29-Aug-2005

>Conference Rules

Syntax and General Point:
  • Use non-bold and only black color.
  • Bold is to be used only sparingly to highlight important messages.
  • Your messages would be read by a lot of people, so please make sure they are meaningful.

Giving trade recomendations:
  • In this conference we place immense importance on stop-loss.
  • DoNot send any recos without stop loss.
  • Star rating (*, **, ***) helps in knowing how sure you are of the trade.
    • 1 star is for high risk trades.
    • 2 star is the average kind of trade, medium risk and good returns.
    • 3 is a trade where risk is very low and returns are huge.
  • format of recos: Name, cmp, stop loss, target 1, target 2, star rating.
  • DoNot send recos that you donot trade yourself or you have not yourself analyzed. Just passing recos form 100 sources is something we donot appreciate.
Connectivity issues.
  • Do make some friends in conference who can invite you in case you are
    • late to conference
    • get disconnected due to some yahoo problem or self-mistake.
Purpose of Conference:
  • To build a network of highly efficient individual/traders/investors.
  • This network would be highly valuable in future.
  • Trust among people which is already building up is our primary tool.
  • if you think you fit the bill, please drop a line at yahoo msgr: rajeevmundra
If you

22-Aug-2005

>Accepting Criticism & Trading Success

  • Novice traders are infamous for needing to be right.
  • This natural, human tendency is so powerful that novice traders engage in unproductive trading behaviors to avoid admitting that they are wrong.
  • They might hold on to a losing trade, for example, to keep losses on paper.
  • They may procrastinate or put off making a trade in an effort to avoid facing the consequences of a bad trading idea. In many ways, a need to be right can be stifling.
  • Rather than feel free and creative, a trader who consciously or unconsciously needs to be right may hold back at critical moments in the midst of a trade.
  • When you are inhibited and afraid, you avoid making trades. And unless you make trade after trade, you'll never hone your trading skills and master the markets.
  • Accepting feedback and criticism is vital for trading success.
  • Why is it so hard to accept criticism, whether it is from anotherperson or the markets? One of the main reasons is that we associate criticism with feelings of inadequacy. We tend to place great psychological significance on a critical comment or negative feedbackof any kind. It is as if parents or teachers are criticizing us fordoing something morally wrong. But this is a false assumption.
  • Criticism doesn't need to have any emotional meaning. It's vital to take criticism and feedback in stride. It isn't personal; it's justfeedback. If you can learn to downplay its emotional significance and view it as cold, hard data, you'll be able to use this information tohone your trading skills.
  • Another reason it's hard to accept criticism is that we have anirrational need to be perfect. We often assume that unless we are always right, we will not be successful. We learn this assumption fromschool. In school, we were usually allowed only one chance to turn in a term paper or take a test. In most school settings, you can't retake a test or rewrite a term paper, and thus, you can't learn to hone yourskills. Many people carry over this mindset into trading. But it doesn't need to apply. If you make small practice trades, for example, you can make a trade, learn from your mistakes, and make a new trade. Over time, you'll hone your trading skills.
  • Since risk is managed, youcan make mistakes and learn from them. There's nothing to fear.
  • There's no reason to avoid accepting criticism. Indeed, if you want to be successful at trading, you should seek it out, either by making trades and seeing what happens or consulting a trading coach.
  • The more information you get about yourself, the more likely you'll be able to hone your skills. So seek out criticism. Don't be afraid to acceptyour limitations. If you can stand there and take all the criticism you can find, you'll hone your skills to the point that you will trade the markets skillfully and profitably.
(was posted in technical investor yahoo group by Pankaj)

>FII Inflows.. whats up?

Those who believe that the FII investments in Indian market may be close to topping out need to take a look at the currency markets and the futures trading in the US dollar – rupee segment to read what the market is telling us.

The forward dollar premium have been falling steadily, indicating large dollar supply going forward.

The message is clear. Markets do not see a decline or a slowdown in dollar inflows into the Indian markets in the near future. In fact, there are indications that the dollar inflow may actually surge in the short term. The annualised forward dollar premium has fallen to a low of 0.81% last week, despite a rise in the dollar versus the rupee and large US$ buying by oil companies.

