Re: Re: Re: Are Yorks a good investment?


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Posted by Chuck(G) on July 15, 2002 at 20:36:02:

In Reply to: Re: Re: Are Yorks a good investment? posted by Rick Denney on July 15, 2002 at 18:02:26:

I think we have a non sequitur here, Rick.

One could draw the same analogy with just about any non-fooditem. A model T Ford went for an MSRP of $500--a huge amount of cash at about the same time you're using for your example. A new Ford Taurus has a base MSRP of $20,4985. But using your 50/510 CPI ratios, a low-end Ford should run only about $5K, not $20K.

Take another example. In 1923 you could move into a very comfortable 3-bedroom brand new house for about $500. Now, using the 50/510 CPI....but you get the idea.

The problem is that the CPI is computed and heavily weighted toward things like fuel and food whose price has actually DECREASED effectively over the years, thanks to global trade and advances in technology. When we're talking specialized durable goods, the ratios are much more pronouced.

Using the Ford example, you get a effective durable-goods CPI ratio closer to 40:1, so a $195 BBb bass wouild cost today about $7800, which is about what a good tuba runs today.

Suppose that one were to invest in a King recording bass in the 1930's. Pros like Joe Tarto and Bill Bell thought them good professional instruments. I've not figured it out, but I suspect you'd have lost money by investing in what was considered a top-of-the line pro instrument.

It's a roll of the dice when you come down to it. Better to invest in real estate for the long haul. People keep making more people and there's gotta be room to put 'em.



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