Fortune Watch

Offshore investment is the keeping of money in a jurisdiction other than one’s country of residence. Offshore jurisdictions are a commonly accepted solution to reducing excessive tax burdens levied in most countries to both large and small scale investors alike.

Selected offshore domiciles are superficially viewed by some as havens used by to conceal or protect illegally acquired money from law enforcement in the investor’s country. Although this may be the case, legitimate investors also take advantage of higher rates of return or lower rates of tax on that return offered by operating via such domiciles. The advantage to this is that such operations are both legal and less costly than the solutions offered in the investor’s country – or “onshore”

Another reason why ‘offshore’ investment is superior to ‘onshore’ investment is because it is less regulated, and the behavior of the offshore investment provider, whether he is a banker, fund manager, trustee or stock-broker, is freer than it could be in a more regulated environment.

Offshore investing refers to a wide range of investment strategies that capitalize on advantages offered outside of an investor’s home country.

The most important advantage in offshore investing is that you can make a lot of money without paying almost any taxes. If the investor lives in a place where he pays taxes like most countries then he will only pay taxes on his dividend or interest made.

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In a bid to remain independent, Yahoo plans to reject Microsoft Corp.’s unsolicited takeover offer, according to reports on the Wall Street Journal’s web site.

Quoting sources familiar with the situation, the Journal reports that Yahoo’s board feels the offer of $31 per share “massively undervalues” the company. A letter spelling out the position is expected to be sent Monday. Yahoo also expressed concern that Microsoft’s offer does not account for risks to Yahoo should the deal be overturned by regulators.

The Journal source said the company would be unwilling to consider an offer below $40 per share, which would represent a $12 billion increase over Microsoft’s original $44.6 billion bid. It is unclear if Microsoft would be willing to increase its bid by such a significant amount.

The two companies have been in discussions about an alliance or merger for more than a year. Yahoo has long hoped to remain independent, believing it can reverse its fortunes and lift its flagging stock price.

In the summer of 2007, investors believed it was possible as well. Yahoo co-founder Jerry Yang replaced Terry Semel as CEO and announced he would unveil a new strategic plan for the company within 100 days.

“There will be no sacred cows and we need to move quickly,” he said. But, after the 100 days – and then some – passed, investor patience wore thin, driving the stock lower.

In late January, the slumping Internet pioneer reported a fifth-consecutive quarter of lower profits and warned of “headwinds” for 2008. Yahoo’s battered stock fell to a four-year low, below the $20 per share level, and Microsoft pounced.

Read Yahoo rejects Microsoft bid

No matter how much you’ve read about trading, or how much experience you have as a trader, it is difficult to trade profitably in a volatile market environment like the one we are in now. A rising market is often perceived to reflect optimism and investor faith. Enthusiasm and rejuvenated interest in the markets rides high. Many investors have multiplied their money manifolds.

Now, is it time to quit? Will the bubble burst? The investor has many questions and very few options before him. Strategies for a rising market are crucial and much depends on the risk appetite of the investor.

Don’t sell into the panic. Don’t buy the greed. This is of course obvious to say, but harder to execute when it is actually happening. When you have extreme market conditions, the individual stock movements can be big and rapid, and they are not necessarily, and in fact, usually not at all, related to fundamentals or economics.

Will the upswing continue? This is a difficult question and much depends on the factors that contribute to the bull run. Many perceive the market to be over-heated and fear to set foot in it. Others view corrections as an opportunity to make quick money. But this calls for quick decision-making and considerable tolerance to risk.

The unfailing strategy is to buy great companies with long track records of rising stock prices and dividends. Pick them low and hold on. Over a long haul, such companies with good fundamentals will not fail you. It is not unusual to find some stocks faring poorly in a bull market and some doing exceptionally well in a bear market. A bull run implies a booming economy, low unemployment rate, high production of goods and low inflation.

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A full-blown dollar crisis on top of a credit crunch and a weakening economy would be frightening. Thankfully, it need not happen. A lot of pressure is being put upon some Governments and, by extension, the Central Bank, to revalue the local currency exchange rate in relation to the US dollar.

