CaseStudy.co.in» Finance

Costs Are Cool: The Strategic Value of Economic Clarity

admin — Sat, 07 Aug 2010 18:31:17 +0000

For most nonprofit organizations, the art of making tradeoffs is a condition of survival as well as a key element of success. With limited means to address substantial social challenges, nonprofit leaders constantly make choices about the most effective way to allocate available resources among competing priorities.
information about revenues (in the form of donations, grants, and earned income) is usually fairly solid, organizational knowledge about costs tends to be weak. This is particularly the case when it comes to the true, all-in costs of providing services, running programs and otherwise operating the organization. Lacking this information, nonprofit executives often end up having to make important resource-related decisions on the basis of intangibles such as intuition, the skills and knowledge of the program staff, or the preferences and inclinations of the organization’s funders.
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Delivering on the promise of non profit

admin — Sat, 07 Aug 2010 18:25:59 +0000

Tough times force hard choices. And these are rapidly becoming the toughest times most of us have ever seen. Even for nonprofit leaders who are accustomed to ‘making much of little,’ the repercussions of the unfolding economic downturn are likely to pose unprecedented challenges.
To read this Harvard Business Review article click here

Investing In Real Estate

admin — Wed, 21 Jul 2010 13:56:14 +0000

Everything is fair in love and war! The war of superiority and the love of immortality!
The competition between stock market investing and real estate has been going on since the mid 1960s, in order to prove to be the best source of investment returns. The stock market was regarded as a place to invest, whereas the realty was considered to be more reliable in the past. The present scenario is more of a revolutionized kind. It showed visible signs of change in the mid 1990s and kept on changing since then.
At present real estate, especially the residential realty that is purchase, renting, reselling and holding of realty assets is the matter of investment choice for the most of investors. Money generally flows as a direct consequence of low interest rates. Mortgaging assets is safer than high-risk speculative stock investments. Residential realty demands have increased manifold throughout the urban areas in North America and to some extent Europe. This generally affects the condominiums and town homes located inside the urban cores but prove to be a boon for single-family assets. Real estate has been compared to gold, which in historical times was considered as a tangible store of value.

The primary reason of the investment revolution is the tangibility of assets. More often than not this is guided by the psychological reasons. Most of the investors would opt for real estate investment where they would be able to see, touch, paint and above all feel the sense of security and possession, rather than the purchase of a share into a distant company over which the investor cannot access any control. Apart from
psychological reasons it can be supported by a very valid reason, the reason of availability of financing. In the stock market, there is a constant fear of being severely affected by its loss, as millions of investors have been the victims of such losses, earlier. But, only a few buyers and sellers have been affected in the scandals relating to Real Estate. Lenders have become more comfortable with the purchase of realty
market values than that of stocks and bonds. Banks generally give loans on appraised values, and an appraiser of a residential realty determines its real market value with a relatively higher degree of accuracy. This is easier than a stock analyst trying to evaluate the books of a corporation accurately.

Buying real estate is about more than just finding a place to call home. Investing in real estate has become increasingly popular over the last fifty years and has become a common investment vehicle. Although the real estate market has plenty of opportunities for making big gains, buying and owning real estate is a lot more complicated than investing in stocks and bonds. In this article, we’ll go beyond buying a home and introduce you to real estate as an investment.
This is an investment as old as the practice of landownership. A person will buy a property and rent it out to a tenant. The owner, the landlord, is responsible for paying the mortgage, taxes and costs of maintaining the property. Ideally, the landlord charges enough rent to cover all of the aforementioned costs. A landlord may also charge more in order to produce a monthly profit, but the most common strategy is to be patient and only charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit. Furthermore, the property may also have appreciated in value over the course of the mortgage (according to the U.S. Census Bureau, real estate has consistently increased in value since 1940), leaving the landlord with a more valuable asset.
A financial institution would lend money far more easily to a qualified real estate buyer than to a stock market investor. This is mainly because real estate assets could be of similar values if they are of similar infrastructure, located at the same place and having similar furniture. However, the same reasoning cannot be applied to different corporations because of several variables, such as location, number of employees, performance, technology, market sector, politics, taxes, rapid growth in population, density, age and other relevant factors in current context of Real Estate over the Stock Market.
People have grown smarter these days. They buy a house generally below the market price, and let the value grow and then capitalize in hundreds and thousands of different ways. Real estate investment is being considered more rewarding as compared to the stock market investment, as people just not believe in spinning money but also securing values…
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COMMODITY MARKETS THROUGHOUT THE WORLD

