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Buying a Stock? Keep In Mind Someone Else Is Selling … 2007-12-06 15:33:00 However intuitive it may be I can never shake that thought out of my mind when buying stocks or other financial assets. What does the seller know that I don’t? Or the buyer in case I’m selling. Why is he selling this stock? What’s wrong with it?People often attribute asymmetrical information to the other side of a deal. Buying
a used car or house is a good example. The seller obviously holds information you don’t. How’s the car running, how are the neighbors etc. Oddly enough people usually don’t think about asymmetrical information when buying stocks. Usually we are more occupied with our thoughts of a promising return on investment.Evidently, if you’re a household investor chances are you’re doing business with someone more experienced and more knowledgeable than you. As a household investor your resources for stock information and analysis are sparse and common. We all know what good are analyst recommendations or promising newspaper coverage.You really should start Read more:Stock
The 10-Step Formula for Building Wealth - By Jeffrey Strain for TheStreet.com 2007-12-05 10:48:00 Jeffrey strain has some great personal finance articles on Thestreet.com. I've added his author page to my recommended readings.In "The 10-Step Formula
for BuildingWealth
" Jeffery discusses age old advice as borrow, buy used, never pay retail price, forget brand names and more from a refreshing point of view.Quality articles are hard to find. So far I've been impressed with this author's writing.Other articles I've found interesting are:1. How to Prioritize Debt2. How to Save During the Holidays3. Why Multitasking Wastes Time and Money4. 10 Financial Steps You Can't Afford to Put Off5. Five Mistakes That Hurt Your Credit Score
Read more:Jeffrey
, Strain
Investment Basics Carnival #2 2007-12-05 09:23:00 The second edition of the investment basics carnival recieved 30 posts. Here are the better ones:1. Jose DeJesus MD presents Your Money - The Flight To Quality posted at Physician Entrepreneur- In the midst of hightened volatility in stock prices, there has been a flight to what are viewed as safer investments.2. Doug Boggs presents The Dollar vs. the Euro? posted at Boggs Development Group, LLC- Interesting discussion of a possible merge of Dollar and Euro3. The Career Counselor presents Seven Strategies to Stop Living Paycheck to Paycheck posted at ask the CareerCounselor- Simple, basic and effective.4. Leon Gettler presents Keeping up with the Joneses: bubbles and herding behavior posted at Sox First- Interesting analysis of herding behavior5. The Dividend Guy presents Quality Investing Quotes from Some Big Name Investors posted at The Dividend Guy Blog- Speaks for itself6. Logan Flatt, CFA presents It's Future Cash Flows, Stupid! posted at PowerWealth.com- Valuation Basics
7. rb pr Read more:Carnival
15 Tips for Saving Time on Emails - How to Make More Time Post #1 2007-12-03 12:57:00 As promised this is the first post in the series of "How to make more time". It turned out quite long but I think it's worth reading. We are virtually flooded by emails both in and out of our office. Emails
can be very time consuming when not dealt with properly. The main problems with email arise from its benefits. Email is very easy to operate, immediate, time efficient and free. As a result emails have become the preferred method of communication in business and private life.However, waste in emails is abundant. This is of course the case with any resource which is readily available and costs nothing. This doesn’t mean you can’t change that for both yourself and your organization. The advantages of emails significantly outweigh the disadvantages but with an extra effort emails can be really harnessed to empower your time management.Here are some tips and advice which can help you become more efficient and save you precious time on emails.1. Make a habit of reading emails early Read more:Saving
, Saving Time
How to Make More Time - A Series of Posts on the Biggest Time Consumers and the Efficient Ways to Deal with Them 2007-12-02 12:33:00 In December I plan to publish a series of 8-10 posts on how to make more time. I consider myself a very efficient person. In my professional life I’ve taken the time to observe daily routines and behaviors in order to make more free time for myself (writing can be very time consuming...).I intend to share my findings and some additional research on how to make more time by efficiently managing:1. Emails2. Cellular Phones3. Meetings4. Traffic5. Planning6. Management7. Time management (yup, Meta time management)8. InformationI would love to hear your ideas on how to make more time. Guest authors are more than welcomed.
