07-14-2011, 06:27 AM
Gentlemen! You are both right, but you are discussing different things. An increase in one's wealth, or decrease, by virtue of a change in the value of our assets, indubitably makes one richer, or poorer. If we wish to realise a profit, of crystallise a loss, however, we must actually buy or sell.
As to 1929, I believe it is a myth that brokers were jumping out of windows. I seem to recall that no-one did, or that someone did, but not connected to the financial shenanigans. In his classic, Prof JK Galbraith ('The Great Crash') explained that at that time, the US had come to believe that a new economic dawn had arrived, where the old rules did not apply. It was 'every American's right to be rich', and there was no connection needed between companies making profits and paying dividends, and the increase in their capital value -- that was old hat! Ordinary people - butchers, bakers anyone- wanted to be in on the act, and they were encouraged to do that by the financial journalists of the day. They did not even have to use much money; they could obtain brokers' loans, against the shares being bought. This was known as buying on margin. One paper excitedly wrote: 'The market has surged forward mile upon mile, parasang upon parasang!' Galbraith dryly wrote: 'The following day, the market fell back a couple of parasangs'. When that happened, of course, the brokers would ask for more collateral. This could only be produced, by selling shares, which then triggered further falls, and further requests from the brokers.
As to Murdoch, of course he has shown himself sharp and shrewd in the past. Now, to me, he looks like an old, tired man. The complexity of the the holdings, may begin to work against it: some, surely, will be asking themselves just how competent his family really are, and how united. Occasionally, families really do continue to produce generations of financial geniuses, with an inclination to follow in the footsteps of their forbears-- the Rothschilds, e.g. But so often, nepotistic appointments are merely a way of ensuring that one does not get the best people at the helm. My feeling is that despite appearances, his daughter Elizabeth would be the best candidate, along with his Chinese wife. I am sure I had all sorts of other interesting nuggets to share, but I have forgotten them....
As to 1929, I believe it is a myth that brokers were jumping out of windows. I seem to recall that no-one did, or that someone did, but not connected to the financial shenanigans. In his classic, Prof JK Galbraith ('The Great Crash') explained that at that time, the US had come to believe that a new economic dawn had arrived, where the old rules did not apply. It was 'every American's right to be rich', and there was no connection needed between companies making profits and paying dividends, and the increase in their capital value -- that was old hat! Ordinary people - butchers, bakers anyone- wanted to be in on the act, and they were encouraged to do that by the financial journalists of the day. They did not even have to use much money; they could obtain brokers' loans, against the shares being bought. This was known as buying on margin. One paper excitedly wrote: 'The market has surged forward mile upon mile, parasang upon parasang!' Galbraith dryly wrote: 'The following day, the market fell back a couple of parasangs'. When that happened, of course, the brokers would ask for more collateral. This could only be produced, by selling shares, which then triggered further falls, and further requests from the brokers.
As to Murdoch, of course he has shown himself sharp and shrewd in the past. Now, to me, he looks like an old, tired man. The complexity of the the holdings, may begin to work against it: some, surely, will be asking themselves just how competent his family really are, and how united. Occasionally, families really do continue to produce generations of financial geniuses, with an inclination to follow in the footsteps of their forbears-- the Rothschilds, e.g. But so often, nepotistic appointments are merely a way of ensuring that one does not get the best people at the helm. My feeling is that despite appearances, his daughter Elizabeth would be the best candidate, along with his Chinese wife. I am sure I had all sorts of other interesting nuggets to share, but I have forgotten them....