Spolu 19: Determining Spolu Share Value

What will determine the value of any spolu share?

To answer this question, I will create a hypothetical investment scenario. An investor has only two choices. He can invest into a 2% term deposit at his bank. Or he can purchase shares in a spolu that have historically paid $3 per share. This spolu is stable, so it’s safe to assume this trend is likely to continue.

A basic financial calculation suggests that this share is worth about $150 ($150 x 2% = $3). This assumes a risk-free investment. But spolus are never risk-free, so some discount is warranted. Let’s say that many astute spolu investors would be willing to pay $125 for this share. For sure $175 would not make much sense; the term deposit in the bank offers a better return, with no risk. The historical per-share profit distribution will determine much of the value of any spolu share.

The spolu exchange will also have its speculators. They are looking for good deals for their long-term investments. If our example’s spolu share is on the auction and current bid is $70, one speculator would realize this spolu is undervalued. He would put a bid of $80. Maybe he might get lucky and actually purchase this share at this price. But more likely, another speculator is going to bid a little more. The competing speculators will bring the value closer to $125 within a few days of…