To diversify your portfolio, mutual fund is a less risky tool to achieve your financial objective. The well diversified factor of mutual fund lowers the potential investment risk. Here we will give you some basic information about mutual fund and then learn how to pick up mutual fund.
1. What is mutual fund
The idea behind a mutual fund is simple: Many people pool their money in a fund, which invests in various securities. Each investor shares proportionately in the fund's investment returns -- the income (dividends or interest) paid on the securities and any capital gains or losses caused by sales of securities the fund holds.
Every mutual fund has a manager, also called an investment adviser, who directs the fund's investments according to the fund's objective, such as long-term growth, high current income, or stability of principal. Depending on its objective, a fund may invest in stocks, bonds, cash investments, or a combination of these financial assets.
2. Advantages of mutual fund
mutual funds have become popular because they offer 4 advantages:
a. Diversification. A single mutual fund can hold securities from hundreds or even thousands of issuers, far more than most investors could afford on their own. This diversification sharply reduces the risk of a serious loss due to problems in a particular company or industry.
b.Professional management. Few investors have the time or expertise to manage their personal investments every day, to efficiently reinvest interest or dividend income, or to investigate the thousands of securities available in the financial markets. They prefer to rely on a mutual fund's investment adviser. With access to extensive research, market information, and skilled securities traders, the adviser decides which securities to buy and sell for the fund.
c.Liquidity. Shares in a mutual fund can be bought and sold any business day, so investors have easy access to their money. While many individual securities can also be bought and sold readily, others aren't widely traded. In those situations, it could take several days or even longer to build or sell a position.
d.Convenience. Mutual funds offer services that make investing easier. Fund shares can be bought or sold by mail, telephone, or the Internet, so you can easily move your money from one fund to another as your financial needs change. You can even schedule automatic investments into a fund from your bank account, or you can arrange automatic transfers from a fund to your bank account to meet expenses. Most major fund companies offer extensive recordkeeping services to help you track your transactions, complete your tax returns, and follow your funds' performance.
3.Types of mutual funds
Money Market FundsThese funds are a great place to park your money. Whether you're storing money for emergencies, saving for the short-term, or looking for a place to store cash from the sale of an investment, money market funds are a safe place to invest. These funds invest in short-term debt instruments and typically produce interest rates that double what a bank can offer in a checking account or savings account and rival the returns of a CD (Certificate of Deposit).
Bond FundsBond funds carry more risk than money market funds are often used to produce income (useful in retirement) or to help stabilize a portfolio (diversification). The primary types of bond funds are:
Municipal Bond Funds -uses tax-exempt bonds issued by state and local governments (these funds are non-taxable).
Corporate Bond Funds -uses the debt obligations of U.S. corporations.
Mortgage-Backed Securities Funds - uses securities representing residential mortgages.
U.S. Government Bond Funds -uses U.S. treasury or government securities.
Stock FundsStocks funds are considered riskier than bond funds (although certain bond funds can be very risky) and are used for growing your money. Money market funds and bond funds typically provide returns just a percentage or two above inflation, but stock funds should do much better over long periods of time.
Wednesday, October 31, 2007
Federal Reserve Cut Interest Rate Again!
Federal reserve today cutted interest rate by 25 basic point to 4.5% which gave great impact on stock price. We will keep a close watch about what the markets will react.
Stimulate economy VS Increase inflation, it is tough to make a decision.
Please read the article from WSJ in which they gave deep analysis.
Stimulate economy VS Increase inflation, it is tough to make a decision.
Please read the article from WSJ in which they gave deep analysis.
Friday, October 12, 2007
DID YOU KNOW??
------------Term Of The Day: Bullet Dodging------------
--------- A form of option granting where the awarding of options is delayed until a piece of bad news is known to the public and the stock's price falls. Because an option's strike price is often determined by what the underlying stock's price is on the grant date, waiting for the stock price to drop will allow the option holders to gain some additional benefit in the form of a lowered strike price to be lower compared to if the grant date had been on May 7.---
-------------For example,
suppose that XYZ Corp. had planned to grant stock options for its CEO on May 7, 2007. However, XYZ Corp. is going to release its earnings a week later, on May 14, and it is believed that the earnings will be under guidance. Because the company didn't meet its earnings projections, the share price will likely drop. Moving the option-granting date to May 15 is likely to cause the option's strike price to be lower compared to if the grant date had been on May 7.This practice is fairly controversial, as some feel that bullet dodging may be a form of insider trading because the option holder, who is usually a member of the company's management, will benefit by using information that is not available to the public.
--------- A form of option granting where the awarding of options is delayed until a piece of bad news is known to the public and the stock's price falls. Because an option's strike price is often determined by what the underlying stock's price is on the grant date, waiting for the stock price to drop will allow the option holders to gain some additional benefit in the form of a lowered strike price to be lower compared to if the grant date had been on May 7.---
-------------For example,
suppose that XYZ Corp. had planned to grant stock options for its CEO on May 7, 2007. However, XYZ Corp. is going to release its earnings a week later, on May 14, and it is believed that the earnings will be under guidance. Because the company didn't meet its earnings projections, the share price will likely drop. Moving the option-granting date to May 15 is likely to cause the option's strike price to be lower compared to if the grant date had been on May 7.This practice is fairly controversial, as some feel that bullet dodging may be a form of insider trading because the option holder, who is usually a member of the company's management, will benefit by using information that is not available to the public.
Cros (CROX) .................!!! amazing info..
Crocs (CROX), which is
up
217% year-to-date.
What's interesting about this stock is that 38% of CROX shares are sold
short, by investors betting the stock will fall in the weeks and months
ahead. Instead, the stock continues to power ahead, fueled in part by
the
buying of short-sellers who must meet their brokers' margin calls;
these
folks, basically, are forced to buy CROX to cut their losses short.
But
for every short who covers, it appears that new ones appear out of the
woodwork to sell, because the total short interest on the stock remains
high!
And these folks get frustrated ... and desperate. So they spread
stories
around to try to knock the stock down, one of which is that insiders
are
selling the stock!
And technically, this is true. In the past few months, CEO Ron Snyder
has
sold over 162,000 shares under a prearranged 10b5-1 trading plan. Such
plans allow insiders to set up a program in advance for such
transactions
and proceed with them even if he or she comes into possession of
material
nonpublic information.
So Snyder's selling is not necessarily a bad thing, or a sign of his
lack
of confidence in the company. In fact, as we've long explained to
readers, there are many legitimate reasons for insiders to sell stock
-
most commonly these sales are a way to get paid or a way to build
diversification.
On the other hand, there's only one reason for an insider to buy his
company's stock, and that's a belief that it will be worth more in the
future. So it's interesting to note that over the same period, Snyder
has
acquired (at very low cost) over 157,000 shares of CROX stock!
In short, he's using his CROX stock to get paid ... and a fine paycheck
it
is. But there's no way to conclude from his sales that he believes the
stock will be lower in the future.
Bottom line: Take insider sales with a grain of salt unless you're
certain
you can see the entire picture. And remember that short-sellers will
do
what they can to drive a stock down.
up
217% year-to-date.
What's interesting about this stock is that 38% of CROX shares are sold
short, by investors betting the stock will fall in the weeks and months
ahead. Instead, the stock continues to power ahead, fueled in part by
the
buying of short-sellers who must meet their brokers' margin calls;
these
folks, basically, are forced to buy CROX to cut their losses short.
