The Wise Investor
asked the man on national television how much
money he had actually lost. 'I have,' he replied with
a smile, 'not lost a single cent'. There was silence in
the room. For a moment, the journalists thought he
was joking, or perhaps had gone mad after the
A few moments later, however, it dawned on
them that the man was absolutely right. He had not
lost a cent. Although his shares were worth half
what they had been the day before, he had not sold
a single share, and so he had not lost any money.
If by some miracle the value of the shares
returned to their previous value the next day, then
he could sell them all and not loose anything. Never,
Kate, confuse an 'unrealised' gain or loss with a real
gain or loss. If the value of a marketable asset
increases in value, then it is not until you actually sell
the item that the gain becomes real."
John had been speaking for quite some time, and
yet he was still full of energy. This was his forte,
telling stories to illustrate simple points. Although
their discussions on budgeting were necessary, John
had found them a little boring.
Many of his ideas were new to Kate, and so he
had kept her interest, but with the benefit of
hindsight they were all simple.
Now that they were talking about wider issues,
though, John was beginning to enjoy himself. He
was not used to sharing these thoughts with people,
as he had long since learnt the wisdom of remaining
silent. As the bible said, 'cast not thou pearls before
swine, lest they trample them in the mud, then turn
and rend you'. How true, John thought.
Often it was the wisest and most heart-felt
comment that attracted the most scorn and
criticism. Kate, however, had an open mind, and
was anxious to learn.