Sonicscooter
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Erm..........No comment i could think of is appropriate.......
Took out a loan to transition to full-time trading. 24 years old.
new_trader
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Still confused
Person A: 25,000
Person B: 0
Person A lends Person B £25,000 [N.B: This isn't Central Banking chicanery, the £25,000 came from real savings not from thin air]
Person A: 0
Person B: 25,000
Person B looses...no...losses...umm...blows the lot trading
Person A: 0
Person B: 0
Person B must now spend the next 12 months saving to repay the £25,000 Person A saved. The books are balanced again!
Person A: 25,000
Person B: 0
How much did Person A make and or lose in this process? (Disregarding opportunity cost)
Person A: 25,000
Person B: 0
Person A lends Person B £25,000 [N.B: This isn't Central Banking chicanery, the £25,000 came from real savings not from thin air]
Person A: 0
Person B: 25,000
Person B looses...no...losses...umm...blows the lot trading
Person A: 0
Person B: 0
Person B must now spend the next 12 months saving to repay the £25,000 Person A saved. The books are balanced again!
Person A: 25,000
Person B: 0
How much did Person A make and or lose in this process? (Disregarding opportunity cost)
Sonicscooter
Experienced member
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Please......no more....i can't cope with it........T2w..................
.........Do I really need to say more.
I can guess why trading might have been tricky for you.
How about putting on socks, are you ok with that?
ffsear
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Your forgetting the 3rd man
Person A: 25,000
Person B: 0
Broker 0
Person A lends Person B £25,000 [N.B: This isn't Central Banking chicanery, the £25,000 came from real savings not from thin air]
Person A: 0
Person B: 25,000
Broker: 0
Person B looses...no...losses...umm...blows the lot trading
Person A: 0
Person B: 0
Broker: 25,0000
Person B must now spend the next 12 months saving to repay the £25,000 Person A saved. The books are balanced again!
Person A: 25,000
Person B: 0
Broker: 25,000
Where's the extra 25k come from?
Person A: 25,000
Person B: 0
Broker 0
Person A lends Person B £25,000 [N.B: This isn't Central Banking chicanery, the £25,000 came from real savings not from thin air]
Person A: 0
Person B: 25,000
Broker: 0
Person B looses...no...losses...umm...blows the lot trading
Person A: 0
Person B: 0
Broker: 25,0000
Person B must now spend the next 12 months saving to repay the £25,000 Person A saved. The books are balanced again!
Person A: 25,000
Person B: 0
Broker: 25,000
Where's the extra 25k come from?
itspossible
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As mention before.THIS IS JUST A MADE UP STORY.It is not happening.
If you believe its real you have some serious work to do on yourself.
If it is real then i will apologise(when i see the proof)
If you believe its real you have some serious work to do on yourself.
If it is real then i will apologise(when i see the proof)
If we go for a curry and it cost £60 (i like to eat a lot) and we agree to split it and as I left my wallet at home (as usual) I now owe my friend £30.
How do I get that to be £ 60, I am now done.
Ok got to stop as people can't be this stupid and use a computer can they!
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mb325
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I hope you're trolling, for your sake.
ffsear
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Answer the question.
Again. You lend me £10 to place a bet with.
The bookie takes the £10 and my bet loses.
How much have am I down after i've paid you back?
No he is like that.
You should see his thread where he makes £3.78 a day ''smashing the bookies''.
Sonicscooter
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This place is just a wind up...i took the week off to do some bits round my home............this is cheap entertainment.............i am speechless....tho..
Anyone want to borrow £25k....it's no big deal, you will just own me £50k after 12 months.........or Nick will be sent round to break your legs....
Anyone want to borrow £25k....it's no big deal, you will just own me £50k after 12 months.........or Nick will be sent round to break your legs....
There seems to be some confusion here between simple accounting terms: asests/liabilities and profit/loss, between profit and loss account and balance sheet.
One way of looking at this example is to think of it as a company and a bank.
We start with company B having zero capital and zero assets, Company B has a total of, say, 1 share which is worth zero. Capital always equals assets less liabilities.
Bank A lends company B 25000 - this creates an asset in the company of 25000 i.e. money sitting in a bank account. This is matched by a liability of 25000 i.e. a loan from the bank. The total value of the company is still zero. Capital always equals assets (25000) less liabilities (-25000) = 0
Company B then buys some stock e.g. widgets costing in total 25000, so the asset of 25000 cash in bank is converted to 25000 of stock. The liability remains at 25000.
