Personal opinion is that it needs not be a monopolisitc state for supply and demand to be out of equilibrium. It can apply to many things in the market, including property and oil just a few years ago (DD> SS).
Restaurant prices were inching up too either due to strong demand (women seldom cook these days) or shortage of supply (not enough restaurants, long queue). That' s when start seeing more and more eateries popping up in Singapore in recent years (including ready-to-eat and DIY options in near future). Soon, when the equilibrium is established, we can look forward to more reasonable dining prices (DD=SS or DD< SS).
So, it needs not be a mono or oligopoly state for law of scarcity to apply....my personal opinion.
If it is a monopolistic market, yes. Unfortunately mkt isnt. henced barriers of entries and competitive advantage is important. Again, new products and services need to keep the mkt interested to increase demand. By introducing qe, demand and supply had lost its equilibrium. ( will u buy 5 washing machines?) Px can only be increased when supply is scarced. Only when it's a monopolistic state which is not possible.
Subject: Law Of ScarcityIm pretty new in sj for about a month n previously I have been sharing my post about investment in the DBS thread. In this new thread there is no history about my thought in investment n those who r not able to apprehend the contents of my coming posts can refer to the history in the DBS thread if u want to find out more..thank you 🙂
Im trained in economic n I always like to apply micro economic in the process of assessing an investment prospect. Some may have read about the success of investment guru like warren Buffett, his famous quote " the ideal time frame to hold a stock is forever" . So what make us so sure that an investment will make money in the long run?
Every investor will have to accept the assumption made in law of scarcity. What it says is in the long run, prices will keep moving up due to scarcity of resources. When an economy grow with robust aggregate demand, high employment rate n disposable income will stimulate consumption. Example ppl will start buying properties, as the supply of land is scarce, cost of land will increase n likewise it' s property price. As prices of goods become more expensive, ppl will start borrowing money to facilitate their consumption, thus central bank will increase its money supply by printing more money to be injected into the banking system. As a result the value of our money depreciate as time goes by.
To protect our value of money we will have to convert it into assets becos as mentioned due to scarcity assets prices are moving up, stocks is one of the asset option. Those who read financial report regularly will note that good company tend to have an upward trend in their operating profit. This is becos due to inflation, firm raise their selling prices of their product n services n hence their revenue will increased. For those company that maintained high operating profit margin will benefit even more from inflation, example if a company operating profit margin is 90%, an increased in 1 mil revenue give an additional 900k operating profit. On the hand if the operating profit margin is only 10%, it will only earn additional 100k for very extra 1 mil of revenue. That' s the reason I always prefer high operating profit margin companies. As a result of inflation in the long run, assets that we converted from our cash, properties, stocks n etc will have its value grow as time goes by n that' s the reason y long term investment is profitable.
In contrast, those who do not believe in law of scarcity should stay away from investments. It is becos if they don' t think that asset prices are going to appreciate in the long run n instead depreciate, there is no reason to convert their cash into assets. The longer they hold onto their cash the higher it' s purchasing value due to prices are falling. Thus countries like Japan, europe n etc are struggling to inflate its economy becos if they don' t do so n prices continue to fall, consumptions n investments will be deferred, as a result stock mkt will decline n when stock mkt fall it create a weath destruction effect n once again it bite into consumption n investment, thus continuing the vicious cycle..
Thank you 🙂
Auspicious opening of a new thread (开 张 大 吉 ) !
U r most welcome. Make yourself comfortable n express your view freely 🙂
Welcome to your new home! Looking forward to the content. =)
Hi guys, learning in progress.. 🙂
Welcome to your new home! Looking forward to the content. =)
Im so glad to see my grand master Famouspinky contributing his view as well.
U r always my beloved pal in sj. Thank you so much for your contribution 🙂
If it is a monopolistic market, yes. Unfortunately mkt isnt. henced barriers of entries and competitive advantage is important. Again, new products and services need to keep the mkt interested to increase demand. By introducing qe, demand and supply had lost its equilibrium. ( will u buy 5 washing machines?) Px can only be increased when supply is scarced. Only when it's a monopolistic state which is not possible.
