Wish you had a better relationship with your boss? Feel like you are ignored in favor of others? Wondering if you have any career progression left?
Think about how well you are helping your boss get her job done and meet her obligations. Are you doing everything you can (within legal and ethical bounds, of course) to help her look good and get ahead.
If not, your relationship may be getting in the way. Consider this list of 15 things you can do to improve your relationship with your boss.
1. Show up every day full of energy and enthusiasm. Love your job, and dive into it eagerly every moment of the day. Can't do that? Perhaps you need to find a different job!
2. Be positive. No griping around the water cooler, or in emails or text messages or elsewhere. No complaining and no wallowing in misery. Find the silver lining and focus on it. That does not mean you can never point out a problem to your boss. Just make sure it is a real problem and try to bring two or three potential solutions along with the problem.
3. Learn every day. Learn new skills, pickup new knowledge, meet new people, find new resources. Help refresh the mind of the group.
4. Set SMART goals, review them with your boss to get agreement on targets and deadlines, report on your progress and seek an evaluation when you have delivered on the goals.
5. Speaking of which - Deliver Results! Bosses love that.
6. Take all the time-off you are entitled to. Smart bosses understand that folks are much more productive when they have time to recharge - at night, on the weekend and on vacation. (Bosses note: you need to take time off, too, or your team never will.)
7. Under-promise and over-deliver. Make your mind up to promise only what you know you can control and deliver, and then do it.
8. Do work that is accurate, complete, relevant and useful.
9. Contribute your ideas to make things better.
10. Support your boss. Just like all of us, bosses need positive feedback and encouragement. Make your feedback specific, tied to goals, and behavior based.
11. Focus your work on the things that make a difference to your boss.
12. Communicate just enough and not too much. Learn how much your boss wants to know about various work issues, opportunities and projects and respect those desires.
13. When you communicate with your boss, use her style. If she loves details, give her details. If she wants the big picture, give her that. If she wants to know how a proposal will affect people, provide your thoughts. If she just wants the facts, just give her the facts. If she wants you to get to the point quickly, do so. If she wants to chat first, do that too. Communicate the way your boss likes, not necessarily in your natural style.
14. Say "No" when you need to. The best bosses fear they won't be told when an idea is stupid - so tell 'em!
15. When the boss gives you an assignment, develop a plan of attack and share it with her soon. A good boss will delegate the "what" and expect you to put together the "how." Reward her with a quick and well-thought response.
Showing posts with label Investment Tips. Show all posts
Showing posts with label Investment Tips. Show all posts
Chidambaram: Sivaganga's Robin Hood Or Houdini
March 3 (Bloomberg) -- Indian Finance Minister Palaniappan Chidambaram' s annual budget is one part Robin Hood and another part Houdini. It's hard to say which one is worse.
In his Feb. 29 budget speech in parliament in New Delhi, Chidambaram announced a 600 billion-rupee ($15 billion) debt waiver for farmers.
This sum, which amounts to a staggering 10 percent of the government's tax revenue in the current fiscal year, would have sufficed to create 15,000 megawatts of new power-generation capacity, enough to significantly reduce the country's perennial and debilitating electricity shortages.
There's no denying that farming in India is facing a crisis. Productivity gains have stalled. The overall economy has grown an average of 8 percent per annum since 2002, adjusting for inflation. In this six-year period, real agricultural output has expanded 2 percent annually with high year-to-year volatility.
Reports of indebted farmers committing suicide have dominated newspaper columns and political debates, putting pressure on the government to take drastic measures.
With general elections very likely to be held later this year, Chidambaram didn't disappoint the ruling coalition. It is, after all, impossible for any government to be returned to power in India without the support of rural voters.
So Chidambaram decided to play Robin Hood.
Playing Robin Hood
He even defended the debt-forgiveness plan as a bonanza for the banking industry, which, he said at a post-budget press conference, would now be rid of potential bad loans.
The least the finance minister could do was to acknowledge the ``moral hazard.''
Voters in India have been known to shun the incumbent party.
So if the ruling Congress Party-led coalition manages to return to power, debt forgiveness will be equated with political nirvana. From time to time, the weather and commodity-price risks inherent in the farming business would shift to the hapless taxpayers. No political party will object because none of them can afford to be seen as anti-farmer.
Chidambaram' s performance was so subtly masterful that the taxpayers aren't even sure if they have been robbed.
The budget left the corporate-tax rate unchanged and cut the excise levy on manufacturers to 14 percent, from 16 percent. The income-tax burden on individuals will also be somewhat lower now. Only the charge on short-term capital gains -- profit on securities sold within a year of purchase -- was raised to 15 percent from 10 percent.
Touch of Houdini
As for the write-off, it doesn't even show up as a budgetary expenditure.
And that's nothing short of a Houdini trick.
Analysts aren't yet sure just how the financial system will be compensated. One possibility is that banks will be given government bonds with which they can replace their impaired assets. Chidambaram himself has been evasive.
All he said is that the government would provide liquidity to the banking system as loans to the farmers are written off over three years.
``You must allow me that I have some intelligence, '' he said. ``I have done my homework.''
Investors certainly would hope so. This penchant for keeping large increases in expenditure ``off-budget' ' has already assumed odious proportions.
Oil companies are being compensated through special government bonds for keeping retail fuel prices low. This has a clear, known fiscal cost, which is nonetheless not included in the budget deficit. A similar strategy has been adopted to tackle food inflation.
Today's headaches are merely being transferred to tomorrow.
Off-Budget
One day the bonds will have to be redeemed; when cash leaves the exchequer, the expenditure will have to be brought on budget. By then, it may be another finance minister's problem.
To be sure, Chidambaram did, in his budget last week, say that this particular accounting practice needed to be reconsidered. But any such review is still about two years away.
There are other problems with Chidambaram' s most recent budget. The minister hasn't made any provision for the hefty salary increases for civil servants that he may announce after the Pay Commission, which resets the wages of government workers every 10 years, submits its report by March 31.
The panel's recommendations are widely expected to be generous, jeopardizing several years of fiscal consolidation.
``Recent fiscal gains, a cornerstone of the sovereign's improved creditworthiness, could not only come under threat but be severely reversed by this pay review,'' says Standard & Poor's analyst Sani Hamid in Singapore.
Enough `Headroom'
In all fairness, the budget ought to have given investors a chance to gauge the risk.
The state-owned Indian Railways, which has had a separate budget since 1925, did just that last week by acknowledging that its wage bill for the next fiscal year may get bloated by as much as 50 billion rupees.
Chidambaram chose not to make the adjustment.
The finance minister's response is that he has enough ``headroom'' in the budget to meet any salary increases that the pay panel may recommend.
Investors would have preferred to see evidence of that headroom because his projections for tax collections appear to be rather optimistic.
As an increasingly important part of the global economy, India needs to gain credibility for its budgets. That means making them more transparent, and less magical.
In his Feb. 29 budget speech in parliament in New Delhi, Chidambaram announced a 600 billion-rupee ($15 billion) debt waiver for farmers.
This sum, which amounts to a staggering 10 percent of the government's tax revenue in the current fiscal year, would have sufficed to create 15,000 megawatts of new power-generation capacity, enough to significantly reduce the country's perennial and debilitating electricity shortages.
There's no denying that farming in India is facing a crisis. Productivity gains have stalled. The overall economy has grown an average of 8 percent per annum since 2002, adjusting for inflation. In this six-year period, real agricultural output has expanded 2 percent annually with high year-to-year volatility.
Reports of indebted farmers committing suicide have dominated newspaper columns and political debates, putting pressure on the government to take drastic measures.
With general elections very likely to be held later this year, Chidambaram didn't disappoint the ruling coalition. It is, after all, impossible for any government to be returned to power in India without the support of rural voters.
So Chidambaram decided to play Robin Hood.
Playing Robin Hood
He even defended the debt-forgiveness plan as a bonanza for the banking industry, which, he said at a post-budget press conference, would now be rid of potential bad loans.
The least the finance minister could do was to acknowledge the ``moral hazard.''
Voters in India have been known to shun the incumbent party.
So if the ruling Congress Party-led coalition manages to return to power, debt forgiveness will be equated with political nirvana. From time to time, the weather and commodity-price risks inherent in the farming business would shift to the hapless taxpayers. No political party will object because none of them can afford to be seen as anti-farmer.
Chidambaram' s performance was so subtly masterful that the taxpayers aren't even sure if they have been robbed.
The budget left the corporate-tax rate unchanged and cut the excise levy on manufacturers to 14 percent, from 16 percent. The income-tax burden on individuals will also be somewhat lower now. Only the charge on short-term capital gains -- profit on securities sold within a year of purchase -- was raised to 15 percent from 10 percent.
Touch of Houdini
As for the write-off, it doesn't even show up as a budgetary expenditure.
And that's nothing short of a Houdini trick.
Analysts aren't yet sure just how the financial system will be compensated. One possibility is that banks will be given government bonds with which they can replace their impaired assets. Chidambaram himself has been evasive.
All he said is that the government would provide liquidity to the banking system as loans to the farmers are written off over three years.
``You must allow me that I have some intelligence, '' he said. ``I have done my homework.''
Investors certainly would hope so. This penchant for keeping large increases in expenditure ``off-budget' ' has already assumed odious proportions.
Oil companies are being compensated through special government bonds for keeping retail fuel prices low. This has a clear, known fiscal cost, which is nonetheless not included in the budget deficit. A similar strategy has been adopted to tackle food inflation.
Today's headaches are merely being transferred to tomorrow.
Off-Budget
One day the bonds will have to be redeemed; when cash leaves the exchequer, the expenditure will have to be brought on budget. By then, it may be another finance minister's problem.
To be sure, Chidambaram did, in his budget last week, say that this particular accounting practice needed to be reconsidered. But any such review is still about two years away.
There are other problems with Chidambaram' s most recent budget. The minister hasn't made any provision for the hefty salary increases for civil servants that he may announce after the Pay Commission, which resets the wages of government workers every 10 years, submits its report by March 31.
The panel's recommendations are widely expected to be generous, jeopardizing several years of fiscal consolidation.
``Recent fiscal gains, a cornerstone of the sovereign's improved creditworthiness, could not only come under threat but be severely reversed by this pay review,'' says Standard & Poor's analyst Sani Hamid in Singapore.
Enough `Headroom'
In all fairness, the budget ought to have given investors a chance to gauge the risk.
The state-owned Indian Railways, which has had a separate budget since 1925, did just that last week by acknowledging that its wage bill for the next fiscal year may get bloated by as much as 50 billion rupees.
Chidambaram chose not to make the adjustment.
The finance minister's response is that he has enough ``headroom'' in the budget to meet any salary increases that the pay panel may recommend.
Investors would have preferred to see evidence of that headroom because his projections for tax collections appear to be rather optimistic.
As an increasingly important part of the global economy, India needs to gain credibility for its budgets. That means making them more transparent, and less magical.
America's Economy Risks Mother Of All Meltdowns
America’s economy risks mother of all meltdowns By Martin Wolf
Published: February 19 2008 18:21 | Last updated: February 19 2008 18:21
“I would tell audiences that we were facing not a bubble but a froth – lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy.” Alan Greenspan, The Age of Turbulence.
That used to be Mr Greenspan’s view of the US housing bubble. He was wrong, alas. So how bad might this downturn get? To answer this question we should ask a true bear. My favourite one is Nouriel Roubini of New York University’s Stern School of Business, founder of RGE monitor.
Recently, Professor Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*.
At that time, his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”**. The characteristics of this scenario are, he argues: “A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe.”
Prof Roubini is even fonder of lists than I am. Here are his 12 – yes, 12 – steps to financial disaster.
Step one is the worst housing recession in US history. House prices will, he says, fall by 20 to 30 per cent from their peak, which would wipe out between $4,000bn and $6,000bn in household wealth. Ten million households will end up with negative equity and so with a huge incentive to put the house keys in the post and depart for greener fields. Many more home-builders will be bankrupted.
Step two would be further losses, beyond the $250bn-$300bn now estimated, for subprime mortgages. About 60 per cent of all mortgage origination between 2005 and 2007 had “reckless or toxic features”, argues Prof Roubini.
