Cisco Stock vs Beer
----- Begin NetScrap(TM) -----
Cisco Stock vs Beer
On July 26, 2000, two friends, Jim and John, each got a $1000 bonus
at work. They both work for Cisco Systems, where in the summer of 2000,
there was LOTS of money around for bonuses.
Jim, being an intelligent, financially conscientious person, put the
whole $1000 into Cisco stock. With his $1000, and a transaction cost of
$35, he was able to purchase 7 shares at $123 each. Having watched Cisco
stock climb and climb, he felt very good about this investment, happy
that he was preparing for the future. John, being a more care-free sort,
did something slightly different with his $1000. John borrowed a
friend's truck, and proceeded to the Seven Eleven, where he purchased 33
cases of beer. John also felt very good about his investment: 33 cases x
24 = is 792 bottles of beer! John, also being an intelligent guy,
although perhaps not as forward-thinking as Jim, calculated that he
could drink about 15 bottles per week, and he wouldn't have to buy beer
for a whole year. Jim, of course, was appalled by John's purchase, and
berated him constantly about it. As months went by, Jim excitedly
watched the stock prices, and saw it start to dwindle. "It'll go back
up", he'd say to Jim. Jim, who had been reaping the benefits of his
investment on a daily basis, would reply,
"Ya, it will. Hang in there buddy ."
Months went by, and the value of the stock continued to fall, and there
was the beginning of a noticeable dent in the beer pile. Midwinter came,
Jim's stock had fallen to about half of it's original value, and John's
beer was about half gone. Jim, being sure that the stock had hit
rock-bottom, still was berating John for his frivolous purchase, telling
him "Your beer will be gone in six months! Who knows what my stock will
be worth!!".
Well, summer has come, and hard times at Cisco continue. Bad news: Both
John and Jim have been affected by the layoffs. Last week, in order to
raise some cash to help through the rough times, Jim sold his 7 shares,
at that day's value of $12, and got $84, then after paying the $35
transaction fee, he only had $49. Jim stopped by John's house later that
day (everyone needs their friends during rough times), and as luck would
have it, there were two bottles of John's beer left. John, being a good,
compassionate friend, offered to share his last two bottles of beer with
his friend. Jim appreciated the gesture, and enjoyed the cold beer on
the hot summer's day, but he felt a bit guilty. "At least I got fifty
bucks back out of it - you have nothing now.", he said. "That's ok.",
replied John. "Perhaps you can help me, I need to return all these
empties.", he added, as his other friend with the truck drove up. So
they loaded up the truck, and proceeded off to the beer store. Upon
arrival at the beer store, they unloaded the empties, feeling a little
grim. John went to the counter, and collected his refund for the
bottles. "33 cases x 24 bottles, at 10 cents per bottle, that comes to
$79.20," the friendly Seven Eleven clerk said to John as he handed him
the money. Jim was speechless. Poor guy. Can you imagine how you would
feel if you just discovered over the course of the last year, your $1000
stock investment left you with $50, and taking the same $1000, buying
beer and drinking it, would leave you with $80.
I'll leave it to the reader to come up with their own moral to the
story.
As they say up North, beer will get you through times of no money better
than money will get you through times of no beer
----- End NetScrap(TM) -----
Entered on: 09/20/2001
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