The world's funniest economics stories

Chapter 26 The accumulation of wealth is not based on wages but investment (2)
Futures are relative to spot.Futures are the subject matter that is traded now, but will be delivered or delivered in the future. The subject matter can be a certain commodity, such as gold, crude oil, agricultural products, financial instruments, or financial indicators.The date of delivery of futures can be a week later, a month later, three months later, or even a year later.A contract or agreement to buy or sell futures is called a futures contract.The place where futures are bought and sold is called the futures market.Investors can invest or speculate on futures.Inappropriate speculation in futures, such as short selling, can lead to financial market volatility.

For investing in futures, some people are happy and others are worried.If you can grasp the market demand and timing, you can make a lot of money in the transaction, and those who are not sensitive to the market may only lose money.

In 1720, a guy in England established a leather bag company. No one knew what he was doing, but when it issued futures subscriptions, people were about to smash the company's office door.No one believes in its real profit channel, but expects a bigger idiot to appear, the price will rise, and it will make money itself.Dramatically, Newton also participated in the subscription, and unfortunately became the biggest fool.

Don't regard speculative madness as the stupidity of people hundreds of years ago. People in this world are actually crazy.Malkiel said Keynes must have snickered where economists must go after death.

Speculation refers to activities in which some people buy for the purpose of selling, neither for production nor for consumption, and make money from the difference between buying and selling.This mainly includes speculation in real estate, stocks, futures, and foreign exchange, as well as hoarding, creating price differences and profiting from them.

Capital is becoming more and more powerful, and the most prominent manifestation is the increasing influence of big capital on policies, so more and more policies are beginning to deviate from the interests of ordinary people.At the same time, the influence of capital on public opinion and the market has become increasingly prominent, and policy effects are often exaggerated or even distorted.

Perhaps it will not be until the end that people will discover that violent market fluctuations are actually wealth amplifiers for those with vested interests; another fact that cannot be ignored will be that many ordinary people have been looted by capital predators during market fluctuations, and their wealth is doomed. The passive will shrink, and the quality of life will go from bad to worse.For those who do not participate in investment and speculation, their original wealth may also shrink relatively.Those who have money are getting richer, and those who have no money are getting poorer.

4. The power of two eggs - compound interest
Many years ago, the American "Science and Invention" magazine put forward the problem of "two eggs": hold an egg in each hand, the two eggs are the same size and are equally hard, and now knock one egg to the other .Q: Which egg will be broken?Is it the one that "goes to hit" or the one that "gets hit"?Note that these two eggs are of the same quality, and there are no problems with size, softness or hardness.

The magazine believes that most of the broken ones are the eggs that "go to hit".And explained: "The egg that was hit" is only impacted by external force, and the arched eggshell is impact-resistant and can withstand the impact of external force; The inner egg yolk and egg white are in a state of motion with the impact, and the impact is instantly pressed from the inside to the eggshell, and the arched inner shell has a much lower ability to withstand pressure, so it is broken.It seems to be quite correct.

However, this answer has caused controversy in many places and countries.Some people support this explanation and testify with their own experiments; some people oppose this answer, insisting that the broken eggs are "hit" eggs, and also testify with their own experiments; Some people even talked about the problem of American foreign eggs and Russian native eggs... The seemingly simple problem has become complicated and confusing.Although it is difficult to make a conclusion at the moment, the original answer does not seem to be quite correct.

Later, some physicists analyzed that the key is how to define the "motion" and "static" of the two eggs.Hold an egg in each hand, and use one to hit the other. It seems easy to determine, the "moving" one "to hit" and the "quiet" one "to be hit".But if you are on a plane or a train, both eggs are "moving"; even standing on the ground, the earth is also moving, and the solar system is also moving.Which one "moves" more powerfully?
In fact, when two eggs collide, it has nothing to do with "motion and stillness". The yolk and white in the "collided" egg will also move and form pressure after being collided. It is really difficult to judge which one is broken.The various answers and experiments later are all true facts.Therefore, the scientific answer is: both the eggs of "going to hit" and "being hit" may break, and it has nothing to do with "going to hit" or "being hit".

The story of the above two eggs reveals the charm of "compound interest".Compound interest is the eighth wonder of the world.This sentence was said by the great physicist Einstein.

