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It isn't a strategy, it is a simple mathematical fact that the boxes are collectively worth $980,000 each.
Whether the 98% chance of a 2% ROI is worth the 2% risk of a 100% loss is a different question. The valuation including risk will be different than the simple valuation of the boxes and will vary widely from person to person depending on risk aversion. And, of course, the example is irrelevant to actual investing since risk is not an absolute known value in investing. What is described with the boxes is simply casino-style gambling as demonstrated on Deal or No Deal. |
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As it happened, I skimmed the O.P. and didnt' read that part. So I posted my political views unknowingly. I likely would have left that out, but eventually --- and sooner rather than later on a subject like this --- politics is going to come up and be discussed. My apologies to BTD. |
Apology accepted and if I skim past the political commentary I can make sense of it (more than SJs [appreciated] effort).
Basically people with to much money were buying what they wanted and people with not enough money were buying what they wanted and now the money came due but no one has the money to pay it back? |
Actually, the biggest portion of the problem started in the Carter administration when laws were passed forcing backs to lend at subprime rates to less than qualified borrowers.
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He's right, Carter started it all ... actually with airline deregulation. And it was Clinton who did the most harm with the repeal of strong banking regulations. But he was a barely closeted Republican.
In any event, Congress was responsible for all of this, not the president on whose watch they happened, even if they happened with his support. Both parties are very pro-business, but generally speaking it's been the Republicans who've been more virulently anti-regulation, and certainly the Republicans who are most responsible for the wealth redistribution that made this whole mess possible. There was simply too much money floating around in the market system, with nowhere legitimate to go. Anyway, my editing window has expired, and I made a big typo in my tirade above. Taxpayers are on the current bailout hook for about 4 billion dollars, not 4 trillion. The $15 trillion in stock wealth lost in 2008 to date is an accurate number, as is the 1 billiion hungry by year's end. So sorry for my error, and again apologies to BTD for the inevitability of me bringing politics into this. For fairness sake, a pox on both their houses. Torches and pitchforks, please. |
I think it all boils down to the fact that the value of money is imaginary
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That's true. Abandoning fiat currency would have avoided most of the current problems.
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I like shiny.
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