Price Is What You Pay. Value Is What You Get.

I like aphorisms. When you dwell on them the best ones make you think about all sorts of ideas. The vague ones can inspire critical thinking. Plus they are short. Some are twee but even the tired ones are tired because they’ve held some element of truth for so long. I collected and devised many of mine own in a small book a few years ago. Now, I am dwelling again on investment type aphorisms as applied to life.

I have:

Every stock has a price. Not every stock has value.

Oscar Wilde wrote: (In Lady Windemere’s Fan via Lord Darlington):

a cynic was ‘a man who knows the price of everything and the value of nothing.‘ :

Warren Buffet wrote:

Price is what you pay. Value is what you get

Philip Fisher:

“The stock market is filled with individuals who know the price of everything, but the value of nothing.”

The price part seems obvious. There is a listed price for assets or products and you pay that and receive the item or share.

The value part fits on two ideas. One idea is “intrinsic value”.  In an investing context, the idea is that price and value are not always equivalent. There are times when the price you pay is less than the value you receive (a bargain), and other times when the price is much more than the value.  Investors looks for opportunities where they believe the intrinsic value of a stock (what you get) is greater than its current market price (what you pay).

This idea is applicable in life beyond investing. You pay a high price for a luxury item, but if it doesn’t bring you proportional happiness or utility. Conversely, some experiences or items might be low or free in price but offer enormous value in terms of enjoyment, knowledge, or emotional well-being. This can be particularly true for experiences.

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