Re: Postage stamp bubbles; WAS: Closed - End Fund Puzzle

[Kevin Quinn <kquinn@xxxxxxxxxxxx>]

Paul Davidson's original post on this specified that the stamp had
minimal consumption value--it's owner left it in the safe. That's why I
left out the things Roger mentions--the "services"--and focused on
monetary dividends. Since the stamp has none, it has a fundamental value of
zero. This is a standard use of the term "fundamentals"--"the discounted
value of all future dividends". See, e.g., Robert Shiller, *Market
Volatility*. If you use "the discounted value of next period's price"
(plus pecuniary and nonpecuniary dividends this period),
as Roger suggests, you're begging the issue of whether or not there's a
bubble: *IF* you have ruled out a bubble, then next period's price will be
the discounted value of all dividends from that point on. When there's a
bubble, on the other hand, we cannot reduce future prices to future
dividends via successive substitution.

On a lighter note, the cartoonist Mark Stamaty ("Washingtoon") once did a
strip where a character suggested that the Social Security Trust Fund
Surplus be
invested in baseball cards and then the cards lofted into space; when the
baby boom was ready to retire, the cards would be brought back and sold!