Market Categories and Values

Market Categories and Values

December 24, 2020
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There four major investment categories: stocks, bonds, alternatives and real estate. The simple answer for why they go up or down is more people are either buying or selling the category. If someone thinks a category is going to be more profitable, they buy the category. The reverse is also true. At the end of each market day everyone is happy because the buyers bought, and the sellers sold.

There is also the matter of calculating the value of an investment. The economic value of a rental home is its future stream of profits discounted to the present by a safe interest rate. If I buy a rental house for $300,000 and the profit, after expenses, is $6,000, the return is 2%.



This is a hypothetical example and is not representative of any specific investment. Your results may vary.