10 Tips on How to Avoid Overspending In Supermarkets 2007-12-19 12:43:00 We are all educated consumers and we all have shopping lists we follow. However, we always find ourselves grabbing those 3-5 extra unplanned products. According to marketing experts some 75% of our decisions are actually made in the store itself. We, as consumers usually buy 30% more then we've planned on.Supermarkets are well aware of those numbers. How do we avoid overspending then?1. Your list should be as detailed as possible - Assume the following products are on my list: Bread, Coffee, Cereals etc. Which brand should I buy? And how much? We get our answers looking to the shelves. When shopping have a detailed list which includes brand names and quantities. Only shop for price per quantity.2. Know the floor plan of the store - Supermarkets are well organized to keep you trapped in for a long time. Dairy and meat products will always be located on corners and far away from the entrance. Popular products will be well scattered through out the store. Know where to get what you Read more:Avoid
In Search of the Perfect Meeting by Tom Krattenmaker 2007-12-18 14:30:00 I've recently added Harvard Business School Working Knowledge to my recommended readings. It is a very valuable resource for business leaders everywhere.As some of you know I've been posting a series on how to make more time by examining the biggest time consumers in our lives. I believe meetings answer that criteria and I've posted my thoughts on the matter a couple of days ago.Yesterday I ran into an article by Tom Krattenmaker for HBS which has some excellent advice on the how to make every meeting pay off by weighing the value and cost, avoiding meetings altogether, discouraging politics and more. If you were interested in my post I believe you'll find this article at least as interesting.Related Posts:1. 8 Tips for Efficient, Time Saving Use of Cellular Phones - How to Make More Time Post #22. 15 Tips for Saving Time on Emails - How to Make More Time Post #13. How to Make More Time - A Series of Posts on the Biggest Time Consumers and the Efficient Ways to Deal with Them4. Man Read more:Perfect
, Search
Risk Management - Pure Risk and Speculative Risk Explained 2007-12-17 14:49:00 Risk management is a relatively new and evolving field. Risk management usually refers to the process of identifying, measuring, controlling, and minimizing uncertainties which may directly or indirectly affect a desired outcome of a system. A great challenge indeed.Any process or procedure we can think of holds many uncertainties. Risk management tries to identify these uncertainties, assign probabilities and possible harm to each and every one and acts to minimize those risks.Two of the most basic terms used by risk managers are pure risks and speculative risks. All risks are historically associated to one of the two families. Understanding the motivation and reason behind this differentiation is key to taking your first steps in risk management.Every risk is at its base a known series of possible outcomes with possible benefits or harms. Each possibility has a known probability of realization (otherwise it is not a risk but an uncertainty and is dealt with differently).Pure risks ar Read more:Management
, Speculative
6 Tips on How to Conduct Efficient Meetings - How to Make More Time Post #3 2007-12-15 14:55:00 How many times have you found yourself staring blankly at the wall during another pointless meeting which seems to last for hours? I often find myself baffled at how senior management seems to be clueless when it comes to conducting efficient meetings.Conduct
ing efficient meetings might seem easy to achieve but is rather challenging. Many people aspire to express themselves and be heard and a meeting is just the place. A delicate balance needs to be achieved between avoiding the waste of time and avoiding insulting or hurting fellow workers.The best way to conduct efficient meetings is setting the right ground. By setting the right ground the meeting can be channeled to where we want it.Here are my recommendations on setting the right ground for efficient meetings:1. A meeting should have a clear goal - If you've decided to allocate your co-worker's precious time resource to a meeting be sure to have a clear and understandable goal. An example can be deciding on the next marketin Read more:Meetings
Sleeping That Extra Half Hour Should Be Costly - Battling Traffic Jams With the Proper Economic Incentives 2007-12-14 11:53:00 I was slowly making my way through traffic today when various thoughts occurred to me. This has been an especially tough week with traffic jams lasting forever.I'm curios as to the economic nature of traffic jams. Surely given the proper incentives traffic jams can be eased considerably. I myself consider standing in traffic jams a complete waste of precious time. This waste of a valuable resource is a strong enough incentive for me to leave home early and return late. This does not seem to be the case for everyone. It seems some people don't really mind their wasted time.I believe people often lack the understanding of economic value as utility and attribute it to money only. Their time is not as precious. An interesting experiment would be to try and translate that loss to a common and measurable quantifier: Money.The waste caused by traffic jams is enormous and encapsulates time, environmental damage, stress, noise, car wear and more. Clearly reducing traffic jams is an economic Read more:Economic