The fall in the forward dollar suggests that dealers expect large supplies to come into the market in the near future. Those who know the mind of the markets say that this is usually an indication of large FII inflows. This is because foreign bankers, who are privy to such fund flows, resort to the forward sale of dollars to get a good price and avoid selling at lower price when the funds actually come in.

This is a good indication of the direction of the flows and savvy market players use it as a tool for their trading strategy.The fall in forward premium has come at a time when the US dollar is rising against all major currencies. This is due to the rising interest rates in the US, which attracts investors to buy US bonds and also because of the strong growth in the US economy, which lends strength to the US dollar.

As a result, over the last few weeks, global currencies like the Euro and Yen have been falling against the US dollar. Asian currencies that rose against USD after the Chinese revaluation too have fallen and ditto for the rupee. Another reason for downward pressure on the rupee is the rising crude oil price, which forces Indian oil companies to buy more dollars from the market to import crude oil at higher prices.

The high requirement of US dollars for buying crude oil puts enormous pressure on the rupee.However, despite such global pressures, the premium on forward dollar has fallen, indicating that there would be a higher supply of dollars in the near future. This should largely translate into an expectation of higher FII inflows in the short term.

Analysts believe that there is likely to be a large-scale movement of funds from markets like Korea to India. The FIIs are impressed by the high growth story of India and want to increase their exposure to Indian stocks. Therefore, there could be a reallocation of funds to India by selling in some other emerging markets. Therefore, a fall in neighbouring stock markets may not necessarily be bad for Indian markets in the short term.

As more and more foreign investors discover the India growth story, FII flows should rise. However investors must remember that much of this money would be invested in a handful of index stocks.