admin — Tue, 20 Jul 2010 09:12:21 +0000

Every day, commodities are traded on the more than one dozen major commodity exchanges that are situated worldwide.
Chicago houses two exchanges, the Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange (CME). The CBOT was established in 1848 to bring farmers and merchants together. Initially its main task was to standardise the quantities and qualities of the grains that were traded. Within a few years the first futures-type contract was developed. It was known as the to-arrive contract. Speculators soon became interested in the contract and found trading in the contract to be an attractive alternative to trading the underlying grain itself. In 1919, another exchange, the CME was established. Now futures exchanges exist all over the world. On these exchanges, a wide range of commodities and financial assets form the underlying assets in various contracts. The commodities include pork bellies, live cattle, sugar, wool, lumber, copper, aluminium, gold and tin. Between these two exchanges, a wide array of commodities are traded, bought and sold.
The CBOT has a very diverse collection of commodity types. These include agriculture such as corn, soybeans, wheat and oats but the diversity extends to include metal contracts such as 100 oz gold, 5,000 oz silver and mini contracts for both of these. Mini contracts allow for a lower initial investment as well as smaller ticks (price increments). This is because the amount that is included in the original contract is smaller than the traditional amount.

The CBOT also has several non physical commodities futures contracts. There are government bonds, including 30 year bonds, 10 year notes, 5 year swaps and others. A swap, whose primary use is for hedging, is a blend of a forward and a cash trade. They are similar to futures. Other trades on the CBOT include major indexes as the Dow AIG Index (a commodity index) and the Big Dow (a stocks index).

The CME, also in Chicago, has been trading commodities for more than one hundred years. Trades such as live as well as feeder cattle, hogs, pork bellies and others have been executed on this exchange. However, lumber, milk, butter and fertilizer are also traded there. However, the CME can also shift gears to offer an E-mini S&P 500 contracts for trading on the Standard & Poor’s 500 stock index. For those who prefer the ever popular NASDAQ, there is E-mini NASDAQ 100 for trading futures contracts.
Some of the more unusual trades made on the CME include Eurodollar futures and the Weather derivative which is a futures contract that predicts weather conditions during different seasons for areas around the world.

The New York Mercantile Exchange (NYMEX) is one of the oldest in the United States. Among the wide variety of petroleum and metal commodities and futures that are traded are Brent and mini crude (CL, WS), Natural Gas (NG), Gasoline (HU), Heating Oil (HO, BH) and many others. Other offerings are Gold (GC), Silver (SI), Copper (HG) and Aluminum (AL). You may have noticed that the commodity abbreviation does not match the common chemical element abbreviation. This is because futures contracts are listed second and have their own abbreviations.
New York houses yet another major exchange, the New York Board of Trade (NYBOT). The NYBOT is New York’s original futures exchange. Offerings on this exchange include cocoa, coffee, sugar, FCOJ (frozen concentrate of orange juice), cotton and many other products that are of an agricultural nature. Non physical items are also offered for trade such as currency pairs, the United States Dollar Index and the NYSE Composite. A unique and convenient feature of the NYBOT is that it also offers live price info that can even be accessed by a Blackberry or other PA.
However, the commodity and futures exchanges are not confined to the United States. In fact, one of the most active exchanges in the world is found in London. Liffe, once known as the London Fox (London Futures and Options Exchange), has merged with euronext. Trades such as cocoa, sugar, coffee, wheat, barley, potatoes and a variety of other agricultural products are conducted on Liffe.
The London Metal Exchange is not far from Liffe. This historic exchange is one of the grandfathers of precious metals trading. Naturally, trades such as copper, lead and aluminum are made here, but plastics are traded here as well.
A major exchange also resides in Japan. The Central Japan Commodity Exchange (C-COM) is based in Nagoya, Japan. It was formed in 1996 when three major exchanges merged, allowing such diverse commodities as eggs, gasoline, kerosene and ferrous scrap.

