Ted Hickman

The Price-to-Quality Relationship



The silver-bullet answer to most technology product issues is “quality” – i.e. spend more money and do it better. And the industry certainly has a ton of technology products and products at least potentially valuable to develop, like Wolverineengines.com.

Now, let me stop there and talk about your prices.

Price-to-cost ratio is one of the oldest (and cheapest) investment performance measurements. This is the ratio of the value of the asset to the price of the asset. The higher the price-to-cost ratio, the higher the chance of buying a losing investment. However, the higher the price-to-value, the more likely you will make money if you buy a winning investment.

So, first, let’s look at what happens if you have a very high price-to-cost ratio, say 50 or higher. The probability of making money drops sharply – the probability is almost zero. Furthermore, the average value per dollar invested goes up. In other words, if the price is $100, the dollar cost of buying a winning investment is $50 (worth about $50), but the market value is $200 (worth $100) it makes buying the winning investment more rewarding.

However, in reality, the price-to-cost ratio is usually not as straightforward as you might think, because the dollar cost of investing varies a lot, as you would expect when dealing with a large market capitalization company or small emerging market company, and even when dealing with one simple commodity. The best home elevators aren’t necessarily used in domestic properties, for instance. You would get into a lot of trouble if you were buying silver at the current market price of about $17.00 a kilogram (yes, at $17.00 a kilogram silver, I believe the market value is significantly higher than the price you will see later).

Unfortunately, this is one of the big limitations of researching the price-to-quality relationship. However, if you assume that your investments are highly liquid, and you trust the local market for that, the price-to-quality ratio should be easy enough to calculate. In this case, the price-to-quality ratio is usually a small fraction of the value, and it usually has been for a long time. So, here is the calculation:

Value of $1 (price of silver) – $100

Price-to-quality ratio: 0.25

This is an excellent example of the Price-to-Quality relationship and what happens when you buy cheap. Now let’s look at another price-to-quality example.

Value of $1 (price of silver) – $3

Price-to-quality ratio: 1.5

Okay, so if you want to invest in silver, then the price-to-quality relationship is still relatively easy to calculate (usually less than a dollar), and it is even easier to calculate when you believe the price will go up.

But what about if you have a very high price-to-quality ratio, say 10 or more? Then the price-to-quality ratio becomes difficult to calculate and the relationship itself becomes a bit tricky. The price will probably be increasing (although silver tends to be somewhat volatile, which makes it hard to predict), but the price-to-quality relationship might not really follow the price, and certainly not necessarily go in the opposite direction (higher price means lower quality). So, the price might not be providing any support to your price-to-quality relationship. Furthermore, if you have a price-to-quality ratio like this, your chance of making money will probably be much lower, simply because the price goes down (the quality goes up), and you get less than a dollar per dollar invested.

The silver price history indicates that if you buy cheap silver – at a price less than $20 – the price-to-quality relationship will be almost as strong as it would be at the current price. What is the price level you should pay to buy a less expensive silver? Well, in terms of the price-to-quality ratio, you don’t actually need to pay less than $3 a kilogram silver, although this might be a good option to consider if silver prices are going up rapidly. In other words, the price-to-quality relationship does not even have to go down.

Intrinsic value comes to the fore in view beyond speculative investment, such as how https://millenniumgeospatial.com/ offers systems of which the value can physically be pointed to.

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