Goldman Sachs estimates mortgage losses at $400bn. But if home prices fell by more than 20 per cent, losses would be bigger. That would further impair the banks’ ability to offer credit.
Step three would be big losses on unsecured consumer debt: credit cards, auto loans, student loans and so forth. The “credit crunch” would then spread from mortgages to a wide range of consumer credit.
Step four would be the downgrading of the monoline insurers, which do not deserve the AAA rating on which their business depends. A further $150bn writedown of asset-backed securities would then ensue.
Step five would be the meltdown of the commercial property market, while step six would be bankruptcy of a large regional or national bank.
Step seven would be big losses on reckless leveraged buy-outs. Hundreds of billions of dollars of such loans are now stuck on the balance sheets of financial institutions.
Step eight would be a wave of corporate defaults. On average, US companies are in decent shape, but a “fat tail” of companies has low profitability and heavy debt. Such defaults would spread losses in “credit default swaps”, which insure such debt. The losses could be $250bn. Some insurers might go bankrupt.
Step nine would be a meltdown in the “shadow financial system”. Dealing with the distress of hedge funds, special investment vehicles and so forth will be made more difficult by the fact that they have no direct access to lending from central banks.
Step 10 would be a further collapse in stock prices. Failures of hedge funds, margin calls and shorting could lead to cascading falls in prices.
Step 11 would be a drying-up of liquidity in a range of financial markets, including interbank and money markets. Behind this would be a jump in concerns about solvency.
Step 12 would be “a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices”.
These, then, are 12 steps to meltdown. In all, argues Prof Roubini: “Total losses in the financial system will add up to more than $1,000bn and the economic recession will become deeper more protracted and severe.”
This, he suggests, is the “nightmare scenario” keeping Ben Bernanke and colleagues at the US Federal Reserve awake. It explains why, having failed to appreciate the dangers for so long, the Fed has lowered rates by 200 basis points this year. This is insurance against a financial meltdown.
Is this kind of scenario at least plausible? It is. Furthermore, we can be confident that it would, if it came to pass, end all stories about “decoupling”. If it lasts six quarters, as Prof Roubini warns, offsetting policy action in the rest of the world would be too little, too late.
Can the Fed head this danger off? In a subsequent piece, Prof Roubini gives eight reasons why it cannot***.
(He really loves lists!) These are, in brief: US monetary easing is constrained by risks to the dollar and inflation; aggressive easing deals only with illiquidity, not insolvency; the monoline insurers will lose their credit ratings, with dire consequences; overall losses will be too large for sovereign wealth funds to deal with; public intervention is too small to stabilise housing losses; the Fed cannot address the problems of the shadow financial system; regulators cannot find a good middle way between transparency over losses and regulatory forbearance, both of which are needed; and, finally, the transactions- oriented financial system is itself in deep crisis.
The risks are indeed high and the ability of the authorities to deal with them more limited than most people hope. This is not to suggest that there are no ways out. Unfortunately, they are poisonous ones. In the last resort, governments resolve financial crises. This is an iron law.
Rescues can occur via overt government assumption of bad debt, inflation, or both. Japan chose the first, much to the distaste of its ministry of finance. But Japan is a creditor country whose savers have complete confidence in the solvency of their government.
The US, however, is a debtor. It must keep the trust of foreigners. Should it fail to do so, the inflationary solution becomes probable. This is quite enough to explain why gold costs $920 an ounce.
The connection between the bursting of the housing bubble and the fragility of the financial system has created huge dangers, for the US and the rest of the world. The US public sector is now coming to the rescue, led by the Fed. In the end, they will succeed. But the journey is likely to be wretchedly uncomfortable.
*A Coming Recession in the US Economy? July 17 2006, www.rgemonitor. com; **The Rising Risk of a Systemic Financial Meltdown, February 5 2008; ***Can the Fed and Policy Makers Avoid a Systemic Financial Meltdown? Most Likely Not, February 8 2008
martin.wolf@ ft.com
Published: February 19 2008 18:21 | Last updated: February 19 2008 18:21
“I would tell audiences that we were facing not a bubble but a froth – lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy.” Alan Greenspan, The Age of Turbulence.
That used to be Mr Greenspan’s view of the US housing bubble. He was wrong, alas. So how bad might this downturn get? To answer this question we should ask a true bear. My favourite one is Nouriel Roubini of New York University’s Stern School of Business, founder of RGE monitor.
Recently, Professor Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*.
At that time, his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”**. The characteristics of this scenario are, he argues: “A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe.”
Prof Roubini is even fonder of lists than I am. Here are his 12 – yes, 12 – steps to financial disaster.
Step one is the worst housing recession in US history. House prices will, he says, fall by 20 to 30 per cent from their peak, which would wipe out between $4,000bn and $6,000bn in household wealth. Ten million households will end up with negative equity and so with a huge incentive to put the house keys in the post and depart for greener fields. Many more home-builders will be bankrupted.
Step two would be further losses, beyond the $250bn-$300bn now estimated, for subprime mortgages. About 60 per cent of all mortgage origination between 2005 and 2007 had “reckless or toxic features”, argues Prof Roubini.
Goldman Sachs estimates mortgage losses at $400bn. But if home prices fell by more than 20 per cent, losses would be bigger. That would further impair the banks’ ability to offer credit.
Step three would be big losses on unsecured consumer debt: credit cards, auto loans, student loans and so forth. The “credit crunch” would then spread from mortgages to a wide range of consumer credit.
Step four would be the downgrading of the monoline insurers, which do not deserve the AAA rating on which their business depends. A further $150bn writedown of asset-backed securities would then ensue.
Step five would be the meltdown of the commercial property market, while step six would be bankruptcy of a large regional or national bank.
Step seven would be big losses on reckless leveraged buy-outs. Hundreds of billions of dollars of such loans are now stuck on the balance sheets of financial institutions.
Step eight would be a wave of corporate defaults. On average, US companies are in decent shape, but a “fat tail” of companies has low profitability and heavy debt. Such defaults would spread losses in “credit default swaps”, which insure such debt. The losses could be $250bn. Some insurers might go bankrupt.
Step nine would be a meltdown in the “shadow financial system”. Dealing with the distress of hedge funds, special investment vehicles and so forth will be made more difficult by the fact that they have no direct access to lending from central banks.
Step 10 would be a further collapse in stock prices. Failures of hedge funds, margin calls and shorting could lead to cascading falls in prices.
Step 11 would be a drying-up of liquidity in a range of financial markets, including interbank and money markets. Behind this would be a jump in concerns about solvency.
Step 12 would be “a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices”.
These, then, are 12 steps to meltdown. In all, argues Prof Roubini: “Total losses in the financial system will add up to more than $1,000bn and the economic recession will become deeper more protracted and severe.”
This, he suggests, is the “nightmare scenario” keeping Ben Bernanke and colleagues at the US Federal Reserve awake. It explains why, having failed to appreciate the dangers for so long, the Fed has lowered rates by 200 basis points this year. This is insurance against a financial meltdown.
Is this kind of scenario at least plausible? It is. Furthermore, we can be confident that it would, if it came to pass, end all stories about “decoupling”. If it lasts six quarters, as Prof Roubini warns, offsetting policy action in the rest of the world would be too little, too late.
Can the Fed head this danger off? In a subsequent piece, Prof Roubini gives eight reasons why it cannot***.
(He really loves lists!) These are, in brief: US monetary easing is constrained by risks to the dollar and inflation; aggressive easing deals only with illiquidity, not insolvency; the monoline insurers will lose their credit ratings, with dire consequences; overall losses will be too large for sovereign wealth funds to deal with; public intervention is too small to stabilise housing losses; the Fed cannot address the problems of the shadow financial system; regulators cannot find a good middle way between transparency over losses and regulatory forbearance, both of which are needed; and, finally, the transactions- oriented financial system is itself in deep crisis.
The risks are indeed high and the ability of the authorities to deal with them more limited than most people hope. This is not to suggest that there are no ways out. Unfortunately, they are poisonous ones. In the last resort, governments resolve financial crises. This is an iron law.
Rescues can occur via overt government assumption of bad debt, inflation, or both. Japan chose the first, much to the distaste of its ministry of finance. But Japan is a creditor country whose savers have complete confidence in the solvency of their government.
The US, however, is a debtor. It must keep the trust of foreigners. Should it fail to do so, the inflationary solution becomes probable. This is quite enough to explain why gold costs $920 an ounce.
The connection between the bursting of the housing bubble and the fragility of the financial system has created huge dangers, for the US and the rest of the world. The US public sector is now coming to the rescue, led by the Fed. In the end, they will succeed. But the journey is likely to be wretchedly uncomfortable.
*A Coming Recession in the US Economy? July 17 2006, www.rgemonitor. com; **The Rising Risk of a Systemic Financial Meltdown, February 5 2008; ***Can the Fed and Policy Makers Avoid a Systemic Financial Meltdown? Most Likely Not, February 8 2008
martin.wolf@ ft.com
Warren Buffett-"Investors Should Not Rule Out A Significant Economic
Warren Buffett on Monday said the U.S. economy is in recession and that "stocks are not cheap."
Speaking on CNBC television, Buffett also said he is no longer offering to guarantee $800 million of municipal bonds backed by MBIA Inc (MBI.N), Ambac Financial Group Inc (ABK.N) and FGIC Corp, three large bond insurers.
Buffett said that "from a common-sense standpoint right now, we're in a recession," though the U.S. economy has not yet recorded two straight quarters of declining gross domestic product, a traditional indicator of recession.
He said, though, that the environment is "nothing like '73 or '74 yet," referring to a deep economic downturn also marked by rising oil prices and falling stocks. Buffett said investors should not rule out the possibility of a significant economic downturn.
On Friday, Buffett's insurance and investment company Berkshire Hathaway Inc (BRKa.N) (BRKb.N) reported an 18 percent decline in fourth-quarter profit.
This stemmed in part from weakness in businesses linked to housing, including units that make bricks and carpet, and that offer real estate brokerage services.
Bond insurers, which normally insure relatively safe municipal bonds, came under pressure in late 2007 after they also guaranteed billions of dollars of riskier debt, often tied to subprime mortgages.
On Feb 12, Buffett offered to reinsure $800 billion of municipal bonds, but only at a steep premium. The offer didn't include the riskier debt. Bond insurers rejected the offer, and have been seeking new sources of capital or possibly breaking themselves up.
Buffett on Monday said his earlier offer is "not on the table." In December, Buffett started its own bond insurer, Berkshire Hathaway Assurance Corp.
Speaking on CNBC television, Buffett also said he is no longer offering to guarantee $800 million of municipal bonds backed by MBIA Inc (MBI.N), Ambac Financial Group Inc (ABK.N) and FGIC Corp, three large bond insurers.
Buffett said that "from a common-sense standpoint right now, we're in a recession," though the U.S. economy has not yet recorded two straight quarters of declining gross domestic product, a traditional indicator of recession.
He said, though, that the environment is "nothing like '73 or '74 yet," referring to a deep economic downturn also marked by rising oil prices and falling stocks. Buffett said investors should not rule out the possibility of a significant economic downturn.
On Friday, Buffett's insurance and investment company Berkshire Hathaway Inc (BRKa.N) (BRKb.N) reported an 18 percent decline in fourth-quarter profit.
This stemmed in part from weakness in businesses linked to housing, including units that make bricks and carpet, and that offer real estate brokerage services.
Bond insurers, which normally insure relatively safe municipal bonds, came under pressure in late 2007 after they also guaranteed billions of dollars of riskier debt, often tied to subprime mortgages.
On Feb 12, Buffett offered to reinsure $800 billion of municipal bonds, but only at a steep premium. The offer didn't include the riskier debt. Bond insurers rejected the offer, and have been seeking new sources of capital or possibly breaking themselves up.
Buffett on Monday said his earlier offer is "not on the table." In December, Buffett started its own bond insurer, Berkshire Hathaway Assurance Corp.
Why did the stock market crash?
Was it inevitable?
When the global economy has been cooling down, and the financial sector in particular has been heading from one cold shower to the next, it was inevitable that stock markets around the world would start catching the chill.