Africa’s most active and important commodity exchange is the South African Futures Exchange (SAFEX). It was informally launched in 1987. SAFEX only traded financial futures and gold futures for a long time, but the creation of the Agricultural Markets Division (as of 2002, the Agricultural Derivatives Division) led to the introduction of a range of agricultural futures contracts for commodities, in which trade was liberalised, namely, white and yellow maize, bread milling wheat and sunflower seeds.
China’s first commodity exchange was established in 1990 and at least forty had appeared by 1993. The main commodities traded were agricultural staples such as wheat, corn and in particularly soybeans. In late 1994, more than half of China’s exchanges were closed down or reverted to being wholesale markets, while only 15 restructured exchanges received formal government approval. At the beginning of 1999, the China Securities Regulatory Committee began a nationwide consolidation process which resulted in three commodity exchanges emerging; the Dalian Commodity Exchange (DCE), the Zhengzhou Commodity Exchange and the Shanghai futures Exchange, formed in 1999 after the merger of three exchanges: Shanghai Metal, Commodity, Cereals & Oils Exchanges. The Taiwan Futures Exchange was launched in 1998. Malaysia and Singapore have active commodity futures exchanges. Malaysia hosts one futures and options exchange. Singapore is home to the Singapore Exchange (SGX), which was formed in 1999 by the merger of two well-established exchanges, the Stock Exchange of Singapore (SES) and Singapore International Monetary Exchange (SIMEX).
Latin America’s largest commodity exchange is the Bolsa de Mercadorias & Futures, (BM&F) in Brazil. Although this exchange was only created in 1985, it was the 8th largest exchange by 2001, with 98 million contracts traded. There are also many other commodity exchanges operating in Brazil, spread throughout the country. Argentina’s futures market Mercado a Termino de Buenos Aires, founded in 1909, ranks as the world’s 51st largest exchange. Mexico has only recently introduced a futures exchange to its markets. The Mercado Mexicano de Derivados (Mexder) was launched in 1998.
Bombay Cotton Trade Association Ltd., set up in 1875, was the first organised futures market. Bombay Cotton Exchange Ltd. was established in 1893 following the widespread discontent amongst leading cotton mill owners and merchants over functioning of Bombay Cotton Trade Association. The Futures trading in oilseeds started in 1900 with the establishment of the Gujarati Vyapari Mandali, which carried on futures trading in groundnut, castor seed and cotton. Futures trading in wheat was existent at several places in Punjab and Uttar Pradesh. But the most notable futures exchange for wheat was chamber of commerce at Hapur set up in 1913. Futures trading in bullion began in Mumbai in 1920. Calcutta Hessian Exchange Ltd. was established in 1919 for futures trading in rawjute and jute goods. But organised futures trading in raw jute began only in 1927 with the establishment of East Indian Jute Association Ltd. These two associations amalgamated in 1945 to form the East India Jute & Hessian Ltd. to conduct organised trading in both Raw Jute and Jute goods. Forward Contracts (Regulation) Act was enacted in 1952 and the Forwards Markets Commission (FMC) was established in 1953 under the Ministry of Consumer Affairs and Public Distribution. In due course, several other exchanges were created in the country to trade in diverse commodities.
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Country Risk-The new risk in the block

admin — Mon, 19 Jul 2010 06:53:33 +0000

With the recent debt troubles of Dubai, Greece, and other sovereigns, country risk has become an important and immediate concern. What happens when a country defaults, and is there any way to predict if a default is coming? Country risk entails the possibility that a sovereign debtor will be unable to pay principal or interest because of unexpected events in the debtor’s country. It is defined more broadly as the risks in all types of foreign investments, equity or debt, arising from a country’s social, political, or economic conditions.