But
for every short who covers, it appears that new ones appear out of the
woodwork to sell, because the total short interest on the stock remains
high!
And these folks get frustrated ... and desperate. So they spread
stories
around to try to knock the stock down, one of which is that insiders
are
selling the stock!
And technically, this is true. In the past few months, CEO Ron Snyder
has
sold over 162,000 shares under a prearranged 10b5-1 trading plan. Such
plans allow insiders to set up a program in advance for such
transactions
and proceed with them even if he or she comes into possession of
material
nonpublic information.
So Snyder's selling is not necessarily a bad thing, or a sign of his
lack
of confidence in the company. In fact, as we've long explained to
readers, there are many legitimate reasons for insiders to sell stock
-
most commonly these sales are a way to get paid or a way to build
diversification.
On the other hand, there's only one reason for an insider to buy his
company's stock, and that's a belief that it will be worth more in the
future. So it's interesting to note that over the same period, Snyder
has
acquired (at very low cost) over 157,000 shares of CROX stock!
In short, he's using his CROX stock to get paid ... and a fine paycheck
it
is. But there's no way to conclude from his sales that he believes the
stock will be lower in the future.
Bottom line: Take insider sales with a grain of salt unless you're
certain
you can see the entire picture. And remember that short-sellers will
do
what they can to drive a stock down.
Who cares bout FED?
"Do you think the Fed will cut rates again?"
My easy answer was "Yes, several times more!" And that answer is based
on
the simple fact that interest rate cuts, just like interest rate hikes,
tend to come in long strings.
But my real thought is this. When everybody in America is wondering
whether the Fed will cut rates again, you should probably be thinking
about something else!
The reason for this thought is simple contrary opinion. When everyone
is
looking at the same indicator, that indicator tends to stop working.
If
it did, making money in the market would be easy ... and it's not easy.
There's no question that interest rate cuts in general are good for the
economy and thus the stock market. And there's little question - at
least
in my mind - that the Fed will cut rates again. But now that everyone
is
focused on the Fed, I'm confident that the more important clues to the
future of the market lie somewhere else.
So where to look? Non-farm payrolls? Consumer non-durables? The
price
of oil? The price of steel in China? No doubt all are important at
some
level. But for my money, the very best indicator is the market itself,
and when I look there, here's what I see.
Trends are up, but overextended, suggesting that a normal correction is
likely. Our Hi-Lo Alert, which measures the number of Dow stocks above
their medium-term moving averages, is at its highest point since May,
just
two weeks before the market got very rocky and embarked on the course
that
took it down to the August low.
Now, that doesn't mean we're in for a repeat of the big summer
correction,
but it does suggest to me that building a little cash here might be
prudent.
BEAT THE BANK...:):) sounds good to me...!!!
There is no end to the techniques used to evaluate stocks and portfolios, but when it comes to banks, the general consensus is that you are stuck with what you get. What you get, in most cases, is a low interest rate, fees for trying to access your money and the security of knowing your deposits are insured.
However, there have been a number of changes in the banking industry in recent years. Internet based banks have arisen to join co-op banks as competition for traditional banks. Now, in the face of increasing selection, you have the power to choose the one that is right for you. Here, we'll cover what factors you should weigh in making your choice.
We All Have Needs
If you and your bank were dating, chances are good that it would be classified as an abusive relationship. Banks protect your money and provide many of the services you need, but they charge you for them as well as charging you for services you don't need.
The first step is to figure out what services are essential to you and then make a list of them. For example, this may be services like online bill payments, ATMs and telephone banking, or high-interest and money market accounts. The easiest way to find out what services you need is to keep a notebook and track your banking behavior. Do you use the ATM or do you go into the branch? Do you pay your bills online or at an ATM? How many withdrawals are you making a month? How many deposits? Finding out which services you actually use will help you to determine what kind of plan will work best for you. (For related reading, see What are the advantages and disadvantages to dealing with internet-only banks?)
Along with this list, you will want to check your bank statements to see precisely how much these services are costing you and what services you are over or under using. Many people pay service fees for unlimited use of ATMs affiliated with their own banks and then use other machines and ring up $10 to $20 in charges every month. On the most basic level of selection, you want to find a bank that gives you the services you need at the lowest possible cost. (For more insight, check out The Ins And Outs Of Bank Fees.)
Rousing Interest
Putting your money in a savings account is not going to make you rich. Assuming you are looking for a bank to provide a checking account, the interest rates are even more nominal than those of a savings account. Sadly, many checking accounts pay no interest at all. Some banks offer money market accounts for people who want to save money with them, but these often (but not always) have a high minimum deposit. As far as saving money for the long term rather than just using an account to pay bills and cash checks, even the best bank will not match an investment.
Banking On Options
Now that we know what we are and aren't expecting, we can look at the alternatives. (For more on these options, read Money Market Vs. Savings Accounts and Your First Checking Account.)
Credit Unions and Co-operative Banking
Higher interest accounts, lower interest loans and the possibility of sharing the profits at the end of the year make credit unions a little too good for most people to believe. If this is so, it is only because traditional banks have engaged in public relations campaigns and other costly actions to convince customers that there is only one way to bank. Credit unions are nonprofit banks that make no distinction between clients and shareholders. By opening an account at a credit union, you are becoming a member of the collective. This means that you may be able to get part of the bank's profits in the form of a dividend at year's end, or it may just mean higher interest rates and more favorable loan terms.
How is this possible when a particular credit union may only have the one branch and the big banks have thousands more and customers galore? It is simply a matter of size and connections. Credit unions don't have to support thousands of branches, CEOs, fund managers, salespeople, clerks and public relations specialists. The fact that a credit union may only have one branch helps the company pass the savings on to its customers in the form of higher interest and other benefits.
The downside of credit unions is access. Even though they issue debit cards, they generally don't have ATMs outside of their branch buildings, meaning you will pay fees for foreign ATM withdrawals. Additionally, not all of them are accessible online aside from checking account balances or sending customer service questions (although the number with online services is always increasing). If you are considering a credit union, you have to think about what you are willing to sacrifice in exchange for lower cost accounts and loans. To make the most of credit unions, you have to be adept at knowing how much cash you need because you may find yourself unable to access your account at short notice without incurring fees.
Online Banking and Internet Banks
Although internet banks probably won't wipe brick-and-mortar banks off the face of the earth, they do offer a good alternative. Online banking and internet banks are two very different beasts. Online banking, including paying bills and making transfers, is available through your average bank. Online banking simply means having some level of access to your bank through the internet. Internet banks, on the other hand, do everything online and do not have a physical location.
An internet bank provides neither locations that you can visit, nor face-to-face interactions with clerks. As with credit unions, this translates into better interest rates and savings for the customer. The short history of internet banks has been hit-or-miss. Many internet banks have folded for a variety of reasons, but most shared a problem of offering more services than they could handle. Offering too many services increases the need for intensive customer support (usually by phone) and costs a lot in employee wages. The successful internet banks started off by offering bare bones services: online bill payments, high interest savings and checking accounts, and debit cards. When these services were established, they slowly expanded to certificates of deposit, credit cards, and so on.
However, there have been a number of changes in the banking industry in recent years. Internet based banks have arisen to join co-op banks as competition for traditional banks. Now, in the face of increasing selection, you have the power to choose the one that is right for you. Here, we'll cover what factors you should weigh in making your choice.
