When I first read about a business model to better understand why it was entangled in the bond feud with the note-holders, I felt quite loss. I read it again, but still I did not get a good picture of the working business relationship among the companies involved. Reading at the first level to understand the working business relationship among the various partners was quite a challenge actually. If comprehending just the working relationship among the business partners cannot be understood by a person who reads passionately about business news, I wonder how many people out there can fully understand it, let alone the legal and accounting aspects that the company had with its business partners. Certainly, not all the note-holders and shareholders are corporate lawyers and accountants to fully appreciate the legal and accounting aspects to fully understand the risks involved when investing in the company. In fact, when business partnerships get very complicated among business partners, it surfaces more links, and if any of these links weakens and give way, it is likely to cause a domino effect to bring down the company as well as a lot of companies associated with it.
By the same token, prior to Alibaba’s launch as an e-commerce website, Jack Ma, the chairman pointed out that he personally made fool-proof tests of the system. It means that he tried to mimic a fool trying to use the system. His argument was if a fool knows how to use the website, then it should be widely understood and useable by the commoners on the street. That brings me to the point – If one cannot understand the business model of the company, why bother to take the risk to invest in it. Why do we need to invest our money to buy headaches?
Brennen has been investing in the stock market for 26 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.