Heinz Blasnik- Views You Can Use Message Board

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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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To: LLCF who wrote (656)	5/3/2003 11:17:34 AM
From: GraceZ	Read Replies (1) of 4912

One doesn't necessarily invest in stocks. An investment could be in a patent or productive capital equipment for a small business. The person who invented the wheel invested their time energy and effort into creating something. That time, energy and effort could have been spent building a bigger house or hunting for more food. Now I dare say while that guy received some economic value from that wheel in his lifetime (maybe enough to have the biggest hut on the block) it is infinitesimal in comparison to the economic value that small invention produced in the future. Most of the value of the invention was in the future. The invention had potential that even the guy who invented it couldn't possibly foresee. Now go back to his decision to "invest" in either creating the wheel or building a bigger hut. I can assure you the hut was more important to the guy, he probably invented the wheel in the process of trying to build a bigger hut. But the house has nowhere near the future economic value that the wheel has and the true economic value couldn't possibly be seen by the people of that day. Just like it's almost impossible for most to see the value of the technologies behind some of those failed companies you guys like to think of as "malinvestment". Real estate has no value add, no future multiplier. Whereas some failed company that invented something that never panned out but was used as a building block to invent something else adds far more economic value in a macro sense. It's impossible to figure out what steps are necessary to get to future inventions because the future is difficult to impossible to predict. You invent A to get to B to get to C and then only maybe D has any real economic value, even then D might sit there waiting for E to be developed. The companies creating A,B,C all go out of business but D creates a whole new sector once E shows up on the scene. Whenever money is diverted to consumption away from investment it has a deadening effect on the economy. It would be hard to find a better example of wasting assets then a million dollar 50s style rancher in CA. Unless it's money invested in gold, whose economic value most likely peaked in the late middle ages. Neither have any value add, there's no hidden potential future value there that can exist in an invention or an idea. Clearly not all inventions have future economic value and certainly almost none with the future economic value that the wheel created, but as I said earlier, it's almost impossible, in the present time, to tell which ones will and which ones won't. For a long time the best use people could find for fiber glass was to make fire-proof curtains.

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