Posted by pakdi on July 17, 2008 – 4:28 pm
What is the relation between love and investing?
Here might be some excerpt that can tell about that.
Economics is the study of the allocation of scarce goods and services. What could be scarcer or more precious than love? It is rare, hard to come by and often fragile.
All right, next …
High-quality bonds consistently yield more return than junk, and so it is with high-quality love. As for the returns on bonds, I know that my comment will come as a surprise to people who have been brainwashed into thinking that junk bonds are free money. They aren’t. The data from the maven of bond research, W. Braddock Hickman, shows that junk debt outperforms high quality only in rare situations, because of the default risk.
In love, the data is even clearer. Stay with high-quality human beings. And once you find that you are in a junk relationship, sell immediately. Junk situations can look appealing and seductive, but junk is junk. Be wary of it unless you control the market.
and also …
Long-term investment pays off. The impatient day player will fare poorly without inside information or market-controlling power. He or she will have a few good days but years of agony in the world of love.
To coin a phrase: Fall in love in haste, repent at leisure.
Read more about Lessons in Love, by Way of Economics here.
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Posted by pakdi on July 13, 2008 – 9:41 pm
John Templeton (1912-2008) famously known as a value investor who bought $100 of every stock trading below $1 on the New York and American stock exchanges. Templeton’s trade got him a junk pile of some 104 companies, 34 of which were bankrupt, for a total investment of roughly $10,400. Four years later he sold these stocks for more than $40,000!
Among his famous quotes:
“If you want to have a better performance than the crowd, you must do things differently from the crowd.”
“When asked about living and working in the Bahamas during his management of the Templeton Group, Templeton replied, “I’ve found my results for investment clients were far better here than when I had my office in 30 Rockefeller Plaza. When you’re in Manhattan, it’s much more difficult to go opposite the crowd.”
More on him:
1. Trailblazing Investor Spotted Market Opportunities Where Others Weren’t Looking
2. The Greatest Investors: John Templeton
3. John Templeton 1912 - 2008
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Posted by pakdi on July 9, 2008 – 6:42 am
If you want to invest your money, you should consider to put your hard working money into index fund. That is one of the advice from Mr Warren Buffet. Unless you have the ability to do your own analysis. Thus ask your mutual fund / unit trust agent, “Do you sell any index fund Mr Salesperson?”
But if you decide not to index, John C Bogle on Common Sense of Mutual Funds, stated …
But if the beginning of simplicity is the index fund, it need not be the end. History suggests that, in the long run, only one of every five actively managed funds is apt to outpace the market index (after taxes, only one of seven). And some simple commonsense principles should help you to select them and to earn a generous portion of the market’s return - again, all too likely, less than 100 percent. If there are long odds against outpacing the market, going about the task of fund selection intelligently can at least help to guard against a significant failure. Even master investor Warren Buffett, a strong proponent of the index approach, concedes that there may be other ways to construct an investment portfolio:
“Should you choose… to construct your own portfolio, there are a few thoughts worth remembering. Intelligent investing is not complex, though that is far from saying that it is easy. What an investor needs is the ability to correctly evaluate selected businesses. Note the word ’selected’: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.”
The Prussian General Karl von Clausewitz once said, “The greatest enemy of a good plan is the dream of a perfect plan.” And, though I believe that an index strategy is a good strategy, you may want to seek a better plan, if not a perfect plan, no matter how great the challenge, no matter how overpowering the odds against implementing it with extraordinary success. So, much as I would urge you to commit your investments to an all-index-fund approach - or at least to follow an approach using index funds as the core of your portfolio - I’m going to offer you another simple approach: eight basic rules that should help you to capitalize on the advantages that have accounted for the historical ability of an index to provide superior returns. These eight rules are not complex. But they should help you to make intelligent fund selections for your investment program.
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Posted by pakdi on June 13, 2008 – 5:26 pm
These securities offer investors a new, innovative, relatively cost efficient and secure way to access the gold market. All of the securities are backed by allocated gold held in a vault on behalf of investors. They are intended to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that interest through the trading of a security on a regulated stock exchange. The introduction of exchange-traded gold securities is intended to lower many of the barriers such as access, custody, and transaction costs, which have prevented some investors from investing in gold.
More excerpt:
Why choose Gold?
Gold holds its own in any investment evaluation on its strengths as a hedge against inflation, value in the event of political uncertainties and its traditionally negative co-relation with other asset classes such as stocks, fixed income securities and commodities.
The value of goods and services that gold can buy has remained stable unlike currencies that have seen significant fluctuation. A study spanning a 400-year period has shown that the basket of goods and services that gold could buy over the period has remained the same.
Gold protects your portfolio from volatility because the factors, both at the macro-economic and micro-economic fronts that affect the returns from most asset classes do not significantly influence the price of gold. Just after 9/11, while stockmarkets and bonds crashed across the world, gold held steady and, in fact, rose on that day by six per cent.
For a given level of returns from a portfolio, the risk or volatility can be reduced by adding gold to it. Similarly, crises such as wars, which have a negative impact on prices of most asset classes, have a positive impact on gold prices since the demand for gold goes up as a safe haven for parking funds. It is the only medium of exchange completely free of credit risk as it does not imply a liability for any other entity.
Reading Sources on Gold ETF :
1. ETF Investors Going for Gold
2. Exchange Traded Gold
3. Gold ETFs & how they can make you rich
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Posted by pakdi on May 21, 2008 – 12:07 am
Q: What advice would you give to someone who is not a professional investor? Where should they put their money?
Answer from Warren Buffet:
Well, if they’re not going to be an active investor - and very few should try to do that - then they should just stay with index funds. Any low-cost index fund. And they shoud buy it over time. They are not going to be able to pick the right price and the right time. What they want to do is avoid the wrong price and wrong stock. You just make sure you own a piece of American business, and you don’t buy all at one time.
Source: Fortune Magazine (April 28, 2008)
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