We All Have Needs
If you and your bank were dating, chances are good that it would be classified as an abusive relationship. Banks protect your money and provide many of the services you need, but they charge you for them as well as charging you for services you don't need.
The first step is to figure out what services are essential to you and then make a list of them. For example, this may be services like online bill payments, ATMs and telephone banking, or high-interest and money market accounts. The easiest way to find out what services you need is to keep a notebook and track your banking behavior. Do you use the ATM or do you go into the branch? Do you pay your bills online or at an ATM? How many withdrawals are you making a month? How many deposits? Finding out which services you actually use will help you to determine what kind of plan will work best for you. (For related reading, see What are the advantages and disadvantages to dealing with internet-only banks?)
Along with this list, you will want to check your bank statements to see precisely how much these services are costing you and what services you are over or under using. Many people pay service fees for unlimited use of ATMs affiliated with their own banks and then use other machines and ring up $10 to $20 in charges every month. On the most basic level of selection, you want to find a bank that gives you the services you need at the lowest possible cost. (For more insight, check out The Ins And Outs Of Bank Fees.)
Rousing Interest
Putting your money in a savings account is not going to make you rich. Assuming you are looking for a bank to provide a checking account, the interest rates are even more nominal than those of a savings account. Sadly, many checking accounts pay no interest at all. Some banks offer money market accounts for people who want to save money with them, but these often (but not always) have a high minimum deposit. As far as saving money for the long term rather than just using an account to pay bills and cash checks, even the best bank will not match an investment.
Banking On Options
Now that we know what we are and aren't expecting, we can look at the alternatives. (For more on these options, read Money Market Vs. Savings Accounts and Your First Checking Account.)
Credit Unions and Co-operative Banking
Higher interest accounts, lower interest loans and the possibility of sharing the profits at the end of the year make credit unions a little too good for most people to believe. If this is so, it is only because traditional banks have engaged in public relations campaigns and other costly actions to convince customers that there is only one way to bank. Credit unions are nonprofit banks that make no distinction between clients and shareholders. By opening an account at a credit union, you are becoming a member of the collective. This means that you may be able to get part of the bank's profits in the form of a dividend at year's end, or it may just mean higher interest rates and more favorable loan terms.
How is this possible when a particular credit union may only have the one branch and the big banks have thousands more and customers galore? It is simply a matter of size and connections. Credit unions don't have to support thousands of branches, CEOs, fund managers, salespeople, clerks and public relations specialists. The fact that a credit union may only have one branch helps the company pass the savings on to its customers in the form of higher interest and other benefits.
The downside of credit unions is access. Even though they issue debit cards, they generally don't have ATMs outside of their branch buildings, meaning you will pay fees for foreign ATM withdrawals. Additionally, not all of them are accessible online aside from checking account balances or sending customer service questions (although the number with online services is always increasing). If you are considering a credit union, you have to think about what you are willing to sacrifice in exchange for lower cost accounts and loans. To make the most of credit unions, you have to be adept at knowing how much cash you need because you may find yourself unable to access your account at short notice without incurring fees.
Online Banking and Internet Banks
Although internet banks probably won't wipe brick-and-mortar banks off the face of the earth, they do offer a good alternative. Online banking and internet banks are two very different beasts. Online banking, including paying bills and making transfers, is available through your average bank. Online banking simply means having some level of access to your bank through the internet. Internet banks, on the other hand, do everything online and do not have a physical location.
An internet bank provides neither locations that you can visit, nor face-to-face interactions with clerks. As with credit unions, this translates into better interest rates and savings for the customer. The short history of internet banks has been hit-or-miss. Many internet banks have folded for a variety of reasons, but most shared a problem of offering more services than they could handle. Offering too many services increases the need for intensive customer support (usually by phone) and costs a lot in employee wages. The successful internet banks started off by offering bare bones services: online bill payments, high interest savings and checking accounts, and debit cards. When these services were established, they slowly expanded to certificates of deposit, credit cards, and so on.
Professors' Recommended Reading List 4
Prof. Nugent
The Age of Turbulence: Adventure
s in a New World by Alan Greenspan
Greenspan's political memoir, which occupies the first half of the book, is readable, lucid and sometimes a bit thin on the dilemmas of monetary policy. In the book's second half, Greenspan the charmer makes way for Greenspan the technician, and the result is a 250-page essay on globalization. His overviews of Russia, India and China say little that is not familiar to attentive readers of the news. But the last chapter makes a powerful and remarkably self-deprecating point. Readers who persevere will feel rewarded.
Blue Blood and Mutiny: The Fight for the Soul of Morgan Stanley
The inside story of the power struggle that rocked Wall Street’s most prestigious financial institution
What began with a shot over the bow ended in a shocking coup d’etat. In less than four months a group of eight retired executives orchestrated a stunning revolt within Morgan Stanley, the venerable and—until recently—most successful financial services firm on Wall Street. Now acclaimed journalist and historian Patricia Beard brings together the entire behind-the-scenes story in Blue Blood and Mutiny, a real-life business thriller exposing the tale that shook high finance.
Warren Buffett Speaks: Wit and Wisdom from the World’s Greatest Investor
This collection of aphorisms and anecdotes reveals Warren Buffett in his own words. Drawn from articles, speeches and new original material, Warren Buffett Speaks is the only book to capture Buffett's own voice. Readers will laugh and learn from the down-to-earth millionaire's business smarts and unique sense of humor. A tribute to Buffett's all-American personality and extraordinary business success, this witty and wise ensemble covers everything from friends and family to business and investing.
Stop the 401(k) Rip-off: Eliminate Costly Hidden Fees to Improve Your Life
-- How would you spend an extra $4,000 a year for the next twenty-five years?
-- How much more secure would your retirement be with an extra $100,000 or more?
-- How much more time could you spend at your family dinner table if you could work an hour less each day?
-- What would you do in retirement if you could retire three years earlier?
Your 401(k) plan is probably one of your most important future sources of financial security. This book makes it easy for you to take the five steps needed to add more than $100,000 to your retirement nest egg without taking more risk or saving more money. This can allow you to improve your lifestyle, increase your benefits, identify the hidden costs and also improve your standing within your company by proactively helping your employer to take needed action.
The Lies about Money: Achieving Financial Security and True Wealth by Avoiding the Lies Others Tell Us—and the Lies We Tell Ourselves
Exposing the seamy underbelly of the retail mutual fund industry, this helpful primer by seasoned financial advisor Edelman offers step-by-step instructions for how to beat it at its own game. We have more to worry about than the ordinary fallibility of mutual fund managers, he explains; the entire industry has become flush with liars, crooks, and charlatans. Writing in a calm, well-reasoned manner, Edelman (Ordinary People, Extraordinary Wealth) explores basic concepts of portfolio management and retirement, and college and elder-care savings approaches. The book gets off to a slow start as Edelman works to ensure that less sophisticated readers are not passed by. After a sobering look at deceptive marketing practices, illegal market timing, late trading and excessive and hidden fees in the retail mutual fund sector, Edelman breaks down the options for ordinary people to regain their savings from crooked hands, in a detailed, interactive guide to portfolio selection. Edelman's clear writing and helpful advice are sure to win him a satisfied audience.
