Marv, as I was trying to get to sleep, presented me with The Horse Riddle.
Skipping the stock market jargon used in the vid...
He starts with $60. Actual cash on hand is $60.
Buys a horse. He has actual cash on hand of $0 now.
Sells horse for $70. Actual cash on hand is $70.
Buys horse back for $80. Actual cash on hand is...
This is where the trick happens.
If he took on debt to gather the $80 then cash on hand is now -$10.
He now sells the horse for $90, repays the debt and has $80 cash on hand. $20 profit.
The riddle doesn't say if he borrow money or not, nor does it state that our horse trader only has $60 on hand.
Let's try it again, but our trader has $1,000 on hand.
He starts with $1,000. Actual cash on hand is $1,000.
Buys a horse for $60. Actual cash on hand is $940 now.
Sells horse for $70. Actual cash on hand is $1,010.
Buys horse back for $80. Actual cash on hand is $930.
Sells horse for $90. Actual cash on hand is $1,020.
Same $20 profit!
Because he's "borrowing" against his pile of cash rather than incurring debt.
HOWEVER
There's a non-transactional way of looking at it where the start position is compared to the final position.
Starts with $60, ends with $90. $30 profit. This method doesn't care how many steps are involved and what their values are.
VAT likes this method. So do labor unions.
Please note, don't hit a friend with this puzzle at 0130 as they're trying to get to sleep.
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