An Interesting Twist

[fast]

The topic I am about to speak on may not withstand tough scrutiny, as in it may not guarantee a better course of action from a purely deductive logical approach, but there seems to be a diamond in the rough for consideration. In other words, that it may not be true in some cases doesn't render it without value.

Many times, people will put a spin on things that capture something well worth paying attention to. It shows up a lot when people asking for advice on what to do: whether to sell stock, whether to sell a vehicle, whether to sell land, etc etc.

Here's an example: a caller says he has $50K in gold stock that he inherited. He asks if he should sell. After the advisor berates the value of gold as an investment, he has this to say: if you didn't have the gold in stock but had a pile of money, would you go out and buy the gold stock? The answer is somehow supposed to answer his question. The point is that a decision to not buy is a decision to sell.

Example after example shows this logic in action. A caller wants to know whether he should sell his rental property he acquired in city X. He's now halfway across the country in city Y. The advisor asks, if you didn't have the property in city X, and given that you're permanently residing in city Y, had you the money, would you take that money and go buy that property in city X? Since no is the answer, the answer is to sell.

You have a boat in your yard and you're wondering if you should sell. Had you no boat yet the cash to buy it, would you? If no, then you should sell, as the choice to not buy is a choice to sell.

I don't think this holds water all the time, but barring emotional involvement, it sounds, well, interesting. What say you?

 

[steve_bank]

My spin on the OP is that there should be a forum 'Adcice For The Lovelorn and Confused'.

 

[DBT]

The topic I am about to speak on may not withstand tough scrutiny, as in it may not guarantee a better course of action from a purely deductive logical approach, but there seems to be a diamond in the rough for consideration. In other words, that it may not be true in some cases doesn't render it without value.

Many times, people will put a spin on things that capture something well worth paying attention to. It shows up a lot when people asking for advice on what to do: whether to sell stock, whether to sell a vehicle, whether to sell land, etc etc.

Here's an example: a caller says he has $50K in gold stock that he inherited. He asks if he should sell. After the advisor berates the value of gold as an investment, he has this to say: if you didn't have the gold in stock but had a pile of money, would you go out and buy the gold stock? The answer is somehow supposed to answer his question. The point is that a decision to not buy is a decision to sell.

Example after example shows this logic in action. A caller wants to know whether he should sell his rental property he acquired in city X. He's now halfway across the country in city Y. The advisor asks, if you didn't have the property in city X, and given that you're permanently residing in city Y, had you the money, would you take that money and go buy that property in city X? Since no is the answer, the answer is to sell.

You have a boat in your yard and you're wondering if you should sell. Had you no boat yet the cash to buy it, would you? If no, then you should sell, as the choice to not buy is a choice to sell.

I don't think this holds water all the time, but barring emotional involvement, it sounds, well, interesting. What say you?

The advisor may have information that is not available to the buyer or seller (seeking information). Information that may tip the balance in favour of one option or the other.

 

[fast]

It's a concept in general.

Suppose you had a 300k house and owe $100k on it. You have $110k in the bank. Cerberus parabus, should you pay off the mortgage?

See the twist: if you had $10k in the bank and a completely paid off house, would you go borrow $100k on it so you can have $110k in the bank?

The intended lesson/logic is there's no difference in the one than the other, so if you wouldn't go into debt on your home to have more sitting in savings, then "what's the difference?," therefore, the answer to one is guidance for the answer to the other.

Personally, I think something's amiss, but whatever fault that's within is not without merit.

 

[skepticalbip]

It's a concept in general.

Suppose you had a 300k house and owe $100k on it. You have $110k in the bank. Cerberus parabus, should you pay off the mortgage?

See the twist: if you had $10k in the bank and a completely paid off house, would you go borrow $100k on it so you can have $110k in the bank?

The intended lesson/logic is there's no difference in the one than the other, so if you wouldn't go into debt on your home to have more sitting in savings, then "what's the difference?," therefore, the answer to one is guidance for the answer to the other.

Personally, I think something's amiss, but whatever fault that's within is not without merit.

I see the advisors as not really answering the question but rather offering one method for the person asking the question to decide for themselves. Essentially they are asking what the person asking thinks they should do. Giving advice whether to sell or keep leaves the advisor responsible if the advice turned out to be bad advice. Telling them a method to decide for themselves leaves the advisor blameless.

What would be your advice if a friend asked you if they should invest in some "opportunity"?

 

[fast]

How sound is that method? There's a lot that I have I wouldn't buy right now, but I'm not falling over myself to sell things.

As to giving advice, I would dig a little first. I'd want a better picture of the friends overall financial well-being. Got money in savings? Or, will upcoming would-be inconveniences be a full blown financial crisis? Got debt? If so, how much, as an investment oughta be a blessing and not a curse, which is exactly the risk you're taking if you're debt heavy. Expected rate of return compared to the market over the long-term? Or, is this just a hobby? Essentially, I would immerse myself in the details before firing the fateful shot of giving advice--because if I give it, I want it to be helpful and grounded.