The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities
Every day, stocks, bonds and currencies bounce around wildly in response to economic indicators like these. They' re monitored obsessively by the world' s leading money managers. Why? Because they provide crucial, subtle clues about the future of the market and of individual investments. Now readers can profit from these indicators just like the professionals do. They don' t need an economics degree, or a CPA, just this easy-to-read book. In plain English, renowned economic journalist Bernard Baumohl helps readers find the numbers, understand their deepest meanings, and use that knowledge to make fast, smart investment decisions. For each key indicator, Baumohl presents a sample release, insider' s information on the indicator' s track record, and step-by-step instructions for decoding it. Baumohl covers both US indicators and the foreign indicators that are becoming increasingly important to investors. He answers key questions like: Which indicators are most likely to affect my personal investments or business? How does each indicator affect interest rates and bond prices? Stock prices? The value of the dollar? And what can these reports tell me where the economy' s really heading?
The Age of Turbulence: Adventure
s in a New World by Alan Greenspan
Greenspan's political memoir, which occupies the first half of the book, is readable, lucid and sometimes a bit thin on the dilemmas of monetary policy. In the book's second half, Greenspan the charmer makes way for Greenspan the technician, and the result is a 250-page essay on globalization. His overviews of Russia, India and China say little that is not familiar to attentive readers of the news. But the last chapter makes a powerful and remarkably self-deprecating point. Readers who persevere will feel rewarded.
Blue Blood and Mutiny: The Fight for the Soul of Morgan Stanley
The inside story of the power struggle that rocked Wall Street’s most prestigious financial institution
What began with a shot over the bow ended in a shocking coup d’etat. In less than four months a group of eight retired executives orchestrated a stunning revolt within Morgan Stanley, the venerable and—until recently—most successful financial services firm on Wall Street. Now acclaimed journalist and historian Patricia Beard brings together the entire behind-the-scenes story in Blue Blood and Mutiny, a real-life business thriller exposing the tale that shook high finance.
Warren Buffett Speaks: Wit and Wisdom from the World’s Greatest Investor
This collection of aphorisms and anecdotes reveals Warren Buffett in his own words. Drawn from articles, speeches and new original material, Warren Buffett Speaks is the only book to capture Buffett's own voice. Readers will laugh and learn from the down-to-earth millionaire's business smarts and unique sense of humor. A tribute to Buffett's all-American personality and extraordinary business success, this witty and wise ensemble covers everything from friends and family to business and investing.
Stop the 401(k) Rip-off: Eliminate Costly Hidden Fees to Improve Your Life
-- How would you spend an extra $4,000 a year for the next twenty-five years?
-- How much more secure would your retirement be with an extra $100,000 or more?
-- How much more time could you spend at your family dinner table if you could work an hour less each day?
-- What would you do in retirement if you could retire three years earlier?
Your 401(k) plan is probably one of your most important future sources of financial security. This book makes it easy for you to take the five steps needed to add more than $100,000 to your retirement nest egg without taking more risk or saving more money. This can allow you to improve your lifestyle, increase your benefits, identify the hidden costs and also improve your standing within your company by proactively helping your employer to take needed action.
The Lies about Money: Achieving Financial Security and True Wealth by Avoiding the Lies Others Tell Us—and the Lies We Tell Ourselves
Exposing the seamy underbelly of the retail mutual fund industry, this helpful primer by seasoned financial advisor Edelman offers step-by-step instructions for how to beat it at its own game. We have more to worry about than the ordinary fallibility of mutual fund managers, he explains; the entire industry has become flush with liars, crooks, and charlatans. Writing in a calm, well-reasoned manner, Edelman (Ordinary People, Extraordinary Wealth) explores basic concepts of portfolio management and retirement, and college and elder-care savings approaches. The book gets off to a slow start as Edelman works to ensure that less sophisticated readers are not passed by. After a sobering look at deceptive marketing practices, illegal market timing, late trading and excessive and hidden fees in the retail mutual fund sector, Edelman breaks down the options for ordinary people to regain their savings from crooked hands, in a detailed, interactive guide to portfolio selection. Edelman's clear writing and helpful advice are sure to win him a satisfied audience.
The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities
Every day, stocks, bonds and currencies bounce around wildly in response to economic indicators like these. They' re monitored obsessively by the world' s leading money managers. Why? Because they provide crucial, subtle clues about the future of the market and of individual investments. Now readers can profit from these indicators just like the professionals do. They don' t need an economics degree, or a CPA, just this easy-to-read book. In plain English, renowned economic journalist Bernard Baumohl helps readers find the numbers, understand their deepest meanings, and use that knowledge to make fast, smart investment decisions. For each key indicator, Baumohl presents a sample release, insider' s information on the indicator' s track record, and step-by-step instructions for decoding it. Baumohl covers both US indicators and the foreign indicators that are becoming increasingly important to investors. He answers key questions like: Which indicators are most likely to affect my personal investments or business? How does each indicator affect interest rates and bond prices? Stock prices? The value of the dollar? And what can these reports tell me where the economy' s really heading?
Professors' Recommended Reading List 3
Prof. McDonnell
The Intelligent Investor
'By far the best book on investing ever written' claims Warren Buffett. Originally published in 1949, it's admittedly not the easiest of reads, but Benjamin Graham's tome remains the definitive guide to value investing. Chapter 8, 'The Investor and Market Fluctuations' and Chapter 20, 'Margin of Safety as the Central Concept of Investment' are seminal works that every budding Buffett must absorb.
Against the Gods: The Remarkable Story of Risk
"Against the Gods," a narrative that reads like a novel, chronicles the remarkable intellectual adventure that liberated humanity from the oracles and soothsayers by means of the powerful tools of risk management that are available to us today. This is a richly-woven tale of Greek philosophers and Arab mathematicians, of merchants and scientists, gamblers and philosophers, world-renowned intellects and obscure but inspired amateurs who helped discover the modern methods of putting the future at the service of the present, replacing helplessness before the fates with choice and decision.
Innovation and Entrepreneurship
Peter Drucker's classic book on innovation and entrepreneurship This is the first book to present innovation and entrepreneurship as a purposeful and systematic discipline that explains and analyzes the challenges and opportunities of America's new entrepreneurial economy. Superbly practical, Innovation and Entrepreneurship explains what established businesses, public service institutions, and new ventures need to know and do to succeed in today's economy.
The Effective Executive
The Effective Executive in Action is a journal based on Peter F. Drucker's classic and preeminent work on management and effectiveness -- The Effective Executive. Here Drucker and Maciariello provide executives, managers, and knowledge workers with a guide to effective action -- the central theme of Drucker's work. The authors take more than one hundred readings from Drucker's classic work, update them, and provide provocative questions to ponder and actions to take in order to improve your own work. Also included in this journal is a space for you to record your thoughts for later review and reflection. The Effective Executive in Action will teach you how to be a better leader and how to lead according to the five main pillars of Drucker's leadership philosophy.
On Being a Leader
This text delves into the qualities that define leadership, the people who exemplify it and the strategies that anyone can apply to become an effective leader. This new edition features a provocative introduction on the challenges and opportunities facing leaders today.
The Lost Art of the Great Speech
Splashy slides, confident body language, and a lot of eye contact are fine and well. But if a speech is rambling, illogical, or just plain boring, the impact will be lost.Now everyone can learn to give powerful, on-target speeches that capture an audience's attention and drive home a message. The key is not just in the delivery techniques, but in tapping into the power of language. Prepared by an award-winning writer, this authoritative speech-writing guide covers every essential element of a great speech, including outlining and organizing, beginning with a bang, making use of action verbs and vivid nouns, and handling questions from the audience. Plus, the book includes excerpts from some of history's most memorable speeches -- eloquent words to contemplate and emulate.
