The foreign business incentives in this country can help double your income.
The foreign business incentives in this country can help double your income by Simon Black – Sovereign Man
Yesterday I spent all afternoon meeting with government officials here in the Philippines, and I’m still in shock. I’ll explain–
About a year and a half ago I purchased a fairly large manufacturing business that is oddly enough based in Australia.
It’s been a fantastic investment so far, primarily because it generates so much cashflow relative to the price I paid.
With big public companies listed on a major stock market, it’s not uncommon to pay 20x, 50x, even more than 100x a company’s annual profits.
For example, as I write to you early in the morning here in Manila right now, Amazon’s stock sells for 180x its annual profits.
In other words, if you were theoretically to acquire 100% of Amazon’s shares, at current levels it would take you 180 years to recoup your investment.
(This presumes you put all the profits in your pocket, but doesn’t account for the effects of dividend taxation.)
Obviously most investors expect Amazon to keep growing.
But even if Amazon’s earnings were to grow at an annual rate of 25% per year (which would be unprecedented), it would still take almost two decades to recoup your investment.
Private businesses, on the other hand, typically sell for extremely low multiples of their earnings, often as low as 3-4x.
You can see the difference in value pretty clearly: recoup your investment in 180 years (or even 20 years) versus 3 years.
Plus there’s often so much more opportunity for growth.
With a private business you can greatly influence the outcome and dramatically grow the company’s bottom line… something you’ll never be able to do investing in stocks.
And that brings to why I’m in Manila again.
Right now our company is manufacturing its products in Australia… which is crazy.
Australia is legendary for its high business costs, with a minimum wage that is about to exceed A$18/hour (around USD $13.50).
It’s not exactly a low-cost manufacturing hub.