To understand how this is done, it is necessary to think in terms of two different capital markets. The first capital market is the market for physical investment. In this market, firms and individuals make real investments in plants and equipment. The second capital market is the financial market where individuals buy financial instruments (ownership rights) without directly managing real plant and equipment. Stocks, bonds, and real estate trusts are examples of the latter; factories, stamping presses, and lathes are examples of the former.
Instant wealth arises in the process of capitalization. Consider a real investment in plant and equipment of $10 million that earns $3 million per year. Suppose that the market rate of interest or the discount rate is 10 percent. With a 10 percent discount rate, a $3 million annual income flow is worth $30 million ($3 million/.10) in the financial market. If the discount rate were 5 percent, the same investment would be worth $60 million. This is true regardless of how much it cost to make the initial investment. But in the example, the initial investor has now increased his wealth instantly from the initial $10 million to $30 million when the investment was sold. The purchaser who buys the stock for $30 million, however, has an investment that only earns the market rate of interest (10 percent). If the real investment opportunity were something that could be duplicated by the initial investor, his $10 million investment might be worth even more because of the future profits that similar investment could bring.
Continue reading...
Wednesday, July 6, 2011
Sunday, February 6, 2011
4 Pernicious Phases that Kill a Relationship
The following is an excerpt from Awaken the Giant Within : How to Take Immediate Control of Your Mental, Emotional, Physical and Financial Destiny!Chapter 21.
In her book How to Make Love All the Time, my friend Dr. Barbara DeAngelis identifies four pernicious phases that can kill a relationship. By identifying them, we can immediately intervene and eliminate problems before they baloon into destructive patterns that threaten the relationship itself.
Stage One, Resistance: The first phase of challenges in a relationship is when you begin to feel resistance. Virtually anyone who's ever been in a relationship has had times when they felt resistance toward something their partner said or did. Resistance occurs when you take exception or feel annoyed or a bit separate from this person. Maybe at a party they tell a joke that bothers you and you wish they hadn't. The challenge, of course, is that most people don't communicate when they're feeling a sense of resistance, and as a result, this emotion continues to grow until it becomes...
Stage Two, Resentment: If resistance is not handled, it grows into resentment. Now you're not just annoyed; you're angry with your partner. You begin to separate yourself from them and erect an emotional barrier. Resentment destroys the emotion of intimacy, and this is a destructive pattern within a relationship that, if unchecked, will only gain speed. If it is not transformed or communicated, it turns into...
Stage Three, Rejection: This is the point when you have so much resentment built up that you find yourself looking for ways to make your partner wrong, to verbally or non-verbally attack them. In this phase, you begin to see everything they do as irritating or annoying. It's here that not only emotional separation occurs, but also physical separation as well. If rejection is allowed to continue, to lessen our pain, we move to...
Stage Four, Repression: When you are tired of coping with the anger that comes with rejection phase, you try to reduce your pain by creating emotional numbness. You avoid feeling any pain, but you also avoid passion and excitement. This is the most dangerous phase of a relationship because this is the point at which lovers become roommates - no one else knows the couple has any problems because they never fight, but there's no relationship left.
What's the key to preventing these "Four R's"? The answer is simple: communicate clearly up front. Make sure your rules are known and can be met. To avoid blowing things out of proportion, use Transformational Vocabulary. Talk in terms of preferences: instead of saying, "I can't stand it when you do that!" say, "I'd prefer it if you did this instead." Develop pattern interrupts to prevent the type of argument where you can't even remember what it's about anymore, only that you've got to win. Continue reading...
In her book How to Make Love All the Time, my friend Dr. Barbara DeAngelis identifies four pernicious phases that can kill a relationship. By identifying them, we can immediately intervene and eliminate problems before they baloon into destructive patterns that threaten the relationship itself.
Stage One, Resistance: The first phase of challenges in a relationship is when you begin to feel resistance. Virtually anyone who's ever been in a relationship has had times when they felt resistance toward something their partner said or did. Resistance occurs when you take exception or feel annoyed or a bit separate from this person. Maybe at a party they tell a joke that bothers you and you wish they hadn't. The challenge, of course, is that most people don't communicate when they're feeling a sense of resistance, and as a result, this emotion continues to grow until it becomes...
Stage Two, Resentment: If resistance is not handled, it grows into resentment. Now you're not just annoyed; you're angry with your partner. You begin to separate yourself from them and erect an emotional barrier. Resentment destroys the emotion of intimacy, and this is a destructive pattern within a relationship that, if unchecked, will only gain speed. If it is not transformed or communicated, it turns into...
Stage Three, Rejection: This is the point when you have so much resentment built up that you find yourself looking for ways to make your partner wrong, to verbally or non-verbally attack them. In this phase, you begin to see everything they do as irritating or annoying. It's here that not only emotional separation occurs, but also physical separation as well. If rejection is allowed to continue, to lessen our pain, we move to...
Stage Four, Repression: When you are tired of coping with the anger that comes with rejection phase, you try to reduce your pain by creating emotional numbness. You avoid feeling any pain, but you also avoid passion and excitement. This is the most dangerous phase of a relationship because this is the point at which lovers become roommates - no one else knows the couple has any problems because they never fight, but there's no relationship left.
What's the key to preventing these "Four R's"? The answer is simple: communicate clearly up front. Make sure your rules are known and can be met. To avoid blowing things out of proportion, use Transformational Vocabulary. Talk in terms of preferences: instead of saying, "I can't stand it when you do that!" say, "I'd prefer it if you did this instead." Develop pattern interrupts to prevent the type of argument where you can't even remember what it's about anymore, only that you've got to win. Continue reading...
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