Subject: Law Of ScarcityIm pretty new in sj for about a month n previously I have been sharing my post about investment in the DBS thread. In this new thread there is no history about my thought in investment n those who r not able to apprehend the contents of my coming posts can refer to the history in the DBS thread if u want to find out more..thank you 🙂
Im trained in economic n I always like to apply micro economic in the process of assessing an investment prospect. Some may have read about the success of investment guru like warren Buffett, his famous quote " the ideal time frame to hold a stock is forever" . So what make us so sure that an investment will make money in the long run?
Every investor will have to accept the assumption made in law of scarcity. What it says is in the long run, prices will keep moving up due to scarcity of resources. When an economy grow with robust aggregate demand, high employment rate n disposable income will stimulate consumption. Example ppl will start buying properties, as the supply of land is scarce, cost of land will increase n likewise it' s property price. As prices of goods become more expensive, ppl will start borrowing money to facilitate their consumption, thus central bank will increase its money supply by printing more money to be injected into the banking system. As a result the value of our money depreciate as time goes by.
To protect our value of money we will have to convert it into assets becos as mentioned due to scarcity assets prices are moving up, stocks is one of the asset option. Those who read financial report regularly will note that good company tend to have an upward trend in their operating profit. This is becos due to inflation, firm raise their selling prices of their product n services n hence their revenue will increased. For those company that maintained high operating profit margin will benefit even more from inflation, example if a company operating profit margin is 90%, an increased in 1 mil revenue give an additional 900k operating profit. On the hand if the operating profit margin is only 10%, it will only earn additional 100k for very extra 1 mil of revenue. That' s the reason I always prefer high operating profit margin companies. As a result of inflation in the long run, assets that we converted from our cash, properties, stocks n etc will have its value grow as time goes by n that' s the reason y long term investment is profitable.
In contrast, those who do not believe in law of scarcity should stay away from investments. It is becos if they don' t think that asset prices are going to appreciate in the long run n instead depreciate, there is no reason to convert their cash into assets. The longer they hold onto their cash the higher it' s purchasing value due to prices are falling. Thus countries like Japan, europe n etc are struggling to inflate its economy becos if they don' t do so n prices continue to fall, consumptions n investments will be deferred, as a result stock mkt will decline n when stock mkt fall it create a weath destruction effect n once again it bite into consumption n investment, thus continuing the vicious cycle..
Thank you 🙂
If it is a monopolistic market, yes. Unfortunately mkt isnt. henced barriers of entries and competitive advantage is important. Again, new products and services need to keep the mkt interested to increase demand. By introducing qe, demand and supply had lost its equilibrium. ( will u buy 5 washing machines?) Px can only be increased when supply is scarced. Only when it's a monopolistic state which is not possible.
Subject: Law Of ScarcityIm pretty new in sj for about a month n previously I have been sharing my post about investment in the DBS thread. In this new thread there is no history about my thought in investment n those who r not able to apprehend the contents of my coming posts can refer to the history in the DBS thread if u want to find out more..thank you 🙂
Im trained in economic n I always like to apply micro economic in the process of assessing an investment prospect. Some may have read about the success of investment guru like warren Buffett, his famous quote " the ideal time frame to hold a stock is forever" . So what make us so sure that an investment will make money in the long run?
Every investor will have to accept the assumption made in law of scarcity. What it says is in the long run, prices will keep moving up due to scarcity of resources. When an economy grow with robust aggregate demand, high employment rate n disposable income will stimulate consumption. Example ppl will start buying properties, as the supply of land is scarce, cost of land will increase n likewise it' s property price. As prices of goods become more expensive, ppl will start borrowing money to facilitate their consumption, thus central bank will increase its money supply by printing more money to be injected into the banking system. As a result the value of our money depreciate as time goes by.
