Is It The Best?

May 7, 2012

I talked to an elderly coworker of mine today and she was raving about her stocks. What I wanted to draw her and explain to her was this simple 2 page diagram. This first picture shows two investments rising over time. Obviously “line 1” is outperforming “line 2” but as they sit, they are both good investments. However, what we often miss is the missing variable. How much money being printed is actually keeping line 2 from really making money. Line 2 is actually devaluing over time. Knowing the full scale changes everything.