Trade The Journey

Trade The Journey

Power of Leverage!

Don’t let the form of money fool you.

As money will ultimately become entirely digital, let us not forget what it represents.

Its a medium of exchange, a storehouse of value, and is noticeably green.

Well, at the least, paper money is. Money is one judge of value. Its a measurement of value that others and myself hold of it. It’s a perspective that can be traded and speculated on because human measurements can be wrong.

The final judge of value is the collective psychology or sentiment of people in the market.

 

There is a market for every product/service that exits. Is there not a job market? A stock market? An online marketplace? Of course these markets have their own rules and regulations but you get the point, right?

Each day and night, money is moving based on value. Where can I get the best value for the money that I hold?

Is the value I seek an income or a return? An asset that can be used to produce revenue? There are as many markets as you can imagine trying to find the best deal. You and I can form an exchange (market) for used items.

 


Scenario:

On a Saturday afternoon, you’re on your way home, and suddenly, a lime green sign catches your attention.

The sign reads, “Yard Sale“, and the address is listed below.

With no pressing matters, you make a u-turn and head towards the yard sale. As you arrive, you notice, its a decent size crowd at the yard sale. Making a quick assessment of your financial obligations for the week and month, you set a spending limit. There are several items you see that can provide some value in your life.

There it is, the coffee maker you’ve been looking for. Although it’s used and an older model, it could do the job. When you plug it in, it works and is still in good shape.

You call over the seller, and at that moment, you have just formed a market. The seller of the item has a price they are willing to sell for. They are reluctant to go below.

As the potential buyer of the item, you have a price you are not willing to go above. What is the basis for your bid?

I’m sure you thought of the previous coffee makers you’ve had. You probably compared the seller’s offer to some of the newer models you saw online.

The Most I can spend now: $50.00

If I waited and saved the money for three months: $150

I currently drink 8 cups of coffee per week priced at $1.50 per cup. That’s $12 per week.

                                                 Yearly that’s 416 cups of coffee  – $624 per year spent on coffee.

The coffee pods are sold for $52.99 containing 6 boxes, 12 pouches per box. 72 total.

Which works out to $0.73 per cup.

At 416 cups of coffee. I make 6 purchases throughout the year at $52.99 for a total of $312 + $50 at the beginning of the purchase.

Yearly, using the same 416 cups – $362 per year spent on coffee.

If I forgo the coffeemaker expense for three months that’s $48 in lost savings.

 My Value Perspective:

Do I really need all the features of the newest coffee maker? Probably Not.

How many times upon purchasing the coffee, do I add additional items to the purchase? Not often but it happens.

Do I have any upcoming bills or potential emergencies on the horizon? Nothing Pressing.

Will I need the money for the rest of the week? No.

Based on my Budget and my value perspective. I’d find the coffeemaker of value to me at between $50 to $60 which could purchase a decent coffee maker at the store.

 

The Sellers Value Perspective:

The coffee maker is a little old but its still one of the newer models. With a little cleaning, it should be good as new.

I paid close to $100 for this coffee maker. I don’t need the money, I just want to get rid of it. The lowest I’ll go is $60.

After some haggling, an agreement is reached at $55. You get the coffeemaker, and the seller receives the greenbacks to make another trade.

The seller could become a buyer of a product or service, increase the amount available for future purchases (Savings Account) or lend it to another individual for a return.


 

The point of this short story is not that money exchanged between both parties as a confirmation of the agreement. The point is that the seller and buyer exercised their best judgment to create a profit.

The profit may be money or time, and the lists go on. The form which the advantage takes is irrelevant.

I remember being asked about the future of cryptocurrency and the banking system as it currently is. A banking manager asked my perspective on this new form of currency, and if his job would be in jeopardy.

My answer: It all depends on the Federal Reserve and rates. The government and the economy is so intertwined that a change will take place at some point.

 

Now, if asked, I’d tell someone to invest in understanding how the perspective of money will change when it is entirely digital. Or will it change?

 

The manager at the time saw a possible version of the future, and his nerves signaled apprehension instead of eagerness to embrace this new opportunity. Money with his help could further adapt to customer preferences. Learning how to innovate leveraging your banking experience and adjusting to the new form of money will help you stay ahead of the curve.

 Value can take many forms, as can money.

The difference is that value is based entirely on your preference/perspective and the perception of others. Money’s meaning is already understood; only its form can change.

Leverage: to use (a quality or advantage) to obtain a desired effect or result:

Leverage is what’s needed, I believe that it could also be thought of as edge.

Thoughts? Corrections?

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