Reverse Confession

One of the best free sources of business education is the Investor Relations pages of companies with Public Equity. The annual “Letter to Shareholders” is normally the most accessibly written and engaging, but anyone can access the presentations the management make to owners. Amazon’s business philosophy is plain for the world to see, with the 1997 Letter attached every year. It is worth re-reading each time. A Form 10-K is an annual report required by the United States Securities and Exchange Commission (SEC). Less glossy, there is a wealth of information listed companies are required to share. The Risk Factors are the section I always start on. It is like Catholic Confession in reverse. Like it is okay whatever you do, as long as you have identified it in advance. Disarmingly honest managing of expectations that feels like the opposite of a sales pitch. Like Eminem in “8 mile” tearing himself to shreds in a rap battle before the other guy says a word. There is a lot of information out there, and it is hard to filter. But the Investor Relations pages of businesses you admire is a good place to start (and continue) learning, whatever your way of making money is. (ir.aboutamazon.com)

Not Corn

Rich lists don’t show the resources people have hoarded. The figure isn’t the same as a weight. It isn’t a pile of bags of corn that could be divided up by the kilogram. You can figure out your own Net Worth. Net Worth is the value of the assets a person owns, minus the money they owe. Owning an asset doesn’t mean you “have” the asset. Asset Managers themselves don’t even have the Assets. They use Custodian Banks who keep a record, but the Assets are companies doing work. The Share Prices are a combination of the Tangible (stuff you can touch) Assets (Factories, Equipment, etc. that could be sold) included in a quote of what the market would pay for ownership of future profits. Like someone giving you money now, up front, for the salary you are going to earn going forward (not that unlike a Mortgage Loan). Worthless if the work isn’t done. The beauty of Public Equity is that it penalises hoarding and rewards Capital that solves real problems for real people.