Larry House

Valuing Assets: The Clueless Cadre

Going forward--only what a buyer will pay. We are entering a new economic age, and previous values have no bearing on what things will be worth. Everything changes with leveraging out of the picture. My 2003 Ford truck was worth $11K a year ago; now it is worth maybe $7K. Obviously it is depreciating, but the size of the drop is because of the contraction in credit and the growing unwillingness of people to spend cash. Money is worth comparatively more than "things" right now, and it appears that will continue for who knows how long. It is better, in my view, to invest for an income stream now rather than going for growth. Growth is not as valuable now as an income stream--cash. The next decade is going to be a doozy.