16-Aug-2005

>Risk Management

  1. The main difference between an amateur and a professional trader is that the latter always tries to understand and control portfolio risks.
  2. Before entering into any trade, good traders first think about how much risk to take and how much risk exposure comes with a particular trade selection.
  3. Only then do they allow themselves to think about how much profit they stand to make.
  4. Prudent investors always cut down their position and exposure if they determine that a portfolio carries too much risk.
  5. They calculate this all-important estimation by employing Risk Management, that set of methods and procedures taken to estimate, quantify, and control risk for the purpose of achieving optimal investment results.
Performance Benchmark, Beta, Correlation, Volatility () and Return/Risk Ratio
If an investor bought a stock at $100 and sold it six months later at $116, then he would realize a profit of $16. His annualized return would be 32%. No doubt, this is a good investment result. Is this a better or worse investment compared with others? Without systematic analysis, we cannot tell: to properly evaluate investment performance, we need to consider the return, the risks involved, and how the outcome compares with other possible investments. Usually, the Standard & Poor's 500 index is used as a performance benchmark, for it is a good representation of the entire US equity market. By this yardstick, an investment is considered good if it outperforms the benchmark on a risk-adjusted basis.
In order to quantify risks and measure risk-adjusted performance, financial analysts apply the concepts and measurements of market beta, correlation, volatility, and return/risk ratio.
Beta:
Beta is defined as the linear regression slope of a stock portfolio (or a single stock), the benchmark over a specified period of time. For example, one can compute the of IBM stock with respect to the S&P 500 index over the past six months. One first calculates the time series of the daily percent change of IBM stock prices and the daily percent change of the S&P 500 index; then, one computes the linear regression slope of the two time series. This serves as the measure of a portfolio's risk relative to the market; the meaning is straightforward: on average, if the index moves 1 percent, then the stock moves Beta percent.
Correlation:
Correlation is defined as the linear regression correlation coefficient of a stock portfolio (or a single stock) and the performance benchmark over a certain period of time. For example, one can compute theof IBM stock with respect to the S&P 500 index over the past six months by first calculating the time series of the daily percent change of IBM stock prices and the daily percent change of the S&P 500 index. Then, one computes the linear regression correlation coefficient of the two time series. The meaning of this complicated idea can be simply put: if the index moves up,percent of the time the stock also moves up.
Volatility:
The volatility of a stock (or of a stock portfolio) is defined as the standard deviation of daily percent changes of the stock (portfolio) price. For trading applications, daily volatility is a very useful measure of risk: percent of the time, stock price moves up or down percent in a day. It is important to know the difference between this daily volatility and the annualized volatility, which is used in stock-option and derivatives valuation:
Return/Risk Ratio
The Return/Risk Ratio, , is defined as R/. Generally speaking, the higher the ratio, the better the performance. If we plot the return R against for many different kinds of investments, we get a chart like that presented in Figure 31:
Figure Risk/Return relationship. The line is the so-called "Efficient Market Frontier". Investments that appear above the frontier are considered good.
Zero-Risk Investment might be likened to a bank account that earns risk-free interest. At the other extreme, some individual stocks are extremely risky, leading to a great variation in the range of potential return or loss. In examining many different kinds of investments over long term periods (say ten years), a graphic representation would appear like a cloud with a rather clear upper boundary. This boundary is the so-called "Efficient Market Frontier." If an investment lies on the efficient frontier, it is considered "optimal" or "advantageous. According to academic theory, it is not possible to make fruitful investments on stock that plots consistently above the frontier. This is to say that, as a consistent strategy, one must take more risk in order to obtain higher return.
VAR (Value At Risk)
Another Risk-Management concept is VAR, nowadays becoming increasingly popular. Most leading investment and trading houses use VAR as one of their main risk measures in routine risk-management operations. VAR is an absolute risk measure for your portfolio, in units of dollars per day. Tradetrek uses the daily 95% confidence VAR definition: this formulation assumes that in a single trading day, there is a 95% probability that the portfolio will not lose more than VAR. For example, if the VAR value is $800, then you can assume that it is 95% certain that the portfolio will not lose more than $800 in one day. Understanding the statistical meaning of VAR is important: a small VAR number does not guarantee that one cannot lose more than VAR; it only says that, most likely--with 95% confidence--one will not lose more than VAR in ONE day.
