| > Transaction with asymmetric information Asymmetric information is called "risk", and risk affects what one is willing to pay for it (i.e. its value). Have you ever noticed that "riskier" investments have higher rates of return? > But it is independent of the market. Value is entirely based on the market. And yes, it can and does change moment by moment. > A company's stock is worth all of its assets divided by the number of shares. No no no. A company's stock is worth what its expected future profits are. > We should be applying the same logic to valuing stocks and other financial instruments. That's never going to work. > You ask for a loan... You don't get a loan unless you put up collateral. So no wealth is created by the loan. Gawd, now I have to explain how banking works (!!!) > you have no choice but to ride along with the fund's choices People are fools to buy into defined benefit pensions. |