Fortune Watch

The initial exchange gave way to a group of merchants who banned together to form the New York Stock Exchange. This initial assembly of men met every day on Wall Street to trade their stocks and bonds – an outdoor ritual that lasted through to the early 1900s, when commerce moved indoors. Today, investment on this scale has come full circle – operating outside the bricks and mortar of traditional trading. Today’s investors operate en masse through the Internet, buying and selling stocks online with the click of a mouse.

Buying and selling stocks online has become the new way of investing. In this chaotic world of long work hours combined with the juggling of frenzied family schedules, the computer has taken an ever-increasing role – giving us a place to work, communicate, and be entertained any time of day from the comfort of our homes. The computer has also taken an ever-increasing role in investing, offering consumers the opportunity to trade online. Several reputable companies have pioneered the online investment arena where they have kept pace with the changing needs of today’s modern investors.

In accessing stocks online, investors have been given access to a bevy of services previously only obtained through visiting brokers in the brick and mortar world of finance. Online investment through reputable brokerage companies requires investors to set up an account through the website. They can then access their financial portfolio at the touch of a mouse. Additionally, these companies will offer up-to-the-minute stock quotes, historical performance and forecasts for each stock, as well as in-depth information about each of the companies.

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If you have your card stolen or you think you have been the victim of credit card fraud, then you need to sort the problem out as quickly as possible.

Credit card fraud is becoming more and more of a problem, and if you are not careful then you could lose money to fraudsters. If you are worried about fraud but are unsure how you can protect yourself and your credit cards, then this article could help you. Here are some useful tips and advice about how to protect yourself from credit card fraud:

The methods and types of fraud are increasing as criminals learn new techniques and get improved technology. The most common methods of fraud today include: Copying and ‘cloning’ of cards, ATM fraud, Internet card fraud,PIN number stealing.

All of these methods are used more commonly than ever before to effectively steal your money. Obviously, it is impossible to totally eliminate the problem of credit card fraud, but there are things you can do to greatly reduce the risks.

Keep cards close. Make sure that you never let your cards out of your sight. Never leave cards unattended, and certainly don’t lend your card to anyone. If you are paying in a restaurant or shop, make sure you pay attention as to where your card is, especially credit card processing machines. A common method used to copy your card is to get the details whilst you pay, so keep an eye on your card at all times.

Whenever you get a receipt or a credit card bill, check that all the items and amounts are correct. If there are any amounts that you are unsure about, contact your card issuer immediately. Any paperwork that you throw away should be disposed of properly. Shred documents so that people cannot go through your rubbish and discover your card details.

Look behind you. When withdrawing money from a cash machine, make sure no one is looking over your shoulder to read your PIN. The easiest way for someone to use your card illegally is to see your PIN and then steal the card. Also, make sure you never keep a written record of your PIN, especially near your cards.

Use reputable firms. When buying on the Internet, make sure that you only purchase items from large and well-established providers. Small or unknown providers should be avoided as even if they are genuine, their security and encryption may be poor and allow fraudsters to access your details.

Keep contact numbers. If you have your card stolen or you think you have been the victim of credit card fraud, then you need to sort the problem out as quickly as possible. Keep all the contact numbers for your card issuer in a safe place so that you can call them up and sort out problems immediately. If you are careful and act quickly, you can limit the damage of fraud or prevent it occurring at all.

The world of stocks is a highly dynamic one. One has to constantly be on his/her toes in order to keep abreast of the latest developments taking place. To a layperson, it can be intimidating, with stock prices constantly changing every second.

Of course, we have seen during the (in) famous market crashes that can happen when things do not go according to what the markets expect. When unexpected events and their sudden impact on stock prices make even the most experienced among us quiver, imagine what the common investor must be thinking!

However, I am of the belief that certain simple investing habits, if inculcated well into one’s behavior can make one’s investing experience more comfortable and rewarding..

In this write-up I shall restrict myself with stock market investing. As such, the term ‘investing’ used in this article will simply imply investing in the stock markets. Let us now take a look at some characteristics effective investors possess.

Begin with the end in mind: Investing, in its broadest sense, is one of the most basic and important processes of preparing oneself for meeting future financial needs like child education and marriage and retirement. And stock market investing is no different. It has to be followed like a process with an aim of achieving your future financial needs. Started early, and done in a systematic manner, investing in good quality companies can help an investor generate good returns over a long-term.