The calculation of compound interest is to calculate the principal and the interest generated together, which is beneficial to the interest.Compound interest is the interest accrued by the combination of principal and accrued interest from the previous interest period.That is to say, the new interest earned from the undrawn interest at the interest rate of the principal is often called interest rate hike or rolling interest. Not only the principal generates interest, but the interest also generates interest.The characteristic of compound interest calculation is: the sum of the principal and interest at the end of the previous period is used as the principal of the next period, and the amount of principal in each period is different when calculating.

Since the inflation rate and the interest rate are closely related, like the positive and negative sides of a coin, the formula for calculating the future value of compound interest can also be used to calculate the actual value of a specific fund in different years.Just replace the interest rate in the formula with the inflation rate.The present value of compound interest refers to the principal that must be invested now to reach a certain amount of funds in the future under the condition of calculating compound interest.

The present value of compound interest is a symmetrical concept of the future value of compound interest, which refers to the current value of specific funds calculated by compound interest in a certain period of time in the future, or the principal required to obtain a certain future principal and interest and now.

Compound interest is a method of calculating interest.According to this method, every time an interest calculation period passes, the interest generated should be added to the principal to calculate the interest, which is rolled over period by period, commonly known as "rollover interest".The interest calculation period mentioned here refers to the time interval between two adjacent interest calculations, such as year, month, day, etc.Unless otherwise specified, the general interest accrual period is 1 year.

The future value of annuity [ordinary annuity future value] refers to the sum of the principal and interest of equal income or expenditure at the end of each period within a certain period of time, that is, the amount of each period is converted to the final value at the end of the last period according to compound interest, and then added up. is the future value of the annuity.

5. Consequences of Wang Chongyang’s Enrollment Expansion – Diversified Investment

The character Wang Chongyang is believed to be familiar to everyone. This person not only really existed in history, but also appeared in the texts of martial arts novels.Jin Yong's novels have influenced a whole generation, and his Wang Chongyang has also left a deep impression on many people.Under his description, Wang Chongyang has undergone artistic processing and shaping, and his character image is very full. His unrivaled martial arts and Daofeng Xiangu make readers unforgettable.

Although Wang Chongyang has many advantages, he made a fatal mistake in one matter.

This matter was to recruit apprentices. Because he blindly expanded his enrollment without considering how to cultivate these apprentices, these apprentices were inferior in skills, which eventually led to failure.

Wang Chongyang had many apprentices, and these were Ma Yu, Sun Buer, Tan Chuduan, Liu Chuxuan, Qiu Chuji, Hao Datong, and Wang Chuyi. The seven of them were the so-called "Seven Masters of Quanzhen".

These apprentices come from all over the world, each with their own strengths and weaknesses.Although Wang Chongyang recruited so many apprentices, it seemed that his merits and virtues were complete, but in fact he was just dazzled by the momentary gains and losses, and did not consider the consequences of recruiting so many apprentices. As a result, although there were many apprentices, the actual Few in the world can surpass the master.In the end, these apprentices all lost to the fledgling fool Guo Jing in the debate on swords in Huashan.

Wang Chongyang seems to have taught all the martial arts to his disciples, but the disciples can't digest them, and everyone's talent is different, so they can't really use them well.But Guo Jing is different, Guo Jing is very talented in martial arts, so he can resist so many of them by himself.Seeing this, I really have to feel sorry.

This little story is very interesting. It turns out that the mysteries of economics are also hidden in martial arts novels.

The original intention of Wang Chongyang's enrollment expansion was good, but the purpose was blind.He understood the principle of "diversified investment", but he didn't use it well, which made his hopes collapse.

Diversified investment means that investors [enterprises] conduct investment business in different fields and different industries [industries], or invest in the production of different products in the same industry to expand the scope of business and carry out diversified operations.Diversified operation and investment is the only way for enterprise groups to increase profit opportunities and diversify operation risks, and it is also a trend of modern enterprise operation and development.

There are three characteristics of diversified investment, one is separate investment.In fact, investment strategies with different concepts in the same investment product can also be understood as diversified investment.For example, part of stock investment adopts long-term investment strategy, and part of stock investment adopts short-term investment strategy, which can also be understood as diversification.The second is portfolio investment.For example, some portfolio investments are like some stocks, futures, and funds.Such a portfolio can be understood as a diversified investment behavior.The third is to attack separately.The characteristic of diversified investment is to invest separately and attack separately, the purpose is not to be harmed by risks all at once.

