"Pfrengle Principle: Income is king"

Mr. Scott Burns Says it!

I believe it!

That settles it!

Never forget that income precedes value


Adapted from: The "San Antonio EXPRESS - NEWS." Sunday, December 21, 2008.

Now, this excerpt:

"One of the best lessons I've learned was not in a classroom.

"It was from a crusty machinist in Rochester, N.Y.

"I haven't seen him in 25 years, but the lesson has stayed with me.

"It seems particularly important now.

"His name was Jerry Pfrengle, so I call it the Phrengle Principle: It's all about the income. To have value, you need income. Never forget that income precedes value.

"Jerry Pfrengle was a machinist who started with a handful of machines.

"He grew it into a much larger shop.

"He could do just about anything with metal.

"Jerry was also a collector.

"He collected automatic screw machines machines and other metal - working equipment, all bought at scrap metal prices.

"Jerry would wait for a turn in the market.

"When it came, he either put the machine to work in his own shop or sold it at a large profit.

"[H]e told me, The big companies give them away when the economy is off, and small companies pay a premium for them when they they have orders in hand.

"Value was all about the income you can produce with an added machine, he explained.

"Without orders, the machines were only worth their scrap value -- and even that would be low when everyone else was scrapping, too.

"But with orders, a single busy machine could provide a living for a machinist, pay the rent and put money in Jerry's pocket.

"Or it could be sold at a fat premium.

"Jerry told me, The swings in value are always extreme, they're much more dramatic than the swings in income.

"So I [Mr. Scott Burns!] have a suggestion.

"Next time you are impressed by a decline in value, check income.

"It's scary out there when you view the world by wealth.

"So just remember -- it all starts with income.

"Wealth and value are artifacts created by income..."

Good point, señores, thanks fro the timely reminder, and a Merry Christmas and Happy New Year to you all, too! :)