| The Top Economic Secret of 2009! |
|
|
|
| Written by P. 'Tan' Douglas Katchings | |
| Sunday, 08 March 2009 | |
|
The Top Economic Secret of 2009! ‘Did you know that your everyday spending is worth $138,000? Paul ‘Tan’ Katchings All Rights Reserved 2009 A few years ago the Wall Street Journal ran an article stating that the value of each member of a financial services network was worth from $1,000 to $10,000 to the company. So this article started me to wondering. How did this writer determine this range of numbers? Well, the conclusion I found is different from his. The range of numbers is not $1,000 to $10,000, but in excess of $138,000 because of a Top Secret in business hidden from people. Like any train of thought or line of research you start at one point and can end up at a completely difference location or conclusion than what was intended at the beginning. When searching you never know what exciting things that you will find. I want to share and explain something very clearly to a diverse audience without mathematical and financial experience. So if you can count to 1-2-3 then you will be able to understand a reality that will solve the globe’s economic crisis now, right now today… starting with you and me and put $138,000 in your pockets. For $138,000 reading a few pages should not be that much trouble for receiving more money than most people make in one year on a job. If you are an American reading this, it will be non-alarming. But if you are from other countries that have not witnessed and enjoyed the American spirit of adventure, freedom and conquering the impossible you may be mesmerized waiting for permission from people who cannot even read! What if we looked very deep, searched very deep for why hidden value exists? Many people may have not noticed but I saw an article recently where women shoppers using coupons can shave as much as 50% of their food bills. This is deep but not deep enough. Lets look deeper for hidden value. We have all witnessed the number of types of loyalty programs, rebates, cash backs, stamps, frequent flyers miles, etc. So the question is: are they gimmicks or are they real savings. And how are these companies able to give these gimmicks or real savings? Publicly Traded Companies Ok when you spend money to buy something, particularly if you spend money to buy from a public traded company… Wow! I just used a word that the general audience may not understand. So please excuse me when I pause here and there to explain something. This word or phrase public company is the most important word or phrase in your 21st century vocabulary for how you will receive $138,000 and more in real value. Let’s be clear here. I mean real value that is greater than what you spend by 11, 20, 40 times or more. We are not taking about some get rich quick schemes, pyramids, ponzi, or multi-level marketing nonsense here. No time for gimmicks when the economic system is falling apart and real opportunities, started by intelligent people, are emerging. We are talking about the complete restructuring of the public corporation business model to include the billions of customers starting in 2009 . So for you individuals who have influence with others you must be responsible in understanding exactly what is being discussed here and not run off half-cocked with a partial understanding. So please understand the words “publicly traded company” if it is the last thing in this world that you learn because your understanding will be worth over $138,000 or more to you and others each and every year for the rest of your lives. I need to cover some basics here. So please do not become frightened by new words. Try understanding the basics yourself before you ask someone to read this. And then after reading please the both of your read this together, two heads are always better than one. There are several types of companies that you buy from. You may not know the legal structure, meaning you may not know the process that this business used to register itself to be able to sell to the public. So it’s important to cover these basics as you will see at the end. Remember that you are not being asked to start a business or buy stock. Being a business starts with registering the name of the business with the county (in the USA) where you live. Over 27 million businesses start here and never go any farther. These are called small businesses. With this county registration one can obtain a bank account, get a tax ID number, and a person is in business to sell us something. The next level of business is to incorporate a business (in the USA) in 1 of 50 states. Again many incorporated businesses never go beyond this incorporating stage. But this does not matter for our $138,000 purposes here, the process is from county DBA (doing business as) to tax ID, to bank account, to incorporating. You can see that this process is starting to seem complicated (actually it is not when you know the steps). But I am saying this for the reason of the next step. The next and last step is when a corporation registers with the state and the federal governments to become publicly traded. This is where the Top Secret begins. After the government registrations begin, a company will apply to have its shares listed on the various stock exchanges in the USA and around the world. This process is basic. Publicly Traded Companies Basics Out of 27 