The way in which Asian stock prices responded last week to the fall of the Dow Jones and Nasdaq indices by 4 per cent, hitting a 10-month low, has also punctured a hole in the decoupling argument (which said Asia would not be hit by an America-based problem) that had become fashionable in recent weeks.
Investors around the world have taken note of the fact that the broad-based S&P 500 index is at a 16-month low, along with European stocks. And investors seem to have little faith in the Bush rescue plan's ability to ward off a recession in the US. The Fed will almost certainly respond with sharp cuts in interest rates towards the end of the month, but the market has already discounted for that.
Indian markets worst hit
It is interesting that Indian markets were hit the most, among all Asian markets. This may have been because the correction in the overheated Chinese stock market began some weeks ago. Investors will also have noticed that the third-quarter corporate numbers show significant deceleration in both sales and profit growth, when compared to the same quarter a year earlier.
When coupled with the data showing that the export target for the year will be missed by a wide margin, and that the industrial sector has suffered a sharp slowdown, it was inevitable that stock prices would have to come off their dizzy highs.
What began with profit-booking and unwinding of long positions cascaded on Friday into a 3.5 per cent decline in the Sensex. Foreign institutional investors had moved to the sidelines in the secondary markets even earlier, and FIIs have been net sellers to the tune of Rs 2,200 crore (Rs 22 billion) in January. Also relevant was the Reliance Power IPO, which pulled in a record amount of application money (Rs 1,15,000 crore (Rs 1,150 billion)). Even if a third or a fourth of that was being garnered by sale of stocks, it is a large enough sum for the market to go into correction mode.
There is no doubt that valuations had become expensive. Even after the 10 per cent correction from the market's peak, the Sensex trades at a trailing P/E multiple of 24.5, which is not cheap in anyone's book.
Yet, buying may soon begin
A global liquidity surplus had certainly contributed to momentum buying. The question is whether the correction that has occurred so far is enough for fresh buying to emerge, or whether a further fall is required before value-based buying starts.
On a forward basis, the Sensex trades at an FY09 estimated P/E of 18. The floor therefore would probably be a Sensex level of 17,000-odd -- which would mean wiping out the gains of the past three months, no more. Provided the general economic and corporate news does not get worse than has already been anticipated, fresh buying cannot be very far away.
Indian stocks witnessed their second-biggest fall ever on Monday.
Is everything okay with the economy?
The fundamentals of the Indian economy are still very strong. Some analysts say that business environment is good, but corporate earnings are not as good as they wree last year.
Will foreign investors sell more stocks?
Market expectations are that foreign investors would continue to sell.
With FIIs turning sellers on the domestic bourses, it is likely that domestic mutual funds might step in and buy equity thereby preventing a further fall. However, it remains to be seen if this would happen.
What should traders do now?
"If you have the money it's a great time to buy into this market," said Ambareesh Baliga of Karvy Stock Broking on NDTV Profit. There is no fundamental reason for this massive fall in the market and its been all about margin calls, he added.
Given the rise in volatility, it may not be advisable to trade in stocks that lack liquidity. Trading in stocks, which do not find presence in the derivatives segment may be dangerous.
The reason is simple: derivatives give you an option to hedge your position, limiting your losses, in case the market goes against you.
Keep your trading positions about 30 per cent lower than what you can actually afford. This would greatly help in avoiding distress sale in case the regulators slap additional margins. For an investor, leveraged positions are completely avoidable.
Stock market traders and investors panicked on Monday as the Indian markets crashed.
When the global economy has been cooling down, and the financial sector in particular has been heading from one cold shower to the next, it was inevitable that stock markets around the world would start catching the chill.
The way in which Asian stock prices responded last week to the fall of the Dow Jones and Nasdaq indices by 4 per cent, hitting a 10-month low, has also punctured a hole in the decoupling argument (which said Asia would not be hit by an America-based problem) that had become fashionable in recent weeks.
Investors around the world have taken note of the fact that the broad-based S&P 500 index is at a 16-month low, along with European stocks. And investors seem to have little faith in the Bush rescue plan's ability to ward off a recession in the US. The Fed will almost certainly respond with sharp cuts in interest rates towards the end of the month, but the market has already discounted for that.
Indian markets worst hit
It is interesting that Indian markets were hit the most, among all Asian markets. This may have been because the correction in the overheated Chinese stock market began some weeks ago. Investors will also have noticed that the third-quarter corporate numbers show significant deceleration in both sales and profit growth, when compared to the same quarter a year earlier.
When coupled with the data showing that the export target for the year will be missed by a wide margin, and that the industrial sector has suffered a sharp slowdown, it was inevitable that stock prices would have to come off their dizzy highs.
What began with profit-booking and unwinding of long positions cascaded on Friday into a 3.5 per cent decline in the Sensex. Foreign institutional investors had moved to the sidelines in the secondary markets even earlier, and FIIs have been net sellers to the tune of Rs 2,200 crore (Rs 22 billion) in January. Also relevant was the Reliance Power IPO, which pulled in a record amount of application money (Rs 1,15,000 crore (Rs 1,150 billion)). Even if a third or a fourth of that was being garnered by sale of stocks, it is a large enough sum for the market to go into correction mode.
There is no doubt that valuations had become expensive. Even after the 10 per cent correction from the market's peak, the Sensex trades at a trailing P/E multiple of 24.5, which is not cheap in anyone's book.
Yet, buying may soon begin
A global liquidity surplus had certainly contributed to momentum buying. The question is whether the correction that has occurred so far is enough for fresh buying to emerge, or whether a further fall is required before value-based buying starts.
On a forward basis, the Sensex trades at an FY09 estimated P/E of 18. The floor therefore would probably be a Sensex level of 17,000-odd -- which would mean wiping out the gains of the past three months, no more. Provided the general economic and corporate news does not get worse than has already been anticipated, fresh buying cannot be very far away.
Indian stocks witnessed their second-biggest fall ever on Monday.
Is everything okay with the economy?
The fundamentals of the Indian economy are still very strong. Some analysts say that business environment is good, but corporate earnings are not as good as they wree last year.
Will foreign investors sell more stocks?
Market expectations are that foreign investors would continue to sell.
With FIIs turning sellers on the domestic bourses, it is likely that domestic mutual funds might step in and buy equity thereby preventing a further fall. However, it remains to be seen if this would happen.
What should traders do now?
"If you have the money it's a great time to buy into this market," said Ambareesh Baliga of Karvy Stock Broking on NDTV Profit. There is no fundamental reason for this massive fall in the market and its been all about margin calls, he added.
Given the rise in volatility, it may not be advisable to trade in stocks that lack liquidity. Trading in stocks, which do not find presence in the derivatives segment may be dangerous.
The reason is simple: derivatives give you an option to hedge your position, limiting your losses, in case the market goes against you.
Keep your trading positions about 30 per cent lower than what you can actually afford. This would greatly help in avoiding distress sale in case the regulators slap additional margins. For an investor, leveraged positions are completely avoidable.
Stock market traders and investors panicked on Monday as the Indian markets crashed.
!!!Types of Marketing!!!
You see a gorgeous girl at a party.
You go up to her and say, "I am very rich. Marry me!"
That's Direct Marketing.
You're at a party with a bunch of friends and see a gorgeous girl. One of your friends goes up to her and pointing at you says, "He's very rich. Marry him." That's Advertising.
You see a gorgeous girl at a party.
You go up to her and get her telephone number.
The next day you call and say, "Hi, I'm very rich. Marry me."
That's Telemarketing.
You're at a party and see a gorgeous girl.
You get up and straighten your tie, you walk up to her and pour her a drink. You open the door for her, pick up her bag after she drops it,
and offer her A ride, and then say, "By the way, I'm very rich. Will you marry me?"
That's Public Relations.
You're at a party and see a gorgeous girl.
She walks up to you and says, "You are very rich..I want to marry you"
That's Brand Recognition.
You see a gorgeous girl at a party.
You go up to her and say, "I'm rich. Marry me"
She gives you a nice hard slap on your face.
That's Customer Feedback !!!!!
You go up to her and say, "I am very rich. Marry me!"
That's Direct Marketing.
You're at a party with a bunch of friends and see a gorgeous girl. One of your friends goes up to her and pointing at you says, "He's very rich. Marry him." That's Advertising.
You see a gorgeous girl at a party.
You go up to her and get her telephone number.
The next day you call and say, "Hi, I'm very rich. Marry me."
That's Telemarketing.
You're at a party and see a gorgeous girl.
You get up and straighten your tie, you walk up to her and pour her a drink. You open the door for her, pick up her bag after she drops it,
and offer her A ride, and then say, "By the way, I'm very rich. Will you marry me?"
That's Public Relations.
You're at a party and see a gorgeous girl.
She walks up to you and says, "You are very rich..I want to marry you"
That's Brand Recognition.
You see a gorgeous girl at a party.
You go up to her and say, "I'm rich. Marry me"
She gives you a nice hard slap on your face.
That's Customer Feedback !!!!!
Why did the stock market crash?
Was it inevitable?
When the global economy has been cooling down, and the financial sector in particular has been heading from one cold shower to the next, it was inevitable that stock markets around the world would start catching the chill.
The way in which Asian stock prices responded last week to the fall of the Dow Jones and Nasdaq indices by 4 per cent, hitting a 10-month low, has also punctured a hole in the decoupling argument (which said Asia would not be hit by an America-based problem) that had become fashionable in recent weeks.
Investors around the world have taken note of the fact that the broad-based S&P 500 index is at a 16-month low, along with European stocks. And investors seem to have little faith in the Bush rescue plan's ability to ward off a recession in the US. The Fed will almost certainly respond with sharp cuts in interest rates towards the end of the month, but the market has already discounted for that.
Indian markets worst hit
It is interesting that Indian markets were hit the most, among all Asian markets. This may have been because the correction in the overheated Chinese stock market began some weeks ago. Investors will also have noticed that the third-quarter corporate numbers show significant deceleration in both sales and profit growth, when compared to the same quarter a year earlier.
When coupled with the data showing that the export target for the year will be missed by a wide margin, and that the industrial sector has suffered a sharp slowdown, it was inevitable that stock prices would have to come off their dizzy highs.
What began with profit-booking and unwinding of long positions cascaded on Friday into a 3.5 per cent decline in the Sensex. Foreign institutional investors had moved to the sidelines in the secondary markets even earlier, and FIIs have been net sellers to the tune of Rs 2,200 crore (Rs 22 billion) in January. Also relevant was the Reliance Power IPO, which pulled in a record amount of application money (Rs 1,15,000 crore (Rs 1,150 billion)). Even if a third or a fourth of that was being garnered by sale of stocks, it is a large enough sum for the market to go into correction mode.
There is no doubt that valuations had become expensive. Even after the 10 per cent correction from the market's peak, the Sensex trades at a trailing P/E multiple of 24.5, which is not cheap in anyone's book.
Yet, buying may soon begin
A global liquidity surplus had certainly contributed to momentum buying. The question is whether the correction that has occurred so far is enough for fresh buying to emerge, or whether a further fall is required before value-based buying starts.
On a forward basis, the Sensex trades at an FY09 estimated P/E of 18. The floor therefore would probably be a Sensex level of 17,000-odd -- which would mean wiping out the gains of the past three months, no more. Provided the general economic and corporate news does not get worse than has already been anticipated, fresh buying cannot be very far away.
Indian stocks witnessed their second-biggest fall ever on Monday.
Is everything okay with the economy?
The fundamentals of the Indian economy are still very strong. Some analysts say that business environment is good, but corporate earnings are not as good as they wree last year.
Will foreign investors sell more stocks?
Market expectations are that foreign investors would continue to sell.
With FIIs turning sellers on the domestic bourses, it is likely that domestic mutual funds might step in and buy equity thereby preventing a further fall. However, it remains to be seen if this would happen.
What should traders do now?
"If you have the money it's a great time to buy into this market," said Ambareesh Baliga of Karvy Stock Broking on NDTV Profit. There is no fundamental reason for this massive fall in the market and its been all about margin calls, he added.
Given the rise in volatility, it may not be advisable to trade in stocks that lack liquidity. Trading in stocks, which do not find presence in the derivatives segment may be dangerous.
