Capital Addition

  

Categories: Econ, Banking

You have a pizza shop with a line around the block. You have only one oven that makes 5 pizzas at a time. You do the math and realize that at peak times, you have demand for double that amount. And your gourmet pizzas sell out for $25 each so they make um, real dough, when you sell them. You decide to add a second oven (i.e. a Capital Addition) to sell more pizza and decrease wait times and make your customers generally do this more :)

A capital addition would NOT be something like a second Washington D.C. We want to corral all the political bureaucrats in one zoo, not more.

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Finance: What is a Hard Asset?12 Views

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Finance allah shmoop What is Ah hard asset Yeah It

00:07

takes a lot of hard work to get an asset

00:08

like that Okay So hard asset is just one that

00:12

you can bang on touch Engage with cell Alright examples

00:17

Oil it's Hard asset gold Hard of vintage nineteen Fifty

00:21

seven Ferrari with beige leather interior hard four thousand head

00:25

of longhorn cattle in texas A commercial building in the

00:28

best part of town All of these arm or less

00:31

commodities Hard assets Well okay Okay The categories Rare cars

00:35

art coins stamps stuff like that that's where they fit

00:38

So what do you care if something is ah hard

00:40

asset or a soft one Well most or all hard

00:43

assets are commodities and they generally do very well in

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periods of very high inflation when you know stocks were

00:51

getting crushed And yeah the feds raising rates appoint a

00:54

quarter now forever Well equities and bonds will get crushed

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Commodities well generally keep up with the spike in prices

01:02

causing the fed raised rates in the first place So

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they're a good hedge for most investment portfolios And not

01:07

all of them are great forever like check out riel

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Inflation adjusted oil prices the last few decades you had

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not a good run Most not all do well though

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an oil will likely have its day in the sun

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again At some point you lan When in doubt remember

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what kim kardashian and warren buffett said A good asset

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is hard to find and a hard asset is good

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to find But we won't tell you who said which

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