The calculation of VAR requires the study of the price time series of all the stocks in a portfolio. VAR depends on many factors, such the volatility of each stock, the correlation among all the stocks, and the stability of their historical relationships. By applying our sophisticated proprietary models and efficient computation algorithms, Tradetrek can calculate VAR on a real-time basis and provide this essential Risk-Management tool to Tradetrek users in a clear and comprehensible format!
Hedging
One often hears phrases like "hedge the trade," "hedge the position," "hedge my portfolio." Hedging means the specific actions one takes to reduce or "neutralize" risks, for example, like the efforts one might take to protect a flower or vegetable garden by surrounding it with a hedge. Hedging entails three steps: First, analyze your portfolio to identify and quantify risks and their sources, Second, in accord with a risk-management system such as Tradetrek’s Portfolio Panel, add, remove, and adjust holdings so that the risks are reduced or neutralized. Third, execute the trades necessary to implement your new portfolio. Sometimes hedging is as simple as selling part of the riskiest stocks in your portfolio, or adding a less-volatile stock to it.
Single Trade Risk Management
Single-trade risk management can be summarized by these fundamental principles:
  1. Know how much you are willing to lose before you execute trades.
  2. See if the stock is sufficiently liquid (active) should you wish to buy or sell promptly.
  3. Determine the cut-loss level before trading.
  4. Determine your profit target (take-profit-level).
  5. Buy the stock only at an acceptable price level. Use a limit order when you buy a stock.
  6. Immediately after the trade has been confirmed, enter the stop-loss-at- market order at your predetermined stop-loss level.
  7. If the trade starts to win significantly, raise the stop level so that your Winner Will Never Become a Loser.
  8. Take profit promptly as the trade reaches your profit target.
The risk management process has to begin before one begins a trade. Most important, one must know beforehand how much one is willing to lose, along with how much one can lose in a planned trade. For example, in buying a stock, one should first consider potential loss, study the stock by read news briefs, use Tradetrek charts and tools to analyze it, and decide if the stop-loss level is reasonable and acceptable. Only then can one properly determine the number of shares to buy. One should also check the liquidity of the stock, for if the stock does not provide liquidity enough to permit quick sale, one cannot be sure of closing the trade as the risk management plan requires. Immediately after a trade is confirmed, enter the stop-loss order to the risk. We've observed how often professional traders say, "Never Let a Winner Turn a Loser," a fundamental principle in risk management. As soon as the trade moves in your favor--say you’ve made a profit that is eight times the typical bid/ask spread of the stock--you should enter an adjusted stop-loss order to replace the original. That way, the trade will not be a loser if the stock turns back.
Portfolio Risk Management
If you actively manage the risk of each trade in your portfolio according to this single-trade risk management method, your whole-portfolio risk will be well under control. After all, a portfolio is just the aggregate of all your individual single trades. However, it is also important to manage your overall risk at the portfolio level. The following is a list of key points for managing portfolio risk:
  1. Know your overall risk tolerance before building up the portfolio.
  2. Determine your overall cut-loss level. Usually your portfolio should not lose more than 10% of your capital.
  3. Diversify your investment in at least three or more different stocks.
  4. Actively manage the risk of every individual trade.
  5. Know your overall risk and where the risk comes from: Use Tradetrek's Portfolio Panel to evaluate your risks.
  6. Act quickly when you see your risk limits exceeded.
  7. Close out the entire portfolio if it loses to your overall stop-loss level.
  8. Stay in the game.
This last point, "Stay in the game," is most important in trading and investing.
It means that cutting losses before they are too big enables one to remain active.
By always recognizing risk limits in a trade by cutting losses when a stock is down 2%, then even if one loses ten times in a row, one still retains 80% of one's capital and can remain in the trading game.
As the experienced manager of a major Wall Street trading department once said, I saw people come and go.
Most new traders lose money and leave. Some make very little money or lose small money in the first few years.
Then they start to make more money as they survive on the trading floor.