The reason is simple: derivatives give you an option to hedge your position, limiting your losses, in case the market goes against you.
Keep your trading positions about 30 per cent lower than what you can actually afford. This would greatly help in avoiding distress sale in case the regulators slap additional margins. For an investor, leveraged positions are completely avoidable.
Stock market traders and investors panicked on Monday as the Indian markets crashed.
When the global economy has been cooling down, and the financial sector in particular has been heading from one cold shower to the next, it was inevitable that stock markets around the world would start catching the chill.
The way in which Asian stock prices responded last week to the fall of the Dow Jones and Nasdaq indices by 4 per cent, hitting a 10-month low, has also punctured a hole in the decoupling argument (which said Asia would not be hit by an America-based problem) that had become fashionable in recent weeks.
Investors around the world have taken note of the fact that the broad-based S&P 500 index is at a 16-month low, along with European stocks. And investors seem to have little faith in the Bush rescue plan's ability to ward off a recession in the US. The Fed will almost certainly respond with sharp cuts in interest rates towards the end of the month, but the market has already discounted for that.
Indian markets worst hit
It is interesting that Indian markets were hit the most, among all Asian markets. This may have been because the correction in the overheated Chinese stock market began some weeks ago. Investors will also have noticed that the third-quarter corporate numbers show significant deceleration in both sales and profit growth, when compared to the same quarter a year earlier.
When coupled with the data showing that the export target for the year will be missed by a wide margin, and that the industrial sector has suffered a sharp slowdown, it was inevitable that stock prices would have to come off their dizzy highs.
What began with profit-booking and unwinding of long positions cascaded on Friday into a 3.5 per cent decline in the Sensex. Foreign institutional investors had moved to the sidelines in the secondary markets even earlier, and FIIs have been net sellers to the tune of Rs 2,200 crore (Rs 22 billion) in January. Also relevant was the Reliance Power IPO, which pulled in a record amount of application money (Rs 1,15,000 crore (Rs 1,150 billion)). Even if a third or a fourth of that was being garnered by sale of stocks, it is a large enough sum for the market to go into correction mode.
There is no doubt that valuations had become expensive. Even after the 10 per cent correction from the market's peak, the Sensex trades at a trailing P/E multiple of 24.5, which is not cheap in anyone's book.
Yet, buying may soon begin
A global liquidity surplus had certainly contributed to momentum buying. The question is whether the correction that has occurred so far is enough for fresh buying to emerge, or whether a further fall is required before value-based buying starts.
On a forward basis, the Sensex trades at an FY09 estimated P/E of 18. The floor therefore would probably be a Sensex level of 17,000-odd -- which would mean wiping out the gains of the past three months, no more. Provided the general economic and corporate news does not get worse than has already been anticipated, fresh buying cannot be very far away.
Indian stocks witnessed their second-biggest fall ever on Monday.
Is everything okay with the economy?
The fundamentals of the Indian economy are still very strong. Some analysts say that business environment is good, but corporate earnings are not as good as they wree last year.
Will foreign investors sell more stocks?
Market expectations are that foreign investors would continue to sell.
With FIIs turning sellers on the domestic bourses, it is likely that domestic mutual funds might step in and buy equity thereby preventing a further fall. However, it remains to be seen if this would happen.
What should traders do now?
"If you have the money it's a great time to buy into this market," said Ambareesh Baliga of Karvy Stock Broking on NDTV Profit. There is no fundamental reason for this massive fall in the market and its been all about margin calls, he added.
Given the rise in volatility, it may not be advisable to trade in stocks that lack liquidity. Trading in stocks, which do not find presence in the derivatives segment may be dangerous.
The reason is simple: derivatives give you an option to hedge your position, limiting your losses, in case the market goes against you.
Keep your trading positions about 30 per cent lower than what you can actually afford. This would greatly help in avoiding distress sale in case the regulators slap additional margins. For an investor, leveraged positions are completely avoidable.
Stock market traders and investors panicked on Monday as the Indian markets crashed.
Interesting Management Stories
Story # 1
It's a fine sunny day in the forest and a lion is sitting outside his cave, lying lazily in the sun. Along comes a fox, out on a walk.
Fox: "Do you know the time, because my watch is broken"
Lion: "Oh, I can easily fix the watch for you"
Fox: "Hmm... But it's a very complicated mechanism, and your big claws will only destroy it even more."
Lion: "Oh no, give it to me, and it will be fixed"
Fox: "That's ridiculous! Any fool knows that lazy lions with great claws cannot fix complicated watches"
Lion: "Sure they do, give it to me and it will be fixed"
The lion disappears into his cave, and after a while he comes back with the watch which is running perfectly. The fox is impressed, and the lion continues to lie lazily in the sun, looking very pleased with himself.
Soon a wolf comes along and stops to watch the lazy lion in the sun.
Wolf: "Can I come and watch TV tonight with you, because mine is broken"
Lion: "Oh, I can easily fix your TV for you"
Wolf: "You don't expect me to believe such rubbish, do you? There is no way that a lazy lion with big claws can fix a complicated TV.
Lion: "No problem. Do you want to try it?"
The lion goes into his cave, and after a while comes back with a perfectly fixed TV. The wolf goes away happily and amazed.
Scene :
Inside the lion's cave. In one corner are half a dozen small and intelligent looking rabbits who are busily doing very complicated work with very detailed instruments. In the other corner lies a huge lion looking very pleased with himself.
Moral :
IF YOU WANT TO KNOW WHY A MANAGER IS FAMOUS; LOOK AT THE WORK OF HIS SUBORDINATES.
Management Lesson in the context of the working world :
IF YOU WANT TO KNOW WHY SOMEONE UNDESERVED IS PROMOTED; LOOK AT THE WORK OF HIS SUBORDINATES
Story # 2
It's a fine sunny day in the forest and a rabbit is sitting outside his burrow, tippy-tapping on his typewriter. Along comes a fox, out for a walk.
Fox: "What are you working on?"
Rabbit: "My thesis."
Fox: "Hmm... What is it about?"
Rabbit: "Oh, I'm writing about how rabbits eat foxes."
Fox: "That's ridiculous ! Any fool knows that rabbits don't eat foxes!
Rabbit: "Come with me and I'll show you!"
They both disappear into the rabbit's burrow. After few minutes, gnawing on a fox bone, the rabbit returns to his typewriter and resumes typing.
Soon a wolf comes along and stops to watch the hardworking rabbit.
Wolf: "What's that you are writing?"
Rabbit: "I'm doing a thesis on how rabbits eat wolves."
Wolf: "you don't expect to get such rubbish published, do you?"
Rabbit: "No problem. Do you want to see why?"
The rabbit and the wolf go into the burrow and again the rabbit returns by himself, after a few minutes, and goes back to typing. Finally a bear comes along and asks, "What are you doing?
Rabbit: "I'm doing a thesis on how rabbits eat bears."
Bear: "Well that's absurd ! "
Rabbit: "Come into my home and I'll show you"
Scene :
As they enter the burrow, the rabbit introduces the bear to the lion.
Moral:
IT DOESN'T MATTER HOW SILLY YOUR THESIS TOPIC IS; WHAT MATTERS IS WHOM YOU HAVE AS A SUPERVISOR.
Management Lesson in the context of the working world:
IT DOESN'T MATTER HOW BAD YOUR PERFORMANCE IS; WHAT MATTERS IS WHETHER YOUR BOSS LIKES YOU OR NOT
It's a fine sunny day in the forest and a lion is sitting outside his cave, lying lazily in the sun. Along comes a fox, out on a walk.
Fox: "Do you know the time, because my watch is broken"
Lion: "Oh, I can easily fix the watch for you"
Fox: "Hmm... But it's a very complicated mechanism, and your big claws will only destroy it even more."
Lion: "Oh no, give it to me, and it will be fixed"
Fox: "That's ridiculous! Any fool knows that lazy lions with great claws cannot fix complicated watches"
Lion: "Sure they do, give it to me and it will be fixed"
The lion disappears into his cave, and after a while he comes back with the watch which is running perfectly. The fox is impressed, and the lion continues to lie lazily in the sun, looking very pleased with himself.
Soon a wolf comes along and stops to watch the lazy lion in the sun.
Wolf: "Can I come and watch TV tonight with you, because mine is broken"
Lion: "Oh, I can easily fix your TV for you"
Wolf: "You don't expect me to believe such rubbish, do you? There is no way that a lazy lion with big claws can fix a complicated TV.
Lion: "No problem. Do you want to try it?"
The lion goes into his cave, and after a while comes back with a perfectly fixed TV. The wolf goes away happily and amazed.
Scene :
Inside the lion's cave. In one corner are half a dozen small and intelligent looking rabbits who are busily doing very complicated work with very detailed instruments. In the other corner lies a huge lion looking very pleased with himself.
Moral :
IF YOU WANT TO KNOW WHY A MANAGER IS FAMOUS; LOOK AT THE WORK OF HIS SUBORDINATES.
Management Lesson in the context of the working world :
IF YOU WANT TO KNOW WHY SOMEONE UNDESERVED IS PROMOTED; LOOK AT THE WORK OF HIS SUBORDINATES
Story # 2
It's a fine sunny day in the forest and a rabbit is sitting outside his burrow, tippy-tapping on his typewriter. Along comes a fox, out for a walk.
Fox: "What are you working on?"
Rabbit: "My thesis."
Fox: "Hmm... What is it about?"
Rabbit: "Oh, I'm writing about how rabbits eat foxes."
Fox: "That's ridiculous ! Any fool knows that rabbits don't eat foxes!
Rabbit: "Come with me and I'll show you!"
They both disappear into the rabbit's burrow. After few minutes, gnawing on a fox bone, the rabbit returns to his typewriter and resumes typing.
Soon a wolf comes along and stops to watch the hardworking rabbit.
Wolf: "What's that you are writing?"
Rabbit: "I'm doing a thesis on how rabbits eat wolves."
Wolf: "you don't expect to get such rubbish published, do you?"
Rabbit: "No problem. Do you want to see why?"
The rabbit and the wolf go into the burrow and again the rabbit returns by himself, after a few minutes, and goes back to typing. Finally a bear comes along and asks, "What are you doing?
Rabbit: "I'm doing a thesis on how rabbits eat bears."
Bear: "Well that's absurd ! "
Rabbit: "Come into my home and I'll show you"
Scene :
As they enter the burrow, the rabbit introduces the bear to the lion.
Moral:
IT DOESN'T MATTER HOW SILLY YOUR THESIS TOPIC IS; WHAT MATTERS IS WHOM YOU HAVE AS A SUPERVISOR.
Management Lesson in the context of the working world:
IT DOESN'T MATTER HOW BAD YOUR PERFORMANCE IS; WHAT MATTERS IS WHETHER YOUR BOSS LIKES YOU OR NOT
Indian Stock Market – Tricks to excel in it.
Want to excel in stock market? Here are some tips to help you in being a good intraday trader and Delivery Investor.
Start with a realistic goal in mind.
First you have to make a decision whether you want to become a trader or seek and employment. Always keep a realistic goal in your mind about what you want to achieve from Indian stock market.
Never make the mistake of believing that you have become the master.
No body is perfect in stock market. Learning never ends here. One should not feel he/she is the king if they make money in 5-6 trades without any loss. One should keep himself open for new learning and appoint consultants for himself. As professionals can help you best.
Draw up a trading plan.
Prepare a trading plan, back test it with historical data and then stick to it. Don’t keep fine tuning the plan i.e never change plan stick to it.
Start with the smallest amount of capital that you can effectively trade with.
Initially start with a small amount and cautiously enter the stock market. You should concentrate on achieving the best possible returns over a 3 month period.
Make a commitment
Don’t get overexcited after a few wins in stock market and start increasing your capital, that is a sure sign that you are not in control, the market is controlling you which mean you are on the path of getting trapped in the stock market.
Sharetipsinfo suggests you to monitor your performance of winning or losing on a weekly basis, Do review each trade and assess your performance.
Take a break
No matter you are making or losing money in stock market. You should take a break after fix intervals lets say after 4 months, pause for a 3-4 days. Again review your performance and identify any gaps in your knowledge that needs additional works.
