Apr

21

There is a simple rule one can apply when looking at long term assets like houses or core stock holdings. If you are a seller, imagine you have cash and no house. What is the most you would be willing to pay for that house? That price should equal your selling price. Subtracting transactions fees, this is your personal clearing price. In reverse if you are a buyer, imagine you owned a house and ask yourself: what would be the least I would sell this house for? That should be your buying price. The beauty is everyone has different answers to these questions and this is what allows trade to take place. "Armchair Economist" by Steven Landsburg is a good resource for these questions.


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