To protect our value of money we will have to convert it into assets becos as mentioned due to scarcity assets prices are moving up, stocks is one of the asset option. Those who read financial report regularly will note that good company tend to have an upward trend in their operating profit. This is becos due to inflation, firm raise their selling prices of their product n services n hence their revenue will increased. For those company that maintained high operating profit margin will benefit even more from inflation, example if a company operating profit margin is 90%, an increased in 1 mil revenue give an additional 900k operating profit. On the hand if the operating profit margin is only 10%, it will only earn additional 100k for very extra 1 mil of revenue. That' s the reason I always prefer high operating profit margin companies. As a result of inflation in the long run, assets that we converted from our cash, properties, stocks n etc will have its value grow as time goes by n that' s the reason y long term investment is profitable.
In contrast, those who do not believe in law of scarcity should stay away from investments. It is becos if they don' t think that asset prices are going to appreciate in the long run n instead depreciate, there is no reason to convert their cash into assets. The longer they hold onto their cash the higher it' s purchasing value due to prices are falling. Thus countries like Japan, europe n etc are struggling to inflate its economy becos if they don' t do so n prices continue to fall, consumptions n investments will be deferred, as a result stock mkt will decline n when stock mkt fall it create a weath destruction effect n once again it bite into consumption n investment, thus continuing the vicious cycle..
Thank you 🙂
Subject: Law Of Scarcity
Im pretty new in sj for about a month n previously I have been sharing my post about investment in the DBS thread. In this new thread there is no history about my thought in investment n those who r not able to apprehend the contents of my coming posts can refer to the history in the DBS thread if u want to find out more..thank you 🙂
Im trained in economic n I always like to apply micro economic in the process of assessing an investment prospect. Some may have read about the success of investment guru like warren Buffett, his famous quote " the ideal time frame to hold a stock is forever" . So what make us so sure that an investment will make money in the long run?
Every investor will have to accept the assumption made in law of scarcity. What it says is in the long run, prices will keep moving up due to scarcity of resources. When an economy grow with robust aggregate demand, high employment rate n disposable income will stimulate consumption. Example ppl will start buying properties, as the supply of land is scarce, cost of land will increase n likewise it' s property price. As prices of goods become more expensive, ppl will start borrowing money to facilitate their consumption, thus central bank will increase its money supply by printing more money to be injected into the banking system. As a result the value of our money depreciate as time goes by.
To protect our value of money we will have to convert it into assets becos as mentioned due to scarcity assets prices are moving up, stocks is one of the asset option. Those who read financial report regularly will note that good company tend to have an upward trend in their operating profit. This is becos due to inflation, firm raise their selling prices of their product n services n hence their revenue will increased. For those company that maintained high operating profit margin will benefit even more from inflation, example if a company operating profit margin is 90%, an increased in 1 mil revenue give an additional 900k operating profit. On the hand if the operating profit margin is only 10%, it will only earn additional 100k for very extra 1 mil of revenue. That' s the reason I always prefer high operating profit margin companies. As a result of inflation in the long run, assets that we converted from our cash, properties, stocks n etc will have its value grow as time goes by n that' s the reason y long term investment is profitable.
In contrast, those who do not believe in law of scarcity should stay away from investments. It is becos if they don' t think that asset prices are going to appreciate in the long run n instead depreciate, there is no reason to convert their cash into assets. The longer they hold onto their cash the higher it' s purchasing value due to prices are falling. Thus countries like Japan, europe n etc are struggling to inflate its economy becos if they don' t do so n prices continue to fall, consumptions n investments will be deferred, as a result stock mkt will decline n when stock mkt fall it create a weath destruction effect n once again it bite into consumption n investment, thus continuing the vicious cycle..
Thank you 🙂
Hi guys,
A very warm welcome to everyone 🙂 from now on this is our new home to share anything under the sun about investment or anything which u think is beneficial to everyone.
There is no restriction on topics/subjects but do maintain an amiable environment n not get anybody upset 🙂
Thank you 🙂
Right time to INVEST heavily in thinly traded stocks please , optimising your capital gain !!
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That' s fast ! Glad to be among the first few to visit your new home . GOOD !
Trial..