Company B starts selling the widgets in Portobello Road market and does very well selling them all to Hugh Grant from 75000. So company B has made 50000 profit i.e sales = 75000 minus cost of sales = 25000 gives profit = +25000
The balance sheet is now:
Assets:
Stock 0
Cash 75000
Liabities:
Loan 25000
Capital:
Shares in company 50000
Capital always equals assets less liabilies
In other words the 50000 profit has now created additional capital in the business of 50000 and the 1 share in the business is worth 50000 now instead of 0. The loan still needs to be repaid to the bank.
When it is repaid to the bank then the balance sheet becomes:
Assets:
Stock 0
Cash 50000
Liabilities:
Loan 0
Capital 50000
Capital always equals assets less liabilities
So the loan is repaid out of cash and the capital of the company remains at 50000 (being the result of the profit previously made and added to the company)
Lets do the same thing where to 25000 worth of widgets is destroyed by a steam roller and there is no insurance. In other words there is a loss of 25000 i.e the sales were 0 but the cost of sales were 25000, giving profit = 0 - 25000 = -25000 (loss)
The balance sheet is now:
Assets:
Stock 0
Cash 0
Liabilities:
Loan 25000
Capital:
Shares in company worth -25000
Capital always equals assets minus liabilies.
In other words there is a 25000 loss, which has resulted in the value of the company going down from zero to minus 25000. This is balanced by a liability to the bank of 25000 loan which must be repaid.
The loss IS NOT 50000.
One way of looking at this example is to think of it as a company and a bank.
We start with company B having zero capital and zero assets, Company B has a total of, say, 1 share which is worth zero. Capital always equals assets less liabilities.
Bank A lends company B 25000 - this creates an asset in the company of 25000 i.e. money sitting in a bank account. This is matched by a liability of 25000 i.e. a loan from the bank. The total value of the company is still zero. Capital always equals assets (25000) less liabilities (-25000) = 0
Company B then buys some stock e.g. widgets costing in total 25000, so the asset of 25000 cash in bank is converted to 25000 of stock. The liability remains at 25000.
Company B starts selling the widgets in Portobello Road market and does very well selling them all to Hugh Grant from 75000. So company B has made 50000 profit i.e sales = 75000 minus cost of sales = 25000 gives profit = +25000
The balance sheet is now:
Assets:
Stock 0
Cash 75000
Liabities:
Loan 25000
Capital:
Shares in company 50000
Capital always equals assets less liabilies
In other words the 50000 profit has now created additional capital in the business of 50000 and the 1 share in the business is worth 50000 now instead of 0. The loan still needs to be repaid to the bank.
When it is repaid to the bank then the balance sheet becomes:
Assets:
Stock 0
Cash 50000
Liabilities:
Loan 0
Capital 50000
Capital always equals assets less liabilities
So the loan is repaid out of cash and the capital of the company remains at 50000 (being the result of the profit previously made and added to the company)
Lets do the same thing where to 25000 worth of widgets is destroyed by a steam roller and there is no insurance. In other words there is a loss of 25000 i.e the sales were 0 but the cost of sales were 25000, giving profit = 0 - 25000 = -25000 (loss)
The balance sheet is now:
Assets:
Stock 0
Cash 0
Liabilities:
Loan 25000
Capital:
Shares in company worth -25000
Capital always equals assets minus liabilies.
In other words there is a 25000 loss, which has resulted in the value of the company going down from zero to minus 25000. This is balanced by a liability to the bank of 25000 loan which must be repaid.
The loss IS NOT 50000.
new_trader
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It might be a made up story, but you must also consider the target audience who may genuinely be considering borrowing money to trade....Now I've said that...Hi Warren Buffett, hope you are enjoying the thread, give my regards to Bill Gates.
Mr. Charts
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Or more simply:
Let's say you start off with a "capital account" of £100.
You borrow £10 so your capital stands at £110, even though that £10 is not actually yours.
You gamble away that £10 of borrowed money (NOT your own) so you have £100 again.
You take £10 of that to repay the moron who lent you £10 to gamble with leaving you with £90
You are now down £20 total from when you had £110 in your account after the borrowing.
BUT you are down £10 NET since the borrowed money wasn't yours to begin with and you do actually have £90 in your account
Oscar Reed
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Greatest Thread in the World
mb325
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OK i accept defeat. But if i lost 25k trading, and ended up with a 25k debt. I'd feel like i'd lost 50k -
When you spend 1k on your credit card and then have to pay 1k back at the end of the month do you feel like you've lost 2k???
new_trader
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OK i accept defeat. But if i lost 25k trading, and ended up with a 25k debt. I'd feel like i'd lost 50k -
I wouldn't worry...to be honest I can't even remember what this thread is about... something to do with how much it costs to eat a good curry...etc
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