Sovereign default
Sovereign default occurs when a country either possesses insufficient reserves or is unwilling to use its reserves to service its interest or short-maturity claims. Default may be accelerated by creditors or debtors. If a debtor is perceived near default, creditors have an incentive to avoid rolling over debt and a “rush to the exits” can precipitate a default. A sovereign may have an incentive to default if it lacks the political will to effect unpopular policies needed to service its obligations, or if it perceives that a restructuring will offer lenient terms without long-term adverse consequences.

Sovereign debt restructuring
In a sovereign debt restructuring process, the IMF takes the lead role, supplying new capital with conditions. By contrast, official (sovereign-to-sovereign) debt is usually restructured
through the Paris Club1 where debt relief involves a case-by case assessment of debtor requirements. Domestic debt is usually restructured internally, since a government has control over local law and local currency. Creditor priority is the primary issue in sovereign debt restructuring because these restructurings lack a legal framework and a variety of debt securities can be involved. The principle of pari passu—the equal treatment of all creditors—is modified for sovereign restructurings. Generally, the debts of international financial institutions (e.g., the IMF) have preferred creditor status and are outside the restructuring
process. External bondholders and certain trade credits have preferred status over sovereign and domestic creditors.

After Argentina’s 2003 default, IMF staff proposed a statutory bankruptcy procedure for sovereigns (the Sovereign Debt Restructuring Mechanism) to address priority issues and the
problem of holdout creditors. The Mechanism was never adopted, however, because private creditors favored addressing creditor priority through collective action clauses built into
the debt contract itself. Majority action clauses, for instance, bind all bondholders to a negotiated settlement after acceptance by a defined majority, and most new emerging market issues now contain this clause.

Treatment of private debt
Some priority issues remain unresolved, like the appropriate priority for individual investors/creditors, an issue in Argentina’s ongoing restructuring. In most sovereign restructurings, creditors are provided with a menu of options, including adjustments in bond maturity, coupon, principal and collateral, or an exchange of new bonds, with different terms, for old debt.

Other private debt defaults are treated variously. Syndicated loans are renegotiated in a coordinated work-out with bank creditors. Private (bond) debt becomes part of bankruptcy proceedings in the debtor’s country, where creditor priority depends on the legal framework prevailing in that country.

Country risk assessment
Methods used to assess country risk vary widely. They involve a range of risks (credit, default forecasts, risk capital allocations) and a degree of subjectivity in the choice of risk categories, their weightings, and qualitative assessment. They take the form of country rankings, numerics (credit rating, risk index), or default estimates. For instance, Euromoney ranks countries according to ability and willingness to service debt and uses both quantitative data and expert surveys. Other entities provide risk ratings for various purposes. The Economist Intelligence Unit (www.eiu.com) provides country risk ratings based on an expert survey of a set of qualitative and quantitative questions. Many firms, like Business Environment Risk Intelligence (www.beri.com) and Political Risk Services (www.prsgroup.com), sell country risk assessments to corporate clients. Export credit agencies calculate ratings to assign premium rates for exporters’ risk insurance, and the relative size of the premium is used to assess country risk. S&P, Fitch, and Moody’s issue ratings for specific debt issues, both sovereign and corporate, and local and foreign
currency debt. Once traded, credit default swap prices, and the bond’s yield spread over other creditors, can provide ongoing risk assessment. Despite the early warning systems available, the recent financial crisis shows that even stable, seemingly safe countries like Iceland can very suddenly appear to be dangerous territory. After all, Moody’s lowered Iceland’s sovereign debt rating to A1 from AA1 a day after the country’s credit default swaps were priced at an exceptional $1.5 million per $10 million.