, Incentives
, Extra
, Sleeping
, Proper
, Battling
Cheap Marketing Tricks Supermarkets Employ: Avoid Overspending By Being Aware 2007-12-12 11:56:00 We are all educated consumers and we all have shopping lists we follow. However, we always find ourselves grabbing those 3-5 extra unplanned products.The richness and variety found in supermarkets is irresistible. As human beings we are faced with many attractive and seductive products aiming at our most basic needs. That, however, is not the whole story. Supermarkets employ a variety of marketing tricks to emphasizes that richness and tickle our buying bones.According to marketing experts some 75% of our decisions are actually made in the store itself. Consumers usually buy 30% more then they've planned on.What are the basic marketing tricks used by Supermarkets? These can be roughly divided into two categories: Location and attractiveness.Supermarket layout is carefully planned to fit sale forecasts, profitability and more per store space. Usually more popular products will be sold at the store's perimeter in corners thus making us travel the length and width of the store. Dairy Read more:Marketing
, Avoid
, Cheap
, Aware
8 Tips on How To Make Efficient, Time Saving Use of Cellular Phones - How to Make More Time Post #2 2007-12-10 14:39:00 This is a second post in a serious of posts on how to make more time. Be sure to take a look at the others. I'd love to hear ideas and suggestions from your experience.Lately I've noticed a very interesting thing. Many people call me at various hours of the day, always accompanied by the noise of traffic. They are always very keen to hear about my weekend or what I did last night. It didn't take long for me to understand I've become a means to pass time in traffic.Needless to say this is very costly in terms of time and even money. An inefficient allocation of resources such as traffic jams creates more inefficiency. One example is spending other people's time on meaningless calls (which are not always unwanted, but this is beside the point).Cellular phones present many potential benefits. Unfortunately, cell phones have become a pandemic of waste of both time and money. By making proper and efficient use of the possible benefits of cell phones you're bound to save both mone Read more:Phones
, Saving
Uncertainty and Risk differentiated - Is a Tactical Surprise Preferable to a Strategic Surprise? 2007-12-24 15:08:00 Risk management is a relatively new and evolving field. Risk management usually refers to the process of identifying, measuring, controlling, and minimizing uncertainties which may directly or indirectly affect a desired outcome of a system. A great challenge indeed.Any process or procedure we can think of holds many uncertainties. Risk management tries to identify these uncertainties, assign probabilities and possible harm to each and every one and acts to minimize those risks.One of the most counter intuitive questions in risk management basics is: What is the difference between risk and uncertainty? There are actually many differences; some are of the utmost importance to every organization and every manager.When every possible option and outcome is known a decision is said to be taken under certainty. Many academic models assume certainty due to their basic function of explaining and prediction. These are also the standards most models are judged by. The recent retreat from certain Read more:Strategic
, Surprise
, Tactical
, Preferable
, Uncertainty
Investment Basics Carnival #3 2007-12-22 11:58:00 Welcome to the 3rd edition of Investment BasicsCarnival
. We had 32 submission out of which 16 are posted.1. Blaine presents Frugality, America's worst nightmare posted at BlainePower.com2. ChristianPF presents Would Peter Lynch invest in Crocs? posted at Money in the Bible Christian Personal Finance Blog 3. Larry Russell presents The Fund Authority Score - A Better Mutual Fund and ETF Rating System posted at THE SKILLED INVESTOR Blog 4. Silicon Valley Blogger presents Latest Net Worth / Portfolio Numbers: Unexpected Increase Of +15% for 2007 posted at The Digerati Life 5. Sagar presents Top 50 Real Estate Marketing Bloggers posted at International Listings Blog6. Jason Elder presents Understanding How to Get a Loan After Bankruptcy posted at A Bankruptcy Lawyer's Blog7. Homo economicus presents Personal Diversification: Multiple Streams of Income posted at Homo economicus8. Valulicious presents Is Ben Graham Turning in His Grave?: Growth as the New Value posted at Valulicious9. Bonn
