Excellent debate this-- a couple of things i can gather from this discussion are:
1) one must buy appreciating assets and lease depreciating assets.
Basically, if anyone buys land, or a home, however grandios that may be, it will only help in increasing the networth of the individual- be it an investor or a businessman.
Moreover, would you call Vijay Mallya's fleet of vintage cadilacs an investment or a wasteful expenditure? On these lines, would you call purchasing costly paintings (by hussain etc) investments or personal gratification?
2) There are some depreciating assets that businesses do invest into, and they cannot be measured from the returns on investment viewpoint. For example, what is the cost of brand building? Would Pepsi/Coke sell more/less if they were to advertize less/more? where is the optimum expense here? In short, some businesses do invest in costly show-offs in order to build a brand image.. and that can be expensive cars, expensive offices, jets etc.
3) Some expenses are meant for personal satisfaction. what Vijay Mallya does can be called as personal gratification, but his public image helps further build his brand- the King of good times!! Having said that, there are businessmen who love to splurge on themselves and as has been said here, if you have earned it....
Thanks
AA
Edited by mragarwal - 05/Jul/2007 at 1:37am
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