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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: John Carragher who wrote (73056)	12/31/2007 4:05:05 PM
From: John McCarthy	Respond to of 116555

Hi John From my perspective the only time I lost was in example 3. However, example 4 raises an issue. In real accounting, a take-down in inventory MUST be written to the P&L as an EXPENSE - which - depending on the rest of the P&L might lead to a LOSS on the P&L. Simply - an accounting treatment for example 4 REQUIRES a write-down of inventory leading to a real journal entry called debt EXPENSE. On the other hand - if I buy a stock at $20 which goes to $40 (I am very happy) and then goes to $80 (I am happy squared) but then falls back down to $40. In the debts and credits of life - I have NOT experienced a LOSS i.e. from 80 - to 40. But you can certainly argue I FEEL PAIN and I certainly would. I want to know is Shiller talking about example 3 or example 4 or both. Recall, we're not talking about billions or even hundreds of billions - we are talking about trillions. The trillions lost around March 2000 - were example 3 type losses - I think but cannot prove. regards, John