million or so businesses in the USA only about 18,600 of them are listed on US stock exchanges. There are about 66,600 total public companies in the world. This point is important for your $138,000. Yes, your $138,000 value and the value of millions of other people begin in 2009. You do not have to buy the companies stock to get this $138,000, as I will explain. But you need this mini MBA or masters of business administration lesson to know how and why. Without this information you will not believe and you will be the last to know. There are lots of details in the steps from county registration, to tax ID, bank account, incorporation and listing one’s company on a stock exchange. But the steps and the picture should be clear now for this $138,000 explanation. Not the how, but the steps for now. You can review the steps at any time. You do not need to perform these steps unless you want to be a business. Now what I want to explain is this. Businesses are in business to make a profit. The profit that businesses make is off of you the customer. No business can be in business without the customer. The customers have more power than they can ever imagine but there is one problem. This is not a matter of us versus them. Every human on this planet is a customer. Only a few of these customers own businesses. But we all are customers. The problem is that when you and others are acting and buying alone, we are called “consumer victims.” We are being taking advantage of by businesses. When we the customers do understand the simple process that is being discussed here, we will never be “consumer victims” again. Instead we will reap automatic daily value each time that we shop. There are a number of ways that we will cease to be consumer victims. But first you must understand a simple formula. To the ones who do not like numbers, please bear with me. The basics are very simple and extremely important for 2009. If you are a small business and you have revenue (revenue is not profit) of $100,000 and you pay for the stuff that you sell $46,000 (including taxes) and next pay yourself $31,000 you will have $23,000 left over. In this example, $23,000 is called profit. The small business owner puts this $23,000 in the bank. Are we clear? Publicly Traded Companies’ Creation of Value Now let’s say you are a publicly traded company with 100,000 shares (outstanding) and that you have the exact same $100,000 in revenue, selling the exact same product, pay your cost of $77,000 and have $23,000 left over. Guess what? Each share (100,000 shares divided by $23,000 profit) is worth $.23 per share. This is called earnings per share. Why is this important? For several reasons but the most important one is for people who buy shares of publicly traded companies. (You are not buying shares to get your free $138,000. You just need to understand this process so that you can get real value that you created.) 1. The first thing that investors want to know is whether this publicly traded company is earning a profit. In this example, it is $.23 per share. 2. The second thing investors want to know is, how long has this company being earning a profit? How long a time does not matter, but the longer the better. 3. The third thing that investors want to know is, what is the likelihood that these earnings will continue or increase for this company? This 3rd point is where you the customer come into play when you buy products and services from these publicly traded companies. If the investors can “reasonably” determine that you the customer will continue to buy from this company then this $.23 per share earnings is very valuable to this investor. Why? For the reason that investors want their money “to work” for them. If the prevailing rate of return (called ROI) on stock investments is 3% then the earnings per share of $.23 divided by this ROI of .03 equals $7.66 dollars per share. In other words an investor is willing to pay $7.66 for a share of stock in this company to receive a dividend of $.23. This dividend is similar (not the same but similar) to the interest you get from your savings deposits. Lets stop for a moment. We just covered a lot of financial ground here! We covered more information than what 99% of the people on planet earth know at this moment. This free information is very valuable. So what is the difference between the small business that earns $23,000 and puts it in the bank, and the publicly traded company that earns $23,000 and “declares” or gives dividends to 100,000 shareholders? First the small business owner has $23,000 in the bank period. (Yes, the small business is probably getting interest on the money). But the publicly traded company is worth (100,000 shares times $7.66 stock price) a whopping $766,666 just by being publicly traded with predictable sales coming from you and me the customers. This $766,666 is 33 times ($766,666 divided by $23,000) the savings of the small business! This 33 times value creation is the Top Secret of being a publicly traded company! In others words a publicly traded company is able to create more value from $1 than a business that is not publicly traded. With revenue of $100,000, it cost the publicly traded company $77,000 to produce this $766,600. We can say that $766,600 capitalization divided by $100,000 revenue equals a ratio of 7.66 to 1. $1 in revenue produces $7.66 in equity value. Ok now what