Conclusion
Keeping current on a country’s risk profile, and knowing the priority accorded to a particular investment, can go some way in ameliorating country risk, but ultimately, the acceptance of country risk is the price of acquiring higher returns through international diversification.
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Do Inefficient Stock Markets Drive Bad Corporate Governance?

maddy — Thu, 01 Jul 2010 06:23:44 +0000

One of the major accomplishments of recent corporate governance research has been to expose the risks confronted by minority shareholders in public companies around the globe. Corporate ownership structures such as pyramids, business groups, and dual class shares leave control in the hands of a limited set of blockholders – exposing minority investors to potential expropriation.
But why do minority shareholders continue to hold stock despite the risk of expropriation by controlling shareholders?

An Insight Into Intraday Trading

vicky113 — Thu, 01 Jul 2010 06:00:04 +0000

If you are one of the many people that are thinking of trading for a living you must learn that it does not pay to aim to make major gains and instead it will be better to remain focused on making small but consistent gains that will all add up to become a considerable sum of money over a period of time.
Today, there are millions of people that are becoming traders and who are trading in stocks that are worth many millions of Rs. However, at the same time it has to be said that judging how the market is going to move in a few hours will prove to be a particularly difficult task.
It is also not possible to make accurate and consistent predictions about what these large numbers of traders will do at any time and so trading to earn a living is not the best course of action. In fact, volatility in the short term is also quite random and the prices too will be fluctuating up and down in short periods of time which means that it is meaningless to think in terms of following support levels. This actually means that when trading in stocks you are going to be pitted against the odds and so will probably end up losing money more often than you make money.
This is why if you come across an advertisement claiming to help people make money from trading in stocks you should fight shy of these ads. These people don’t actually trade for themselves because they know the odds are against them and so will recommend that others do the trading and this is why they will willingly offer to teach them how to make trades. The simple truth is that only a few handful and expert people can succeed in making money out of trading in the stock market; most others will fail.
This is because trading is an activity that is contrary to our nature and in addition you will fail also because trading seems to be a means to achieve quick and easy success but in reality it is neither easy nor the best way to make a living. What’s more, there are many reasons why people wish to trade for a living including because they get to be their own bosses, and they can trade from home and also from anywhere in the whole wide world. In addition, to trade in stock also does not require that the trader has to employ anyone and it also does not mean needing to make anything.
You also do not need to sell products and services and nor is there any need to look for customers and best of all you don’t need to pay for any significant overheads other than cost of running your PC, paying the Internet subscription and buying useful software.
Trading for a living also means enjoying flexible hours and you can in fact trade whenever you want to and you can also always take a day or two whenever you want to. This means that you will always have plenty of time and you can also earn as much as you want to make. There are in fact no limits to how much money a person can make in this manner.
But, it also means being astute and extremely knowledgeable about various stocks and you need to also have a plan of action that you can use to help you make a serious living. If you set aside your emotions and use your brains chances of making money out of trading on the stock market will definitely increase.
Now in order to make money from intraday trading, the traders should be aware of the Efficient Market Hypothesis (EMH). Under this we have The Weak Market Efficiency, The Semi-strong Market Efficiency and The Strong Market Efficiency. The Weak Market Efficiency says that past returns on stocks are uncorrelated; meaning traders by doing technical analysis won’t be able to outperform the market. The Semi-strong Market Efficiency states that traders won’t be able to make abnormal returns depending on publicly available information as these informations are quickly reflected in the share prices. Then at the last comes the Strong Market Efficiency which states that any public information as well as private information is quickly reflected in the share prices, so no trader having access to these informations won’t be able to make superior returns. But 1 thing I myself have noticed nearly every day that I trade on the NSE that the Weak Market Efficiency fails 95% of the time in intraday trading; meaning, by looking at recent stock price movements a trader can make profit with approx 95% success rate, but that also depends on the individual skill of the trader in inferring what the future price can be from recent past price movements.
To conclude I would like to say, trading for loving is not the right motto for a person, trading is a means of investment in the capital markets and the returns you generate is an extra income of yours, but if you only rely on these returns for your living then you should be ready for huge losses from time to time, as the correct saying goes One Wins From Another’s Loss And One Looses Due To Another’s Win.
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Things To Consider Before Investing In An IPO

vicky113 — Mon, 28 Jun 2010 17:52:15 +0000

IPOs or Initial Public Offers are means by which a company can raise debt free capital through sharing the ownership and profits. There have been many companies opting for the IPO route over the last two decades. There have also been many big success stories with people making decent profits through these investment tools. However, there are always some items to consider when investing in an IPO that can reduce the risk in this.