Your ability to make money grows exponentially if you can stay in the game.
The risk-management strategies we've looked at provide the crucial means of surviving and growing in today's market by applying the same rational controls that keep long-experienced traders ahead!

09-Aug-2005

>Lessons from famous Investors

It's not as if they were born with their stock-picking skills. They learned–and are still learning–the hard way. Says BSE (Bombay Stock Exchange) broker Rakesh Jhunjhunwala: "You learn the stock market by trial and error. Without making mistakes in the market, you will never be able to progress in it." What's important is to spot the mistakes, learn from them, and move on.

Motilal Oswal
Chairman and managing director, Motilal Oswal Securities

  1. Do your homework well.
  2. While choosing a stock, you could use either the top-down approach or the bottom-up approach.
  3. In the former, you look for a good company in an industry that is doing well, say, IT.
  4. In the latter, you scout for a company with good fundamentals, irrespective of the performance of the industry or the economy as a whole.
  5. Don't follow the herd. Don't buy (or sell) just because everybody and this dog is buying (or selling).
  6. Research the com-pany as thoroughly as possible before deciding to buy or sell.
  7. Don't buy in an overheated market and don't sell when there is panic.
Shreekant Pandey
Director, Sundaram Newton AMC
  1. Sectors and stocks have cycles.
  2. Every sector–and stock–goes through peaks and troughs.
  3. Hype over a sector mostly sets in around the time it is beginning to peak. So, beware of entering at the fag end of the cycle.
  4. The top companies in the sector are the first to rise. These are followed by second-rung companies, and then junk stocks. Once the hype is over, only the top companies survive; the rest fall by the wayside.
  5. Assess the management. Assessing the quality of management includes studying its performance and concern for shareholders.
  6. Look for the four Cs: concern for shareholders, corporate governance, credibility and competence.
  7. Pay attention to weightages in your portfolio. Say, you have X exposure to equity in your portfolio. If this X appreciates to 2X, trim it back to X unless you have sound reasons to believe otherwise. Also, when a stock moves 10-15 per cent away from the mean set by you, cut your exposure in that share immediately.
Ravi Mehrotra
Senior vice-president and chief investment officer, Kothari Pioneer AMC
  1. Don't react to news in haste. Every news bite emanating from companies is fodder for market players to influence share valuations. Hence, it becomes important to differentiate between material news and information of a cosmetic nature. While basing an investment decision on a piece of news, make sure that what you see is what you get.
  2. Look at the main business, not subsidiaries. Theoretically, a company's intrinsic worth should equal the sum of its parts, namely businesses, subsidiaries, financial assets and so on. Such a valuation methodology might pay off in developed markets, but in an imperfect one like ours, it might be asking too much.
  3. So, peg your investment decision to a company's primary business, not secondary avenues that might or might not materialise.
Gul Tekchandani
Chief investment officer, Sun F&C Asset Management
  1. Discipline is the key.
  2. The market has a mind of its own, one which is quite likely to confuse investors. You cannot make money in themarket by acting on market rumours. Listen to the stories, but do your own research–and do it thoroughly. Make your buy or sell decision based on your analysis of the company, not on what others have told you.
  3. So, if you have invested in a company for the long term, and the price falls in around three months, don't change your strategy. The company's fundamentals have not changed–it's the market that's volatile. In the long term, the fundamentals will reward you.
  4. Keep track of your investments. However, investing for the long term does not mean you forget about your holding. Stay alert, and monitor your stocks with a view to improving your returns. Keep an eye on the changing economy, because the fundamentals of a company are dynamic and change with the overall economy.
Divya Krishnan
Chief Investment Officer, SBI Mutual Fund
  1. Price is important. Zeroing in on a great company is one half of the investment puzzle. You also have to see whether the company is worth investing in at its current price, for that will ultimately determine your returns. Buy the right company only at the right price.
  2. Likewise, sell it when its valuations appear overstretched. Review and decide.
  3. Hope is an easy crutch to lean on. Pressure or no pressure, there's always a tendency to stay invested when the going is good in the hope of making a little more money.
  4. Similarly, if an investment is showing a loss, people refrain from selling thinking the stock is bound to rebound. The bottom line: base your investment decision solely on fundamentals.
Kisan R. Choksey
Chairman, Kisan Ratilal Choksey Shares and Securities
  1. Analyse the business. Study the industry and the company thoroughly, and analyse its strengths and weaknesses. Also look at the quality of management–an over-ambitious management could consider expanding operations beyond the company's capacity.
  2. Don't shy away from booking profits. It's important to be willing to give up on the upside to protect your downside. Work out your risk-reward profile, and set a target price for each stock. Book profits as the share appreciates, even if it is in phases. For, when a stock plummets from its peak, you may be caught unawares.
Darshan Mehta
Chief executive officer, Anagram Stockbroking
  1. Maintain a lean portfolio. Don't grow too big for your boots. There's no point in having a portfolio of 90 stocks if you cannot track them.
  2. If diversification is what you seek, you can achieve the objective with just 10 stocks.
  3. What matters is not how many stocks you have in your portfolio, but what kind of stocks these are.
  4. Moreover, the fewer stocks in your portfolio, the easier it is to track them.
  5. Don't lose sight of your initial objective. Invest with an objective in mind.
  6. Once that objective is met, look to exit unless there are very good reasons to stay invested.
  7. In rising markets, new issues ride on the coattails of the bullishness, and list at hefty premiums to their issue prices. But once the euphoria subsides, so does the share price. So, keep your options open.
Parag Parikh
Chairman, Parag Parikh Financial Advisory Services
  1. Don't get in at peaks.
  2. Stock markets are not always the barometer of the economy, or even of a company.
  3. With globalisation and hot fund flows, they have become glorified casinos and don't always reflect the true worth of its constituents.
  4. Hence, always invest for the long term and avoid short-term momentum plays.
  5. Bear in mind that momentum works both ways: you could crash as easily as you soar.
  6. Don't speculate. If you buy today and sell tomorrow, you're not investing–you're trading. And that is one dangerous proposition.
  7. If you don't understand technicals or are not clued in to the market grapevine, the odds are stacked against you.
  8. Be flexible with your investment mix.
  9. Don't hold stocks for the sake of holding equities. Sometimes, it's better to hold cash or debt to maximise returns. Your investment mix should reflect your perception of the market. If you feel valuations are high and a downturn is looming, lighten up on equity and shift to debt. And get back in when you are comfortable with valuations.
Rakesh Jhunjhunwala
Broker, Bombay Stock Exchange
  1. Don't be overstretched in a stock. Even if you have hit on a great idea, review your allocations in a particular stock periodically.
  2. Ideally, you should not invest more than 15 per cent of your portfolio in one stock. Overexposure can becounter-productive, more so if a stock is illiquid.
Dileep Madgavkar
Chief investment officer, Prudential ICICI Mutual Fund
  1. Commodities get lower discounting. In commodities businesses, value-addition is limited to the usage of the product. When a plant reaches its maximum capacity, the company has to invest more to set up new units to increase business.
  2. But a degree of circumspection is called for during capacity expansion because commodities are cyclical businesses.
  3. On the other hand, a non-commodity business like software can flourish because scalability is far easier to achieve–which is partly why the market gives them a higher discounting than commodity stocks.
  4. Cash is king. Cash flows say a lot more about a company than the profit and loss numbers. You cannot fudge cash flows: a cash outflow is an outflow.
  5. The share price of a company is today determined by its ability to generate future cash.
  6. What you have to look for is how much cash a company can yield vis-a-vis the amount you put in.
  7. Look ahead. Very often, it is possible to make accurate cash flow predictions based on the EPS (earnings per share) of a company. But it's almost impossible to predict the PE ratio of a company.
  8. What you can do is to check if the PE ratio is linear or non-linear in its ability to scale up.