Think ‘risk-risk’: In making an investment decision, apart from returns, there is one more very important factor that should weigh heavy on your minds — risk.

Simply defined, it is the uncertainty of happening/non-happening of a certain event(s) that is likely to affect future returns. A risk is generally attributed to external factors that create disturbance in the existing scheme of things. Some of these external factors are geo-political uncertainties (elections, terrorist attacks and wars), financial crisis and economic downturn.

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Perfection is achieved not when there is nothing more to add, but when there is nothing left to take away.

What, you may ask, is the connection between minimalism and investments? A very close connection, I think. When I look at the market for investment products today, and see the kind of investment portfolios that people are collecting, I think there’s a strong need for a self-conscious and aggressive minimalism in investment planning. What is happening now is the very opposite. The loudest messages about investments and savings that reach people are advertising about the launch of new mutual funds. This collective impact of these messages is to fabricate the idea that your investment needs are best met by portioning out little bits of your savings into a large number of exotic and specialized mutual funds.

Here’s a sampling of just the last few months. There are funds specializing in different sizes of companies-large, medium, small and micro. There’s a fund for companies that are facing ‘unique’ situations, which are apparently different from ‘special’ situations. There’s a fund for investing in companies that will benefit from increased infrastructure spending and one for only companies that will benefit from increased consumer spending. There’s a fund for investing in companies that are growing fast and another one only for companies that will grow fast in the long-term. There are even some funds that specialize in companies of all sizes although that’s clearly a meaning of the word ‘specialize’ that’s not there in any dictionary that I have seen.

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Risk perception is the subjective judgment that people make about the characteristics and severity of a risk.

As I’m writing this piece, a friend of mine and his wife are discussing the cancellation of a holiday to the hill station.. But my friends’ problem is this that an accident took place around the place he wanted to visit a few days back and killing 12 tourists. Now, my friends think that hill roads are too risky to travel on. They are too risky, aren’t they? Well, compared to what?

Human beings perceive and calculate risk in a very non-linear fashion. This may have been OK till prehistoric times but in the modern world, our perception of risk means we are often unable to take the correct decisions in everything from where to go on a holiday to where to invest our money. Savings and investing decisions are almost entirely about how we absorb and process risk-related information and how we balance this out with rewards and gains.

As it happened, when my friends told me about this recent crisis, I had just read an article titled ‘Rare Risk and Overreactions’. It says that human brains are not very good at probability and risk analysis, especially when it comes to rare and unfamiliar events. We tend to exaggerate spectacular, strange and rare events, and downplay ordinary, familiar and common ones. Our brains are much better at processing the simple risks we’ve had to deal with throughout most of our species’ existence, and much poorer at evaluating the complex risks society forces us to face today.

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When you buy a company’s stock, you are investing in the future growth of the company. Yet, the stock’s price may float up or down based on some broad market or economic factors that may only indirectly effect the company.

For example, the possibility (not certainty) of increased inflation will send the overall market into a slump, especially if the Federal Reserve Board expresses its concern. That concern is seen as translating into higher interest rates to head off any rise in inflation before it gets started. Increased interest rates are bad news for most businesses.

Likewise, pronouncements that the economy is expected to grow at a robust rate is usually a bad sign for the market because it means they will probably be less inclined to cut interest rates – to avoid overheating the economy and fueling inflation.

The trick for investors is understanding which market-moving factors may also directly affect the company and its stock.

Major demographic changes may have a much more permanent effect on a company than temporary fluctuations in interest rates, for example. Aging baby boomers will create opportunities for some companies and problems for others. Knowing the difference will mean investment mistakes avoided.

How do you know what is a major problem or opportunity for a company you own or are considering buying?The answer is to do your homework Study the company, its products and markets. The company Web site (if it doesn’t have a Web site, there’s a big problem) and annual report.

While you won’t find proprietary marketing data in these public forums, you can get a sense of whether the management has a sense of what is important to the future growth of the company.

And it is the future growth of the company that will generate the earnings to benefit shareholders.

Most working people dream of this thing called financial freedom. It certainly sounds like something we’d all want. But have you ever stopped to really think about what it means? It can mean different things to different people, so before you spend time looking for it, maybe it’s worthwhile to examine what the concept really means to you. After all, it’s hard to find something if you don’t know exactly what it is!

