The year 2008 has been unkind to investors so far. Many have suffered huge losses. Who knows, there could be more pain ahead. It’s worth reminding ourselves of basic lessons that every retail investor ought to keep in mind to avoid, or at least minimize, losses in one’s portfolio.
1. High rewards don’t come without taking high risk.
Remember, if you chase high returns, high risk will follow you.
2. Understand what you own — don’t always rely on the latest tip or prediction.
In today’s wired world, it is possible even for retail investors to understand, even if in basic ways, what is it that you are about to invest in — what does the company do, who its customers are, is the company profitable and so on.
3. Leverage is a double-edged sword that can destroy you in falling markets.
The recent collapse of various hedge funds and banks has shown that living on borrowed money can be dangerous.
4. Keep some of your powder dry — you don’t always need to be fully invested.
Keep some cash available to take advantage of falling prices. Professionals think of a correction in stock prices as a sale in stocks.
5. Build portfolio on a strong foundation.
Your stock portfolio also needs to be built on the back of strong companies and predictable stability. The more junk you have and poor quality stocks you own, the quicker your portfolio will also collapse during a correction.
6. Keep a wishlist of companies.
Smart investors keep a wishlist of companies whose shares they want to buy when the opportunity and price are right.
7. Invest for the long-term.
Serious investors put money to work for the long-term.You will also avoid the tax liability associated with short-term trading that can add more complexity to your finances.
Click here to read the entire article in Economic Times.
Sunday, April 6, 2008
Saturday, April 5, 2008
India then and now: Kalam's Mantra
Some views from the great man Abdul Kalam:
The Vision
"I climbed and climbed
Where is the peak, my Lord?
I ploughed and ploughed,
Where is the knowledge treasure, my Lord?
I sailed and sailed,
Where is the island of peace, my Lord?
Almighty, bless my nation
With vision and sweat resulting into happiness."
"In 1991, we were in a precarious foreign exchange reserve condition. We had to pledge our gold to maintain the minimum balance required for our imports. Inflation was high. Land lines were few and mobile phones were a luxury. The people had to wait for telephone connections for months after booking. We had to wait in long queues for the railway reservation. We had very few automobile companies and there was a large waiting list for getting the allotment for a car or scooter. The export performance from software, pharma and other industries were negligible. This was the scene in 1991.
"Today, India is in an ascending economic trajectory, with continuously rising foreign exchange reserves, moderate rate of inflation, global recognition of our technological competence, energy of 540 million youth, umbilical connectivities of 23 million people of Indian origin in various parts of the planet. India as the largest democracy in the world has the reputation for providing leadership to one billion people with multi-cultural, multi-language and multi-religious backgrounds. India has become a trillion dollar economy."
Societal needs
Kalam visualised the following distinctive profile of India to emerge by the year 2020:
1. A nation where the rural and urban divide has reduced to a thin line.
2. A nation where there is an equitable distribution and adequate access to energy and quality water.
3. A nation where agriculture, industry and service sector work together in symphony.
4. A nation where education with value system is not denied to any meritorious candidates because of societal or economic discrimination.
5. A nation which is the best destination for the most talented scholars, scientists, and investors.
6. A nation where the best of health care is available to all.
7. A nation where the governance is responsive and transparent.
8. A nation where poverty has been totally eradicated, illiteracy removed and crimes against women and children are absent and none in the society feels alienated.
9. A nation that is prosperous, healthy, secure, peaceful and happy and continues with a sustainable growth path.
10. A nation that is one of the best places to live in and is proud of its leadership.
Integrated Action for developed India
"To achieve the distinctive profile of India, we have the mission of transforming India into a developed nation. We have identified five areas where India has a core competence for integrated action:
1. Agriculture and food processing
2. Reliable electric power, transport and infrastructure for all parts of the country.
3. Education and healthcare
4. Information and communication technology
5. Self reliance in critical technologies.
"These five areas are closely inter-related and if progressed in a coordinated way, will lead to food, economic and national security."
"Our story is still unfolding. The global environment, however, needs protection and India's freedom won by suffering and sacrifice has to be alertly guarded, strengthened and expanded. Freedom and independence must be our continuing quest, and in such a manner as to accelerate our evolution as a free nation through a bold and swift development."
