Ever wonder why the stock market gets so much attention? Think about it. What’s it all about? Money?
Ask anyone to define money. Most can’t do it. Not even the dictionary fully succeeds. According to the dictionary, it’s a store of value.
OK, so what is value? Value is defined as the “worth of something.” OK, so what is “worth”? What about this: “the level at which someone, or something deserves to be valued.” One could go on like this forever.
You’ve heard the phrase “time is money.” On first consideration, it seems to make sense. After all, people must work for money, which takes time.
However, ninth grade algebra says that if a=b, then b=a. On that basis, money is time, specifically stored time. How come we never hear that? It’s because it’s difficult to conceptualize, but as we chew it over it seems true. In other words, perhaps the best definition for money is “stored time.”
Since time is finite for all of us, everything we do in life contains a tradeoff. You will never get that time back if you pay for and do event A, because you’re missing event B. Everything in life is based on the fear of missing out, or in acronym-speak, FOMO. Everything. Whatever you’re doing right now, you’re missing out on something else. That includes reading this. Think about that.
This concept has been around for a long time. For instance, Benjamin Franklin in Advice to a Young Tradesman, wrote: “Remember that time is money. He that can earn ten shillings a day by his labor, and goes abroad, or sits idle one half of that day, though he spends but six pence during his diversion or idleness, it ought not to be reckoned the only expense; he hath really spent or thrown away five shillings besides.”
Let me translate that for you. He’s saying that if you earn 10 shillings per day, spending half the day doing something aside from work is basically throwing away five shillings. OK, easy enough. But more important is that he’s quantifying the value of your time outside of work.
People intuitively realize this, which is why things like the stock market are so intriguing. How many people do you know dream about winning the lottery, or hitting it big in the Market? Why? Because they would get all the time back they spend in their job. We idolize the ability to have all the time in the world. But this begs the question, why is it that 70% of lottery winners go bankrupt?
Clearly, they run out of money. So, what keeps wealthy people wealthy if not a big account? Apparently, they have discovered a way to keep refilling their reservoir of stored time, i.e. money which keeps their bank account filled.
Well we know money doesn’t grow on trees, so what keeps guys like Bill Gates out of the bankruptcy courts? — He owns an asset, a bunch of stock in Microsoft. As long as this asset keeps doing its “thing”, Bill has nothing to worry about.
Ok fine, but what is an asset? Stay tuned, to this blog for the answer. In the meantime, next time you buy something, think about what you’re really paying the cashier with. It’s not your cash, it’s your time.