Why a 5% decrease in your house value could ripe out 100% of the equity? Can you put together a balance sheet and Income Statement just for your own family? If there was a hen that lays golden eggs forever, how much should you pay for it? Why do we need audit in the aftermath of Enron and the Financial Crisis of ’08? These are just a few interesting questions from James Jiang in front of a roomful of curious audience, during the third of a series of grass-root seminars hosted by Pearland Chinese Association on a Friday evening.
“I came (to the seminar) because I am just curious about what James can talk about.” An audience said. “Apparently he used very simple examples to walk us through important concepts,” said another. James, a veteran business executive, CPA and CFA, clearly understands that most of his audiences, including full-time students and people from various trades, are probably laymen to accounting and finance jargon. He used a simple example of some “Lao Song” making investment in rental house with borrowed money to illustrate how balance sheet and PNL statement work, and how small market change can cause much bigger impact to equity due to leverage. When he asked audience to give example of major items in household expense, one young audience said “Wifi” and immediately drew understanding laughter from both parents and peers. In just half an hour, many people were already confident enough to apply what they learned to their household book-keeping.
When he started to talk about the hen that lays golden eggs in the story of Jack and Beanstalk, few could tell how that had anything to do with financial valuation. As he threw some numbers and let audience to bid for such a hen that can bring the owner $50 a year indefinitely, random amounts were heard. “$400”, “1,500”, “3 thousand”. As he explained such a hen may be no different than earning $50 interest from a bank, or owning a stock that will pay dividend, the audience learned an important principal of risk and return and how interest rate affects valuation. Based on his business experience, James also elaborated on how Enron and the financial crisis in 2008 changed the way corporations operate in a more regulated environment. Amid laughter and jokes, the 2-hour seminar just flew by.
After the seminar Brian Liu, President of PCA, made a few comments on the purpose of these grass-root seminars. “Everybody has valuable experiences. We just wanted to give more members a platform to share his or her knowledge, whether it’s about gardening or cooking dumplings, as long as these knowledge can bring us all closer together as a community.” Let us wait for the next fun and informative event.
This seminar is part of a series seminars aimed to serve the Pearland Chinese community and is organized by the Pearland Chinese Association (https://txpca.org/). The Pearland Chinese Association is a non-profit membership organization. It is organized to enrich the life of the Pearland Chinese community and to help Chinese immigrants to assimilate into the mainstream of American society. The Pearland Chinese Association encourages its members to contribute to the community through various charity work and sincerely hopes anyone interested in contributing to the community to visit their website for more information.