There are pitfalls in any approach, and diversified investment is no exception. For any media, its resource capital is always limited, but its market opportunities are unlimited.To carry out diversified investment is bound to disperse resource capital.

In an enterprise group, one or several project enterprises with poor investment returns will become "a piece of mouse droppings spoiling the whole pot of soup", affecting the entire capital operation situation of the enterprise group and causing the entire enterprise group to run into trouble.This situation is not uncommon in media diversification investments.

In the above short story, Wang Chongyang obviously fell into the trap of diversified investment. He did not understand and investigate the talents and personalities of his apprentices, but just blindly expanded enrollment and blind teaching, which made these people unable to digest , Kong has strength but has no ability to change everything. He was originally at an investment risk, but he didn't realize it.

Investment refers to the process of converting money into capital.Investment can be divided into physical investment and securities investment.The former is to invest money into the enterprise and obtain certain profits through production and operation activities.The latter uses money to buy stocks and corporate bonds issued by enterprises, and indirectly participates in the distribution of profits of enterprises.

The basic principle of diversified investment is not to enter industries or products that are unlikely to form new advantages and cannot form new profit growth points.Instead, we should rely on the original foundation, expand gradually and steadily, first expand around the original industry and related industries, and gradually pass it on to other industries, so that we can form new advantages every time we enter a new industry.Diversification can be divided into related diversification and non-related diversification. The former refers to the obvious tangible relationship between the various businesses carried out by the enterprise: such as common market, marketing channels, production, technology, procurement, credit, talents, etc. Value activities between related businesses can be shared; the latter is more of an intangible connection, mainly based on the sharing of management, brand, and goodwill.

6. If Hitler was your father - inferior assets
Mention Hitler, I believe everyone will grit their teeth with anger.

He was the culprit who caused the "World War II". After he became Chancellor of Germany, he began to manage the Nazi Party.Due to his extreme policies and his anti-Semitic character, he launched the Second World War and massacred a lot of Jewish compatriots, which brought huge disasters to people all over the world.

Let's imagine, if Hitler was your father, what kind of property would such a father leave to you?
Hitler was very brilliant when he was alive, and the whole German people loved and respected him very much. Not only the whole German people, but also the Nazis all over the world respected him as a god, but once he was wiped out by justice-loving people in the world, Then, this once brilliant man can be said to be scattered, the building collapsed, and nothing is left.

If you have such a father, it can be said that you have an inferior asset.

Asset quality refers to the degree of pros and cons of assets, which is essentially the degree to which assets bring future benefits.If a company's net asset profit rate is greater than [less than] the industry or social average net asset profit rate, it can be considered that the company's assets as a whole are of good [bad] quality.An asset whose rate of return per unit asset is greater than the average rate of return per unit of an enterprise with high-quality overall assets can be called a single high-quality asset, and an asset whose unit rate of return is lower than the average rate of return of an enterprise with high-quality overall assets is called a single low-quality asset.

There are four reasons for the low-quality assets: First, the accounting valuation method has an impact on the formation of low-quality assets.Second, mistakes in investment decisions have resulted in a large number of low-quality assets. Affected by the planned economy, my country's investment decisions have not formed a scientific investment decision-making mechanism.The third is the lack of scientific management.Enterprises in our country do not have strict scientific management methods in terms of inventory, accounts receivable, long-term investment and fixed assets, resulting in the loss of control of these assets.Fourth, the adjustment of national industrial policies and the restrictions of laws and regulations are also one of the reasons for the formation of low-quality assets.

Asset management business refers to the act of a securities company, as an asset manager, operating client assets and providing clients with investment management services for securities and other financial products in accordance with the methods, conditions, requirements and restrictions stipulated in the asset management contract.

Targeted asset management is a business handled by a securities company for a single client. It refers to a business in which a securities company signs a targeted asset management contract with a single client and provides asset management services to the client through the client's account.The specific investment direction should be stipulated in the asset management contract, and must be operated in a single client's dedicated securities account.

(End of this chapter)