Comments on: How Warren Buffett Would Calculate Your Intrinsic Value (And How You Should, Too)

By: Amused Peasant

Amused Peasant — Thu, 15 Jan 2009 22:40:43 +0000

Incidentally, your car won’t depreciate to a zero value because of it’s scrap value.

By: Amused Peasant

Amused Peasant — Thu, 15 Jan 2009 22:37:43 +0000

That’s all very fascinating but there are blue skies, white waves, green hills, lush forests and none of those things cost a thing. I can’t imagine why your net worth would actually matter, unless you intended to do something philanthropic with it and let’s face it, which of us mortals is going to be playing in those leagues? I’m sure your house is nice and big though. Problem is, you’re too busy spending all those hours increasing your net worth to have much time to enjoy it…

By: junger

junger — Fri, 10 Aug 2007 20:41:56 +0000

Wow. That really is a no frills Web site.

By: DR

DR — Sat, 04 Aug 2007 12:28:02 +0000

Steven, you are right of course that buying the car and not including it on your balance sheet will decrease your net worth in one day. I know folks who depreciate assets as you’ve suggested, and that’s certainly another approach. I don’t follow it because it’s too much trouble and because the car will eventually be written down to a zero value anyway. I also don’t want to take any financial comfort from buying a depreciating asset by putting it on my balance sheet for a few years while it depreciates. That said, I do include the equity in my cars when calculating how much money I could generate in an emergency.

By: steven

steven — Fri, 03 Aug 2007 19:49:44 +0000

Hmmmm … you don’t include depreciable assets? The trouble with that is that when you go buy that car, it would look like your net worth dropped by a big chunk in one day. That’s artificial, no? Doesn’t it make more sense to depreciate per month or quarter? Is it just too much work?

By: Matt

Matt — Fri, 03 Aug 2007 16:26:26 +0000

Excellent. I started using the financial program Gnucash a few months ago which will automatically provide you with a balance sheet and your net worth whenever you want. Of course it’s up to you to enter all your assets, liabilities, income and expenses. I never really understood stuff like net worth and equity until I could see it for myself.