The Intelligent Investor
'By far the best book on investing ever written' claims Warren Buffett. Originally published in 1949, it's admittedly not the easiest of reads, but Benjamin Graham's tome remains the definitive guide to value investing. Chapter 8, 'The Investor and Market Fluctuations' and Chapter 20, 'Margin of Safety as the Central Concept of Investment' are seminal works that every budding Buffett must absorb.
Against the Gods: The Remarkable Story of Risk
"Against the Gods," a narrative that reads like a novel, chronicles the remarkable intellectual adventure that liberated humanity from the oracles and soothsayers by means of the powerful tools of risk management that are available to us today. This is a richly-woven tale of Greek philosophers and Arab mathematicians, of merchants and scientists, gamblers and philosophers, world-renowned intellects and obscure but inspired amateurs who helped discover the modern methods of putting the future at the service of the present, replacing helplessness before the fates with choice and decision.
Innovation and Entrepreneurship
Peter Drucker's classic book on innovation and entrepreneurship This is the first book to present innovation and entrepreneurship as a purposeful and systematic discipline that explains and analyzes the challenges and opportunities of America's new entrepreneurial economy. Superbly practical, Innovation and Entrepreneurship explains what established businesses, public service institutions, and new ventures need to know and do to succeed in today's economy.
The Effective Executive
The Effective Executive in Action is a journal based on Peter F. Drucker's classic and preeminent work on management and effectiveness -- The Effective Executive. Here Drucker and Maciariello provide executives, managers, and knowledge workers with a guide to effective action -- the central theme of Drucker's work. The authors take more than one hundred readings from Drucker's classic work, update them, and provide provocative questions to ponder and actions to take in order to improve your own work. Also included in this journal is a space for you to record your thoughts for later review and reflection. The Effective Executive in Action will teach you how to be a better leader and how to lead according to the five main pillars of Drucker's leadership philosophy.
On Being a Leader
This text delves into the qualities that define leadership, the people who exemplify it and the strategies that anyone can apply to become an effective leader. This new edition features a provocative introduction on the challenges and opportunities facing leaders today.
The Lost Art of the Great Speech
Splashy slides, confident body language, and a lot of eye contact are fine and well. But if a speech is rambling, illogical, or just plain boring, the impact will be lost.Now everyone can learn to give powerful, on-target speeches that capture an audience's attention and drive home a message. The key is not just in the delivery techniques, but in tapping into the power of language. Prepared by an award-winning writer, this authoritative speech-writing guide covers every essential element of a great speech, including outlining and organizing, beginning with a bang, making use of action verbs and vivid nouns, and handling questions from the audience. Plus, the book includes excerpts from some of history's most memorable speeches -- eloquent words to contemplate and emulate.
Monday, October 8, 2007
Professors' Recommended Reading List 2
Prof. Lekacos
The Definitive Drucker
The Definitive Drucker is a fascinating look into the ideas of the man who helped to shape the practice of management as we know it today. A great read for business majors, and up and coming executives.
The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics
It offers a way to think about economic growth and business management. This book explores the roots of modern economic theory and ultimately declares it outmoded and wrong. It suggests that markets and growth can be explained by drawing on the field of complexity economics: the study of markets and social systems as complex adaptive systems.
Prof. Laskowski
The World is Flat: The Globalized World in the Twenty-First Century
The beginning of the twenty-first century will be remembered, this book argues, not for military conflicts or political events, but for a whole age of globalization, a flattening' of the world. It attempts to demystify the exciting, often bewildering, global scene unfolding before our eyes, one which we sense but barely yet understand.
Winning
Winning is destined to become the bible of business for generations to come. It clearly and succinctly lays out the answers to the most difficult, important questions people face both on and off the job. Welch's objective is to speak to people at every level of the organization, in companies large and small. His audience is everyone from line workers to college students and MBAs, from project managers to senior executives. He describes his core business principles and devotes most of Winning to the real "stuff" of work--how to lead, hire, get ahead, even write a budget. Welch's optimistic, no excuses, get-it-done mind set is riveting. His goal is to help anyone and everyone who has a passion for success.
The Age of Turbulence
Greenspan's political memoir, which occupies the first half of the book, is readable, lucid and sometimes a bit thin on the dilemmas of monetary policy. In the book's second half, Greenspan the charmer makes way for Greenspan the technician, and the result is a 250-page essay on globalization. His overviews of Russia, India and China say little that is not familiar to attentive readers of the news. But the last chapter makes a powerful and remarkably self-deprecating point. Readers who persevere will feel rewarded.
The Definitive Drucker
The Definitive Drucker is a fascinating look into the ideas of the man who helped to shape the practice of management as we know it today. A great read for business majors, and up and coming executives.
The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics
It offers a way to think about economic growth and business management. This book explores the roots of modern economic theory and ultimately declares it outmoded and wrong. It suggests that markets and growth can be explained by drawing on the field of complexity economics: the study of markets and social systems as complex adaptive systems.
Prof. Laskowski
The World is Flat: The Globalized World in the Twenty-First Century
The beginning of the twenty-first century will be remembered, this book argues, not for military conflicts or political events, but for a whole age of globalization, a flattening' of the world. It attempts to demystify the exciting, often bewildering, global scene unfolding before our eyes, one which we sense but barely yet understand.
Winning
Winning is destined to become the bible of business for generations to come. It clearly and succinctly lays out the answers to the most difficult, important questions people face both on and off the job. Welch's objective is to speak to people at every level of the organization, in companies large and small. His audience is everyone from line workers to college students and MBAs, from project managers to senior executives. He describes his core business principles and devotes most of Winning to the real "stuff" of work--how to lead, hire, get ahead, even write a budget. Welch's optimistic, no excuses, get-it-done mind set is riveting. His goal is to help anyone and everyone who has a passion for success.The Age of Turbulence
Greenspan's political memoir, which occupies the first half of the book, is readable, lucid and sometimes a bit thin on the dilemmas of monetary policy. In the book's second half, Greenspan the charmer makes way for Greenspan the technician, and the result is a 250-page essay on globalization. His overviews of Russia, India and China say little that is not familiar to attentive readers of the news. But the last chapter makes a powerful and remarkably self-deprecating point. Readers who persevere will feel rewarded.
Sunday, October 7, 2007
Professors' Recommended Reading List 1
Hi! I will post a series of reading lists which I got from the professors of Stony Brook University. They are great professors, so let's see what they recommend us to read!!!
Prof. Palermo
Blue Ocean Strategy
W. Chan Kim and Renee Mauborgne argue that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Based on a study of 150 strategic moves spanning more than a hundred years and 30 industries, the authors argue that lasting success comes not from battling competitors, but from creating "blue oceans"--untapped new market spaces ripe for growth. Such strategic moves--which the authors call "value innovation"--create powerful leaps in value that often render rivals obsolete for more than a decade. Blue Ocean Strategy presents a systematic approach to making the competition irrelevant and outlines principles and tools any company can use to create and capture blue oceans. A landmark work that upends traditional thinking about strategy, this book charts a bold new path to winning the future.