IPO Basics

As the company starts growing, there is a time when it needs huge capital to take it to the next level of growth. Some companies decide to raise debt to get this capital; others opt for profit sharing without adding to the debt. The second option is the IPO route. In effect, when you invest in an IPO you are opting for part of its profits and losses too! So you need to be very selective on which companies you want invest in.

No History

It’s hard enough to analyze the stock of an established company. An IPO company is even trickier to analyze since there won’t be a lot of historical information. Your main source of data is the red herring, so make sure you examine this document carefully. Look for the usual information, but also pay special attention to the management team and how they plan to use the funds generated from the IPO.

And what about the underwriters? Successful IPOs are typically supported by bigger brokerages that have the ability to promote a new issue well. Be more wary of smaller investment banks because they may be willing to underwrite any company.

Studying the Company

A good starting point for your IPO analysis is to look at the financial reports of the company for as many years as possible. One thing that every company must publish is its total debt and total asset value. As long as the asset value is more than the debt, you know that enterprise can pay off its debts so it would survive. Also look at the difference in the assets value and debt which in effect is like the company value. Check what is the effective company value based on the IPO price and number of shares. If the IPO price is less than this value you are in for good profits on listing.

Besides value, another good indicator is the company growth seen in the profits it has made over the past few years. Sometimes the enterprise is new, so its current value is less, but a strong growth pattern would be that its value is going to increase in future so it is a good longer term investment.

Third important thing to look at is whether the company is stuck in some legal tangles. Typically, if the verdict goes against it, it would affect its finances and more importantly the stock price in the market. You could lose lot of money, in that case. So study these aspects well before investing.

Lastly, analyse its market standing among the peers. If you use its products, you know it is a good company and you can invest with lesser risk. But if it is an unheard commodity, you need to be cautious.

The Lockup Period

If you look at the charts following many IPOs, you’ll notice that after a few months the stock takes a steep downturn. This is often because of the lockup period.

When a company goes public, the underwriters make company officials and employees sign a lockup agreement. Lockup agreements are legally binding contracts between the underwriters and insiders of the company, prohibiting them from selling any shares of stock for a specified period of time. The period can be anything from 3 to 24 months. The problem is, when lockups expire all the insiders are permitted to sell their stock. The result is a rush of people trying to sell their stock to realize their profit. This excess supply can put severe downward pressure on the stock price.

strong>Flipping

Flipping is reselling a hot IPO stock in the first few days to earn a quick profit. This isn’t easy to do, and you’ll be strongly discouraged by your brokerage. The reason behind this is that companies want long-term investors who hold their stock, not traders. There are no laws that prevent flipping, but your broker may blacklist you from future offerings or just smile less when you shake hands.

Of course, institutional investors flip stocks all the time and make big money. The double standard exists and there is nothing we can do about it because they have the buying power. Because of flipping, it’s a good rule not to buy shares of an IPO if you don’t get in on the initial offering. Many IPOs that have big gains on the first day will come back to earth as the institutions take their profits.

Avoid the Hype

It’s important to understand that underwriters are salesmen. The whole underwriting process is intentionally hyped up to get as much attention as possible. Since IPOs only happen once for each company, they are often presented as “once in a lifetime” opportunities. Of course, some IPOs soar high and keep soaring. But many end up selling below their offering prices within the year. Don’t buy a stock only because it’s an IPO – do it because it’s a good investment.