10 Tips on How to Make the Most of Time Spent In Traffic - How to Make More Time Post #4 2007-12-21 09:28:00 My forth post on how to make more time will focus on one of my most hated time consumers: Traffic. One of the painstaking problems of our modern lives is commuting. Getting stuck in traffic is a complete waste of time. On average Americans spend almost 40 hours a year in traffic. These numbers are much higher for people working in bigger cities. Just half an hour wasted on traffic back and forth, each day, quickly accumulates to 5 precious hours a week.I personally literally hate traffic. I get frustrated simply by thinking of all the other things I could have been doing instead. I have tried everything to make the best use of time spent in traffic. Here are my tips:1. Avoid it - An obvious start. Get up early, get back home earlier or later. Avoiding traffic altogether is the best possible remedy. You're obviously not reading this to be told to avoid traffic but if you take the time to think of it and try and change your daily routine you just might be able to save that time.I use
Dollar Reserves Might Change Future Investment Trends 2007-12-20 09:47:00 Foreign governments with tremendously high dollar reserves seem to be on the hunt for investments. As the dollar weakens and reserves erode governments find investing in American corporations more and more attractive.Investment banks seem to be in the spotlight these days after taking painful blows due to the subprime crisis. Apparently stock prices have become attractive enough especially for China and OPEC countries which have significant amounts of dollar reserves and are more the happy to answer the banks' cries for liquidity.The Chinese government has just announced, through it's investment corp (CIC), a $5 billion investment in Morgan Stanley after the latter announced a $9.4 billion write-down on subprime linked investments. This investment follows a 3 billion dollar investment in the private equity firm Blackshire group for just under 10% ownership.Abu-Dhabi recently purchased a $7.5 billion stake in City Group with what appears to be a change of strategy for the largest oil Read more:Dollar
, Change
, Future
, Trends
Is Present Value - Value in the Present? The Economic sense behind Net Present Value 2008-03-11 13:27:50 Present value is a very common financial tool which is used to determine the current value of a future sum of money. 1,000$ a year from now, at 5% interest, are worth approx. 952$ (As you could deposit 952$ today, with 5% interest and receive 1,000$ in a year). Discounting is the process of translating future sums of money to present value.Present value (or net present value in case of a series of timely cash flows) is also used to determine the economic feasibility of projects and entrepreneurships or in other words – Are they at all profitable? A project with a positive NPV is worth undertaking.Net present value (or NPV) is widely used. However, seldom do we question the economic justification to use this financial tool and the economic source of an NPV. Does a positive net present val Read more:Present
, Value
, Economic
, behind
10 Sure Ways to lose 50% of your investment 2008-03-07 09:03:32 Before I start I want to thank the “baglady” for choosing my article on “practical reasons why you should learn a foreign language” to be first on this week’s carnival of personal finance. I apologize for the delay in posts. This week has been hectic. And now, without further delays my post on 10 sure ways to lose 50% of your investment
.#1 Have you heard of technical analysis? I’ve read this book and I’m really cashing inTechnical analysis is a method of using data on a financial asset’s past behavior to foresee future trends. Technical analysis has always been regarded suspiciously by academic scholars yet attracted a huge crowd of supporters amongst investors and traders.In academic papers stocks are usually assumed to follow a pattern of “random walk”, meaning past p
Buying a Home – an In-Depth Look at the Process 2008-03-07 08:50:00 Buying a home is probably one of the more major decisions in our lives. I’ve decided to buy a home about a year ago. After a long and tedious year I can gladly say I’m writing this post from my new home. The process of buying a home is tedious, long and difficult both physically and mentally. It can be a bit easier with experience but I don’t think it changes much when you buy your second home later in life. It’s just the way it is.A year ago my wife and I decided we had enough of renting. We sat down and looked at our options and the process we’re about to go through. We had little knowledge and experience but we compensated for it with common sense and hard work (as everything in life).You can find your dream home in a short period of time and maybe even get a good deal on an a Read more:Buying
, Depth
, Process
