The Money Maniac

RSS Feed Homepage

Articles: 1, 2, 3, 4

The Principles of Passionate Financial Planning - Thomas T. Brown
2008-01-31 17:14:00
Thomas T. Brown is the founder of Business Jungle Enterprises, a consulting firm serving financial planning professionals. He is the former owner of a successful financial planning firm in California, and the author of Zebras Don’t Wear Pinstripes—27 Indispensable Laws of Survival and Prosperity in the Business Jungle.Perseverance is the ability to continually move toward the achievement of a goal or objective—it’s one of the most important attributes of successful people. If perseverance is one of the most important attributes of success, then you may ask, “What’s the most important attribute of perseverance?”Passion.Passion is the driver of perseverance. Passion is the state of mind that creates the incredible will to persevere. Think of it this way: perseverance is like a rocket ship that can propel you to the top of the financial planning profession, and passion is the rocket fuel. Your missile will never leave the launch pad and reach the stars without the proper ...
More About: Financial , Planning , Thomas , Principles

Ten Points: Ben Graham’s Last Will and Testament
2008-01-31 15:44:00
In his last years, Ben Graham distilled six decades of experience into ten criteria that would help the intelligent investor pick value stocks from the chaff of the market.The Ten:1. An earnings-to-price yield of twice the triple-A bond yield. The earnings yield is the reciprocal of the price earnings ratio.2. A price/earnings ratio down to four-tenths of the highest average P/E ratio the stock reached in the most recent five years. (Average P/E ratio is the average stock price for a year dividedby the earnings for that year.)3. A dividend yield of two-thirds of the triple-A bond yield.4. A stock price down to two-thirds of tangible book value per share.5. A stock price down to two-thirds of net current asset value—current assets less total debt.6. Total debt less than tangible book value.7. Current ratio (current assets divided by current liabilities) of two or more.8. Total debt equal or less than twice the net quick liquidation value as defined in No. 5.9. Earnings gro...
More About: Points , Testament

Understanding Sub Prime
2008-01-30 11:13:00
Origin of sub-primePrime loan also means A-paper loan it is a term used to describe a mortgage laon where the asset and borrower meet the following criteria:- In the United States, the borrower has a credit score of 680 or higher- The borrower fully documents their income and assets- The borrower’s debt to income ratio does not exceed 35%- The borrower retains 2months of mortgage payments in reserves after closing.- The borrower injects at least 20% equityIn short, prime loan means a loan given to a borrower having good credit history and good earnings potential clubbed with strong security in terms of cash or assets.Sub prime loans means B-paper loan where the asset and the borrower does not fulfill the mandatory criteria for borrowing a loan.- It is exactly antonym of prime loans these loans are disbursed to borrows having poor credit history low income and earnings potential having less or no collateral.- As the borrower a...
More About: Understanding

Sub-Prime What has happened?
2008-01-30 11:11:00
Sub-prime mess has contaminated various assert class and investment avenue across the globe. As the old saying goes – “One rotten mango spoils the whole basket”Immediate issue in the US:- Credit Crunch- Negative momentum in home sales, inventory and prices Assumption- Partial mean-reversion of home pricesThis can be very slow train, but its direction is very clear.Cascading effect Globally:- Economic exporting heavily to US has got a jolt. As US housing slump increases lesser people will spend for households, FMCG and white goods products hence retail sales will be affected.- Credit Crunch – Lenders are getting more tightfisted as more tough times loom for housing. Hence the lending lesser is the borrowing again agitating the housing slump.- Corporate Credit – The private equity and stock buyback booms of the past few years, both fuels by cheap debt, has slowed down. The stock markets globally has seen major corrections. A lo...
More About: Prime

Money Source for Webmasters
2008-01-29 15:27:00
It can be difficult figuring out how to monetize your blog. We recommend the following monetization strategies to help maximize your profit while minimizing effort.1. Text Link AdsText Link Ads are unobtrusive links that get placed somewhere on your site either at the individual page level, or site-wide. Selling text link ads is one of the easiest way to monetize your site. However, you can currently only sell links if your blog has a PageRank of 4 or better.Sign up to sell Text Link Ads. 2. Google AdSensePlacing Google ads on your site is pretty straightforward and the ads are targeted towards the topic of your blog. To make any serious money from AdSense you either need lots of traffic or a high-paying topic. Signup for AdSense.3. BlogadsIf you've got the right kind of site, blogads can be a nice source of income. The best performing sites are those that are associate with visible products (political -> tshirts, music -> cds/ipods, gadgets -> electronics, etc.). Last we heard, yo...
More About: Money , Webmasters , Source