Take PROFESSIONAL HELP
If you know there is a problem in your trading plan, don’t hesitate to consult a mentor. Find an experienced and performance oriented professional company who are providing tips to there clients. Take advantage of there research and knowledge.
Long term strategy
After 12 month again review your performance and decide whether you are ready to commit more capital to the stock market or not. But we assure you with professional help and your own knowledge you will surely be a winner in Indian or any stock market.
Indian Stock Market Trading Golden Rules
We are mentioning few golden rules for trading and investing in Indian stock market or in any other Stock market.
If you want to be a successful intraday / day trader or Positional / Delivery investor then simply follow these golden rules.
"Trading runs in cycles; some are good, some are bad, and there is nothing we can do about that other than accept it and act accordingly"
Think in terms of probabilities and act upon them. There are no certainties in trading. You can keep yourself out of trouble by thinking in terms of probabilities. Get comfortable with approximate predictions and interpretations.
"To trade/invest successfully, think like a fundamentalist; trade like a technician"
Along with economic fundamentals that will drive a market higher or lower, but we must try to understand the technical as well.
"Don't be a hero. Don't fight the trend. Follow the money flow"
You should forget the news, remember the chart as chart already knows the news is coming and buy on rumors; sell on news.
"In trading/investing, an understanding of mass psychology is often more important than an understanding of economics"
Trading is a psychological game. Most people think that they're playing against the market, but the market doesn't care. You're really playing against yourself. Hope, fear and greed are not strategies: they are emotions. Simple emotions are not an effective strategy. Positive emotions could cause us to fail to apply risk precautions. Negative emotion could cause us to hesitate.
"Learn to monitor yourself and draw conclusions from your mistakes. "
Predetermine maximum losses in every potential trade. Do not risk more than 5% of your capital on any trade. Don't average your losses.
"Buy that which is showing strength - sell that which is showing weakness"
The public continues to buy when prices have fallen. The professional buys because prices have rallied. This difference may not sound logical, but buying strength works. The rule of survival is not to "buy low, sell high", but to "buy higher and sell higher". Furthermore, when comparing various stocks within a group buys only the strongest and sells the weakest.
"Think like a guerrilla warrior."
We wish to fight on the side of the market that is winning, not wasting our time and capital on futile efforts to gain fame by buying the lows or selling the highs of some market movement. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we don't need to fight at all.
"When you lose, don't lose the lesson!"
Forget the names but remember the events. Those who don't remember the past are doomed to repeat it. Make mistakes with composure and character, without blaming others, and don't dwell on mistakes.
"Evaluate your results at least monthly".
Monitor your P&L, your win/loss ratio, and the relationship between your biggest wins and worst losses. Reviewing these results helps you continually improve your understanding of the markets and yourself.
"When in doubt, get out."
Scrutinize your positions at all times, each day, and you will not be left holding a stock without reason. Be willing to change direction at any time, because your flexibility as an individual investor is a big advantage which should be embraced!
"There is no "genius" in these rules. They are common sense and nothing else, but as Voltaire said, "Common sense is uncommon." Trading is a common-sense business. When we trade contrary to common sense, we will lose. Perhaps not always, but enormously and eventually. Trade simply. Avoid complex methodologies concerning obscure technical systems and trade according to the major trends only".
Life Insurance
Now there is another way to put your money to work for you.This is by the means of investing in Life Insurance.
Investing in Life Insurance has many benefits in it.The first benefit of it is that it provides your family a support when you are leave this world suddenly.Other benefit is that while you live they help you pay for the medicines.
I just came across a new site http://www.lifeinsure.com while i was surfing the net for some of the best Insurance Sources.The site is very useful and you can instantly obtain life insurance quotes and information.You can also check the market on your own before you talk with anyone.
One of the remarkable things that i would like to share with you is that you can insure for a Term or time that you wold like to insure yourself. Term is simple. You pay a premium for a period of time (the term) from one to thirty years and if you die during that time the insurance is paid to the person or persons you designate to receive it - called the beneficiary (ies).
http://www.lifeinsure.com/lifeinsurance/termlife.asp.Try life term insurance
You can also instantly check the quotes for Insurance Market for Term Life Insurance from this site.Just check http://www.lifeinsure.com/lifeinsurance/quotes.asp for quotes.Check your Quote Here
Investing in Life Insurance has many benefits in it.The first benefit of it is that it provides your family a support when you are leave this world suddenly.Other benefit is that while you live they help you pay for the medicines.
I just came across a new site http://www.lifeinsure.com while i was surfing the net for some of the best Insurance Sources.The site is very useful and you can instantly obtain life insurance quotes and information.You can also check the market on your own before you talk with anyone.
One of the remarkable things that i would like to share with you is that you can insure for a Term or time that you wold like to insure yourself. Term is simple. You pay a premium for a period of time (the term) from one to thirty years and if you die during that time the insurance is paid to the person or persons you designate to receive it - called the beneficiary (ies).
http://www.lifeinsure.com/lifeinsurance/termlife.asp.Try life term insurance
You can also instantly check the quotes for Insurance Market for Term Life Insurance from this site.Just check http://www.lifeinsure.com/lifeinsurance/quotes.asp for quotes.Check your Quote Here
7 Rules of Long Term Investment:
A defensive investor is one who generally places high emphasis on the safety of his capital through avoiding serious mistakes while making investment decisions.
Also, a defensive investor is one who aims at freedom from effort and the need for making frequent decisions.
In these volatile times, thus, such an investor should keep some benchmarks for himself while selecting his portfolio of stocks. Only this would be of help in his need for making less frequent decisions.
These are some of the characteristics that a defensive investor should look at in a company, or the potential investment target(s).
1. Adequate size of the enterprise: This is one of the most important factors while selecting a company for investment. Investors should note that small companies or those that are in the nascent stages of their development are more likely to have a volatile future than bigger corporations.
While an aggressive investor would have interests in such small yet growing companies, this should not be a defensive investor's cup of tea. He should be content in having large and strong companies in his portfolio.
2. Sufficiently strong and stable financial condition: A sufficiently strong financial condition of a company should be another top priority for defensive investors.
They should make sure that their investment target (company) has a strong balance sheet and profit and loss account, and a very strong cash flow statement. This is because, more than book profits, it is the strong cash position that is of help for the company in times of pressure and uncertainty.
Also, for a company to be a sound investment target, not only should it have a history of decent earnings growth, but also stability in the same. A company with a volatile earnings growth history is more likely to be a risky proposition.
3. Dividend growth: A consistent dividend payment record is another indicator of the sound financial position of the company. While there might be instances when a growing company is ploughing back earnings towards future growth rather than paying large dividends, investors must see that there are no grave inconsistencies in dividend payments.
4. Moderate P/E ratio: A moderate price-to-earnings ratio is a very useful indicator for a defensive investor. This is because a relatively lower P/E would save investors from paying a very high price that does not justify the value of an investment.
Also, a history of moderate or less-volatile P/E's also helps the investors' cause. This is because a company that has had volatile P/E's in the past is a case of investors building up 'irrational expectations' of its growth.
5. Management quality: Apart from these performance parameters, investors should also take note of the 'management quality', its vision and the past track record.
6. Do your homework: All said and done, while the rules mentioned above are benchmarks that every defensive investor needs to apply before making any investment decision, the fact that he should do his homework carefully should not lose relevance.
This means that he should research well about the company's history, its business model and factors that are likely to affect its future performance.
7. Long-term view: Also, the investor should have a long-term (more than 3 years) investment horizon for this maximises the chance of garnering adequate return on investments.
Also, a defensive investor is one who aims at freedom from effort and the need for making frequent decisions.
In these volatile times, thus, such an investor should keep some benchmarks for himself while selecting his portfolio of stocks. Only this would be of help in his need for making less frequent decisions.
These are some of the characteristics that a defensive investor should look at in a company, or the potential investment target(s).
1. Adequate size of the enterprise: This is one of the most important factors while selecting a company for investment. Investors should note that small companies or those that are in the nascent stages of their development are more likely to have a volatile future than bigger corporations.
While an aggressive investor would have interests in such small yet growing companies, this should not be a defensive investor's cup of tea. He should be content in having large and strong companies in his portfolio.
2. Sufficiently strong and stable financial condition: A sufficiently strong financial condition of a company should be another top priority for defensive investors.
They should make sure that their investment target (company) has a strong balance sheet and profit and loss account, and a very strong cash flow statement. This is because, more than book profits, it is the strong cash position that is of help for the company in times of pressure and uncertainty.
Also, for a company to be a sound investment target, not only should it have a history of decent earnings growth, but also stability in the same. A company with a volatile earnings growth history is more likely to be a risky proposition.
3. Dividend growth: A consistent dividend payment record is another indicator of the sound financial position of the company. While there might be instances when a growing company is ploughing back earnings towards future growth rather than paying large dividends, investors must see that there are no grave inconsistencies in dividend payments.
4. Moderate P/E ratio: A moderate price-to-earnings ratio is a very useful indicator for a defensive investor. This is because a relatively lower P/E would save investors from paying a very high price that does not justify the value of an investment.
Also, a history of moderate or less-volatile P/E's also helps the investors' cause. This is because a company that has had volatile P/E's in the past is a case of investors building up 'irrational expectations' of its growth.
5. Management quality: Apart from these performance parameters, investors should also take note of the 'management quality', its vision and the past track record.
6. Do your homework: All said and done, while the rules mentioned above are benchmarks that every defensive investor needs to apply before making any investment decision, the fact that he should do his homework carefully should not lose relevance.
This means that he should research well about the company's history, its business model and factors that are likely to affect its future performance.
7. Long-term view: Also, the investor should have a long-term (more than 3 years) investment horizon for this maximises the chance of garnering adequate return on investments.
Lessons To Be Learnt Before Entering Markets.... 1
What is Investment?
The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment.
Why should one invest?
One needs to invest to:
§ earn return on your idle resources
§ generate a specified sum of money for a specific goal in life
§ make a provision for an uncertain future..
What are various options available for investment?
One may invest in:
§ Physical assets like real estate, gold/jewellery, commodities etc.
and/or
§ Financial assets such as fixed deposits with banks, small saving
instrume nts with post offices, insurance/provident/pension fund etc.or securities market related instruments like shares, bonds,debentures etc.
What are various Short-term financial options available for investment?
1)Savings Bank Account
2)Money Market or Liquid Funds
3)Fixed Deposits with Banks
What are various Long-term financial options available for investment?
1)Post Office Savings
2)Public Provident Fund
3)Company Fixed Deposits
4)Bonds
5)Mutual Funds
What is an ‘Equity’/Share?
Total equity capital of a company is divided into equal units of small denominations, each called a share. For example, in a company the total equity capital of Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is called a Share. Thus, the company then is said to have 20,00,000 equity shares of Rs 10 each. The holders of such shares are members of the company and have voting rights.
The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment.
Why should one invest?
One needs to invest to:
§ earn return on your idle resources
§ generate a specified sum of money for a specific goal in life
§ make a provision for an uncertain future..
What are various options available for investment?
One may invest in:
§ Physical assets like real estate, gold/jewellery, commodities etc.
and/or
§ Financial assets such as fixed deposits with banks, small saving
instrume nts with post offices, insurance/provident/pension fund etc.or securities market related instruments like shares, bonds,debentures etc.
What are various Short-term financial options available for investment?
1)Savings Bank Account
2)Money Market or Liquid Funds
3)Fixed Deposits with Banks
What are various Long-term financial options available for investment?
1)Post Office Savings
2)Public Provident Fund
3)Company Fixed Deposits
4)Bonds
5)Mutual Funds
What is an ‘Equity’/Share?
Total equity capital of a company is divided into equal units of small denominations, each called a share. For example, in a company the total equity capital of Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is called a Share. Thus, the company then is said to have 20,00,000 equity shares of Rs 10 each. The holders of such shares are members of the company and have voting rights.
OECD: India's Economic Growth is sustainable
India's current economic growth - averaging 8.5 percent annually over the past four years - appears sustainable, but it can do better by opening its markets and easing government control, the Organization for Economic Cooperation and Development said Tuesday.