Time and money are inversely related. This means that in most cases, one can be traded for the other. And if you think of how that applies both to your everyday life and to the way business is conducted, it’s true. For example, you can spend your own time cleaning your house or mowing your lawn, or pay someone to do it for you, and free up the time for yourself. You can spend time researching on your own, or you can pay some money for someone else’s specialized knowledge in that same field.

With that idea in mind, financial freedom may be defined broadly as reaching the point where you no longer have to trade your time for money in order to provide for what you want in life. There are two key phrases in that idea – “no longer have to trade” and “what you want”. These are what you have to define for yourself, in order to determine what financial freedom means to you.

To many, financial freedom means just not having to work for a living. They dream of stepping off the treadmill of going to work everyday to pay the bills. Some may want to escape the stresses of the job itself, unpleasant working conditions, commuting, boredom, and so on. Others may just value more time to be with their families and pursue their own interests. For most people, it’s some combination of those.

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Here’s an old story that some of us have heard when we were children. A group of blind men want to know what an elephant is like and are taken to an elephant to figure its shape out for themselves. Each one touches a different part and thus gets a completely different idea of what the elephant is like. One touches its side and thinks the elephant is like a wall. Another one touches the trunk and thinks it to be like a snake. The one who touches the tail thinks that the elephant to be like a rope and the ears were like a fan and the tusks like spears and the legs like tree trunks and so on and so forth. The moral of the story is obvious. In some versions of this story the blind men become violent over their differences and beat each other up. The story is used to indicate that reality may be viewed differently depending upon one’s perspective. The problem, of course, is not the blind men are all wrong but they are all correct, but only partially so.

When the stock markets have fall sharply, losing about 5 per cent over five trading days. Newspapers and on TV channels, there are any number of blind men offering opinions about the elephant in the stock markets. Here are some of the more popular reasons. Worried about inflation and under pressure, the government will reduce duties on X and/or forbid the exports of Y and/or ban futures trading in Z and/or increase capital gains tax (either short-term or long-term) and/or an increase in the Securities Trading Tax and lots more.

All of it sounds like reasonable fears and any one could come true. In recent months, generally when I talked to big investors they seemed to be hunting for reasons to justify the rise in stocks. Now, they are desperately hunting for reasons to prove that stocks are going to fall. At the end of the day, the fact remains that after years of booming stock prices, everyone is nervous and knows that there will some kind of a correction and would like it be over and done with as quickly as possible.
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Every investor has several components that combine to make them successful. The degree of success depends on how well you can implement the components and how well your strategy works.

The method investors have for selecting shares that they want in their portfolio is arguably one of the most important areas of being a successful investor.

The next vital component is the trading plan. This doesn’t need to be overly complex you just need to know what you will do if the share price goes up, down or sideways. If you can cover these three things then you have a contingency for anything the share price can throw at you. And more importantly you will prevent yourself from reacting to market fluctuations.

The trading plan should also incorporate an overall strategy for the share that you have selected and explain the reasoning behind why you’re doing what you’re doing ie why you decided to place your order level at this particular point.

You will need a risk management strategy and to be successful in the long term you will need to implement the strategy. The number of times I’ve seen people unwilling to sell when the share reaches a risk price is a little bit scary.

The above three things are great to have in place but don’t forget that you must be disciplined in implementing them otherwise you’re setting yourself up for failure.

After identifying these strategic factors you should consider how much you are willing to outlay on each share. It is important to try and spend the same amount on each share ie $5000 across a portfolio of 10 shares in order to maintain a balanced portfolio. In other words don’t put all your eggs in one basket.

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A young couple came to me several years ago. At the time, they had a good combined annual income of over $100,000 yet owed $20,000 to credit cards, and they were adding debt at the rate of almost $2,000 per month. Despite their high income, they were spending considerably more than they were earning.

When we reviewed their situation, I discovered that a lawn service visited their home four times a month, at $85 per visit. I told them to cancel the service, and he replied, “But our lawn will look terrible if we do that! We must keep this expense.”

I also noticed that they subscribed to cable TV, including every premium channel — a monthly cost of $97! I told them to cancel cable. Monica gasped. “There will be nothing for us to watch! We can’t cancel cable!”

I’m sure you’ll agree with me that a lawn service and cable TV are optional, yet neither understood this. Both these expenses are optional, just as — pardon me for shocking you — almost your expenses are optional.

Health club membership? Optional. Entertainment? Optional. Telephone? Optional. Clothes? Most of it — or more accurately, the total money you spend on it — is optional.
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