Investing in Arts - The Role of Artist
2008-01-29 12:09:00
Of course, the artist plays a vital role in the scope of a work of art. Yet, in addition to the quality of the piece that an artist creates, other factors also carry weight in terms of the artist. He or she is key to your art investment strategy. Primarily, the basic factors including your collecting goals, enjoyment for a piece, interest, and quality should dictate your decision to buy a work of art. Make certain that the work meets the standards for presentation and condition and then, assess the other criteria. As for the artist, the artist's general background is important. This certainly impacts the value of the piece. In basic terms, this means that the artist's background or his or her training and art teachers, degrees completed, and other credentials are important. Points such as an artist's exhibition record (how often and where do they show their work?), and the sales or commercial record come into play when determining value and investment return. Most of us understan...
More About: Artist , Arts , Investing , Role

US Federal Reserve Cut – An overview and impacts
2008-01-29 11:56:00
The federal reserve cut its Benchmark interest rate by 0.75% points on Tuesday. This is the highest single rate cut by the US fed in over 20 years.Statement accompanied this decision is “in view of a weakening of the economic outlook and increasing downside risks to growth”.Lowering interest rate is one tool available to central banks worldwide to modulate the impact of an impending slowdown. The magnitude of the rate cut clearly indicates the serious concerns in the US about the impact that the slowdown can have on the economy. In fact, going forward it is widely expected that the Fed will cut interest rates further by 50 basis point before pausing to take stock of the impact of these rate cuts.It seems now clear that we are in for some interesting times. The unidirectional bull run in the global equity markets at least pausing for some time. On one other hand economic growth of countries like India is seriously affected by a slowdown in other major economies.
More About: Federal Reserve , Reserve , Overview

Graham's Guidelines for Ordinary Longterm Investor
2008-01-29 11:39:00
Below are some simple guidelines from the Father of Value investing Benjamin Grham on portfolio and selecting a stock to buy. This is mainly to an investor who has limited knowledge on stocks and willing to have a longterm investment. The only requirement to practice these guidelines are, 'common sense'.Once if you cound found a company, then it required some research to match the required areas of this companies to Graham's following guidelines:1. There should be adequite but not excessive diversification of stocks in portfolio (Minimum 10 and Maximum of 30)2. Each company selected should be large prominant and coservatively financed.3. Each company should have a long record of divident payment.4. The investor should impose a limit on P/E ratio. The portfolio should be subjected to a periodice inspection.A strong minded approach to investment, firmly based on the margin-of-safety principle can yield handsome rewards.
More About: Investor , Guidelines , Ordinary

Credit Crunch - a deep insight
2008-01-27 15:47:00
The US credit market runs on two wheels. One wheel is borrowing and the other is lending. Credit crunch is a situation in which the wheel of lending gets jammed leading to a sudden decline in lending, that is, credit. This situation will automatically jam the other wheel. So if there is a credit crunch, borrowers are not able to find lenders. And even if they find them, the credit is available at unusually high interest rate.Many reasons will lead to credit crunch.1. Increased perception of risk due to many reasons.2. Imposition of credit controls or a sharp restriction in money supply.Increase a risk perception causes the worst kind of credit crunch. When the lenders are not sure about the creditworthiness of borrowers, there is an increase in the risk perception. This makes lenders nervous and they stop lending. When one of your wheels is in a rut, you can't expect the other wheel to keep on moving. As a result, the flow of credit comes to a grinding halt.What causes lenders to d...
More About: Insight , Deep , Crunch