The Essential Galbraith
It includes key selections from the most important works of John Kenneth Galbraith, one of the most distinguished writers of our time - from the affluent, the groundbreaking book in which he conined the tern "conventional wisdom," to the great crash, an unsurpassed account of the events that triggered America's worst economic crisis. Galbraith's new introductions place the works in their historical moment and make clear their enduring relevance for the new century. The essential galbraith will delight old admirers and introduce one of our most beloved writers to a new generation of readers. It is also an indispensable resource for scholars and students of economics, history, and politics, offering unparalleled access to the seminal writings of an extraordinary thinker.
Open Innovation
This collection investigates the phenomenon of "Open Innovation," in which firms draw on research and development that may lie outside their own boundaries. The book's contributors link the practice of innovation to the established body of innovation research, showing what's new and what's familiar in the process. Looking in depth at a process recently adopted by such leading firms as Intel and Cisco, this book will lead the intellectual debate in an increasingly important area.
One Up on Wall Street
If novice stock pickers were to buy just one book, it ought to be Peter Lynch's One Up On Wall Street. Lynch relays his proven investment talents into a punchy, no-nonsense, but light-hearted read. Brimming with straightforward stock market advice, anecdotal stories and many famous investment quotes, Lynch explains how to 'kick the tyres' and find small-cap growth stocks that evolve into ten-baggers.
How Technical Analysis Works
Written by Bruce M. Kamich. It’s a thorough new approach to technical analysis for professionals and smart investors explain the fundamentals of charting and analysis, explaining how to used technical analysis to identify trends and make a profit in today's volatile market.
The Little Book That Beats the Market
Short and Simple. This is Joel Greenblatt’s presentation of the magic formula (return on capital and earnings yield). You can play around with the magic formula by using the great investment tool built specifically for this book. “The Little Book” is undoubtedly one of the best investment books of the last half century. Required reading. Foreword by Andrew Tobias.
Prof. Palermo
Blue Ocean Strategy
W. Chan Kim and Renee Mauborgne argue that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Based on a study of 150 strategic moves spanning more than a hundred years and 30 industries, the authors argue that lasting success comes not from battling competitors, but from creating "blue oceans"--untapped new market spaces ripe for growth. Such strategic moves--which the authors call "value innovation"--create powerful leaps in value that often render rivals obsolete for more than a decade. Blue Ocean Strategy presents a systematic approach to making the competition irrelevant and outlines principles and tools any company can use to create and capture blue oceans. A landmark work that upends traditional thinking about strategy, this book charts a bold new path to winning the future.The Essential Galbraith
It includes key selections from the most important works of John Kenneth Galbraith, one of the most distinguished writers of our time - from the affluent, the groundbreaking book in which he conined the tern "conventional wisdom," to the great crash, an unsurpassed account of the events that triggered America's worst economic crisis. Galbraith's new introductions place the works in their historical moment and make clear their enduring relevance for the new century. The essential galbraith will delight old admirers and introduce one of our most beloved writers to a new generation of readers. It is also an indispensable resource for scholars and students of economics, history, and politics, offering unparalleled access to the seminal writings of an extraordinary thinker.Open Innovation
This collection investigates the phenomenon of "Open Innovation," in which firms draw on research and development that may lie outside their own boundaries. The book's contributors link the practice of innovation to the established body of innovation research, showing what's new and what's familiar in the process. Looking in depth at a process recently adopted by such leading firms as Intel and Cisco, this book will lead the intellectual debate in an increasingly important area.
One Up on Wall Street
If novice stock pickers were to buy just one book, it ought to be Peter Lynch's One Up On Wall Street. Lynch relays his proven investment talents into a punchy, no-nonsense, but light-hearted read. Brimming with straightforward stock market advice, anecdotal stories and many famous investment quotes, Lynch explains how to 'kick the tyres' and find small-cap growth stocks that evolve into ten-baggers.How Technical Analysis Works
Written by Bruce M. Kamich. It’s a thorough new approach to technical analysis for professionals and smart investors explain the fundamentals of charting and analysis, explaining how to used technical analysis to identify trends and make a profit in today's volatile market.
The Little Book That Beats the Market
Short and Simple. This is Joel Greenblatt’s presentation of the magic formula (return on capital and earnings yield). You can play around with the magic formula by using the great investment tool built specifically for this book. “The Little Book” is undoubtedly one of the best investment books of the last half century. Required reading. Foreword by Andrew Tobias.
Friday, October 5, 2007
The 3 most timeless Investments Principles
I want you everyone to read and implement this....!!
Warren Buffett is widely considered to be one of the greatest investors of all time, but if you were to ask him who he thinks is the greatest investor he would probably mention one man: his teacher, Benjamin Graham. Graham was an investor and investing mentor who is generally considered to be the father of security analysis and value investing.
His ideas and methods on investing are well documented in his books, "Security Analysis" (1934), and "The Intelligent Investor" (1949), which are two of the most famous investing texts. These texts are often considered to be requisite reading material for any investor, but they aren't easy reads. Here, we'll condense Graham's main investing principles and give you a head start on understanding his winning philosophy. (For more insight, read Ten Books Every Investor Should Read and The Intelligent Investor: Benjamin Graham.)
Principle No.1: Always Invest with a Margin of Safety
Margin of safety is the principle of buying a security at a significant discount to its intrinsic value, which is thought to not only provide high-return opportunities, but also to minimize the downside risk of an investment. In simple terms, Graham's goal was to buy assets worth $1 for $0.50. He did this very, very well.
To Graham, these business assets may have been valuable because of their stable earning power or simply because of their liquid cash value. It wasn't uncommon, for example, for Graham to invest in stocks where the liquid assets on the balance sheet (net of all debt) were worth more than the total market cap of the company (also known as "net nets" to Graham followers). This means that Graham was effectively buying businesses for nothing. While he had a number of other strategies, this was the typical investment strategy for Graham. (For more on this strategy, read What Is Warren Buffett's Investing Style?)
This concept is very important for investors to note, as value investing can provide substantial profits once the market inevitably re-evaluates the stock and ups its price to fair value. It also provides protection on the downside if things don't work out as planned and the business falters. The safety net of buying an underlying business for much less than it is worth was the central theme of Graham's success. When chosen carefully, Graham found that a further decline in these undervalued stocks occurred infrequently.
While many of Graham's students succeeded using their own strategies, they all shared the main idea of the "margin of safety".
Principle No.2: Expect Volatility and Profit from It
Investing in stocks means dealing with volatility. Instead of running for the exits during times of market stress, the smart investor greets downturns as chances to find great investments. Graham illustrated this with the analogy of "Mr. Market", the imaginary business partner of each and every investor. Mr. Market offers investors a daily price quote at which he would either buy an investor out or sell his share of the business. Sometimes, he will be excited about the prospects for the business and quote a high price. At other times, he is depressed about the business's prospects and will quote a low price.
Because the stock market has these same emotions, the lesson here is that you shouldn't let Mr. Market's views dictate your own emotions, or worse, lead you in your investment decisions. Instead, you should form your own estimates of the business's value based on a sound and rational examination of the facts. Furthermore, you should only buy when the price offered makes sense and sell when the price becomes too high. Put another way, the market will fluctuate - sometimes wildly - but rather than fearing volatility, use it to your advantage to get bargains in the market or to sell out when your holdings become way overvalued.