Conclusion

Besides these points, other items that could affect the IPO price on listing are market sentiments, the economic outlook, general industry news, etc. These are so dynamic that they cannot be used a guidelines, and you need to go with the market flow.

In short, investing in IPOs is risky, but with careful analysis you can reduce the risk. For this there are some items to consider when investing in an IPO. As long as you do your homework, the risks are limited.

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Learning From Warren Buffet

vicky113 — Sun, 27 Jun 2010 08:16:27 +0000

Money is hard to come by in our current economic situation. Taking the time to research and invest your hard earned money properly is crucial in surviving hard economic times.

It is at times like these that we should look to the men and women that are successfully investing and earning through the times of hardship. It may be scary for you to invest your money when you feel that the markets are unstable.
It is very beneficial to take look at the most successful investors and analyze their mistakes and what they have done right. Learning from them and mimicking what they have done correctly is a very smart move for making money.
Warren Buffet is a worldwide acclaimed investor. He has learned the ins and outs of investing and used that knowledge to his advantage.
Warren Buffet was born in Omaha Nebraska and was an only child. His father was a businessman/politician.

Growing up Buffet worked at his grandfather’s grocery store and in 1943 he filed his first income tax return. Even at this age Buffet understood what a tax return was and he deducted his bicycle and watch as a work expense for $35 for his work as a newspaper delivery boy.

When Buffet was in high school he invested in pinball machines with a friend. After purchasing their first machine for $25 they placed it in a barber shop.
Within only a few months, Buffet and his friend owned three machines in different locations. At a young age Buffet showed the ingenuity and innovation it takes to be a great investor.

Buffet received a Bachelor of Science degree in Economics from the University of Nebraska. After learning that Benjamin Graham and David Dodd taught at the Columbia Business School, Buffet enrolled.
Buffet then earned an M.S. in Economics from Columbia University in 1951. Buffet worked as a Securities Analyst in New York for five years.
Buffet also became a General Partner at Berkshire Hathaway Inc in 1970 and still holds that position today. Buffet has worked many jobs in the financial fields and has learned exactly how he likes to invest his money. Buffet said, “The basic ideas of investing are to look at stocks as business, use the market’s fluctuations to your advantage, and seek a margin of safety. That’s what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing.”
A very important trait to recognize in Warren Buffet is his thirst for knowledge. He has never stopped learning and he continues to stretch his mind and take in more information.

After working on Wall Street, he moved back to Omaha Nebraska. While living in Nebraska he worked as a stockbroker.
After taking a public speaking course, he taught an “Investment Principles” night class at the University of Nebraska-Omaha. The majority of his students were twice his age.
Warren Buffet became a millionaire in 1962. He had multiple partnerships and the net worth of all of his partnerships was around 7 million dollars.
After discovering Berkshire Hathaway, Warren and his partners began aggressively purchasing the shares of the company. Buffet took control of Berkshire Hathaway at the board meeting and named a new president, Ken Chance, to run the company.

The partnership was then officially closed, Buffet wrote that unless a new partner could add something besides capital to their partnership they were not interested in admitting an additional partners.
It was in 1979 that Buffet’s investment in Berkshire became a booming success. Berkshires’ trades started selling at $775 and at the end of the year were selling at $1,310.
At this point Buffet’s net worth reached $620 million and he was included on the Forbes 400 for the first time. All the while, Buffet was living solely on his salary of $50,000 a year.
Warren Buffet is also a great philanthropist. He holds fundraisers and does a lot every year for those that are less fortunate.
When warren Buffet passes away his children will not inherit the majority of his wealth. He has said that he wants to leave just enough money to his children that they will feel like they can do anything, but not enough money so that they feel like they can do nothing.