"The time has now arrived for India to emerge with a new vision and leadership to make our nation not only enlightened, rich and prosperous, but above all, a safe nation, invulnerable forever to invasion and infiltration across its borders and bring unity of minds."
"Economic prosperity is possible only if we adopt and practice the value system in a society, which is derived out of our civilizational heritage. For all these actions, righteousness in the heart is very essential.
"Knowledge society will emerge only by the enlightened citizens of the nation. Our challenge today, is to bring the societal transformation with value system leading to a prosperous, happy and peaceful nation. It is the responsibility of the developed and developing nations to create peaceful neighbors with inclusive growth devoid of societal imbalance."
"Make it a reality by your attitude of give, give and give of the knowledge and experience you have gained over the years. This will be the singular contribution for which our motherland will be proud of you."
The Vision
"I climbed and climbed
Where is the peak, my Lord?
I ploughed and ploughed,
Where is the knowledge treasure, my Lord?
I sailed and sailed,
Where is the island of peace, my Lord?
Almighty, bless my nation
With vision and sweat resulting into happiness."
"In 1991, we were in a precarious foreign exchange reserve condition. We had to pledge our gold to maintain the minimum balance required for our imports. Inflation was high. Land lines were few and mobile phones were a luxury. The people had to wait for telephone connections for months after booking. We had to wait in long queues for the railway reservation. We had very few automobile companies and there was a large waiting list for getting the allotment for a car or scooter. The export performance from software, pharma and other industries were negligible. This was the scene in 1991.
"Today, India is in an ascending economic trajectory, with continuously rising foreign exchange reserves, moderate rate of inflation, global recognition of our technological competence, energy of 540 million youth, umbilical connectivities of 23 million people of Indian origin in various parts of the planet. India as the largest democracy in the world has the reputation for providing leadership to one billion people with multi-cultural, multi-language and multi-religious backgrounds. India has become a trillion dollar economy."
Societal needs
Kalam visualised the following distinctive profile of India to emerge by the year 2020:
1. A nation where the rural and urban divide has reduced to a thin line.
2. A nation where there is an equitable distribution and adequate access to energy and quality water.
3. A nation where agriculture, industry and service sector work together in symphony.
4. A nation where education with value system is not denied to any meritorious candidates because of societal or economic discrimination.
5. A nation which is the best destination for the most talented scholars, scientists, and investors.
6. A nation where the best of health care is available to all.
7. A nation where the governance is responsive and transparent.
8. A nation where poverty has been totally eradicated, illiteracy removed and crimes against women and children are absent and none in the society feels alienated.
9. A nation that is prosperous, healthy, secure, peaceful and happy and continues with a sustainable growth path.
10. A nation that is one of the best places to live in and is proud of its leadership.
Integrated Action for developed India
"To achieve the distinctive profile of India, we have the mission of transforming India into a developed nation. We have identified five areas where India has a core competence for integrated action:
1. Agriculture and food processing
2. Reliable electric power, transport and infrastructure for all parts of the country.
3. Education and healthcare
4. Information and communication technology
5. Self reliance in critical technologies.
"These five areas are closely inter-related and if progressed in a coordinated way, will lead to food, economic and national security."
"Our story is still unfolding. The global environment, however, needs protection and India's freedom won by suffering and sacrifice has to be alertly guarded, strengthened and expanded. Freedom and independence must be our continuing quest, and in such a manner as to accelerate our evolution as a free nation through a bold and swift development."
"The time has now arrived for India to emerge with a new vision and leadership to make our nation not only enlightened, rich and prosperous, but above all, a safe nation, invulnerable forever to invasion and infiltration across its borders and bring unity of minds."
"Economic prosperity is possible only if we adopt and practice the value system in a society, which is derived out of our civilizational heritage. For all these actions, righteousness in the heart is very essential.
"Knowledge society will emerge only by the enlightened citizens of the nation. Our challenge today, is to bring the societal transformation with value system leading to a prosperous, happy and peaceful nation. It is the responsibility of the developed and developing nations to create peaceful neighbors with inclusive growth devoid of societal imbalance."
"Make it a reality by your attitude of give, give and give of the knowledge and experience you have gained over the years. This will be the singular contribution for which our motherland will be proud of you."
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