Financial Market Turmoil - The Credit Crunch
2008-01-27 15:32:00
The global meltdown can be attributed to whats happening in the US and some other influential economies. It all started with sub prime crisis resulting in a liquidity and credit crunch.The US credit crunch, the sub-prime situation there and the consequential loss of retail business confidence have all been evident ion the US economy for the past few months. Early impact of this pain has already been felt in the property markets of the US and other developed economies like UK. Significant write-offs in the large financial institution in these economies are now transferring some part of this into the financial markets also.A slowing US economy is causing concern among the consumers around the world. There is a growing sense of concern that loses from sub-prime mortgage will cause the global economy to slow down this has further spread the negative sentiment to the markets in Europe and some parts of the world.This contagion over the last one month along with concerns with respect to t...
More About: Credit , Market , Financial , Crunch

Why the P/E ratio is irrelevant
2008-01-26 14:06:00
The Price/Earnings (P/E) ratio is simply the market price of a company's shares divided by the company's earnings per share (Share Price/EPS). It is widely (and wrongly) regarded as a measure of value - supposedly a way to quickly determine if a company's shares are cheap.Market commentators, amateur investors and even some professionals use it because it is easy to calculate. But for investment success the path of least resistance is not reliable.Two companies, each with $10 of equity, producing a return on equity of 5%, and each trading on a P/E ratio of 10, would produce entirely different returns to the investor if there was any variation in the dividend payout ratios. For this reason the P/E ratio of 10 has told the investor nothing about which company is better value.Put simply, Price is what you pay, but Value is what you get. Because the P/E ratio uses price it cannot estimate value. This is only a view point. Welcom your comments on the same
More About: Irrelevant

Common mistakes short term investors commits
2008-01-26 13:11:00
Not selling a losing stock: Because of psychological reason, people holding a losing stock for log term without selling. This is because they are not ready to admit the lose of money. Some people thinking that they are can’t be wrong about their stock or seduced by hope and greed. Others will convince themselves the stock will come back one day or are afraid to throw the stock because of affection.To get out from this situation, you have to plan from the day when you are buying the first stock. You have to select the company properly and if that is a bear phase, you can wait till the market bounce back. If that is a bull phase and the price of your stock is coming down, then you have to take decision till what percentage you can wait and sell the stock. This decision is important to you to throw your losing stock in a bull phase.You let your winning stocks turn into losers.A perfect investor will always study about his company and always aware about the price limitation to sell th...
More About: Common , Short-term , Investors , Short , Term

FPO – Follow-on Public Offering
2008-01-26 13:08:00
We all are aware about IPO (Initial Public Offering) by a company but most of us are unaware about what is FPO – Follow-on public offering. Here is a window opening to know more about FPO in a general basis. Your comments of the same shall be highly appreciated and will be useful to those who is coming and reading this article lately.FPO are identical to applying for an IPO. But, the main difference is that there is a reference price. In an FPO, you know the range in which the stock has traded in the recent past and hence, can take a view about the issue price. With the media constantly hyping up the huge listing gains in a few IPOs it is natural for investors to ignore FPOs due to the usual small gap between market price and the offer price.It is easy to formulate an FPO subscription strategy, if you are already and existing share holder. But, a put option on the number of shares you hold, if the stock is traded in the futures market. Then apply in the FPO. This way, you will pr...

Contrarian Investment Philosophy - At a glance
2008-01-25 12:47:00
We all are aware and hear the word Contrarian or Contra Funds for a long term. How many of us are aware about this term and how some funds got the name as ‘Contra Funds’ ? This is a small explanation about the contrarian theory using in the investment world.Contrarian investment is nothing but, it emphasizes out-of-favor securities in the low P/E ratios but having strong intrinsic value.Contra investing works against prevailing market trends by buying assets that are performing poorly and then selling when they perform well. This equities commonly have low P/E ratios but very good intrinsic value and does not have any interest from other investors to buy and hold. Identifying and buying contra stocks are little painful but a good study and little knowledge can make you able to identify and buy this black horses and which will never cheat you.To know how to identify the intrinsic value of a stock, click hereStocks falling under the contrarian philosophy will be available from the...
More About: Philosophy , Investment , Glance

