Sony falls to a new 30 YEAR low. Markets just dont believe them.

[Dodece]

Currency inflates in part, because the economy itself has inflated. When a economy gets bigger it needs even more money to function. In a real sense some inflation reflects a healthy economy, because the economy is expanding, and needs more money to conduct transactions. Inflation gets a bad rap when currency devalues faster then a given economy is growing. This can be caused by trade disparities, resource shortages, or bad economic policies.

Speaking to this subject inflation isn't a friend to Sony, because the stock is not in line with inflation. Since the value of the money has decreased so has the value of the stock. Lets say that fifteen dollars then is equal to say twenty dollars today. Then the stock should be worth twenty dollars, but instead it is worth twenty five percent less money. Now if you want to adjust the price of the stock for inflation in accordance with what the money was worth at the time the stock was purchased.

That fifteen dollars actually equates out to be eleven dollars and twenty five cents. So you lost three dollars and seventy five cents on that stock purchase. You retained no equity, because the stock did not stay in line with how much the economy inflated during the given time frame. You have lost purchasing power on this transaction. To be fair though that isn't actually the case for those who held onto the stock for thirty years, because they did in fact receive dividends from the stock. When you own stock you get paid a share of the profits that a company makes. Now for a single stock that may be as little as a dime or nickle a year, but seeing as Sony had some very good years. Chances are that those long term investors actually beat inflation on the dividends.

So in a sense the investors from thirty years ago aren't too badly off. Even if the stock slips further they may just make or beat inflation on the whole. The people that are clenching their teeth are the ones who bought in when the stock was very high. Those are the people that are probably going to take the real losses. They probably lost more money on the stock then anyone else, and dividends even very long term aren't likely to add up to the cost out of pocket let alone cover the inflation of currency.

To put it succinctly the stock is actually worth less then it was thirty years ago, because in the intervening time span the value of the money decreased. Sony is actually doing worse then going back to square one if that is how some of you are seeing this.