In agriculture industry, you are either deal with plantation or cattle. When come to cattle, basically, we can think of 2 person, the Cattle rancher and the Dairy Farmer. Their both greatest assets are same - the cattle, but they treat their cattle very differently. The cattle rancher will feed their cattle, make them fat enough and send to the slaughter house. The dairy farmer will feed their cattle, nurture them, and send for milking. Instead of one time harvest, selling off the meat, and start over to raise a new cattle, the dairy farmer make their cattle provide them milk as long as the cattle live. The milk provide steady cashflow to the farmer, the meats provide capital gain to the farmer.
It is the same come to investing. People who invest for capital gain, such as stock, options, futures and derivatives are similar to the cattle rancher. They are like holding a bucket of water. Once the water is full, they consume it and there will be no more. If there is a hole under the bucket, their bucket will never fill with water. However, people who invest for cash flow, they are like the dairy farmer. Instead of holding a bucket of water, they are in building a pipe line. They built the pipe so that the cash can flow. They are also continuously expanding the diameter of the pipe line, so that the cash can flow even faster. If there is a leak on the pipe line, they got the time to plug the leak, while only the speed of the flow is affected. Once the pipeline is constructed, there will be no strap of cash or no cash!
It is very important for investor to know what they are investing for. It is for capital gain or cashflow? If i would investing in cashflow, i do not really care about the price, I will pay the price and show me the cash now!
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