Here's a checklist of what to look for before investing in a company:

  1. Fundamentals of the company
  2. Management
  3. Industry prospects
  4. Total cost, vision and accounting policies
  5. Return on net worth over the past few years
  6. Return on capital employed
  7. Earnings per share
  8. One final piece of advice: if you have made a mistake, admit it, and reverse the decision swiftly

06-Aug-2005

>U Hate My Stocks? Great .. !!

As someone who loves a good underdog story and loves to buy the stocks of companies that the market apparently hates, I can't help asking: Why do you care if somebody hates your stock? In fact, I'm usually happy to hear from people who look up my holdings and tell me how stupid they think I am.

Now,a few reasons why I think you, too, shouldn't care much whether somebody hates your stock.

Different strokes for different folks
Oddly enough, two investors can have very different opinions of a stock and both be right. It all has to do with risk tolerance, expectations, and comfort level. Successful stock selection isn't just about picking the stocks that go up the most in a given year. Rather, I believe that a successful approach incorporates an investor's attitude toward, and tolerance for, risk and volatility.
If you are an older investor who's only a few years from retirement, having the majority of your nest egg in biotech, energy-tech, or other speculative ideas is not very prudent. Similarly, if you're a young investor with years to go before retirement, it might be equally imprudent not to take at least a little risk in your portfolio.

It is entirely possible that a given company or stock has become simply too volatile for an investor's comfort level. Don't forget -- an investment that keeps you from sleeping is not really a good investment even if it goes up. So in this case, one rational investor can dislike a stock because he thinks it is too risky for the expected return, while a separate and equally rational investor can look at the same tradeoff and decide that the expected reward meets her standards and is a good buy.

Performance matters
This is the simplest, but least accepted, point that I can ever hope to make as a writer, Over the long haul, the only thing that really matters in determining a company's stock price is the performance of that company.
Naysayers don't have an impact on revenue, margins, profits, free cash flow, or development milestones. As long as a company consistently delivers the goods, its long-term stock performance will reflect that. Even if skeptics can short the stock, nobody has enough money to sit on.

At the bottom line, it's performance, and only performance, that separates the wheat from the chaff. Whether it's nanotech, steel, biotech, or any other industry, performance determines the winners and losers. No management can float a story forever, and no skeptic can bash forever. Sooner or later, the facts determine the long-term value of the company in question.

New highs require new blood
This is, quite simply, the best reason that I like to see doubters and skeptics talking about my stocks. While I suppose it's mathematically conceivable that a stock could appreciate simply by having a fixed group of investors buying and selling the stock from each other at ever-higher prices, that's not really very likely.

Rather, stocks go up as new investors come into the story and bid up shares. When that new blood peters out, the rally often stalls and the stock price moves sideways. In that sense, then, skeptics constitute a standby pool of potential new investors. As the doubters see a company (and its stock) do well, some of them will ultimately abandon their skepticism and buy the shares for themselves.

When everybody agrees, everybody is wrong.
Here's another good reason to embrace disagreement: Generally speaking, by the time a large percentage of market participants agree on something, the game is over. The time to buy tech stocks was not in 1999, when seemingly everybody had bought into the "New Economy" claptrap, but rather years before, when people barely thought much at all about networking or the Internet.

When everybody agrees that a company is terrible, odds are good that its stock has become undervalued. Similarly, when everybody agrees that a company's destined for greatness, its stock is most likely overpriced. If any of my stocks ever get to a point where everybody seems to agree that they're sure winners, that's when I'm slapping on a tight stop-loss order.

Have confidence, but be cautious
Now, just because I happen to like it when people bad-mouth my stocks, that doesn't mean I always turn a blind eye toward their arguments. As I have discussed before, professional shorts are often the first to realize that the emperor is, in fact, buck-naked. So while I might not agree with the conclusions, I'm always willing to
at least listen to the arguments.