We can’t all be Warren Buffet’s and we won’t all make it on the Forbes 400 list. By living within our means, finding a professional to help us invest wisely and taking the time to research what investing is we can at least live comfortable lives.
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Investments In Gold

vicky113 — Sun, 27 Jun 2010 08:04:09 +0000

Learning how to buy gold bars is one of the first things that you have to learn if you want to invest in gold, and if you want to invest in gold bars. Although it is much convenient to invest in gold coins as it is easier to carry and bring around, it helps to know some tips in advance to make sure you also know how to differentiate if it is pure gold or a fake one.
Gold bullion bars has both storage and return on investment value. It has the potential to offer you safer return during bull and stability during bear stage of market. Studies have found investment in gold bullion as a sustainable return for long term. After implementation of two-tier pricing system to control bullion price in 1968, the price of gold and silver fluctuates daily. But, the fluctuation is minimal if Gold bullion bars has both storage and return on investment value. It has the potential to offer you safer return during bull and stability during bear stage of market. Studies have found investment in gold bullion as a sustainable return for long term. After implementation of two-tier pricing system to control bullion price in 1968, the price of gold and silver fluctuates daily. But, the fluctuation is minimal if you compare it with stock and equity market. Hence, after 1968, gold is treated as a profitable investment option during depression too. Investment in gold bullion is cheaper compared to other financial tools. Here, you do not need to pay any brokerage related to buy and sale of bullion bars. Its inflationary hedge offers you more stability irrespective of adverse market situations.
Trade related to bullion bars is not dependent on time factors. You can buy and sale it 24X7X365. Hence, more flexibility is attached with trade of bullion bars. Gold bullion bars contain 99.5% pure gold. Hence, it does not loose lustre over passage of time. Price of gold has followed increasing path except few adverse times in last five hundred years. During this time period, price of dollar and other financial investment tools has witnessed significant lean periods. This comparison favours the investment in bullion bars. Investors looking for a diversified portfolio should also find gold bars as a preferable alternative. It offers them higher level of liquidity and lower risk during adverse economic situations.
However, investment in gold bullion bars is not completely free from shortcomings and criticisms. It will not earn you any interest. Continuous buying and selling of gold bullions can offer you profit only. As its price is more or less stable, return on investment at favourable market condition is much lower compared to volatile financial tools. Gold bars are physical assets. Hence, they are prone to theft and loss. Along with, if purity is not checked properly during purchase, its lustre might degrade with passage of time. And the main thing is to check that you are not being fooled in buying fake gold. You should only buy gold from registered authority, but it doesn’t hurt to be a bit cautious while buying.
One of the properties that you have to check to make sure you are not being fooled is to check the colour. Sometimes a fake one will appear reddish in colour as other metals are being mixed with it. Pure gold nay have a duller shine.
Although sometimes the colour may not be a good indicator for gold bars because some of them may really be gold plated, but then again it cannot escape other tests such as density. To learn how to buy gold bars, you have to learn how to tell a fake one from a real one almost immediately.

As there are only few metals having almost the same density as gold, fake gold bars differ in density than the real one. There are a number of metals that have been used in the making of counterfeit gold bars but then again, they end up being easily detected as there are only a few metals with density closer to pure gold. If metals are also combined to form the fake gold bars, the colour would obviously differ making it easy to detect.
If you want to venture into the business of buying gold bars, you might as well prepare some equipment such as a scale to help you determine which ones are real. But of course, because gold bars are bigger than coins or rings, you can determine the difference easily by just simply lifting the gold bar.
In learning how to buy gold bars, you have to be smart to determine if they are really real. Sometimes going to the jeweller will not only give you an honest answer on whether you have a genuine or fake one. If you want, you can actually set up your mini testing lab to test the specific gravity as well as density of the old bar.
Doing the scratch test may not however be effective also. Keep in mind that gold bars are a lot bigger than gold coins or rings, and they are often gold plated in the surface, so any scratching test will show you the thin layer of gold.
Keep in mind however that testing for the genuineness of gold may be difficult to do it yourself. If you are serious about venturing into the gold business, you have to invest in some equipment that will truly give you an accurate answer on whether you are dealing with a real one or a fake one.
Keep in mind too that the gold business is one of the most greatly desired by many individuals thus you have to make sure of your safety as well…
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