terence_Say
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I read a book a few years ago. Despite forgetting the book title and author’s name, I still remember the main idea:
We try to understand a company’s business, revenue, net profit, prospects etc to decide if we want to invest our money. However, according to the author, there is another factor: the company “brain”.
The “brain” can be the company leader, major shareholder or the management team. They have the final say on the company’s policies and direction.
The “brain” can also be the company leader’s decision-making and management abilities thataffect the business, profit as well as stock price. A good “brain” is capable to make the best decision to maximize profit, by forecasting the trend effectively and overcoming the challenges.
Put it in a simple term, if the “brain” is not working well, the company will collapse.
As investors, we have to be confident on and trust the company “brain” before we really put our money in it. This is exactly the same as business partnership: if we want a good partnership, having confidence on partners and trust are essential.
I agree with the author,but have a different interpretation after years of working experience: knowledge, good decision-making skills and management are crucial, but most importantly, a good “brain” must be ethical. An ethical “brain” will make sure all of the shareholders’ benefits are protected, and be honest about the company status.
We have seen so many negative cases nowadays: the “brain” is a good leader in terms of managing company and bringing in profits. On the other hand, he/she also does many other things wrongly: care about own benefit and disregard others’, conceal bad news and spread fake news to boost the stock price. Think of Enron and Lehman Brothers, these are the classic examples of “bad brain”.
A good “brain” will lead the company to go extra mile (so is the stock price),but a bad one will only lead you to failure. It is worth spending more time to identify the good “brain” of the company. After all, everyone wants to be successful in the stock market, do not let the bad “brain” bring you down.
Translated by Mr Wai © LeInvest.com
The
We try to understand a company’s business, revenue, net profit, prospects etc to decide if we want to invest our money. However, according to the author, there is another factor: the company “brain”.
The “brain” can be the company leader, major shareholder or the management team. They have the final say on the company’s policies and direction.
The “brain” can also be the company leader’s decision-making and management abilities thataffect the business, profit as well as stock price. A good “brain” is capable to make the best decision to maximize profit, by forecasting the trend effectively and overcoming the challenges.
Put it in a simple term, if the “brain” is not working well, the company will collapse.
As investors, we have to be confident on and trust the company “brain” before we really put our money in it. This is exactly the same as business partnership: if we want a good partnership, having confidence on partners and trust are essential.
I agree with the author,but have a different interpretation after years of working experience: knowledge, good decision-making skills and management are crucial, but most importantly, a good “brain” must be ethical. An ethical “brain” will make sure all of the shareholders’ benefits are protected, and be honest about the company status.
We have seen so many negative cases nowadays: the “brain” is a good leader in terms of managing company and bringing in profits. On the other hand, he/she also does many other things wrongly: care about own benefit and disregard others’, conceal bad news and spread fake news to boost the stock price. Think of Enron and Lehman Brothers, these are the classic examples of “bad brain”.
A good “brain” will lead the company to go extra mile (so is the stock price),but a bad one will only lead you to failure. It is worth spending more time to identify the good “brain” of the company. After all, everyone wants to be successful in the stock market, do not let the bad “brain” bring you down.
Translated by Mr Wai © LeInvest.com
The