Above all else, always avoid the "well, I'll show you" instinct that some investors seem to adopt -- the attitude that ignores the facts and good old common sense simply because ego won't allow you to sell at a loss. The market doesn't know you, doesn't care about you, and isn't out to "get" you. If you forget that, the only thing you'll be showing to anybody is a record of your losses.

Bottom line
Remember, stocks are just ownership stakes in a business. They're not your children, they're not your sports team, and they're not your religion. If you've done your homework and have confidence in your analysis, who cares whether somebody else hates your stock?

The point is, though, that just because you don't like my stocks, that doesn't mean you're right and I'm wrong. Maybe the next time you see an analyst or columnist "bash" your little darlings, you can think of it in terms of being just one more person to be brought on board down the line at a (hopefully) higher price.

So to all of the haters and bashers out there, I say, "Do your worst." I've done my homework, and I'm more than happy to match wits and analyses against you in the market. After all, if we all agreed all of the time, there wouldn't be much of a market, and investing would be the domain of accountants, actuaries, and computer formulas.

04-Aug-2005

>Be an Entrepreneur

(not directly related to investments but found this very interesting)

The Department of Labor predicts that the #1 employer in 2010 will be “self.”
A recent Internet poll of 25-44 year olds revealed that 90% of them hoped to own their own business.
A survey conducted by Ernst & Young found that 75% of influential Americans believe that entrepreneurship will be the defining trend of the 21st century.
Some of the factors that have attributed to the rise of the modern day entrepreneurial spirit are access to technology, a global economy, and corporate stagnation.

Many workers have experienced feelings of discontent, which are likely due to the upsizing, downsizing, and right-sizing of corporations. But whatever the reason, modern workers want to have more control over the work they do. And they want work that is meaningful and important to them. Now is a great time to become your own boss. In fact, the number of Americans who are running their own businesses will continue to grow as we move further into the millenium. As workers’ values are changing and people want more time to do the things they love with those they love, having employment that allows for a greater balance in their lives is critical to today’s worker.

The new world of work encourages the entrepreneurial mindset, in that we need to learn to use our imagination to dream up new ideas, challenge assumptions and belief systems to find a better way, and break through worn-out thinking to create new and innovative products and services. This way of thinking is helpful whether you are working for yourself or someone else. An entrepreneur can be defined as anyone who undertakes a commercial risk for profit, and/or tackles new challenges. They are the change agents of society because they see a problem and want to find a way to solve it. They believe in being self-reliant and taking action to better their communities. Robert Schwartz’s definition: “An entrepreneur is essentially a visualizer and actualizer. He can visualize something and when he visualizes it, he sees exactly how to make it happen.”

Successful entrepreneurs realize that if it is to become a reality, they are the ones to make it happen. An entrepreneur is someone who is able to continually reinvent himself, and to rethink an entire project (and possibly start all over) if he finds that something is not right. Thus, someone who has vision, flexibility, and a risk-taking nature fares very well in self-employment ventures.

Of course, like anything else, there are pros and cons to becoming an entrepreneur. One pro is that you are the boss. The con is that you still have other co-workers, customers, and vendors to rely on to get the job done. People who are self-employed often only have illusions of control. For instance, you may think you have everything under control and then something happens that puts everything out of your control. The difference is that being the boss means that it all comes down to you. You are fully responsible for your success. For many people this level of personal responsibility is part of the challenge and enjoyment. The truth is that any successful entrepreneur rolls with the punches and moves with the winds of change. Take this test to find out if you have what it takes to be an entrepeneur.

Are You the Entrepreneurial Type?

Check if applicable to you.

- Responsible - Hard Worker - Risk Taker
- Flexible - Follows through with ideas - Personable
- Optimistic - Perceptive - Self-confident
- High degree of energy - Innovative - Independent
- Ability to anticipate needs - Effective communicator
- Determined
- Responsive to criticism - Able to take the lead - Creative
- Learn from mistakes - Self-directed

Would you say that you are always, sometimes, or never like these statements:

  1. I am goal and action-oriented. I am a self-starter.
    I am self-confident. I am a persistent person.
    I like taking risks. I am flexible and adaptable when necessary.
    I am a problem-solver. I am an innovative thinker.
    I can sell myself and/or my product to others. I accept responsibility for my actions.
    I enjoy networking. I can function in an environment of uncertainty.
    I like being in charge. I am able to see what needs to be done and then do it.
    I am willing to devote whatever time and energy it takes to be successful.