Here are two strategies that Graham suggested to help mitigate the negative effects of market volatility:
Dollar-Cost Averaging
Dollar-cost averaging is achieved by buying equal dollar amounts of investments at regular intervals. It takes advantage of dips in the price and means that an investor doesn't have to be concerned about buying his or her entire position at the top of the market. Dollar-cost averaging is ideal for passive investors and alleviates them of the responsibility of choosing when and at what price to buy their positions. (For more, read DCA: It Gets You In At The Bottom and Dollar-Cost Averaging Pays.)
Investing in Stocks and Bonds
Graham recommended distributing one's portfolio evenly between stocks and bonds as a way to preserve capital in market downturns while still achieving growth of capital through bond income. Remember, Graham's philosophy was, first and foremost, to preserve capital, and then to try to make it grow. He suggested having 25-75% of your investments in bonds, and varying this based on market conditions. This strategy had the added advantage of keeping investors from boredom, which leads to the temptation to participate in unprofitable trading (i.e. speculating). (To learn more, read The Importance Of Diversification.)
Principle No.3: Know What Kind of Investor You Are
Graham advised that investors know their investment selves. To illustrate this, he made clear distinctions among various groups operating in the stock market.
Active Vs. Passive
Graham referred to active and passive investors as "enterprising investors" and "defensive investors".
You only have two real choices: The first is to make a serious commitment in time and energy to become a good investor who equates the quality and amount of hands-on research with the expected return. If this isn't your cup of tea, then be content to get a passive, and possibly lower, return but with much less time and work. Graham turned the academic notion of "risk = return" on its head. For him, "Work = Return". The more work you put into your investments, the higher your return should be.
If you have neither the time nor the inclination to do quality research on your investments, then investing in an index is a good alternative. Graham said that the defensive investor could get an average return by simply buying the 30 stocks of the Dow Jones Industrial Average in equal amounts. Both Graham and Buffett said that getting even an average return - for example, equaling the return of the S&P 500 - is more of an accomplishment than it might seem. The fallacy that many people buy into, according to Graham, is that if it's so easy to get an average return with little or no work (through indexing), then just a little more work should yield a slightly higher return. The reality is that most people who try this end up doing much worse than average.
Warren Buffett is widely considered to be one of the greatest investors of all time, but if you were to ask him who he thinks is the greatest investor he would probably mention one man: his teacher, Benjamin Graham. Graham was an investor and investing mentor who is generally considered to be the father of security analysis and value investing.
His ideas and methods on investing are well documented in his books, "Security Analysis" (1934), and "The Intelligent Investor" (1949), which are two of the most famous investing texts. These texts are often considered to be requisite reading material for any investor, but they aren't easy reads. Here, we'll condense Graham's main investing principles and give you a head start on understanding his winning philosophy. (For more insight, read Ten Books Every Investor Should Read and The Intelligent Investor: Benjamin Graham.)
Principle No.1: Always Invest with a Margin of Safety
Margin of safety is the principle of buying a security at a significant discount to its intrinsic value, which is thought to not only provide high-return opportunities, but also to minimize the downside risk of an investment. In simple terms, Graham's goal was to buy assets worth $1 for $0.50. He did this very, very well.
To Graham, these business assets may have been valuable because of their stable earning power or simply because of their liquid cash value. It wasn't uncommon, for example, for Graham to invest in stocks where the liquid assets on the balance sheet (net of all debt) were worth more than the total market cap of the company (also known as "net nets" to Graham followers). This means that Graham was effectively buying businesses for nothing. While he had a number of other strategies, this was the typical investment strategy for Graham. (For more on this strategy, read What Is Warren Buffett's Investing Style?)
This concept is very important for investors to note, as value investing can provide substantial profits once the market inevitably re-evaluates the stock and ups its price to fair value. It also provides protection on the downside if things don't work out as planned and the business falters. The safety net of buying an underlying business for much less than it is worth was the central theme of Graham's success. When chosen carefully, Graham found that a further decline in these undervalued stocks occurred infrequently.
While many of Graham's students succeeded using their own strategies, they all shared the main idea of the "margin of safety".
Principle No.2: Expect Volatility and Profit from It
Investing in stocks means dealing with volatility. Instead of running for the exits during times of market stress, the smart investor greets downturns as chances to find great investments. Graham illustrated this with the analogy of "Mr. Market", the imaginary business partner of each and every investor. Mr. Market offers investors a daily price quote at which he would either buy an investor out or sell his share of the business. Sometimes, he will be excited about the prospects for the business and quote a high price. At other times, he is depressed about the business's prospects and will quote a low price.
Because the stock market has these same emotions, the lesson here is that you shouldn't let Mr. Market's views dictate your own emotions, or worse, lead you in your investment decisions. Instead, you should form your own estimates of the business's value based on a sound and rational examination of the facts. Furthermore, you should only buy when the price offered makes sense and sell when the price becomes too high. Put another way, the market will fluctuate - sometimes wildly - but rather than fearing volatility, use it to your advantage to get bargains in the market or to sell out when your holdings become way overvalued.
Here are two strategies that Graham suggested to help mitigate the negative effects of market volatility:
Dollar-Cost Averaging
Dollar-cost averaging is achieved by buying equal dollar amounts of investments at regular intervals. It takes advantage of dips in the price and means that an investor doesn't have to be concerned about buying his or her entire position at the top of the market. Dollar-cost averaging is ideal for passive investors and alleviates them of the responsibility of choosing when and at what price to buy their positions. (For more, read DCA: It Gets You In At The Bottom and Dollar-Cost Averaging Pays.)
Investing in Stocks and Bonds
Graham recommended distributing one's portfolio evenly between stocks and bonds as a way to preserve capital in market downturns while still achieving growth of capital through bond income. Remember, Graham's philosophy was, first and foremost, to preserve capital, and then to try to make it grow. He suggested having 25-75% of your investments in bonds, and varying this based on market conditions. This strategy had the added advantage of keeping investors from boredom, which leads to the temptation to participate in unprofitable trading (i.e. speculating). (To learn more, read The Importance Of Diversification.)
Principle No.3: Know What Kind of Investor You Are
Graham advised that investors know their investment selves. To illustrate this, he made clear distinctions among various groups operating in the stock market.
Active Vs. Passive
Graham referred to active and passive investors as "enterprising investors" and "defensive investors".
You only have two real choices: The first is to make a serious commitment in time and energy to become a good investor who equates the quality and amount of hands-on research with the expected return. If this isn't your cup of tea, then be content to get a passive, and possibly lower, return but with much less time and work. Graham turned the academic notion of "risk = return" on its head. For him, "Work = Return". The more work you put into your investments, the higher your return should be.
If you have neither the time nor the inclination to do quality research on your investments, then investing in an index is a good alternative. Graham said that the defensive investor could get an average return by simply buying the 30 stocks of the Dow Jones Industrial Average in equal amounts. Both Graham and Buffett said that getting even an average return - for example, equaling the return of the S&P 500 - is more of an accomplishment than it might seem. The fallacy that many people buy into, according to Graham, is that if it's so easy to get an average return with little or no work (through indexing), then just a little more work should yield a slightly higher return. The reality is that most people who try this end up doing much worse than average.
Well this is something u really dont wanna miss upon???
Why does the majority of my mortgage payment start out as interest and gradually move toward mostly principal?
--------------------------------------------------------------------------------
When you make a mortgage payment, the amount paid is a combination of an interest charge and principal repayment. Over the life of the mortgage, the portions of interest to principal will change.
