potatoes from my supplier for $12.00 each, and i sell them for $17.00 each. i sell about 30 bags per day.
i buy frozen "marvel" fries (my supplier is the only supplier who has them) for $26.00 per 15kg, and i sell them for $31 each. i sell about 70 of them per day. i have more products to sell than this, but i will use these 2 products as the focus for what i am going to say.

$17-$12=$5 profit. $5*30=$150 for peeled potatoes.
$31-$26=$5 profit. $5*70=$350 for frozen fries.

$150+$350=$500 profit for those 2 products per day. my driver is paid $180 per day, so $500-$180=$320 per day profit for me for those 2 products.

if i bought a potato washing and peeling machine (industrial size ), and warehouse space and an automatic bagging machine, i could buy unpeeled and unwashed (dirty) potatoes direct from the growers at $0.18 per kilogram, and with electricity and rent, pay about $0.40 cents per kilo for my potatoes.

that means that i would pay $4.00 per bag and not $12.00 per bag, and i would then market my 10kg potatoes at $14.00 per bag which is cheaper than anyone else in sydney. that means that i would make $10 per bag and also draw many more customers into my market.
i know that if i was selling peeled potatoes at $14.00, i would be deluged with business, and i would have to put more trucks on the road.

if i bought a chip slicing machine and a pre frying machine and as well, i could produce frozen fries at about $9.00 (including refrigeration costs and boxing), and if i sold them at $25 each, they would be the cheapest chips in sydney, and likewise i would be deluged with new customers.
with the demand from my current business which is 70 boxes per day, 70*16=$1120 profit per day for the chips rather than only $350 per day.

the demand for my chips would explode if i could sell them for $24-$25 per box.

but at my current level of income, i can not afford a potato peeling and bagging machine ($200,000) and the rent ($25000) and the prefryer ($60,000).

if i compiled a business activity report and also a feasibility report every month that was published, before long, people would want to invest their money so i could go ahead and purchase the equipment. the amount of money they initially invest would represent a percentage of ownership of my business.

if i value my business at $500,000, then if they invest $10,000, they would own 2% of my business.
if i got enough investors to buy the plant and equipment, the value of the business would skyrocket, and i may have 100's of trucks on the road, and their investment means they own 2% of my business even if it grows to a sale value of $20 million.

without investors, i could never realize this bonanza, and in order to legitimately gather numerous investors who understand the situation (by reading the monthly reports) and who wish to contribute to it's realization, i would have to float my business on the stock market to attract investors.

without external investment, i can draw a good income, but with it, everyone would benefit (including. the shops who would get their chips very cheaply, and their customers who favor them above other shops not sourcing my products)

only people who are insanely rich to begin with can scale up their ventures using their own money.

without the stock market, there would be very few businesses that could employ thousands of people.




if i went into the "dragons den" if you know that show, then i know they would invest

I have a 401k and a mutual fund but I'm *far* more interested in direct investment in real estate, particularly buy and hold (ie. investment rental property) than I am buying stocks. My main reasons - its something you can intimately control, you know the details (at least as good as the due diligence you're willing to put in), and you have not only other people paying off your houses but you have cashflow and huge lines of equity in the forms of the mortgages to buy more; especially as knowledge accrues you're net worth increases exponentially so long as you're actively seeking opportunities.

My worst case scenario would be buying interest in a few good REITs, though I'd much prefer to start buying houses, getting to know a reputable management company or two, finding a good real estate lawyer for LLCing each poperty as well as drafting letters of intent; eventually I'd love to be investing in purchase and resale of appartment complexes or even commercial development.

I suppose I don't mean to entirely shoot down the stockmarket - ie. if you have a field that you're intimately knowledgable with, if you're willing to get to know as much as you can about all of the board and major players as well as their personal history, their vision, and you have trust that they've got it in them to make almost nothing but great decisions - you're in a place to make all kinds of money. Seems like the trick though is investing, not speculating, and for most people who have little interest in researching this kind of stuff or don't have the time other than to just distribute risks it really amounts to speculating.

almost all of my money is in the bank at the moment. i am terrified to invest in anything anymore, but interest rates are dropping, so i may be forced to buy things i would not ordinarily buy in order to minimize the reduction of my income.

i wanted to buy a few houses in the USA, but i was told that the US economy will "tank" out. i see nice houses that are going for $40,000, and in australia, those houses would cost $600,000 or more. they are 2 storey large homes which are currently vacant and in danger of being destroyed because their owners can not maintain them, and they are becoming ramshackle.

i have to wonder why the owners can not find tenants to occupy them.

i have even thought that if i could buy only one house in the USA and move to america, and run my australian business from there, i would be very well off, but i have to stay in australia because i often have to personally deal with problems that occur by going physically to where the problems are to solve them.


there is no easy solution.

Not a thing. Competition one of the engines of innovation. The other engines are egotism -- showing how smart one is and curiosity --- finding out how the world works. All these motives together are what has created the modern technologically based world we live in. For better or for worse.

ruveyn