Notional Vs Real Wealth

Aug 28
10:21

2015

Dr C K Narayan

Dr C K Narayan

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Oftentimes we read headlines in the papers that ‘X-thousand crores wealth wiped out’, if reference to some market fall or the other. Seldom do we find the opposite- that so many thousand crores of wealth has been added! Why is that, I wonder? Maybe its because newspapers largely like to spread bad news I suppose! But thats not the point. What I am referring to is the fact that almost no one really takes those alarming headlines seriously. What is the reason? Isnt something that says we lost x-thousand crores of our wealth something to be taken seriously?

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Perhaps it has to lie somewhere in the domain of belief that stock created wealth is not really “Real”- it is more notional. It goes up,Notional Vs Real Wealth Articles it comes down, it stays the same, it falls rapidly, it multiples rapidly and over some time, it pretty much just ticks along, if we are lucky. This is how it is for most people. The few that have really built wealth thru stocks have an entirely different take on it. So,, when you consider stock created wealth as being notional, it is just a feel-good factor. Like living in a house in a nice neighbourhood whose value has gone up substantially. You know you never did anything to make that happen. You also know that you are not going to sell out your house just because its value went up. But its nice to know. Feels good to live in a house or locality that is valued high.

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