Friday, September 19, 2008

Worth

Just noticed on the BBC news website that shares are up over 9% today. Over the past few days, I have been thinking about worth and value. A company ends up being worth what short-sellers can push it down to. Nothing in bricks and mortar has changed, of course, but digits on a computer screen can determine solvency, jobs and much more.

Economics - still don't understand it.

1 comment:

Chris said...

It is rather complicated - a year into my MBA and I am only beginning to understand how a company's value is calculated (Several methods that are fairly confusing).

However, solvency is related to bricks and mortar, well at least the cost of owning/using the bricks and morter. If you can't afford to pay mortgages/rent and other liabilities, then the chances are, you are in trouble, and as such your stock price will plummet, you won't be able to borrow, you won't have the capital to contiune operations and you will have to axe some or all of the jobs etc etc.

What is amazing and very confusing is how everything is interconnected.

This, no doubt, adds very little to your broader understanding of economics and finance. Once i have all of the valuation methods 'down', I'll email you and explain. For now, I wish someone would send me that email and/or give me a job.