How to avoid credit card risk
2008-01-25 11:45:00
Your credit card spending is a loan; make sure you treat it like that. Credit card companies agree to loan you money interest-free for average 35-40 days. You can sue this to your advantage as long as you pay off the “loan” by the due date each month.If you feel you need to carry plastic fro emergencies, then try a debit card. It will ensure that you are spending only the money you actually have. Most country presently have vast support systems which ensure you can easily borrow emergency cash when you need it.If you do use a credit card, try to make the payments in full. In case you are unable to meet the entire payment, ensure that you set aside the entire money for it from your next pay cheque and curtail the credit card usage until the balance is cleared. Remember that there is a whopping 36% p.a. or more interest to be paid not only on the outstanding balance but also on any fresh purchases you make.Plan your purchases. When you go out for shopping, make a list and stick to...
More About: Card , Risk , Credit Card , Avoid

Investing in Art
2008-01-24 13:18:00
Virginia Wilson, an art consultant from Australia, says, "Art has been an attractive investment for centuries and is becoming increasingly recognized as it has outperformed more conservative investments over the last few decades. It is an alternative investment earning capital gains rather than a dividend." Collecting fine art used to be a luxury reserved for the extraordinarily rich and well connected. Today, however, collecting art is an investment strategy that, with a little interest and research, can prove to be both enjoyable and lucrative. Not long ago, an article in Forbes reported that, over a number of different time periods, art outperformed the S&P 500. Even in the months following September 11th, amid recession and war, art auction houses saw new sales records set for more than thirty artists. A study by New York University, which examined twenty seven recessions and four wars, concluded that art values tend to hold up well during periods of economic difficulty and ...
More About: Investing

GOLD EXCHANGE TRADED FUNDS
2008-01-24 13:14:00
Gold ETF’s are open ended scheams that invest the money collected from the investors into the gold bullion. The investors holding will be denoted in units, which will be listed in a stock market. These are passively managed funds and are designed to provide returns that would closely track the returns from physical gold in the stop market.Investor can buy and redeem the units directly from the mutual funds or from the stock exchange. There are GOLD ETF available in the stock markets of most of the developed countries.Requirements to choose the Gold ETF:Gold holds it weightage in any investment evaluation and also work as a hedge product against inflation. Gold value remains unchanged in the events of any political uncertainties and it is traditionally negatively co-related with other asset classes such as stocks, fixed income securities and commodities.The value of good and services gold can buy has remained stable unlike currencies that have seen significant fluctuations.Gold pro...
More About: Gold , Exchange , Funds , Exchange Traded Funds

Exchange Taded Fund – At a glance
2008-01-24 13:12:00
As their name implies, they are mutual funds but they are listing and trading like a stock in stock market. This dunds can buy and sell like a stock from the stock market on a real time basis. A demat account required by an investor to buy and trade ETF.ETF trading based on the NAV – Net Asset Value, of the assets it represents. Generally ETF invest in a baskets of stocks and replicate a stock market index or a market sector such as power or banking.ETF has closed ended and open ended classifications. An open ended ETF is similar to the open ended mutual fund.ETF can also be categorized as actively managed or passively managed in terms of fund management style. When it is actively managed. Its aim to outperform the bench mark. If passively managed, it means the stock picks are aligned to that of the benchmark index is exactly in the same proportion or weightage.Compare with Mutual funds, ETF can be brought or redeemed in a real time basis. ETF offers the convenience of intra-day s...
More About: Exchange , Fund , Glance

Selecting a right IPO - Major things to remember
2008-01-23 16:42:00
Apply for the IPO that from the companies engaged in potentially promised sectors – Recently power, infrastructure, banking are some of this.....Focusing only IPO’s with a low absolute priceSelect companies with good financial track record and performance and reasonable level of earnings (this kind of companies are likely to price their IPO’s at a high absolute price)An overall outlook of the sector and companies performance is a must consider fact. (The sector is fine and company performance is satisfactory, you can apply the IPO for a little higher price too)It is very important that to search the companies background and future prospectus as an investor. Be sure to read the prospectus and other offer documents for the issue. Most of the time this documents provide you the required information about the companies financial position and track record. Keep in mind that the available data from this source may be not completed or perfect.Always keep in mind that the analyst shou...
More About: Things , Major