Some financial experts are calling for a revaluation, one to take account of the dramatic decline the dollar has suffered over recent months.

Other financiers are saying the time has come for their currency to be del-inked to the dollar and set against a basket of currencies which would reflect a more realistic value of their currency on the world market. So far these calls have been resisted by many, for a number of reasons.

It is not sentimentality that compels a currency to retain the US dollar as its peg, but there is a recognized historical reason for doing so. Until recently, many Gulf countries relied solely upon exports of crude oil and refined products for its export earnings to support the economy.

Oil was and still is traded in American dollars so it made a lot of sense for Gulf , as nascent nations and emerging economies to link its currency to that with which most business would be conducted.

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A remarkable number of investors are deeply concerned about the size of the company to invest in. Unfortunately, unlike some other kinds of prejudices, not having a prejudice about size is not good. Let me explain. A few days ago I was talking to (or rather, I was being talked to) by a group of very enthusiastic investors. These were people who had dropped in to extract investment advice from me, despite my strong protestations that I had no advice to offer about any specific stocks.

However, it did not really matter because what they were interested in was displaying the high quality of the research that their brokers had provided them with. This research consisted, in its entirety, of a list of stocks that were about to go up. No actual reasoning and logic accompanied the list. In the olden days of the stock markets, this kind of research went under the term ‘tips’ but it has been re branded now

Anyway, one of things that struck me about the research-led investment strategies that they were discussing was the utter lack of any consideration for size. They consider the stock of a large company, with a high market value, and that of a company with a lower market value as alternatives to each other. This is so because the ‘research’ they are going by says that all these are likely to rise. This is deeply misguided way of evaluating stocks.

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If you don’t give customers a set of positive values that they will associate with you, expect to hear that often.

Companies have been sinking deeper into the bog of misunderstood marketing by entwining it with other business functions such as sales. To club them together is corporate suicide simply because marketing is about generating value and generating consumer appeal. Whereas sales is about building on the value generated by marketing activity.

Making sense of why we club these diverse aspects of a business’s activities is not hard. Director of Sales and Marketing – it sounds like a great job, but it’s actually two jobs, both complimentary of each other. It’s like the story of the chicken and the egg: nobody really knows which came first, but they do know that one cannot exist without the other and now companies are starting to realize that respect is due to both.

Executives view marketing as a necessary evil, but are now willing to allow the freedom it requires and only 23% of them say marketing makes a considerable value contribution.

To be successful in any business you need to master both sales and marketing but the idea that marketing can actually generate revenue, just like sales and service departments, is alien to many senior executives. And in organizations that consider marketing a vital function, the marketing team is under tremendous pressure to produce results and to produce them immediately.

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You may have heard the saying ‘If it sounds too good to be true, it probably isn’t true’. But how do you work out what could be too good to be true?

Start with the rate of return you have been offered. Most investments illustrate their rates of return using percentages. While that’s perfectly reasonable, research suggests that many people have trouble working out percentages, especially in their heads.

To determine how many years for your capital to double, you bring to mind the Rule of 72, which tells you to always divide the capital by the interest, and the result is in how many years it will be doubled. This is simpler than it seems. Before calculators or spreadsheets, investors used the trusty old ‘Rule of 72’.

How the Rule of 72 works

Suppose you were offered an investment with a return of 10% per year and you reinvested all your returns. How many years would it take to double the value of your original investment?

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“Recently, there have been several reports in the media on my personal wealth. Frankly, I am amused by these reports. I measure my success by the value that I create for my shareholders and the assets that we, as a company, create for the nation as a whole. My wealth and your wealth are inevitably linked to our growth.”

Mukesh Ambani the Indian Billionaire today became the richest person in the world, surpassing Mexican business tycoon Carlos Slim Helu, American software king Bill Gates,and famous investment guru Warren Buffett, following the latest the Bull run in the stock market.