does this have to do with me and the other 6 billion global consumers obtaining $138,000 in real liquid value? The Creation of Value for the Future Customers Knowing this base information being discussed here tells you how a public company is worth more than a non public company. This will guarantee not only your economic future but also the economic future for your family for generations starting in 2009. Currently when a company decides to become publicly traded, the customers are left entirely out of the planning and free distribution of its shares. Customers are left out in the design stage of who gets some shares and how many shares are free. Customers are left out of the design and the sharing in the real value that the customers created! There has been a fixed process for the distribution of shares for about as long as companies have been divided up and sold to the public. Customers have been left of this process for no other reason than downright greed and ignorance. The deeper reasons explaining why this distribution process has existed to this day in the manner that it does, are too numerous to explain here. But it works like this. Lets take Google for example. When the youngsters from Stanford University obtained the rights for their product from the university, a share distribution process was already in place. I doubt that these fellows themselves understood clearly, because it is a “top secret.” The newly incorporated company contacts a Venture Capital Company. The VC sees the new “idea” (by reading the executive summary and business plan). The venture capital company says: “Aha…we like it, we will give you $1 million today but we want 20% of the shares in your company.” So the new incorporated business owners say wow! They say $1 million gives us the money we need so that we can develop this product that we believe will be purchased by a certain percentage of the public. Product is completed. After some time the venture capital company says great. We want out! Now we want you to become publicly traded so that we can get our $1 million back (and then some). The venture capital company calls this their “exit strategy.” So the venture capital company puts this new incorporated company with a completed product (or sometimes just an idea) in contact with an investment banker. By the way, there are lots of investment bankers. But the big ones are Goldman’s Sacs, Lehman Brothers, Merrill Lynch, Bank of America, Royal Bank of Scotland, UBS... You have seem all of these names in the press lately losing billons of dollars and now getting billions of our dollars as bailouts. This IS NOT another story; this story is connected to your $138,000 value, my $138,000 value and the Top Secret. Let’s see more of exactly what is going on here. The investment banker says: “Aha… we will take your company public,” meaning that the investment banker (in order to protect the top secret) will get all of the registrations done for you with the government, get you the high powered legal representation and find you an excellent auditor. The investment banker will give you $100 million, but you must give us 50% of the shares in your company. So you add up the numbers of shares and say wow! The venture capital company has 20% and now the investment banker has 50% that adds to 70% and that only leaves 30% of the shares for my partner and me. Sounds good, so you say yes. There are a few more steps before the public ever has the opportunity to buy these shares or if you prefer stocks, or some even call them equities, IPO or initial public offering. but you see the point? Do you see the point of the story? Or don’t you see? Ask yourself the following questions! Where is the public and where is the customer in this allocating of shares? At this point and time the customer is nowhere. Now let us use our formula that was discussed earlier with some more facts. 1. When incorporated, this company had 100 million shares authorized. 2. This company has been selling its new product and last year it had $100 million in revenue with 63% in after tax profit. Very good. The product is a downloaded software package. No overhead or buildings etc… Therefore $100 million revenue times .63 divided by 100 million shares equal earnings per share of $.63. So just like before we use the ROI or return on investment of 3%. So .03 divides the $.63 ROI and we have a share price of $21. 30% of 100 million shares (owners) times $21 is worth $630 million 20% of 100 million shares (VC company) times $21 is worth $420 million 50% of 100 million shares (banker) times $21 is worth $1.05 billion Great news for the investment banker. This $1.05 billion is another story – most of these shares are allocated to institutions. The ordinary investors are the last ones in line waiting to get their hands on a hot IPO. Do you understand this? Where is the customer in this value creation process? Take at good look at what the venture capital company received virtually free. Now do you see why the venture capital company is called VULTURE CAPITAL? They just earned 420 times $1 for controlling the Top Secret! Do you remember above in our value creation formula where we compared a small business with $23,000 in profit and public company with the exact same $23,000 in the profit that produced $7.66 to every $1 of revenue? A. The owners who control 30% of our publicly traded company