Quote from Spectra:
I have not heard of the term TFSE. What's it stand for?
I've found when I get to talking about numbers with prospective traders and clients it can get frustrating. They wish to mirror my results but may have an account size 1/5th the size of mine or their experience level is much lower. I get a lot of mail from people trying to duplicate the track record. The most important thing is keeping a record or journal of your own when starting out.
TFSE stands for tax free stock exchange.
The technique is used to make money in a way that allows you to have the advantage of how the public can value what is going on.
An example will help.
By taking several closely held private corps (C corp start ups) into a publically traded corp (Nasdaq level), you have traded stock into the treasury of a corp for stock that is in the float of a listed corp.
By continuing to run each corp as an entity, what is given to the public corp is checks that have no expenses associated with them.
The P/E of the public is affected in the E.
I swap and get control too, it turns out. The timing is to do it so the annual meeting puts me and others on the board and then the board hires me as CEO.
quarterly, the income of the public advances. The first yeaar this does not affect the P/E ratio; it stays the same.
I preplan so that the E part is increasing about 100% a quarter.
E is used to do things.
The P of the P/E is in correpondence to the new E per Q.
Soo you can see my assets have increased 400% and the corps all perform as usual. I am drawing salary in each and also the public as a new salary.
The first four Q's just set the new P and after that this P would be pretty well set because of year to year thinking.
As successive years ensue there is a kicker that comes to pass; you may see it already. From sector analysis, you know what happens. Corps in sectors are internally ranked by E and the P/E ratio adjusts to make this come into effect on a trailing basis (annualized). ET deals mostly in TA and not FA so thisstuff is not part of conversations. Slowly but surely (over a few Q's) the P/E grows by the number of times the E grew. In my case by 6 Q's the P/E wwnt from 15 to 60.
So I have had P grow by 4 at first then by 4 at last. I gave one E away for 16 P and drew salaries, and honorariums (board comps) for 5 corps.
Now think of the stock holders that had to do one thing. They had to go from majority to minority with no dilution. They only got to have 16 times the wealth in 18 months.
Since the corp traded on the list next to Apple, it was a fun run for them.
Can you guess two things? Who would come along next? What would (did) they do?
Then they were running the show. Did they plan ahead well enough? Okay, you get it.
The dynamic of TFSE's draws flies. M&A has a downside if the planning isn't cool for the A people. Most A types are very controlling and they don't cotton to anything except counting beans.
The only way you can make any money is to sell two businesses. I would look around for two more to get into a package. Then you do not have to sell. You can do a TFSE and take control. Currently you do not have any cash cows.
That is the final points. I only do cash cows.
i better explain cash cow.
Draw a series of boxes. On the left is where the materials begin to flow to the right. Each box improves the value of the left to right flow and money flows from right to left.
One and onlt one of the boxes is the cash cow.
The input to the box is where a "buyer's market" is maintained. The output of the box is where a "seller's market" is maintained. This is the cash cow box of the series.
I will give you four examples of these to help you out.
regional warehousing tomatos.
packaging pesticides as private labels.
selling liquid soap to maintenance people.
picking up old tires from tire stores.
You do not have any cash cows, so you have to find at least two or three to combine with your two non cash cow businesses.
Liz and I have two cash cows. She just rounded up two more with the same regional markets. We will find a corp doing a publically traded spin off and capture it in the next year. Each cow is a market sector. Each cow is enjoying a unit price rise of about 100% a year. We do not deal in getting hands dirty so it these are another set of cash cows from another class than those above.
The guys who are agents for Jake Berstein's presentations occassionally chat with me; their lawyers are on retstraints vis a vis bait and switch mistake that was made. What do you think the last offer they made was that I turned down??
Getting businesses to be valuable is a big business in itself. Fixing things that are busted is a big sector in consulting. Packaging stuff is another big consultiing sector.
What do you think it would be worth to "fix" traders experiencing "repeated failure"?
