Things Not to ASS-U-ME!

Another thing my Granny always thought me is to learn from those that are more successful than me!! (tiok boh?) Learn their tricks and most important learn from their mistakes!

The other day, this rich man (and surely one that is more successful than me (LOL!)) , Datuk Tan, mentioned the following..

• “I am already thinking about writing a book containing my favourite jokes about business and life. A couple of them are already in Never Say I Assume! For example, in an explanation of my book title, it really ought to be Never Say I Ass-u-me! because when you assume anything in business you make an 'ass' out of 'u' and 'me.' Don’t assume that there is a market for a product. Do the necessary work in advance to find out. Make sure there are enough mice before building a better mousetrap.”

Can I learn from it?

Can I?

Sure can!

In the stock market, there are so many things one cannot simply ass-u-me!

For example, cash-per-share yardstick is never really a 100% sure-win thingy.

Think what could go wrong.. think.. think..

Hmm.. you see, when we buy a share in a public listed company, yes we do become a partner of the public listed company but bear in mind, a lot of stuff is simply beyond our control.

For example, the cash-per-share thingy. Say a company is flushed with cash, can we invest in the company and expect that the company is willing to share the piggy bank cash by rewarding us, the minority shareholder, with a nice juciy, syiok-syiok cash dividend? Can we ass-u-me such an event will happen?

What if they management declares they want to keep the cash and instead use the money on some new project?

Not possible?

So if they do embark on new project(s), isn't it logical that the investor fortune now depends on these new project(s)? (Granny will say, 'Eat rice or eat porridge, will depend on it!')

Now how does one valuate such 'investment' risk?

One cannot.. because one do not even know what the project(s) are at this moment of time!

So how? See how the investment became a speculation? See how risky it is to ass-u-me that ze cash-per-share is a good investment yardstick?

Here is a clear and present example. KL City Corporation (KLCCB) is reported to be a brand new cash moo-moo-cow, sitting on a cash mountain of rm264 million or a cash per share of rm1.18, which is significantly much higher than the current traded share price. WOW!

How? Shall one jump into the market and chiak and chiak all available KLCCB shares? Chiak da bugger!

Now the obvious catch or the danger is the management... LOL!

What if the management says Nay!!! (not possible?)

NO, we are not going share this money with you all and instead we are going to use the money to acquire some new business! read more here..

• Speaking to reporters after its AGM in Kuala Lumpur on March 9, he said among the 165 proposals under its consideration for acquisition are 49 properties, 37 plantation estates, 26 information and communications technology (ICT) businesses, 19 manufacturers and those in tourism, power, mining and advertising.

WoW!

165 proposals for consideration!!!!

Wow!!! (Sei for lor!!)

Are you willing to ass-u-me that the proposal accepted will be the gold mine? (if really strike gold, then ho-say lor.. but if no.. then? chiak ka-ki ar?... :p)

See the dangers in ass-u-ming too much in the cash-per-share yardstick?

There are things one cannot ass-u-me in the share market or else one will be making an 'ass'out of 'u' and 'me'!

I think my Granny mentioned this to me before 'Silly fella, the cash is in their hand and not in your hand... !!!

(ps... excuse the extensive Chinese lingo in this posting!.. :p)