just turned $1 million (obtained from the venture capitalists) into 630 times $1. Free money! B. The venture capital company turned $1 million (it gave) into 420 times $1. C. The investment banker turned $1 into 10.5 times $1 So what is wrong with this Top Secret picture? Customers have been 100% left out of this (basically free) value creation process. The customers put up $100 million in revenue in the form of product purchasing and got only a piece of software in this example. Using 20th Century thinking, prejudices, ignorance, stupidities, and lack of communication technologies, I can understand why the customers were left out. But in the dawn of the 21st Century, it is the customers’ spending of $100 million that produced the value creation, and not the owners, not the venture capital company, and certainly not the investment banker. Now let’s learn and see how the customers in the 21st Century will get free the same 11, 20, 30 and even 169 times the value of their $1 in spending. Now the customers will get two values: one in the products utility, and the other in free shares just like the insiders. Product Equity Value© There is new economic term called Product Equity Value©. It is a “new consumption function.” But this economic term, consumption function, may be too much to digest. It is included for the professional economist to leap into. But you too must have this discussion for reference. You are not expected to remember these terms; they are here for your reference. The terms must be included so that you can follow the simple logic. The current “consumption function” in economics (this function pertains to all consumers just like you and me) states that “consumption is a function of income.” This makes sense if we have income then we can consume, buy things. If we do not have income from a job then we cannot consume. This is the reason why the global economies are collapsing all around us – too many people do not have jobs to buy things, so value is not being created. The “new consumption function” states that consumption is a function of Product Equity Value©. So what is Product Equity Value©, or PEV©? Just like the name sounds. Every product that is produced, especially for publicly traded companies contains in the product, “utility value” or “useful value.” This is the reason why we buy the products and services – these products and services are useful to us. But there is another value in the product or services that is the Top Secret created by the consumers but kept hidden from the consumers because of greed and ignorance. So there are two consumption functions in economics and not one. The first “consumption function” get us the “utility value” from the product and service. The second, called here “new consumption function” CAPTURES the excess value created by the consumer for the consumer in the form of free shares just like the owners, venture capitalists, and the investment bankers obtained 630, 420, and 10.5 to 1 basically free because they are in on the “top secret” and we the consumers are not. Let’s use some of the value creation information that has been covered already to make this point. The 20th century value creation process starts from “idea” to “venture capital” to “investment banker” to “institutions” and finally to “customers.” Why not make the process in the 21st Century from “idea” to “customers” to “venture capital” where all of the participants are the preassembled customers under one umbrella? Then all the customers own the umbrella company, and the customer-owners of the umbrella company provide the venture capital and then all of the consumers purchase the product? When this is the case – and it will be starting in 2009 – then each new company will have an exact distribution of shares. Product Equity Value© Distribution of 61 million shares 1. 10% of each new company to umbrella company 2. 31% to the partner with the idea (the ideas come from partners ‘seed’ money) 3. 46% to the 14 million customers (2 shares each to each purchaser) 4. 13% to a partners supplying the venture capital Lets see how your $138,000 is obtained free. (For example) there is a new ‘magic pen’ that requires no ink. The pen costs $21. This is only an example, because as far as I know there is no “magic pen” yet. This hypothetical “magic pen” is developed by one of the 14 million preassembled customers under this mutually owned Umbrella Company. And we can pick this pen up at any department store. 14 million customers times $21 equals $294 million in revenue for this Magic Pen company. $294 million in revenue times 63% in earnings equals $185 million profit. Now we divided $185 million profit by 61 million shares for $3.036 earnings per share. Next we divide $3.036 earnings per share by the return on investment (ROI) figure of .03 for a stock price of $101.21. Remember, 100% of the umbrella company (which is also publicly traded) is owned by 100% of the 14 million partners. Certain partners at various times for various reasons have “ideas” that all of the partners want. Some of the partners provided $1 million in “seed money’” for the “idea” to get developed. 