At first, your payment will be primarily interest, with a small amount of principal included. As the mortgage matures, the principal portion of the payment will increase and the interest portion will decrease. This is due to the interest charge being calculated off the present outstanding balance of the mortgage, which decreases as more principal is repaid. The smaller the mortgage principal, the less interest is charged. (If you have negative amortization and your mortgage is actually growing in debt, see Understanding the Mortgage Payment Structure.)
For example, let's examine a simple mortgage for $100,000 at an interest rate of 4% annually and a time to maturity of 24 years. The yearly mortgage payment is $6,558.68. The first payment will consist of an interest charge of $4,000 ($100,000 x 4%) and a principal repayment of $2558.68 ($6,558.68 - $4,000). The outstanding mortgage balance after this payment is $97,441.32 ($100,000 - $2,558.68). The next payment is equal to the first, $6558.68, but will now have a different proportion of interest to principal. The interest charge for the second payment equals $3,897.65 ($97,441.32 x 4%), while the principal prepayment is $2,661.03 ($6,558.68 - $3,897.65).
The principal portion of the second payment is about $100 larger than the first. This occurs because you've paid money towards the principal amount - lessening it - and the new interest payment is calculated on the lower principal amount. Near the end of the mortgage, the payments will be primarily principal repayments
Why does the majority of my mortgage payment start out as interest and gradually move toward mostly principal?
--------------------------------------------------------------------------------
When you make a mortgage payment, the amount paid is a combination of an interest charge and principal repayment. Over the life of the mortgage, the portions of interest to principal will change.
At first, your payment will be primarily interest, with a small amount of principal included. As the mortgage matures, the principal portion of the payment will increase and the interest portion will decrease. This is due to the interest charge being calculated off the present outstanding balance of the mortgage, which decreases as more principal is repaid. The smaller the mortgage principal, the less interest is charged. (If you have negative amortization and your mortgage is actually growing in debt, see Understanding the Mortgage Payment Structure.)
For example, let's examine a simple mortgage for $100,000 at an interest rate of 4% annually and a time to maturity of 24 years. The yearly mortgage payment is $6,558.68. The first payment will consist of an interest charge of $4,000 ($100,000 x 4%) and a principal repayment of $2558.68 ($6,558.68 - $4,000). The outstanding mortgage balance after this payment is $97,441.32 ($100,000 - $2,558.68). The next payment is equal to the first, $6558.68, but will now have a different proportion of interest to principal. The interest charge for the second payment equals $3,897.65 ($97,441.32 x 4%), while the principal prepayment is $2,661.03 ($6,558.68 - $3,897.65).
The principal portion of the second payment is about $100 larger than the first. This occurs because you've paid money towards the principal amount - lessening it - and the new interest payment is calculated on the lower principal amount. Near the end of the mortgage, the payments will be primarily principal repayments
Monday, October 1, 2007
some tips i hade like to share
So what do you buy? Well, if you're more conservative, you simply buy up some index funds and enjoy the ride. Or, if you're a bit more aggressive, you can snap up some of those ProShares I've written about before, which are leveraged index funds - more risk, but more reward should things appreciate. (Actually buying some leveraged index funds on weakness is a great way to get your foot in the door of this bull move, as you search for stocks to buy.) For our part, however, we like individual stocks and sectors. And the good news is, this market is shaping up to be a "something for everyone" market - already, a ton of different sectors are participating. Gold stocks, believe it or not, have blasted out of very long basing structures as gold prices have done the same. No, it's not changing the world, but with lower rates and a weaker U.S. dollar, we think the move has legs. Agnico Eagle (AEM) is one Tim has mentioned, and Randgold (GOLD) is a smaller, more volatile play on the sector. Wireless stocks are in favor. Research in Motion (RIMM) is a monster, Apple (AAPL) is setting up in a (sloppy) base and Nokia (NOK) is aiming to be the next Apple, as it diversifies into wireless services, not just handsets. Internet stocks are gaining traction. Google (GOOG) is setting up a base on top of a prior base, Amazon (AMZN) is crawling above resistance, while eBay (EBAY) has rocketed to its highest level in 17 months. Solar stocks are coming back. LDK Solar (LDK), JA Solar (JASO), and Yingli Green Energy (YGE) hit new highs last week, while SunPower (SPWR) and First Solar (FSLR) are coming on strong. Chip stocks are attracting money. Nvidia (NVDA) and Sigma Designs (SIGM) are two leaders in the group. Traditional technology stocks are looking good. Oracle (ORCL) just ripped out of a base on the back of terrific earnings, while Cisco (CSCO) and Juniper (JNPR) ride the wave of strong networking demand. And oil service firms are moving straight up as investors foresee accelerated exploration spending by the majors with oil north of $80. National Oilwell (NOV), Cameron (CAM), Oceaneering (OII) and FMC Tech (FTI) are a few doing well. Just note that the group is due for some type of pause. This strong breadth this early in an advance (we're just 5 weeks off the bottom) is a good sign that the traditional year-end rally could, for all intents and purposes, already be underway. However, there is one sector that's far and away the strongest in the market today - and for good reason! The most interesting part? It's not really a "sector" at all. --- ADVERTISEMENT --- Don't Invest in China Until You Read This Special Report Could the great ride we've had in China stocks be coming to an end? Consider that economic growth has exploded to an 11-year high of 11.9%, inflation has surged to a near three year high of 4.4%, and food prices have risen an unheard of 11.3%. Does this mean China's economy is close to overheating... or is it on track to deliver even greater profits to those who invest now? According to Paul Goodwin, editor of the Cabot China & Emerging Markets Report, China's economy is sizzling, BUT there's another side to this story... one that proves that the Chinese economy isn't overheating but is growing in a way that will make the profits we banked in Ctrip - up 144%, Focus Media - up 80%, and China Mobile - up 57%, look like chump change.
The Fed's interest rate cuts last week lit a fire under the market, and I'm predicting that this fire will burn for a long time. Supporting this conclusion are a number of market timing indicators ... but I'm not going to write about them here. Instead, I want to write about the very best way to make money in strong bull markets - investing in stocks with strong momentum. Now, I'm not talking about short-term hot stocks - I'm talking about those stocks that are outperforming the market and are under intense accumulation by big institutional investors. Stocks with strong momentum can fatten your portfolio fast. They might be fast-growing retailers like Crocs (CROX), which has doubled since its May breakout. They might be Chinese stocks like Aluminum Corp of China (ACH), which has gained 95% since its August low. Or they might be technology companies like Research in Motion (RIMM), which has soared 65% since it gapped up into new-high territory at the end of June. In other words, with momentum stocks, anything goes ... as long as it's going up fast!
The Fed's interest rate cuts last week lit a fire under the market, and I'm predicting that this fire will burn for a long time. Supporting this conclusion are a number of market timing indicators ... but I'm not going to write about them here. Instead, I want to write about the very best way to make money in strong bull markets - investing in stocks with strong momentum. Now, I'm not talking about short-term hot stocks - I'm talking about those stocks that are outperforming the market and are under intense accumulation by big institutional investors. Stocks with strong momentum can fatten your portfolio fast. They might be fast-growing retailers like Crocs (CROX), which has doubled since its May breakout. They might be Chinese stocks like Aluminum Corp of China (ACH), which has gained 95% since its August low. Or they might be technology companies like Research in Motion (RIMM), which has soared 65% since it gapped up into new-high territory at the end of June. In other words, with momentum stocks, anything goes ... as long as it's going up fast!
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