Following a strong share price rally on in his three group company, India’s most valued firm Reliance Industries, Reliance Petroleum and Reliance Industrial Infrastructure Ltd, the net worth of Mukesh Ambani rose to $63.2 billion. A historical landmark for the nation’s economy, thus pushing Ambani to the top of the list. Mukesh Ambani owns Reliance Industries, India’s largest private sector enterprise with businesses in the energy and materials value chain. His personal stake in Reliance is 48 per cent.

In comparison, the net worth of both Gates and Slim is estimated to be slightly lower.

I wonder where his brother Anil Ambani stands. For those who don’t know, Mukesh and Anil Ambani are brothers who jointly owned Reliance Industries, before they broke up. I am inclined to believe that they would have made it to the top had they not split.

Given below are the five richest men in the world and their net worth:

1. Mukesh Ambani ($63.2 billion)

2. Carlos Slim Helu ($62.2993 billion)

3. William (Bill) Gates ($62.29 billion)

4. Warren Buffett ($55.9 billion)

5. Lakshmi Mittal ($50.9 billion)

Earlier on September 26, Ambani had overtaken steel czar Lakshmi Mittal to become the richest Indian in the world.

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Although we don’t like to admit it, fear can often motivate our investment decisions. That’s understandable — the thought of losing even a portion of your savings can be scary. But unfortunately, fear can distort reason and sound analysis, causing investors to ignore both risks and opportunities of investing. It can also lead to “financial paralysis” — when an investor is so afraid of making the wrong decisions, they fail to make any decisions at all.

On Tuesday, February 27 this year, the Dow Jones Industrial Average dropped 416 points—the markets sharpest drop in three years. Two emotions—fear and greed—can lead to bad investment decisions

Here are some quick tips to help overcome anxiety and fear, and allow you to take control of your investment future.

Investing can be dangerous yet profitable endeavor. Many people have been burnt and decide not to ever invest again. This is the primary fear for investing in anything. They may give you excuse such as ‘I don’t have enough money’ or ‘I don’t know where to invest’. But the number one fear is always the fear of losing money. If a novice investor knows that he won’t lose money, he must have used all means necessary (such as loan) to buy as much investment opportunity possible.

Investing here can mean a lot of things from buying gold coin to real estate. There are several ways of how to reduce your fear of investing in common stock.

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There was a one hour interview on CNBC with Warren Buffet, the third richest man in the world who has donated $37 billion to charity. (The richest now is Carlos Slim and Bill Gates is the second richest.) Here are some very interesting aspects of his life:

1. He bought his first share of stock at age 11 and he now regrets that he started too late!
2. He bought a small farm at age 14 with savings from delivering newspapers.
3. He still lives in the same, small 3-bedroom house in midtown Omaha that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall around it nor a fence.
4. He drives his own car everywhere and does not have a driver or security people around him.
5. He never travels by private jet, although he owns the world’s largest private jet company.
6. His company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis. He has given his CEO’s only two rules. Rule number 1: Do not lose any of your shareholder’s money. Rule number 2: Do not forget rule number 1.
7. He does not socialize with the high society crowd. His pastime after he gets home is to make himself some popcorn and watch television.
8. Bill Gates, the world’s richest man, met him for the first time only 5 years ago. Bill Gates did not think he had anything in common with Warren Buffet (other than money!). So, he had scheduled his meeting only for half hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.
9. Warren Buffet does not carry a cell phone, nor has a computer on his desk.

His advice to younger people:

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Stay away from credit cards, Invest in yourself. He is prepared, however, and does so regularly, to outline general principles of sound investment. These have a consistent theme and can be summed up like this.

A. Money doesn’t create man, but it is the man who created money.
B. Live your life as simple as you are.
C. Don’t do what others say. Just listen to them, but do what makes you feel good.
D. Don’t go on brand name. Wear those things in which you feel comfortable.
E. Don’t waste your money on unnecessary things. Spend on those who really are in need.
F. After all, it’s your life. Why give others the chance to rule your life.
G Never invest in a business you cannot understand.
H Always invest for the long term.
I Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway.
J If you’re doing something you love, you’re more likely to put your all into it, and that generally equates to making money.
K Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.
L In the short run, the market is a voting machine but in the long run it is a weighing machine.’