How ULIPs can make you rich!
2008-01-22 06:36:00
Ever since unit-linked insurance plans (ULIPs) made their debut, they have become a subject of much discussion and debate. On the one hand, they were a trifle too complicated for individuals not yet exposed to the stock markets; on the other hand, they were much-maligned because of the ‘unusually high’ costs.As ULIPs made their presence felt, insurers were more open to discussing the costs and how they evened out over the long term. This and the flexibility that ULIPs offer became important points that made individuals consider adding them to their portfolios.Today, more individuals are open to using the ULIP-way to create wealth over the long term. Here we outline exactly how ULIPs can help you fulfill that responsibility.If you are between 25 and 35 years of ageYou are young, probably married and even have kids. If you are the sole breadwinner in the family, then you have quite a few responsibilities to fulfill right from planning for your child’s education/marriage to plann...
More About: Rich , Make

ULIP Selection - What you should know
2008-01-22 06:33:00
Here’s a 5-step investment strategy that will guide investors in the selection process and enable them to choose the right unit-linked insurance plans (ULIPs).But before we get there, let’s understand what ULIPs are all about?For the generation of insurance seekers who thrived on insurance policies with assured returns issued by a single public sector enterprise, unit-linked insurance plans are a revelation.Traditionally insurance products have been associated with attractive returns coupled with tax benefits. The returns part was often so compelling that insurance products competed with investment products for a place in the investor’s portfolio.Perhaps insurance policies then were symbolic of the times when high interest rates and the absence of a rational risk-return trade-off were the norms.The subsequent softening of interest rates introduced a degree a much-needed rationality to insurance products like endowment plans; attractive returns at low risk became a thing of the...
More About: Selection

Finding Stocks the Warren Buffett Way – Part 3
2008-01-20 10:29:00
Understand How It Works As is common with successful investors, Buffett only invests in companies he can understand. Individuals should try to invest in areas where they possess some specialized knowledge and can more effectively judge a company, its industry, and its competitive environment. While it is difficult to construct a quantitative filter, an investor should be able to identify areas of interest. An investor should only consider analyzing those firms operating in areas that they can clearly grasp.Conservative FinancingConsumer monopolies tend to have strong cash flows, with little need for long-term debt. Buffett does not object to the use of debt for a good purpose--for example, if a company uses debt to finance the purchase of another consumer monopoly. However, he does object if the added debt is used in a way that will produce mediocre results--such as expanding into a commodity line of business.Appropriate levels of debt vary from industry to industry, so it is best t...
More About: Stocks , Warren Buffett , Warren , Part

Bank Account Requirements for us – A simple perfect solution
2008-01-19 14:56:00
We are aware that each and every transaction happening through bank accounts. There are something every person can understand while selecting a bank account. This will be subject to change in country to country and bank to bank. Even though, I can just tell you the minimum bank account requirement for an ordinary person and hope he/she has an investment centric mind.Savings Bank Account One can start a savings bank account with any good bank. As the name shows, it is a savings account and he/she can put the surplus money to that. It is a better idea if you are considering this account as a savings spot and a source for your emergency fund requirement. A person shouldn’t have temptation to withdraw money from this bank account when facing silly finance problems. Adding small surplus to this kind of account will five you a big amount after some time and that will be enough to meet emergencies.Savings bank account connected to trading accountThis is an another savings account but conn...
More About: Simple , Perfect , Solution

Calculating Future Value
2008-01-18 14:07:00
To know how much your investments will be worth after a certain time period, assume as indicative rate of return and do the following calculation Courtesy: outlookmoney.com
More About: Future

Finding Stocks the Warren Buffett Way – Part 2
2008-01-18 13:50:00
How do you spot a commodity-based company? Buffett looks for these characteristics: The firm has low profit margins (net income divided by sales); The firm has low return on equity (earnings per share divided by book value per share); Absence of any brand-name loyalty for its products; The presence of multiple producers; The existence of substantial excess capacity; Profits tend to be erratic; and The firm's profitability depends upon management's ability to optimize the use of tangible assets.Buffett seeks out consumer monopolies. These are companies that have managed to create a product or service that is somehow unique and difficult to reproduce by competitors, either due to brand-name loyalty, a particular niche that only a limited number companies can enter, or an unregulated but legal monopoly such as a patent.Consumer monopolies can be businesses that sell products or services. Buffett reveals three types of monopolies:Businesses that make products ...
More About: Stocks , Warren Buffett , Warren , Part