 

[skepticalbip]

How sound is that method? There's a lot that I have I wouldn't buy right now, but I'm not falling over myself to sell things.

But then you are not asking the question of if you should sell or keep those things.

As to giving advice, I would dig a little first. I'd want a better picture of the friends overall financial well-being. Got money in savings? Or, will upcoming would-be inconveniences be a full blown financial crisis? Got debt? If so, how much, as an investment oughta be a blessing and not a curse, which is exactly the risk you're taking if you're debt heavy. Expected rate of return compared to the market over the long-term? Or, is this just a hobby? Essentially, I would immerse myself in the details before firing the fateful shot of giving advice--because if I give it, I want it to be helpful and grounded.

All those are good suggestions on how to decide to give to someone wondering if they should sell. However if you advise them one way or the other what to actually do then you could lose a friend. They could be royally pissed if the advice you gave turned out to cause them to lose because market swings went opposite to what you assumed.

Example: if you are asked if they should sell their gold, are you willing to try to predict the future price of gold and risk losing a friend if you guess wrong? Or do you think it more advisable to tell them some of the things they should consider in making the decision then tell them to decide for themselves?

 

[fast]

How sound is that method? There's a lot that I have I wouldn't buy right now, but I'm not falling over myself to sell things.

But then you are not asking the question of if you should sell or keep those things.

As to giving advice, I would dig a little first. I'd want a better picture of the friends overall financial well-being. Got money in savings? Or, will upcoming would-be inconveniences be a full blown financial crisis? Got debt? If so, how much, as an investment oughta be a blessing and not a curse, which is exactly the risk you're taking if you're debt heavy. Expected rate of return compared to the market over the long-term? Or, is this just a hobby? Essentially, I would immerse myself in the details before firing the fateful shot of giving advice--because if I give it, I want it to be helpful and grounded.

All those are good suggestions on how to decide to give to someone wondering if they should sell. However if you advise them one way or the other what to actually do then you could lose a friend. They could be royally pissed if the advice you gave turned out to cause them to lose because market swings went opposite to what you assumed.

Example: if you are asked if they should sell their gold, are you willing to try to predict the future price of gold and risk losing a friend if you guess wrong? Or do you think it more advisable to tell them some of the things they should consider in making the decision then tell them to decide for themselves?

I feel that I have grasped your point from the beginning, but things are not so simple. My advice, were I to give it, would not include predictions or guessing. If I advise you to sell, that advice is regardless of what might happen. Failing to gain is not the same as losing, net differences be damned. If you are invested in something that has done poorly over a very long time frame, the intermittent spikes are irrelevant, so if I suggest that you sell gold and the price shoots up and you don't realize any gains, that is the absence of a credit, not the presence of a debit.

Besides, (and I get the difference between giving actual advice and showing a method), but that's just another layer of depth. If you show me a method and choose not to give advice, you're still giving me the tools to bring about potential failures--so although you're trying to distance yourself from accountability, you're still on the hook.

Case in point: suppose I say that what I do is tell you what I would do if I woke up in your shoes. You're an adult. You can do as you choose, but what I would do is based on x, y, and z, and that's why I would do it. So yes, that is different, like you say, than merely giving advice. But, suppose I take what you've fed my head up with and make my very own disastrous decisions. Joe blow might accept full responsibility, but there's an air of influence that traces straight back to you.

What I'm hearing (a lot on the Dave Ramsey show) as an example, is a hybrid of such advice and reasoning. What I'm after isn't so much the advantages of withholding advice for sake of giving people the tools to make their own informed decisions so much as it is to gauge whether this idea of turning things upside down and over on it's back is praiseworthy in examining sell decisions or paying off decisions etc.

If I advise you to pay off your mortgage and all of a sudden you don't like the feeling of being without a mortgage, you could always jump back in debt. There's less risk of foreclosure with a zero balance mortgage.

If you were left $200k in stock in a major corporation after a loved one passing away and you wanted advice on whether to sell, the issue before us isn't remotely related to its potential value per se. It's a no research needed question, especially if you haven't done any research yourself. So now, I ask you: if you didn't have that stock but instead $200k laying on the table, would you go buy $200k of that stock? If the answer is no (to buy), then the answer is yes (to sell). Why, because a decision (to keep) is a decision (to buy). It's when you would not buy it that clues you in to sell it. See, it's that very line of reasoning that I'm trying to analyze.

 

[fromderinside]

So an experimenter carefully measures some dimension of some physical energy on some set of filters. What she gets is some points ordered by magnitude across signal duration running from a minimum to maximum for each signal level. She then connects the dots across time and sees each stimulus level follows a particular pattern. She then detunes his measurements an finds a single complex function underlying all his data across time.

Wallah?

 

[bilby]

A better way to decide - toss a coin.

If the result disappoints you, do the opposite of what the coin told you to do.

 

[fromderinside]

Your score is sooo bid it's slopping over to a second line. Disappointing?