Here is a final addition to my articles about profit I (Rendite I) and profit II (Rendite II). They were about the race for turnover profits and stock prices …
The higher the profits of an enterprise, the higher the stock price. It is an automatism that does not change the profit (dividend relative to the market price) made by the investor. Consequently, the profit for the investor remains mostly on a low, almost negligible level.
So an investor is not fascinated by the profits of the really or virtually provided capital when buying shares. No, all that matters is the added value of the documents. That is what the investor hopes for (speculates on).
This hope of added value is deceptive. Because, even with shares, the inflation seems to come faster than the added value. For instance, if we assume that the Euro, after all, bought almost twice as much at the end of the millennium as it does now, then we have to divide the current stock prices by the factor two to make them comparable. That means the DAX, which today is on 5,500, equals a DAX value of 2,750 in the year 1998. To be sure, the nominal value is higher, but the real value…
And in case it plummets again – perhaps really plummets – all will be lost, anyway. And if the governments of this world had not given surety to speculators a short time ago with horrendous sums, it would have plummeted not very long ago.
So what is it the vernacular says?
Postponed is not abandoned.
If you see it like this, investment and profit are always just a gamble with time. And the faster the wheel turns, the harder it gets. The only way to win is to gamble, and you loose as much as you gain. Gambling, however, costs a lot…
It is very simple, isn’t it? Have fun with your investment!
RMD
(Translated by EG)
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