The Paris-based economic grouping of 30 countries gave much of the credit for India's rapid economic expansion in recent years to its government's efforts in the early 1990s to switch from a socialist-style state to a market-driven economy.
Over the past 15 years, India has significantly opened its markets to foreign competition, cut down government intervention in economic activities and liberalized policies to allow a bigger play for private capital.
As a result, "the sustainable growth rate of the (Indian) economy has reached 8.5 percent," the OECD said in its first-ever survey of India, released in New Delhi. That is the average pace at which the economy grew in the past four years.
Separately Tuesday, credit rating agency Standard & Poor's predicted 8.6 percent growth for India's gross domestic product in the current fiscal year ending March 2008.
Such economic expansion will help India double its per capita income in a decade, the OECD report said. It would have taken India 55 years to double average incomes if it had stayed on the growth path experienced in the three decades following the country's independence in 1947, the report aid.
Still, many economists remain concerned that much of the growth is concentrated in areas like telecommunications, information technology and other services sectors - and that many Indians, especially in rural areas, have benefited little from the boom.
More than 300 million people in India still live on less than the equivalent of $1 a day.
"This growth is meaningless if it is not inclusive," said Isher Judge Ahluwalia, who heads the Indian Council of Research in International Economic Relations, a New Delhi-based think tank.
The Indian government says it wants the economy to grow even faster so that more people can benefit from it.
OECD Secretary General Angel Gurria said "it is possible" for India to accelerate its economic growth to 10 percent if the country moves quickly to build infrastructure, reforms its labor market and further opens up to foreign capital, especially in the financial and energy sectors that are still dominated by state-run firms.
"The impressive response of the Indian economy to past reforms should give policy makers confidence that further liberalization will deliver additional growth dividends and foster the process of pulling millions of people out of poverty," the OECD report said.
Meanwhile, foreign investors have increasingly flocked to India to seize opportunities in one of the world's fastest-growing economies. Foreign funds have already bought more than $14.5 billion in Indian stocks this year, according to Securities and Exchange Board of India.
That money, which has come on the top a record $16 billion the country received in foreign direct investment through last fiscal year, has helped Indian shares reach record highs.
On Tuesday, the Bombay Stock Exchange's 30-share Sensex rose 4.5 percent to cross 18,000 for the first time. The index has gained more than 2,000 points, or 13 percent, in just 14 trading sessions
The Paris-based economic grouping of 30 countries gave much of the credit for India's rapid economic expansion in recent years to its government's efforts in the early 1990s to switch from a socialist-style state to a market-driven economy.
Over the past 15 years, India has significantly opened its markets to foreign competition, cut down government intervention in economic activities and liberalized policies to allow a bigger play for private capital.
As a result, "the sustainable growth rate of the (Indian) economy has reached 8.5 percent," the OECD said in its first-ever survey of India, released in New Delhi. That is the average pace at which the economy grew in the past four years.
Separately Tuesday, credit rating agency Standard & Poor's predicted 8.6 percent growth for India's gross domestic product in the current fiscal year ending March 2008.
Such economic expansion will help India double its per capita income in a decade, the OECD report said. It would have taken India 55 years to double average incomes if it had stayed on the growth path experienced in the three decades following the country's independence in 1947, the report aid.
Still, many economists remain concerned that much of the growth is concentrated in areas like telecommunications, information technology and other services sectors - and that many Indians, especially in rural areas, have benefited little from the boom.
More than 300 million people in India still live on less than the equivalent of $1 a day.
"This growth is meaningless if it is not inclusive," said Isher Judge Ahluwalia, who heads the Indian Council of Research in International Economic Relations, a New Delhi-based think tank.
The Indian government says it wants the economy to grow even faster so that more people can benefit from it.
OECD Secretary General Angel Gurria said "it is possible" for India to accelerate its economic growth to 10 percent if the country moves quickly to build infrastructure, reforms its labor market and further opens up to foreign capital, especially in the financial and energy sectors that are still dominated by state-run firms.
"The impressive response of the Indian economy to past reforms should give policy makers confidence that further liberalization will deliver additional growth dividends and foster the process of pulling millions of people out of poverty," the OECD report said.
Meanwhile, foreign investors have increasingly flocked to India to seize opportunities in one of the world's fastest-growing economies. Foreign funds have already bought more than $14.5 billion in Indian stocks this year, according to Securities and Exchange Board of India.
That money, which has come on the top a record $16 billion the country received in foreign direct investment through last fiscal year, has helped Indian shares reach record highs.
On Tuesday, the Bombay Stock Exchange's 30-share Sensex rose 4.5 percent to cross 18,000 for the first time. The index has gained more than 2,000 points, or 13 percent, in just 14 trading sessions
A Sino-Jap Battle for Iron Ore
A quiet Sino-Japanese skirmish in the wild west of Western Australia over iron ore flared hotter Wednesday, with Japan-backed Murchison Metals launching a pre-emptive hostile takeover of smaller rival Midwest Corp.
Murchison’s offer, valued at up to 986 million Australian dollars ($887 million), came after the West Australia state government confirmed Monday that it had given up hope that the two competitors would work together and decided instead to choose only one to develop rail and port links to iron ore deposits that the two companies are developing in the remote midwest region of the state.
Ostensibly, the takeover battle is being fought among two mid-size Australian iron ore producers. Both, however, are deeply entwined with Chinese and Japanese interests that are competing for increasingly expensive metal resources.
Murchison is allied with Japan’s Mitsubishi Corp. (other-otc: MSBHY - news - people ), which agreed in June to a joint venture partnership in which it will buy half of Murchison’s iron ore production.
Murchison also has South Korea’s largest steel maker, Posco, as a major shareholder and a key customer.
Midwest is aligned with Chinese commodity trader Sinosteel Corp., which is backing its iron ore projects in the region. China passed Japan as the world’s largest buyer of iron ore in 2003.
Murchison is about 2.5 times larger than Midwest in terms of market capitalization.
A showdown was seemingly inevitable as neither side would like to see the other party win the government’s tender as the sole developer of the rail-port infrastructure project.
Midwest advised its shareholders to stay put before its board has a chance to review the merits of Murchison offer.
Paul Kopejtka, Murchison’s executive chairman, said merger talks between the two companies had failed and that recent events had also made the timing of the bid sensible.
“The value that can be generated by combining these companies will diminish over time as each company moves forward with separate development plans,” he said.
Murchison said combining it with Midwest would create Australia’s second-largest listed iron ore producer after Fortescue Metals and a major pure-play iron ore producer with targeted 2008 production of 45 million tons.
Its two-tiered offer offers a sizable carrot for Midwest to dissolve its planned joint venture with Sinosteel: an all-stock 4.70 Australian ($4.23) bid for each Midwest share, a 34% premium over its Monday close, or 986 million Australian dollars ($887 million).
However, if Midwest incurs a “material tax liability” by selling a 50% interest in its development projects in Weld Range and Koolanooka to Sinosteel, a lower offer would be on the table at 4.38 Australian dollars ($3.95) per share, a 25% premium, or 919 million Australian dollars ($826 million).
Murchison was up 2.17% early Monday afternoon at 5.19 Australian dollars ($4.68). Midwest soared 29.63% to 1.04 Australian dollars (94 cents).
Murchison’s offer, valued at up to 986 million Australian dollars ($887 million), came after the West Australia state government confirmed Monday that it had given up hope that the two competitors would work together and decided instead to choose only one to develop rail and port links to iron ore deposits that the two companies are developing in the remote midwest region of the state.
Ostensibly, the takeover battle is being fought among two mid-size Australian iron ore producers. Both, however, are deeply entwined with Chinese and Japanese interests that are competing for increasingly expensive metal resources.
Murchison is allied with Japan’s Mitsubishi Corp. (other-otc: MSBHY - news - people ), which agreed in June to a joint venture partnership in which it will buy half of Murchison’s iron ore production.
Murchison also has South Korea’s largest steel maker, Posco, as a major shareholder and a key customer.
Midwest is aligned with Chinese commodity trader Sinosteel Corp., which is backing its iron ore projects in the region. China passed Japan as the world’s largest buyer of iron ore in 2003.
Murchison is about 2.5 times larger than Midwest in terms of market capitalization.
A showdown was seemingly inevitable as neither side would like to see the other party win the government’s tender as the sole developer of the rail-port infrastructure project.
Midwest advised its shareholders to stay put before its board has a chance to review the merits of Murchison offer.
Paul Kopejtka, Murchison’s executive chairman, said merger talks between the two companies had failed and that recent events had also made the timing of the bid sensible.
“The value that can be generated by combining these companies will diminish over time as each company moves forward with separate development plans,” he said.
Murchison said combining it with Midwest would create Australia’s second-largest listed iron ore producer after Fortescue Metals and a major pure-play iron ore producer with targeted 2008 production of 45 million tons.
Its two-tiered offer offers a sizable carrot for Midwest to dissolve its planned joint venture with Sinosteel: an all-stock 4.70 Australian ($4.23) bid for each Midwest share, a 34% premium over its Monday close, or 986 million Australian dollars ($887 million).
However, if Midwest incurs a “material tax liability” by selling a 50% interest in its development projects in Weld Range and Koolanooka to Sinosteel, a lower offer would be on the table at 4.38 Australian dollars ($3.95) per share, a 25% premium, or 919 million Australian dollars ($826 million).
Murchison was up 2.17% early Monday afternoon at 5.19 Australian dollars ($4.68). Midwest soared 29.63% to 1.04 Australian dollars (94 cents).
Quotes of Warren buffet 2
You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.
We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own assets.
When Berkshire buys common stock, we approach the transaction as if we were buying into a private business.
Wide diversification is only required when investors do not understand what they are doing.
Accounting consequences do not influence our operating or capital-allocation decisions. When acquisition costs are similar, we much prefer to purchase $2 of earnings that is not reportable by us under standard accounting principles than to purchase $1 of earnings that is reportable.
Never invest in a business you cannot understand.
Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.
Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful".
(When speaking of managers and executive compensation) The .350 hitter expects, and also deserves, a big payoff for his performance - even if he plays for a cellar-dwelling team. And a .150 hitter should get no reward - even if he plays for a pennant winner.
The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.
Risk can be greatly reduced by concentrating on only a few holdings.
Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.
Many stock options in the corporate world have worked in exactly that fashion: they have gained in value simply because management retained earnings, not because it did well with the capital in its hands.
Buy companies with strong histories of profitability and with a dominant business franchise.
Be fearful when others are greedy and greedy only when others are fearful.
It is optimism that is the enemy of the rational buyer.
As far as you are concerned, the stock market does not exist. Ignore it.
The ability to say "no" is a tremendous advantage for an investor.
Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.
Lethargy, bordering on sloth should remain the cornerstone of an investment style.
An investor should act as though he had a lifetime decision card with just twenty punches on it.
Wild swings in share prices have more to do with the "lemming- like" behaviour of institutional investors than with the aggregate returns of the company they own.
As a group, lemmings have a rotten image, but no individual lemming has ever received bad press.
An investor needs to do very few things right as long as he or she avoids big mistakes.
"Turn-arounds" seldom turn.
Is management rational?
Is management candid with the shareholders?
Does management resist the institutional imperative?
Do not take yearly results too seriously. Instead, focus on four or five-year averages.
Focus on return on equity, not earnings per share.
Calculate "owner earnings" to get a true reflection of value.
Look for companies with high profit margins.
Growth and value investing are joined at the hip.
The advice "you never go broke taking a profit" is foolish.
It is more important to say "no" to an opportunity, than to say "yes".
Always invest for the long term.
Does the business have favourable long term prospects?
It is not necessary to do extraordinary things to get extraordinary results.
Remember that the stock market is manic-depressive.
Buy a business, don't rent stocks.
Does the business have a consistent operating history?
An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.
We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own assets.
When Berkshire buys common stock, we approach the transaction as if we were buying into a private business.
Wide diversification is only required when investors do not understand what they are doing.
Accounting consequences do not influence our operating or capital-allocation decisions. When acquisition costs are similar, we much prefer to purchase $2 of earnings that is not reportable by us under standard accounting principles than to purchase $1 of earnings that is reportable.
Never invest in a business you cannot understand.
Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.
Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful".
(When speaking of managers and executive compensation) The .350 hitter expects, and also deserves, a big payoff for his performance - even if he plays for a cellar-dwelling team. And a .150 hitter should get no reward - even if he plays for a pennant winner.
The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.
Risk can be greatly reduced by concentrating on only a few holdings.
Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.
Many stock options in the corporate world have worked in exactly that fashion: they have gained in value simply because management retained earnings, not because it did well with the capital in its hands.
Buy companies with strong histories of profitability and with a dominant business franchise.
Be fearful when others are greedy and greedy only when others are fearful.
It is optimism that is the enemy of the rational buyer.
As far as you are concerned, the stock market does not exist. Ignore it.
The ability to say "no" is a tremendous advantage for an investor.
Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.
Lethargy, bordering on sloth should remain the cornerstone of an investment style.
An investor should act as though he had a lifetime decision card with just twenty punches on it.
Wild swings in share prices have more to do with the "lemming- like" behaviour of institutional investors than with the aggregate returns of the company they own.
As a group, lemmings have a rotten image, but no individual lemming has ever received bad press.
An investor needs to do very few things right as long as he or she avoids big mistakes.
"Turn-arounds" seldom turn.
Is management rational?
Is management candid with the shareholders?
Does management resist the institutional imperative?
Do not take yearly results too seriously. Instead, focus on four or five-year averages.
Focus on return on equity, not earnings per share.
Calculate "owner earnings" to get a true reflection of value.
Look for companies with high profit margins.
Growth and value investing are joined at the hip.
The advice "you never go broke taking a profit" is foolish.
It is more important to say "no" to an opportunity, than to say "yes".
Always invest for the long term.
Does the business have favourable long term prospects?
It is not necessary to do extraordinary things to get extraordinary results.
Remember that the stock market is manic-depressive.
Buy a business, don't rent stocks.
Does the business have a consistent operating history?
An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.
Quotes of Warren Buffett 1
A public-opinion poll is no substitute for thought.
Warren Buffett
Chains of habit are too light to be felt until they are too heavy to be broken.
Warren Buffett
I always knew I was going to be rich. I don't think I ever doubted it for a minute.
Warren Buffett
I am quite serious when I say that I do not believe there are, on the whole earth besides, so many intensified bores as in these United States. No man can form an adequate idea of the real meaning of the word, without coming here.
Warren Buffett
I buy expensive suits. They just look cheap on me.
Warren Buffett
I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
Warren Buffett
I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
Warren Buffett
If a business does well, the stock eventually follows.
Warren Buffett
If past history was all there was to the game, the richest people would be librarians.
Warren Buffett
In the business world, the rearview mirror is always clearer than the windshield.
Warren Buffett
It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
Warren Buffett
It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction.
Warren Buffett
It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
Warren Buffett
Let blockheads read what blockheads wrote.
Warren Buffett
Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.
Warren Buffett
Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.
Warren Buffett
Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
Warren Buffett
Only when the tide goes out do you discover who's been swimming naked.
Warren Buffett
Our favorite holding period is forever.
Warren Buffett
Our favourite holding period is forever.
Warren Buffett
Price is what you pay. Value is what you get.
Warren Buffett
Risk comes from not knowing what you're doing.
Warren Buffett
Risk is a part of God's game, alike for men and nations.
Warren Buffett
Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
Warren Buffett
Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
Warren Buffett
The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.
Warren Buffett
The first rule is not to lose. The second rule is not to forget the first rule.
Warren Buffett
The investor of today does not profit from yesterday's growth.
Warren Buffett
The only time to buy these is on a day with no "y" in it.
Warren Buffett
The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves-and the better the teacher, the better the student body.
Warren Buffett
There seems to be some perverse human characteristic that likes to make easy things difficult.
Warren Buffett
Time is the friend of the wonderful company, the enemy of the mediocre.
Warren Buffett
Value is what you get.
Warren Buffett
We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'
Warren Buffett
We enjoy the process far more than the proceeds.
Warren Buffett
We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
Warren Buffett
When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
Warren Buffett
When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
Warren Buffett
Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful".
Warren Buffett
Wide diversification is only required when investors do not understand what they are doing.
Warren Buffett
You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing.
Warren Buffett
You only have to do a very few things right in your life so long as you don't do too many things wrong.
Warren Buffett
Your premium brand had better be delivering something special, or it's not going to get the business.
Warren Buffett
Warren Buffett
Chains of habit are too light to be felt until they are too heavy to be broken.
Warren Buffett
I always knew I was going to be rich. I don't think I ever doubted it for a minute.
Warren Buffett
I am quite serious when I say that I do not believe there are, on the whole earth besides, so many intensified bores as in these United States. No man can form an adequate idea of the real meaning of the word, without coming here.
Warren Buffett
I buy expensive suits. They just look cheap on me.
Warren Buffett
I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
Warren Buffett
I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
Warren Buffett
If a business does well, the stock eventually follows.
Warren Buffett
If past history was all there was to the game, the richest people would be librarians.
Warren Buffett
In the business world, the rearview mirror is always clearer than the windshield.
Warren Buffett
It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
Warren Buffett
It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction.
Warren Buffett
It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
Warren Buffett
Let blockheads read what blockheads wrote.
Warren Buffett
Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.
Warren Buffett
Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.
Warren Buffett
Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
Warren Buffett
Only when the tide goes out do you discover who's been swimming naked.
Warren Buffett
Our favorite holding period is forever.
Warren Buffett
Our favourite holding period is forever.
Warren Buffett
Price is what you pay. Value is what you get.
Warren Buffett
Risk comes from not knowing what you're doing.
Warren Buffett
Risk is a part of God's game, alike for men and nations.
Warren Buffett
Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
Warren Buffett
Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
Warren Buffett
The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.
Warren Buffett
The first rule is not to lose. The second rule is not to forget the first rule.
Warren Buffett
The investor of today does not profit from yesterday's growth.
Warren Buffett
The only time to buy these is on a day with no "y" in it.
Warren Buffett
The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves-and the better the teacher, the better the student body.
Warren Buffett
There seems to be some perverse human characteristic that likes to make easy things difficult.
Warren Buffett
Time is the friend of the wonderful company, the enemy of the mediocre.
Warren Buffett
Value is what you get.
Warren Buffett
We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'
Warren Buffett
We enjoy the process far more than the proceeds.
Warren Buffett
We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
Warren Buffett
When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
Warren Buffett
When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
Warren Buffett
Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful".
Warren Buffett
Wide diversification is only required when investors do not understand what they are doing.
Warren Buffett
You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing.
Warren Buffett
You only have to do a very few things right in your life so long as you don't do too many things wrong.
Warren Buffett
Your premium brand had better be delivering something special, or it's not going to get the business.
Warren Buffett
A Cut in US Interest Rates will lead to a Weak Dollar
Last week, Former Fed Chairman Greenspan declared that the ongoing credit crunch is "identical" to the crisis of 1998 — when Russia defaulted on its debt and the giant hedge fund Long-Term Capital Management came to the brink of collapse.
I disagree. It's actually a lot worse.
The primary source of today's crisis — the mortgage meltdown in the U.S. — is far larger than the source of the crisis in 1998.
The number of hedge funds and other institutions involved is hundreds of times greater.
Most important, in my view, the borrowing of low-interest Japanese yen to buy high-risk investments (the "yen carry trade") is many times larger.
And now, it seems U.S. Treasury Secretary Hank Paulson shares my view. Indeed, this week Paulson warned that:
We have a severe crisis of confidence in credit markets.
It is likely to last longer than previous financial shocks of the past two decades.
It could even last longer than the turmoil that followed the 1998 crisis or Latin American debt crisis of the 1980s!
Good. At least someone besides us realizes this isn't an isolated pain that a couple aspirin can alleviate. And fortunately, your portfolio doesn't have to just lie there suffering. There are plenty of profits to be made as long as you know where to look.
One of my favorite vehicles: Japan's currency, the yen. Let me explain why …
Dust Off Your "De Lore-Yen,"
We're Going Back in Time!
Let's step back in time to 1997-1998, focusing on the Asian Financial Crisis.
That's sparked one of the greatest and sharpest rises of any major currency in modern history — the yen was up 20% in just one month, and much more as the year progressed.
I showed you this chart in Money and Markets two weeks ago … and I don't want you to forget it.
Reason: I have a feeling we could see a move of similar (or even greater) proportions very soon.
What was the big force behind the yen's powerful surge back then?
It wasn't economic growth — the Japanese economy was still suffering from an on-again-off- again recession that began earlier in the decade.
And it certainly wasn't the attraction of high interest rates, in as much as the Bank of Japan had been pushing rates sharply lower, maintaining a zero-interest rate policy.
Rather, the yen surged during the Asian Financial Crisis because of a surging worldwide aversion to RISK!
Let me explain.
In the 1990s, Japan slashed its interest rates practically to zero. So investors in the U.S. and elsewhere got the brilliant idea that they could …
Borrow Japanese yen at lower interest rates …
Convert them into dollars or other currencies …
Invest in higher-yielding, higher-risk instruments, and …
Make a fortune!
That's the "yen carry trade" — using borrowed yen to finance your investments in dollars and other currencies. And back in 1998, close to $140 billion was involved in this transaction.
But as soon as the crisis hit, investors scrambled to reverse the transaction:
They started losing a fortune on their higher-risk investments in the U.S. and elsewhere.
They rushed to sell them …
They bought Japanese yen to pay back the money they had borrowed from Japan, and …
They drove the value of the Japanese yen through the roof!
That's why the yen surged 20% in just one month. That's the powerful force that created one of the greatest moves in currency of all time.
Back to the Present
Now, I expect the same thing to happen again this time around, and possibly on a much larger scale.
Not only is the credit crunch bigger and longer lasting, as Treasury Secretary Paulson himself said this week. But the amount of money involved in the yen carry trade — estimated at $1 trillion or more — is about seven times greater.
Plus, there's another side of the story no one seems to be telling:
Japanese Investors Themselves Are Getting Scared, So
Many Are Repatriating Their Money Invested Overseas
U.S. and other international investors aren't the only ones who have hopped on the carry-trade bandwagon. Domestic investors in Japan are also a big part of this phenomenon: They've been just as quick as anyone else to borrow yen and invest it outside the Japanese archipelago.
Few analysts have paid much attention to this side of the story, perhaps because Japanese investors have typically been slower to run from their overseas investments. But that could be changing very quickly.
A catalyst: Just this week, Japanese Prime Minister Shinzo Abe resigned after his Liberal Democratic party was defeated in elections for the Upper House.
That leaves Japanese investors wondering if their government will now have trouble supporting the economy. Enough of a shock to alter the risk-appetite among investors in Japan? You bet!
In fact, that trend may have already been under way well before Abe's resignation. According to data from Japan's Ministry of Finance, Japanese residents sold more foreign equities than they purchased — to the tune of 273.3 billion yen — this past July. Then, in August, sales of foreign bonds outpaced purchases by more than 690 billion yen.
Year to date, Japanese residents are also net sellers when it comes to transactions in international securities, quite a departure from the prior two years when the Japanese were largely net purchasers.
And remember: When the Japanese (or anyone else) are investing in foreign securities with yen, they have to sell their yen to convert into a foreign currency, driving its price down. So all their overseas investing in recent years contributed to yen weakness.
Conversely, now it's the opposite: When they unload their foreign investments, they have to buy yen to bring their money back home, driving the yen's value up. And all this money repatriation by the Japanese is another big factor that should contribute to yen strength.
There's a pattern emerging: As risk continues to find its way back into global financial markets, we could see the floodgates open and a tidal wave of investors all over the world rush to buy yen.
The net result: Don't be surprised to see a yen surge that rivals — or exceeds — its massive rise of 1998.
I disagree. It's actually a lot worse.
The primary source of today's crisis — the mortgage meltdown in the U.S. — is far larger than the source of the crisis in 1998.
The number of hedge funds and other institutions involved is hundreds of times greater.
Most important, in my view, the borrowing of low-interest Japanese yen to buy high-risk investments (the "yen carry trade") is many times larger.
