Fun: A reply from CEO of J.P. Morgan to a pretty girl seeking a rich husband

 A reply from CEO of J.P. Morgan to a pretty girl seeking a rich husband

A young and pretty lady posted this on a popular forum:

Title: What should I do to marry a rich guy?
... I'm going to be honest of what I'm going to say here.
I'm 25 this year. I'm very pretty, have style and good taste. I wish to marry a guy with $500k annual salary or above. You might say that I'm greedy, but an annual salary of $1M is considered only as middle class in New York. My requirement is not high. Is there anyone in this forum who has an income of $500k annual salary? Are you all married?
I wanted to ask: what should I do to marry rich persons like you?
Among those I've dated, the richest is $250k annual income, and it seems that this is my upper limit.
If someone is going to move into high cost residential area on the west of New York City Garden(?), $250k annual income is not enough.
I'm here humbly to ask a few questions:
1) Where do most rich bachelors hang out? (Please list down the names and addresses of bars, restaurant, gym)
2) Which age group should I target?
3) Why most wives of the riches are only average-looking? I've met a few girls who don't have looks and are not interesting, but they are able to marry rich guys.
4) How do you decide who can be your wife, and who can only be your girlfriend? (my target now is to get married)

Ms. Pretty

A philosophical reply from CEO of J.P. Morgan:

Dear Ms. Pretty,
I have read your post with great interest. Guess there are lots of girls out there who have similar questions like yours. Please allow me to analyse your situation as a professional investor.
My annual income is more than $500k, which meets your requirement, so I hope everyone believes that I'm not wasting time here.
From the standpoint of a business person, it is a bad decision to marry you. The answer is very simple, so let me explain.
Put the details aside, what you're trying to do is an exchange of "beauty" and "money" : Person A provides beauty, and Person B pays for it, fair and square.
However, there's a deadly problem here, your beauty will fade, but my money will not be gone without any good reason. The fact is, my income might increase from year to year, but you can't be prettier year after year.
Hence from the viewpoint of economics, I am an appreciation asset, and you are a depreciation asset. It's not just normal depreciation, but exponential depreciation. If that is your only asset, your value will be much worse 10 years later.
By the terms we use in Wall Street, every trading has a position, dating with you is also a "trading position".
If the trade value dropped we will sell it and it is not a good idea to keep it for long term - same goes with the marriage that you wanted. It might be cruel to say this, but in order to make a wiser decision any assets with great depreciation value will be sold or "leased".
Anyone with over $500k annual income is not a fool; we would only date you, but will not marry you. I would advice that you forget looking for any clues to marry a rich guy. And by the way, you could make yourself to become a rich person with $500k annual income.This has better chance than finding a rich fool.
Hope this reply helps.
signed,
J.P. Morgan CEO

WARREN BUFFETT: The Investment You Think Is 'Safe' Is Actually The Riskiest In The World

Warren Buffett has published a preview of his annual letter in Fortune.

In the preview, he does one of the many things he does best: Explains basic investing concepts and history in a way that no one else can.

In the first section of the article, for example, Buffett explains why most investors' concepts of "risk" and "safety" are completely bass-ackwards.

Over the long haul, Buffett explains, the asset class that most investors consider the "riskiest"—stocks—is actually the safest.

The asset class that most investors consider the "safest," meanwhile—cash—is actually extremely risky.

Why?
Inflation.

Thanks to even moderate rates of inflation, cash is basically guaranteed to lose huge amounts of value over time.
In the past century, for example,the value of $1.00 has fallen to 3.8 cents (see chart at right).

Stocks, meanwhile, have appreciated to the tune of ~10 percent per year.

Even since 1965, the year before I was born, the value of the dollar has plummeted 85 percent. It takes $7 now to buy what $1 bought then. Meanwhile, the DOW is up 13X.

Sure, there were stock-market crashes along the way. Stocks are "high beta," meaning that their prices fluctuate wildly. Most people, including most Wall Street investors, describe this beta as "risk." As Buffett points out, however, it isn't risk. It's beta. It's price-fluctuation. Actual risk, Buffett observes, is the risk that your investment will lose purchasing power.

Over time, investments in currency have lost a devastating amount of purchasing power.

Investments in stocks, meanwhile, have gained purchasing power. And this is true even after the lousy stock-market performance of the past decade.

Now, cash does have its place in a portfolio. What cash provides, Buffett further observes, is liquidity—a.k.a., flexibility. The future is unpredictable, and you'll never know when you need cash. And you also never want to be forced to sell long-term investments to raise cash when the long-term investments might be experiencing temporary price fluctuations to the downside. So you have to keep some cash, even it's an extremely dangerous long-term investment.

Buffett, for example, keeps $20 billion of cash on hand ($10 billion minimum). He knows he's going to get a horrible long-term return on that cash, but the flexibility and liquidity is worth it to him. Meanwhile, the rest of his portfolio is invested in equity.

Here's W.E.B.:
Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as "safe." In truth they are among the most dangerous of assets. Their beta may be zero, but their risk is huge.

Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal. This ugly result, moreover, will forever recur. Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies that produce inflation. From time to time such policies spin out of control.

Even in the U.S., where the wish for a stable currency is strong, the dollar has fallen a staggering 86 percent in value since 1965, when I took over management of Berkshire. It takes no less than $7 today to buy what $1 did at that time. Consequently, a tax-free institution would have needed 4.3 percent interest annually from bond investments over that period to simply maintain its purchasing power. Its managers would have been kidding themselves if they thought of any portion of that interest as "income."


For taxpaying investors like you and me, the picture has been far worse. During the same 47-year period, continuous rolling of U.S. Treasury bills produced 5.7 percent annually. That sounds satisfactory. But if an individual investor paid personal income taxes at a rate averaging 25 percent, this 5.7 percent return would have yielded nothing in the way of real income. This investor's visible income tax would have stripped him of 1.4 points of the stated yield, and the invisible inflation tax would have devoured the remaining 4.3 points. It's noteworthy that the implicit inflation "tax" was more than triple the explicit income tax that our investor probably thought of as his main burden. "In God We Trust" may be imprinted on our currency, but the hand that activates our government's printing press has been all too human.

High interest rates, of course, can compensate purchasers for the inflation risk they face with currency-based investments — and indeed, rates in the early 1980s did that job nicely. Current rates, however, do not come close to offsetting the purchasing-power risk that investors assume. Right now bonds should come with a warning label.


Read Buffett's whole article at Fortune >