21-06-2019, 01:06 PM
So if a company with Book $100 say $10 annual net cashflow pass through issues 50 X shares with 100% pass through dividend and 50 Y shares with 100% retained dividend, which one will we buy determines what type of investors we are. For the former, 10 years later the X shares will be worth say same $50 but investors hold $50 cash, while the latter holds $100 worth of Y shares. The former can use the $50 cashflow to invest in other opportunities whereas the latter will have to sell his stake to realise the cashflow. So imagine the latter wants to have the same amount of $50 cash for whatevewr purpose he will have to sell 25 Y shares say to investors in X. So investors in X shares will have 50 X shares & 25 Y shares while investor in Y shares hold 25 Y shares. Their net worth is the same at this point but from there it will start to diverge. Just a simplified story.
Asset is same; Business is same but the Structure is very different will lead to different consequences. Mr Market though emotional is not stupid: He values X shares differently from Y shares in actual market valuation. Cashflow and capital appreciation is not the same thing though numbers wise looks same
When COE price goes up recently, some that bought on the low may have made money from cars. But unless you generate cashflow from usage of cars eg sales or grab, it is unlikely cars is deem as an asset rather than expense per say, though accounting wise it is stated as such.
So own stay house would be what type of asset? Cost of living going higher hence owning a house as a hedge is right. But that does not change the fact that it is a hedge against expense.
Asset is same; Business is same but the Structure is very different will lead to different consequences. Mr Market though emotional is not stupid: He values X shares differently from Y shares in actual market valuation. Cashflow and capital appreciation is not the same thing though numbers wise looks same
When COE price goes up recently, some that bought on the low may have made money from cars. But unless you generate cashflow from usage of cars eg sales or grab, it is unlikely cars is deem as an asset rather than expense per say, though accounting wise it is stated as such.
So own stay house would be what type of asset? Cost of living going higher hence owning a house as a hedge is right. But that does not change the fact that it is a hedge against expense.