02-Aug-2005

>India: Finally recognized

Asia: the best bet for businesses

Asia remains one of the world's most dynamic regions and offers multiple opportunities for businesses and investors. In addition to the considerable enthusiasm that has been directed toward China as a result of its rapid growth in recent years, considerable attention is now being accorded to India and other markets as well. Economic progress is also fueling increasing regional integration, which in turn is further accentuating Asia's potential.

Asia grew at an impressive 7.3% in 2004, according to the Asian Development Bank's 2005 Outlook report. In fact, 2004 marked the region's "best growth performance since the Asian financial crisis of 1997-98". First-quarter 2005 data supports the view the region remains on an upward trend. India grew at a 7% rate while Malaysia registered 5.7% growth over the same period. For its part, Japan registered 5.3% during the first three months of 2005. This success in part is attributable to solid growth in traditional trading partners such as the US. At the same time, the region is benefiting from rising domestic consumption, business investment and intraregional trade. Looking forward, some analysts are questioning whether this growth is sustainable. In addition to stagnant growth in Europe, Asian economies have to grapple with the potential of lower growth in China and the US.

Asia's fundamental strength was recently emphasized by Morgan Stanley Chief Economist Stephen Roach who noted "any hit to Asian growth seems likely to be cyclical and temporary". Reasons for optimism were enumerated in a recent Far Eastern Economic Review article by editor-in-chief of the China Economic Quarterly, Joe Studwell, who highlighted better corporate governance, Asia's enlarging role in global supply chains, the strong financial positions of many regional economies, Asia's growing role as a center for innovation, and an expanding middle class. Paradoxically, portfolio investors have traditionally underweighted the region. In 2003, Marc Faber observed Asia, including Japan, accounted for only 11% of world equity market capitalization. This allows substantial room for valuation increases as this deficiency is addressed.

India: Finally recognized
While much of the interest directed toward Asia in recent years can be attributed to rapid development in China, we are now beginning to see a similar enthusiasm emerge in regard to India. Many analysts believe, in fact, that India's strong devotion to democratic rule, its emphasis on service industries, long-term familiarity with Anglo-Saxon business practices, knowledge of English and more favorable demographic structure make it an even more favorable market over the long term than China. Over the last three years, the economy of India has grown at an average rate of 6.5%. According to Deputy Chairman of India's Planning Commission, Montek Singh Ahluwalia, the country is expected to average 7.5% over the next two years, with an objective of seeing it rise to an 8% growth path thereafter.

India undoubtedly still requires numerous additional structural and other reforms as well as substantial infrastructure improvements to sustain its progress. The lower baseline from which it is starting, however, allows investors and businesses a major opportunity for growth and entry into an extremely promising market as it begins to open its doors more seriously to foreign investment and participation.

Recognizing the emerging potential of the Indian economy, Japanese firms have been moving to strengthen their presence on the subcontinent. Similarly, Indian firms are increasingly looking to Japan as an export market. As a result, the governments of Japan and India have moved to form a Joint Study Group, with the goal of establishing a comprehensive economic relationship, most likely including a Free Trade Agreement (FTA) between the two nations. At the first meeting of the study group this month, it was agreed that a report would be submitted to the two prime ministers by June 2006.


Despite these challenges, Japan's Ministry of Economy, Trade, and Industry (METI) estimates that by 2020, Asia will have a 25.5% share of world GDP (gross domestic product) versus 19.3% in 1990. Consumption is rising, with polling firm ACNielsen reporting Asian consumers are far more confident about 2005 than those in America and Europe.

While US and European managers and investors have long recognized Asia's ability to produce cheaply manufactured export products, the region is now seen as a huge market for commodities and, increasingly, consumer goods. Less widely appreciated is that Asia is quickly becoming a hub for advanced R&D (research and development), as well as design, production, and test-marketing of higher-end products such as automobiles, consumer electronics and a range of technological applications and services. Asian governments are supporting these trends by investing in education and infrastructure, offering favorable tax and regulatory treatment, and reducing tariffs and other barriers. These measures, as well as Asia's underlying attractiveness, are helping to facilitate record numbers of cross-border transactions as well as rising trade and investment flows into the region.