The Role of Information in Stock and Capital Market Efficiency 2008-03-07 08:43:42 Market efficiency is a concept describing market behavior. The assumption about market efficiency is a basic assumption in many economic and financial models and is required in order to build fundamentals.At the basis of market efficiency are three assumptions:1. There is a multitude of sellers and buyers with no one dominant enough to affect pricing.2. There is homogeneity in products or services offered.3. Perfect information is available to everyone.These assumptions are required in order to demonstrate equilibrium of supply and demand which constitute the price and quantity of every product or service. These market dynamics also help in understanding the processes which takes place in inefficient markets.Capital Market Efficiency
The capital market is often regarded as a market which is Read more:Stock
, Market
The Need for Accountability in Advertising and Marketing 2008-02-25 14:10:22 I'm working on an in-depth post about the process of buying a home from deciding to moving in. I've recently completed the process myself and would like to share my advice and my experience in the matter. In the meantime I'm publishing this post I wrote for Helium.com some time ago in the hope you'll find it interesting.Accountability
, according to Merriam-Webster is “the quality or state of being accountable; especially: an obligation or willingness to accept responsibility or to account for one's actions”. Is there a place for accountability in advertising or marketing?Companies invest in advertising and marketing in order to build a brand, raise awareness to a product or service, target a new audience, increase market share and more.Intuitively, a more credible and accountable messa Read more:Advertising
, Marketing
Inflation, Frugality and Vampire Energy – RoundUp 2008-02-23 10:50:10 InflationYou guessed it. Talking inflation again. The NY Times published an article on Thursday discussing the problems facing the Fed as growth lags and inflation rises. As I’ve written in past posts the dilemma the Fed is facing is growing ever more difficult. With no foreseeable end to the slowdown and with prices increasing the danger of stagflation is becoming more and more real. The article discusses the following:1. Despite the short-term cut in interest rates home mortgage rates are on the rise.2. Prices jumped 4.3 percent in January, compared with one year earlier.3. The Fed adjusts the forecast for growth this year to an anemic pace of 1.3 to 2 percent. Joblessness is likely to climb to 5.3 percent, from 4.9 percent today.It's worth noting the current rise in prices is more dis Read more:Energy
, Inflation
, Frugality
, Vampire
, RoundUp
Inflation Rearing Its Ugly Head 2008-02-21 15:54:51 In January I wrote a post about the topics we will be discussing in 2008. Inflation
was definitely on the top of the list (commodities and China were on that list too). It appears this wasn’t for nothing. In the last couple of days a series of inflation related news suddenly accumulated. As always I’m here to sum it up in a post:#1 China’s inflation rose to 11 year highAnother topic staring the aforementioned list was China which has displayed rising inflation levels for some time now. The Chinese inflation rate rose to 7.1% for 12 months ending in January.#2 American food industrialists are concerned with price levelsLarry Pope, president and CEO of Smithfield foods, was quoted saying “There's going to be real food inflation in this country”. Wheat and meat prices are continuall
How does it feel like to lose over $50B? 2008-02-19 14:12:34 UBS shareholders have written off over $50B in the last couple of months. I can’t help but wonder how does that feel like? American companies are writing off hundreds of billions of dollar in subprime and alt-a mortgages. Housing prices continue to drop and on average each American citizen has lost more than we want to count (tens of thousands of dollars at the least).Why do most of our lives seem to go on relatively unaffected? I believe there are 4 basic reasons for this phenomenon:#1 Concentration of wealth results in concentration of lose as wellO n average the numbers point to almost 80% of the wealth in the US being held by 10% of families in (yet another interesting reference for the 80-20 principle). Naturally, when this is the case 90% of the families don’t take part in either
ETFs and Mutual Funds – The Slowdown Will Teach Us another Valuable Lesson 2008-02-17 12:21:24 ETFs have become the investment tool of the 21st century for household investors. It is true, they do have many advantages ranging from lower commission, better performance, tax considerations and more.With ETFs becoming increasingly popular more investors ask themselves why invest in mutual funds altogether?I am a big supporter of investing in ETFs. There’s nothing more enjoyable then watching how simple financial assets outperform the big money in mutual funds constantly preaching to the household investor when and what to buy. Mutual
