There has been much hype over autonomous cars. To a degree, new technology evokes a curiosity in all of us. Investors have flocked towards start-ups devoted to this area and drove up share value. However, I draw a seemingly unrelated parallel between automated car technology and real estate valuation vis a vis speculative value. Speculative value is what fuels a sharp rise in share value. It is fueled by the notion that an asset will be worth more in the future because market participants think that if they do not buy now they will miss out on appreciated asset value. The same feeling is felt by the typical Toronto real estate buyer because many feel that the property they want will be worth significantly more in the future so they feel a sense of urgency to buy. This is the underpinning of the parallel between real estate value and share value. The basic concept of speculative value is the same. There are many different types of "value" based on valuation theory and value as legally defined. The downside of speculative value is that declines occur as fast as gains do. If your timing is good you stand to do well but if you are caught in the middle of a speculative market shift you are at greater risk. #recg #speculation #speculativevalue #realestate #technology #investing #autonomousvehicles #property #investments
- Demitry Omrin