Ann: Global Distribution Partnership Secured in Brazil, page-50

hi Gordon,

not you personally - but, a general comment

"Many of the SH's like myself, have purchased at a much higher SP and in turn this leads to a little frustration, soul searching and reasoning behind the decline."


What is at the heart of the matter is that in general, people who own shares - look at things vastly differently to what owners of a business do.

People who own shares -------------------- in their head - own shares. They, in general, do not consider themselves as part business owners - and, mostly they certainly do not think like that.

Also - share owners are perceived that way also -

I have lost count of the amount of people who have met me and say - 'oh, yes, I hear you play on the sharemarket' or, 'arrh, you are the share trader' - or similar.

It is very unusual to have someone understand that you are an investor and not a trader.

It is rare for someone to know that you own part of a business.


For a business owner - there is one thing of importance and one thing only -------------- the state of the business - that's it.
All inside the business are important - sales - are they going up as planned or are we having a slump as predicted. How is the cash - cash flow ok, or whoops, what are the competition doing - have they got us, or have we got them, - how can we get the tax bill down this year? -- etc. etc.

If a business were a private company - an owner, unless they were near retirement or soon wanted to sell - would not give a moments thought to what say, Jim down the road thinks our business is worth.

Share holders however in public companies ------------ think of almost nothing than what the share price is and what it is doing at the time -- indeed, they are in a constant emotional frenzy about it ------

it's going strong - oh, it's falling, oh, it's just plugging along, there are no buyers, there are no sellers, how will we go in a major meltdown, has the dog crapped on the share certificate again ----------------- on and on and on.

And, the point is ------------- none of it means a thing - not a bit of it.

You constantly hear the cry --------------- oh, this is what it's worth, because that's what the market will pay today -

OMG - as if the market is God, who decides all.

Anyone who has ever traded anything at all will tell us that price is the very last judge of value.

You can see a widget for sale ----------------- it might cost 100 bucks new - but, you can find that same widget for sale for 90 bucks or you can find it for sale for 20 bucks.

The price is irrelevant to the value of the widget.

ATM - I am buying an electrical plug.

I have had 3 prices on the plug - 184, 204, 230 ----------------- whereas, I have seen it for 30 and, I have just bought it for 49 bucks -----------

so, -------------- what does that tell us about the market?

There are people out there who are paying over 200 bucks for it and people who are paying 50 bucks for it -

All exactly the same plug.

Now - does it matter if you pay 50 - bucks - or 200 bucks -------------- is the plug the same - and, will it do the same job (value) for you?

Clearly - the only difference is ----------------- the price you pay. (another beaut example of market valuations at the bottom of this post).

With a business - the difference in price - only matters twice ------------- when you buy it ---------- and, when you sell it.

Mr Buffet says ----------- you are better to buy a great business at a fair price than a fair business at a great price -

now, translate that to if you were a business owner --------------- put that hat on -

and, you find, that Mr Buffet is dead set right.

Now, because we buy parts of business as public companies - hence shares -------------- all of a sudden, we look at it differently ---------------- why?

Because we can see the price on a screen - that's all.

The real concern or happiness should come from exactly what is important ------------- how is business?

If that's good --------------- that's all that matters.


have a great arvo

Pinto


Here is a great example of how the market is king --------- (prices are a guess, - too far back to remember - but, the lesson is exact),

I lived in Perth - and, one day I was at an auction and, a vacuum cleaner came up - one of those workshop jobs about 20 litres wet or dry.
On when the auction - up went the bids - 40, 60, 80, 100 - 120 dollars - sold.

Now - around the corner was a vacuum cleaner shop - and, there, on the floor - brand new, full warranty etc. was exactly the same vacuum ---------------- 90 bucks.

Now - now someone tell me the market got that one right!

Any trader of physical goods or real estate will tell you ---------------- markets get prices all over the shop - there is never a right price.

So - the market as king ------------- yeah, King Crap, that's what.