And now, it seems U.S. Treasury Secretary Hank Paulson shares my view. Indeed, this week Paulson warned that:
We have a severe crisis of confidence in credit markets.
It is likely to last longer than previous financial shocks of the past two decades.
It could even last longer than the turmoil that followed the 1998 crisis or Latin American debt crisis of the 1980s!
Good. At least someone besides us realizes this isn't an isolated pain that a couple aspirin can alleviate. And fortunately, your portfolio doesn't have to just lie there suffering. There are plenty of profits to be made as long as you know where to look.
One of my favorite vehicles: Japan's currency, the yen. Let me explain why …
Dust Off Your "De Lore-Yen,"
We're Going Back in Time!
Let's step back in time to 1997-1998, focusing on the Asian Financial Crisis.
That's sparked one of the greatest and sharpest rises of any major currency in modern history — the yen was up 20% in just one month, and much more as the year progressed.
I showed you this chart in Money and Markets two weeks ago … and I don't want you to forget it.
Reason: I have a feeling we could see a move of similar (or even greater) proportions very soon.
What was the big force behind the yen's powerful surge back then?
It wasn't economic growth — the Japanese economy was still suffering from an on-again-off- again recession that began earlier in the decade.
And it certainly wasn't the attraction of high interest rates, in as much as the Bank of Japan had been pushing rates sharply lower, maintaining a zero-interest rate policy.
Rather, the yen surged during the Asian Financial Crisis because of a surging worldwide aversion to RISK!
Let me explain.
In the 1990s, Japan slashed its interest rates practically to zero. So investors in the U.S. and elsewhere got the brilliant idea that they could …
Borrow Japanese yen at lower interest rates …
Convert them into dollars or other currencies …
Invest in higher-yielding, higher-risk instruments, and …
Make a fortune!
That's the "yen carry trade" — using borrowed yen to finance your investments in dollars and other currencies. And back in 1998, close to $140 billion was involved in this transaction.
But as soon as the crisis hit, investors scrambled to reverse the transaction:
They started losing a fortune on their higher-risk investments in the U.S. and elsewhere.
They rushed to sell them …
They bought Japanese yen to pay back the money they had borrowed from Japan, and …
They drove the value of the Japanese yen through the roof!
That's why the yen surged 20% in just one month. That's the powerful force that created one of the greatest moves in currency of all time.
Back to the Present
Now, I expect the same thing to happen again this time around, and possibly on a much larger scale.
Not only is the credit crunch bigger and longer lasting, as Treasury Secretary Paulson himself said this week. But the amount of money involved in the yen carry trade — estimated at $1 trillion or more — is about seven times greater.
Plus, there's another side of the story no one seems to be telling:
Japanese Investors Themselves Are Getting Scared, So
Many Are Repatriating Their Money Invested Overseas
U.S. and other international investors aren't the only ones who have hopped on the carry-trade bandwagon. Domestic investors in Japan are also a big part of this phenomenon: They've been just as quick as anyone else to borrow yen and invest it outside the Japanese archipelago.
Few analysts have paid much attention to this side of the story, perhaps because Japanese investors have typically been slower to run from their overseas investments. But that could be changing very quickly.
A catalyst: Just this week, Japanese Prime Minister Shinzo Abe resigned after his Liberal Democratic party was defeated in elections for the Upper House.
That leaves Japanese investors wondering if their government will now have trouble supporting the economy. Enough of a shock to alter the risk-appetite among investors in Japan? You bet!
In fact, that trend may have already been under way well before Abe's resignation. According to data from Japan's Ministry of Finance, Japanese residents sold more foreign equities than they purchased — to the tune of 273.3 billion yen — this past July. Then, in August, sales of foreign bonds outpaced purchases by more than 690 billion yen.
Year to date, Japanese residents are also net sellers when it comes to transactions in international securities, quite a departure from the prior two years when the Japanese were largely net purchasers.
And remember: When the Japanese (or anyone else) are investing in foreign securities with yen, they have to sell their yen to convert into a foreign currency, driving its price down. So all their overseas investing in recent years contributed to yen weakness.
Conversely, now it's the opposite: When they unload their foreign investments, they have to buy yen to bring their money back home, driving the yen's value up. And all this money repatriation by the Japanese is another big factor that should contribute to yen strength.
There's a pattern emerging: As risk continues to find its way back into global financial markets, we could see the floodgates open and a tidal wave of investors all over the world rush to buy yen.
The net result: Don't be surprised to see a yen surge that rivals — or exceeds — its massive rise of 1998.
A Dollar decline will be positive for Third World Stocks
In the last few years, many U.S. investors have begun pouring money into global mutual funds, and they think they're getting great diversification.
However, many of the funds receiving the biggest inflows are about as authentically foreign as an Italian meal at the Olive Garden!
Here's why:
A lot of so-called "global" mutual funds have only 30% or 40% of their portfolios in foreign investments. Plus, many "emerging market" funds are heavily concentrated in mega-cap multinational companies that have huge U.S. businesses.
So these funds could suffer grievously when the U.S. economy sputters.
I'd like to take this a step further …
The typical U.S. investor considers foreign stocks and bonds to be extremely risky. So they allocate perhaps 5% or 10% of their holdings to international investments. In contrast, my colleagues and I believe the vast majority of investment risks are currently found in the U.S.
As a result, we recommend investors allocate at least 90% of their portfolios to non-dollar-denomina ted assets!
If you've been steeped in the rhetoric of Washington and Wall Street, that might sound extreme. But when you consider the current realities of the global economy, then I think you'll agree that our suggested approach is not at all risky, extreme, or as some would even argue, unpatriotic.
The Typical Foreign Stock Has Better
Fundamentals, a Superior Yield, and a
Lower Valuation than its Domestic Counterpart.
Plus It Protects You Against a Declining Dollar.
We believe that the growing imbalances in the U.S. … its twin budget and current account deficits … its lack of domestic savings … and the erosion of its industrial base … have now reached a tipping point.
In our view, the dollar will have to decline substantially in value, perhaps as much as 50% or 75%. The principal factor that has prevented this from happening already is the unprecedented currency intervention of foreign central banks.
When this crutch is removed, and one day it will be, the dollar will fall hard. We do not celebrate this trend, but we do recognize it as an intractable force.
Some assume that a declining dollar is only a problem for those Americans who vacation abroad. What they don't realize is that a weakening greenback will also raise the cost of living right here in the U.S.
A falling dollar will not only limit the amount of goods flowing into the U.S., but also increase the share of U.S.-produced goods and services flowing overseas (as foreigners outbid Americans). The drop in supply means that prices will rise in real terms.
Buying foreign shares can help you prepare for that scenario, because you'll be setting yourself up for higher current income.
Moreover, we believe this rise in income will occur precisely at a time when income from other sources, such as wages, stock price appreciation, and home equity extractions becomes increasingly hard to come by.
We are not alone in our view that the greenback will fall, either. Former Fed Chairman Paul Volker, PIMCO Bond specialist Bill Gross, and legendary investor Warren Buffett have all sounded the same warning.
In fact, Buffett is positioning his own portfolio for that day. His holding firm, Berkshire Hathaway, recently paid $4 billion to purchase Israeli metalworking firm Iscar.
Mr. Buffet expressly stated that he made the purchase because Iscar had a low valuation, generous cash flow, and generated almost all of its income from non-dollar sources!
So, how can you practice what Mr. Buffett preaches?
In short, we think a non-dollar-denomina ted investment portfolio will be the deciding factor in maintaining your current lifestyle.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
However, many of the funds receiving the biggest inflows are about as authentically foreign as an Italian meal at the Olive Garden!
Here's why:
A lot of so-called "global" mutual funds have only 30% or 40% of their portfolios in foreign investments. Plus, many "emerging market" funds are heavily concentrated in mega-cap multinational companies that have huge U.S. businesses.
So these funds could suffer grievously when the U.S. economy sputters.
I'd like to take this a step further …
The typical U.S. investor considers foreign stocks and bonds to be extremely risky. So they allocate perhaps 5% or 10% of their holdings to international investments. In contrast, my colleagues and I believe the vast majority of investment risks are currently found in the U.S.
As a result, we recommend investors allocate at least 90% of their portfolios to non-dollar-denomina ted assets!
If you've been steeped in the rhetoric of Washington and Wall Street, that might sound extreme. But when you consider the current realities of the global economy, then I think you'll agree that our suggested approach is not at all risky, extreme, or as some would even argue, unpatriotic.
The Typical Foreign Stock Has Better
Fundamentals, a Superior Yield, and a
Lower Valuation than its Domestic Counterpart.
Plus It Protects You Against a Declining Dollar.
We believe that the growing imbalances in the U.S. … its twin budget and current account deficits … its lack of domestic savings … and the erosion of its industrial base … have now reached a tipping point.
In our view, the dollar will have to decline substantially in value, perhaps as much as 50% or 75%. The principal factor that has prevented this from happening already is the unprecedented currency intervention of foreign central banks.
When this crutch is removed, and one day it will be, the dollar will fall hard. We do not celebrate this trend, but we do recognize it as an intractable force.
Some assume that a declining dollar is only a problem for those Americans who vacation abroad. What they don't realize is that a weakening greenback will also raise the cost of living right here in the U.S.
A falling dollar will not only limit the amount of goods flowing into the U.S., but also increase the share of U.S.-produced goods and services flowing overseas (as foreigners outbid Americans). The drop in supply means that prices will rise in real terms.
Buying foreign shares can help you prepare for that scenario, because you'll be setting yourself up for higher current income.
Moreover, we believe this rise in income will occur precisely at a time when income from other sources, such as wages, stock price appreciation, and home equity extractions becomes increasingly hard to come by.
We are not alone in our view that the greenback will fall, either. Former Fed Chairman Paul Volker, PIMCO Bond specialist Bill Gross, and legendary investor Warren Buffett have all sounded the same warning.
In fact, Buffett is positioning his own portfolio for that day. His holding firm, Berkshire Hathaway, recently paid $4 billion to purchase Israeli metalworking firm Iscar.
Mr. Buffet expressly stated that he made the purchase because Iscar had a low valuation, generous cash flow, and generated almost all of its income from non-dollar sources!
So, how can you practice what Mr. Buffett preaches?
In short, we think a non-dollar-denomina ted investment portfolio will be the deciding factor in maintaining your current lifestyle.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Peter Lynch Investment Strategies
Peter Lynch is one of the best fund managers in the world and presented are some of the key learnings from his investment style and ideas.
Small Market capitalized companies -
Lynch loved small emerging businesses with strong balance sheets,. His extraordinary returns in La Quinta Inns came at a time when the company was in the initial years of development He argued "Big companies don't have big stock moves you’ll get your biggest moves in smaller companies."
Fast growers
- Among Lynch's favorites are companies whose sales and earnings are expanding 20% to 30% a year. He cautions investors from looking at companies that grow more then 30% every year. Companies growing at 50% to 100% are bound to falter and crack. It is therefore imperative to view very high growth ideas with a sense of suspicion.
Dull names, dull products, dead industry
- Lynch loved good managements in simple mundane, colorless businesses. His arguments were that nobody creates excess capacity in dull boring industries and when you can find a winner there it makes sense to jump in.
Lynch was the proponent of the PEG theory. As long as the PE of a company was lower then the growth rate that it expected to generate Lynch would have advocated a buy on the stock.
Small Market capitalized companies -
Lynch loved small emerging businesses with strong balance sheets,. His extraordinary returns in La Quinta Inns came at a time when the company was in the initial years of development He argued "Big companies don't have big stock moves you’ll get your biggest moves in smaller companies."
Fast growers
- Among Lynch's favorites are companies whose sales and earnings are expanding 20% to 30% a year. He cautions investors from looking at companies that grow more then 30% every year. Companies growing at 50% to 100% are bound to falter and crack. It is therefore imperative to view very high growth ideas with a sense of suspicion.
Dull names, dull products, dead industry
- Lynch loved good managements in simple mundane, colorless businesses. His arguments were that nobody creates excess capacity in dull boring industries and when you can find a winner there it makes sense to jump in.
Lynch was the proponent of the PEG theory. As long as the PE of a company was lower then the growth rate that it expected to generate Lynch would have advocated a buy on the stock.
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