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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 414.48+0.7%Jan 9 4:00 PM EST
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To: energyplay who wrote (30970)3/15/2008 3:34:00 AM
From: Maurice Winn  Read Replies (1) of 219198
 
EP, you are ignoring large parts of the value. For example, what value did you put on the legal system? What about the US$? What about spectrum? What about the USA language? What about the philosophical foundations? What about the total land and water acreage?

Okay, let's consider GDP per capita of $44,000, which is a very narrow way of measuring value because there is more to life than purchasing power. For example, in NZ we breathe very clean air, which is very nice. We have intensely bright sun which is very nice too [provided one avoids melanoma and other skin cancers]. The epidermis of leaves is shiny, which is nice to look at. We have very clean ocean in which to swim and go fishing.

But let's just consider GDP per capita at nearly $44,000 per person. With a P:E of 30:1 that would be about $1.3 million capital value, which is near enough to $2 million.

Now that you mention GDP per capita, it looks as though the USA might be worth more than $2 million per person with everything included.

A P:E of 30:1 is about right because 3% is about the rate of interest required to cover the risk that people will die without spending their savings. As life expectancy has increased over the last 100 years, it makes more sense to accept lower rates of return than when one expects to live only 60 years. Investing is done because one expects to be around long enough to enjoy the returns from the investment.

Mqurice
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