Book value in deflationary times
Posted by cij on Dec 12th, 2008
In fundamental analysis of stocks, one of the most important numbers is the book value. Basically, book value is calculated by total assets minus intangible assets (patents, goodwill) and liabilities. Roughly speaking, it is the value you get if you liquidate the company.
But in times of debt deflation, how reliable is book value?
Remember that as [...]
Demand for money, inflation/deflation & its implication
Posted by cij on Dec 3rd, 2008
Two years ago, we first covered the root cause of inflation in Cause of inflation: Shanghai bubble case study:
The mainstream economists’ definition of inflation is rise in the general level of prices. However, according to the Austrian School of economic thought, the definition of inflation is the increase in the supply of money, in which [...]
Is this the beginning of the loss of confidence in fiat money?
Posted by cij on Sep 23rd, 2008
Events from the past week are tumultuous. It started from the nationalisation of Freddie and Fannie (we were mulling about the implication of nationalisation 2 months ago in How do we all pay for the bailout of Fannie Mae and Freddie Mac?). Then came the bankruptcy of Lehman Brothers and takeover of Merrill Lynch. Then we have the nationalisation of AIG. Gold prices surged by more than US$100 in two days (it had declined since), which was the most rapid surge in 26 years.
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