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Entire World on Sale?

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By bingocards
March 17, 2008

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Bit of background: I live in Japan, get paid in yen, and invest stateside primarily in index funds.

My girlfriend has not quite reached the investment stage yet (starts job in two weeks, after which I intend to gently nudge her down the path of righteousness), but has a bit of interest about my quirky hobbies. We're both Disney freaks. While we were waiting to go out to see Enchanted, I told her I had to quick schedule a transaction on the brokerage website. She said "My stepfather said that that the dollar is being hit and the markets are in shambles. Is everything alright?"

"Yep, everything is fine."

"So you haven't lost any money???"

"Oh, no, I've theoretically lost about a paycheck's worth."

"Bingocards! That's not 'fine'!!"

"Well, here's how I look at it. You know Disney? The markets are in shambles, but are you less likely to go to Disney next month? [She goes monthly.]"

"No, of course not, what does that have to do with anything?"

"Exactly. So Disney is still the same company it was a week ago. Except now it's cheaper, both because my same steady investment in yen buys more dollars, and because all the prices in dollars are falling. Now, I'm not buying Disney -- I don't really trust my ability to pick whether Disney is going to do well or poorly relative to everything else. So I just buy the entire world."

"How does that work?"

"So it's like the entire world is on sale?"

"Yep, exactly. The entire world is on sale."