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> Actually, it's always true There are such things as "gains from trade", you know. Not all assets are worth the same amount to all players! If you buy an as
by Eliezer 17y ago
> Actually, it's always true
There are such things as "gains from trade", you know. Not all assets are worth the same amount to all players! If you buy an asset that you think anticorrelates with your other assets to reduce variance, you don't need to think that asset is underpriced. And if you need to liquidate some of your assets to return to shareholders or, heck, buy a house, we call that "liquidity preference" and it means you don't necessarily think the asset is undervalued, just that cash in hand is worth more to you.
- anamax 17y ago> Not all assets are worth the same amount to all players! I wrote that trades happen because the parties value the relevant asset differently (the one that starts with the asset thinks that the cash is worth more than the asset to it, while the other thinks that the cash is worth less to it), so "correcting" me by telling me that is curious.... > to think that asset is underpriced I didn't say anything about "underpriced". I said that the two parties had different opinions about the assets in question wrt themselves. They can both be correct. (They can also both be wrong.)