Tuesday, February 26, 2008

Opportunity Costs

An opportunity cost is when you lose something that you could have gotten, when another alternative is chosen. I guess in lamer terms, this must mean that for instance; Say I were to go to the food court at Queens Center Mall. There are many choices of food to eat. Let's also say that I have high blood pressure and I'm terribly overweight. If I choose something loaded with calories, like...McDonalds, over something more healthy, like Sushi, or perhaps Subway, I could possibly get a heart attack, or die. While the sushi or the Subway sandwich would have probably not killed me.

This is probably related to stocks in the way that people choose between two stocks, the one they choose from, takes a dramatic drop, and they lose money. I had a problem with google. Where it dropped 40 points in only 2 days. I mean, it dropped like crazy. It may as well have crashed for me. I bought it at 512. At the moment of making this entry. It is at about 460. When it was at it's peak, it was around 530. So I lost about 1000 in the stock game. My personal experience with opportunity costs has taught me never to invest in google again.

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