Finding Stocks the Warren Buffett Way – Part 1
2008-01-17 16:51:00
Like most successful stockpickers, Warren Buffett thinks that the efficient market theory is absolute rubbish. Buffett has backed up his beliefs with a successful track record through Berkshire Hathaway, his publicly traded holding company. Maria Crawford Scott examined Warren Buffett's approach in the January 1998 issue of the AAII Journal. Table 1 below provides a summary of Buffett's investment style. In this article, we develop a screen to identify promising businesses and then use valuation models to measure the attractiveness of stocks passing the preliminary screen.Buffett has never expounded extensively on his investment approach, although it can be gleaned from his writings in the Berkshire Hathaway annual reports. Many books by outsiders have attempted to explain Buffett's investment approach. One recently published book that discusses his approach in an interesting and methodical fashion is "Buffettology: The Previously Unexplained Techniques That Have Made Warren Buff...
More About: Stocks , Part

Great Value Investing Quotes – Part 5
2008-01-13 02:09:00
Bob Goldfarb (Sequoia Fund) One could logically challenge my conclusion that retaining securities of outstanding companies with excellent growth prospects through periods of overvaluation will turn out to be the most profitable course to follow. One could argue that our investors would have been better off if we had sold Berkshire and Progressive at the end of 1998 and bought them back at much lower prices in subsequent years. However, one of the manylessons that I have learned about investing from Charlie Munger is that finding and buying a great company at a great, or even a good, price is hard enough to do once. Buying a great company at the right time, selling it subsequently at the right time, and then buying it back at the right time would be winning a trifecta of difficult investment decisions. The odds are overwhelmingly against you winning that trifecta.Living through that long dry spell is the price that long-term investors must willinglypay if they believe that they o...
More About: Great , Quotes , Investing , Part , Value Investing

Insurance space for family - at a glance
2008-01-11 08:16:00
There are hundred and thousands of insurance companies with number of services to entirely confuse us in the space of insurance. Because of ignorance, most of us are not able to identify our requirements and proper insurance protection to meet these requirements. Here is a study and the possible insurance details to meet the requirements.Remember, life is precious to all human beings. Everyone in this earth want to live long . Discipline can ensure this till and extend.All of us are aware that most of the family has single bread winner. Entire family depending on him and they will completely join to his good times and bad times. His worry will be the future once if something happening to his life. This is the time to depend insurance with proper policies. Below are the list for them.For an ordinary family with single bread winner, I am introducing three must have policies to protect life of him/her, medical requirements and valuables from future incidents:Term Policy: Known as chea...
More About: Family , Space , Insurance , Glance

Great Value Investing Quotes – Part 4
2008-01-10 18:12:00
Philip Fisher"The stock market is filled with individuals who know the price of everything, but the value of nothing." -Common Stocks And Uncommon Profits"The percentage of investors who own 25 or more different stocks is appalling. It is not this number of 25 or more which itself is appalling. Rather it is that in the great majority of instances only a small percentage of such holdings is in attractive stocks about which the investor has a high degree of knowledge. Investors have been so oversold on diversification that fear of having too many eggs in one basket has caused them to put far too little into companies they thoroughly know and far too much in others about which they know nothing at all. It never seems to occur to them that buying a company without having sufficient knowledge of it may be even more dangerous than having inadequate diversification.""The investor cannot pinpoint just how much per share a particular company will earn two years from now. As a matter of fact,...
More About: Great , Quotes , Investing , Part , Value Investing

Great Value Investing Quotes – Part 3
2008-01-09 09:50:00
Ben Graham"In the short run, the market is a voting machine but in the long run it is a weighing machine.""Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.""As long as the earnings power of his holdings remains satisfactory, the investor can give as little attention as he pleases to the vagaries of the stock market. More than that, at times he can use these vagaries to play the master game of buying low and selling high. The investor who permits himself to be stampeded or unduly worried by the unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to…the ...
More About: Great , Quotes , Investing , Part , Part 3