14 million partners receive 46% of the new ‘idea’, which are 2 shares each. New Consumption Function (PEV©) 46% of the Magic Pen company’s authorized stock that is allocated to 14 million customer-partners. It is this 46% stock allocation that is the Product Equity Value© and the “new consumption function” for the 14 million customer-owners Here is how. Each of the 14 million partners were GIVEN 2 shares FREE each just for purchasing the “magic pen.” After the Magic Pen purchase, the price of the stock for Magic Pen Company Inc. is $101.21 because of financial fundamentals. Since each of the partners has 2 shares each worth $101.21, then this is $202.42 in free value. Next we subtract the price of the $21 paid for this ‘magic pen’ and we have $181.42. This $181.42 is the Product Equity Value© for this ‘magic pen’ which is 8.63 ($181.42 divided by $21) times the price paid received absolutely free. Therefore the “new consumption function” states that consumption is a function of Product Equity Value©. Ok now how do we get to the $138,000 that we started this discussion with? Product Equity Value© is the fastest and the number one Top Secret Solution to this economic crisis that we find ourselves in on the planet earth. Product Equity Value© is simple and effective. Product Equity Value© is the mass spending solution that the planet has been screaming for because it creates continuous demand, innovation and value for people. The more the people spend their purchasing dollars, the more value is created. I do not mean artificial spending from credit created out of thin air, as was the case in the 20th Century business and venture capital models, which creates debt. I mean Product Equity Value© which creates value and balances debt automatically. Besides the Solar Cycle Budget©, Product Equity Value© is the single greatest discovery ever produced to solve instantly the global economic crisis. Every human on the planet earth multiplies by formula their new consumption dollars into perpetual equity value daily. The value of the equity held by customers in publicly traded companies is greater than the customers’ purchases for each dollar spent. Now! At this very moment, over 86,000 public companies must be setup and redesigned to accommodate Product Equity Value©. Over $50 trillion in value will change hands over the next three years benefiting all. Those who act first in 2009 will benefit the most. The consequence of these 86,000 publicly traded companies being set up and redesigned is that 6 billion people on the planet earth will be able to spend and have savings greater than the cost of the products and services. This means instant public safety-nets, savings and pensions as a direct result of their spending. So if you are a US citizens or have annual income of say $40,000 and 30% of this income ($12,000) is spent on everyday items like, food, clothes, cars, computers, appliance, medical, educations etc and you purchase these goods and services from publicly traded companies that give Product Equity Value©, then on average your $12,000 in spending will produce about 11.5 or $138,000 in real liquid tradable shares that you can convert instantly into cash. In reality this multiplier will be greater than 11.5 because of competition. Now 21st Century publicly traded companies armed with a new business model are scrambling to get you to spend with them. They can decrease their production costs and eliminate traditional costs in marketing, advertising and sales. They can eliminate the unpredictable inventory process expenses all because their customers are preassembled. So the competition for your consumer dollars will be from publicly traded companies offering the greater equity percentage of their companies to the consumers free just for consumers to purchase from these newly formed and redesigned publicly traded companies using the Top Secret of value creation called Product Equity Value©. Lets say that 14 million umbrella partners Product Equity Value© multiples were 20 instead of 11.5 then $12,000 times 20 would be $240,000. Let say that you purchased an electric car that cost $25,000 and paid 100% cash for the electric car. Your Product Equity Value® would be 6.8 or $170,352. Sounds good? It gets even better when the design of your Product Equity Value© are in the hands of Business Engineers who are masters of the variables that creates value for customers . Everything is designed for the benefit of the customers in the 21st century. You make the choice. Do I stay with an outdated purchasing model that “takes from me” or do I learn and embrace the new customer centered businesses model that “gives me” in 2009-2010 what the customers own. • Buy a $1,100 green laptop computer and get $5,700 in instant equity • Buy a $100 green cell phone and get $1,038 in instant equity • Buy a $1,200 year supply of healthy food and get $5,500 in instant equity • Buy a Flat Panel HDTV for $400 and get $2,076 in instant equity • Buy a global medical insurance for $3,300 and get $17,064 in instant equity • Buy a $65 ‘solar-lantern’ and get $337 in instant equity • Buy a $100 new 16 films annual contract and get $1,147.53 in instant equity 364 products and services are immediately subject to Product Equity Value©. One hot product or service per day produces automatic savings for each customer-owner. Click on the link and join b2bvp.com today! Thanks You! Paul Katchings |
|
| Last Updated ( Saturday, 21 August 2010 ) |
| < Prev | Next > |
|---|
Polls
Who's Online
Product Equity Value Blog © 2007-2008 All Rights Reserved
Joomla Template by Joomlashack
Joomla Template by Joomlashack