Topic: How To Invest

What is Pat’s commentary for the week of July 26, 2022

Article Excerpt

In the early years of my investment career, I fell in love with the concept of “hidden assets.” My view is that hidden assets can help you expand profits while limiting losses. It’s a broad concept, but easy to visualize if you think of it in basic terms. For instance, when a company buys a $1 million piece of real estate, the purchase can appear on its balance sheet in various ways. Let’s stick with the simplest: it borrows the money to pay for the purchase, and that $1 million item appears on the balance sheet as a $1 million debt or liability. The $1 million piece of real estate appears on its balance sheet as an asset. These two $1 million entries offset or balance each other (that’s why we call it a “balance sheet”). Let’s say that over the next year, the value of the property rises by 5%. The $1 million asset is now worth $1,050,000, which is $50,000…

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