Popiah and the Psychology of Paper Profit

There was a gathering coming up and it was decided we were all going to DIY and make popiah (chinese spring roll).

As 5 out of 6 people in the group were retired or in between jobs, given the social atmosphere of austerity and belt tightening, we had a budget drawn up. I was tasked with the enviable responsibility of getting the popiah skin.

With a price cap of $10 in mind (actually also in reality), I went about the co-op supermarket on my CSI popiah skin hunt. There were a few familiar brands and one popular (popiahlar?) one was going for just under the budget at 9.50. Thinking it was just 5 minutes into the hunt, surely I need to do more due diligence. Plus I would look even better in front of my jobless banker and auditor friends if I hit a  lower price.

After a few more encounters exceeding budget, I walked over to the next supermarket few blocks away. A ha! Same brand and cheaper by 50 cents! But... Seems like the expiry date was near. So I sheepishly went back to the co-op for the 9.50 branded one. Then I thought again, hey, we are having the gathering three days away, and it would most certainly still be within the month of expiry. Gloating with my realization, I trekked over back to the 9.00 skin supermarket just...

To realise the last pack had already been bought. Darn! Could have...would have...should have... Yet I still felt sore that I simply couldn't bear to pay 50 cents more.

Taken from Investorglossary.com:

"A paper profit is a unrealized gain on a security or asset. For example, suppose 10 shares of Acme stock are bought at $8 and two months later the stock is selling at $12. The paper profit is (10X12)-(10X8), or $40. If the stock was sold, the paper profit would become a realized profit. A paper profit is just that - a profit on paper only - and should never be confused with a tangible gain. First, a paper profit is usually reduced significantly by both taxes and transaction costs upon realization. Moreover, a paper profit can become an important psychological obstacle to successful investing. Suppose Acme falls back to $10 and part of the paper profit disappears. Some investors will find it hard to sell the shares until they climb back to $12 and the full paper profit re-emerges. In this way, an historical paper profit can make an investor hold a stock too long and forego better investment opportunities."

Indeed, the same can be said of property.

Well, I guess I had nothing much to shout about to my popiah friends then.