fund managers have nearly completely failed in justifying the commissions they charge with very little abnormal returns to show for.However, and there is always an however, sometimes the judgment and discretion of an investment manager is required. If you Read more:Funds
, Slowdown
, Mutual Funds
Upcoming Tax Rebates, Spotting Genuine Market Lows and More 2008-02-16 05:16:05 I’ve just finished reading a very useful article in Yahoo about the upcoming tax rebates which I think you will find interesting. It addresses the basic questions of who’s entitled to get a check? How much will we get? What needs to be done? When can we expect the money? How to boost rebates? Etc... The article can be found here “Tax Rebate Winners and Losers”.Another interesting article I thought you’d like was published in “The Economist” titled “Bear Necessities”. This article deals with the notoriously difficult questions of how can one spot the difference between a genuine market low and the staging point for a short-lived “suckers” rally. The article discusses stock dividend yield vs. bond yields, p/e multipliers and the fear factor.My weekly roundup contains s Read more:Market
, Upcoming
, Rebates
, Spotting
, Genuine
No Room for Careful Optimism. Not yet Anyway 2008-02-14 11:05:49 We’ve seen some interesting developments this week. Some might be considered reasons for careful optimism regarding the chances of a full blown recession hitting the US. However, several less noticed news were also published which we should consider before reaching a conclusion.#1 Warren Buffet offers to reinsure municipal bondsThe oracle from Omaha, Mr. Warren Buffet, offered to reinsure $800B in municipal bonds to help the deteriorating bond insurance market. Naturally, If Mr. Buffet sees a business opportunity in insuring municipal bonds then it is likely that Buffet considers municipal bonds to be ‘good credit’ caught in a bad market situation.The insurance companies, Ambac, MBIA and FGIC, were definitely not too eager to accept the offer. One apparently turned it down already. I Read more:Careful
, Optimism
, Anyway
5 Practical Reasons Why You Should Definitely Learn a Foreign Language 2008-02-12 12:44:05 Intellectuals are often recognized by their ability to conduct fluent conversations in several languages, usually English, French and German. Being fluent in a foreign language is a pre-requirement for many academic programs and is often a mark of intelligence and capability.The majority of the non English world studies English as a default second language (as I have). That’s a step in the right direction. But I insist we should not stop there. I’ve decided to study French as an additional foreign language and urge my dear readers to do the same.The most common languages on earth are Mandarin Chinese (885 million speakers), Spanish (332 million), English (322 million), Bengali (189 million) and Hindi (182 million). The UN’s 5 official languages are: Chinese, English, French, Russian Read more:Practical
, Reasons
, Foreign
Investment Basics Carnival #6 and Weekly Round-up 2008-02-09 03:37:43 Welcome to the sixth edition of the "Investment BasicsCarnival
". We recieved a record 63 posts out of which 24 were chosen and are presented here.Investment Tips1. The Dividend Guy presents Investment Ideas from My Fridge posted at The Dividend Guy Blog- There are numerous ways to find stocks to analyze. I started by looking in my fridge.2. Phil B. presents Short-Term versus Long-Term Capital Gains posted at Phil for Humanity- Short-term investments must have a higher return just to guarantee the same profit over long-term investments because of the differences between short-term and long-term capital gains tax.3. FIRE Getters presents Our 7 Mutual Fund Investing Mistakes! posted at FIRE Finance- Common investing mistakes in mutual funds4. The Stock Teacher presents Tips For Cutting Down Read more:Weekly
Save Time and Money with These Tips for Organizing Your Personal and Financial Records 2008-02-07 12:13:08 Surely you easily remember that one time you couldn’t find the receipt for that pricy camera which suddenly stopped working after 3 months. Where did I put that? Or maybe last year’s tax filings or your marriage license? How about the guarantee for the TV?In our short lives we create and accumulate mass amounts of documents –never ending piles of paper. Unfortunately, they’re never there when we need them.Organizing your personal documents can save you precious time and money with little effort. Furthermore, having the history available, especially when it comes to bills and expanses can help you learn a lot about your spending habits and also help you with budgeting and managing expenses.#1 First and foremost you should defiantly keep the documentsAccumulating mass amounts of pape Read more:Money
, Personal
, Financial
, Records
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