Ten mistakes equity investors generally make

People lose money in stock markets more because of their own mistakes, than any market turmoil and other such things. For instance, it has generally been observed that equity investments are often guided by greed and investors seldom do their homework before putting their hard-earned money in stock markets. Besides, they often resort to speculation and keep 'timing the market', which has not proven to be a great strategy. Lots of investors also presume that the market will only go northwards and the bull run will never end. But that never happens. Not in any market of the world. But that's how it is.

1. Guided by greed 
Many investors have been losing money in stock markets owing to their inability to control greed and fear. The lure of quick wealth is difficult to resist, particularly in a bull market. Greed augments when investors hear stories of fabulous returns being made in the stock market in a short period of time and, thus, lose their hard-earned money in many cases. 

2. Following herd mentality 
Following herd mentality is another reason for the investors’ losses. “It has been witnessed that the typical buyer’s decision is heavily influenced by the actions of his acquaintances, neighbours or relatives. So, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. But this strategy may backfire in the long run,” says Ashish Kapur, CEO, Invest Shoppe India Ltd.

3. Resorting to speculation
Investors also face losses because they speculate and buy shares of unknown companies. They should, therefore, avoid relying on random tips and go for long-term gains only. 

4. Lack of research 
Proper research should be undertaken before investing in stocks. But this is rarely done. Investors generally go by the name of a company or the industry they belong to. But this is not the right way of putting one’s money into the stock market. “Therefore, if one doesn’t have time or temperament for studying the markets, one should always take the help of a suitable financial advisor,” says Kapur.

5. Creating leveraged positions 
Many investors suffer from creating heavy positions in the futures segment without really understanding the risks involved. Instead of creating wealth, however, these investors burn their fingers very badly in case the sentiment in the market reverses. 

6. Panic selling 
In a bear market, investors panic and sell their shares at rock bottom prices. Trading on the bourses was suspended on May 17, 2004, May 18, 2006 and recently on January 22, 2008. Investors who had taken speculative positions lost heavily when blood was on the street. Even investors who had the capacity to hold on to their investments, lost faith in the markets and sold their investments in a hurry, thus incurring heavy losses.

7. Timing the market 
Many investors try to time the market. But this has not proven to be a great strategy. Historically, in fact, it has been witnessed that even great bull runs have shown bouts of panic moments. The volatility witnessed in the markets has inevitably made investors lose money despite the great bull run. Therefore, only prudent investors who put in money systematically, in the right shares and hold on to their investments patiently, have made outstanding returns. So it’s not ‘timing the market’, but ‘time in the market’ which creates wealth. Hence, it is prudent to have patience and always keep a long-term broad picture in mind. 

8. Putting all eggs in one basket 
Another mistake which investors generally make is non-diversification of their portfolio. They generally put all their money in limited and favourite stocks which are in momentum. So, investors should diversify their portfolio across industries and size of the companies. Also, it is important to diversify across asset classes – equities, real estate, bonds, commodities, cash etc.

9. Avoiding financial planning 
Investors also do not apply financial planning practices in their investment approach. They should follow an asset allocation model and invest only in long-term funds in the equity markets. They should also keep rebalancing their overall portfolio from time to time to keep their exposure to equity markets at the desired ratio of the total portfolio. 

10. No monitoring of portfolio 
We are living in a global village. Any important event happening in any part of the world has an impact on our financial markets. Hence, we need to constantly monitor our portfolio and keep affecting the desired changes in it. If one can’t review one’s portfolio due to time-constraint or lack of knowledge, they should take the help of a financial advisor.

Welcome to the day !!!

Hi Sachin,
Very Good Morning!!! Welcome to the day one of your Voyage. Keep on sailing I'll guide you for the journey. Keep on doing your Good work.
All the Best
- Almighty

Your Innate Talent

That sense of wonderment is only heightened when you read that he has also graduated from the finest and the best educational institutions in India. For Balu Nayar, the managing director of IMG India has achieved educational excellence as well.

After graduating from IIT Kharagpur (1987) he went ahead and did his MBA from IIM Bangalore (1989). Ask him how he could crack two topmost exams in India and the humble Balu says, "There's a lot of luck involved."

After completing his MBA Balu began his career with Rediffusion DY&R. Though he has an MBA degree, Balu believes that a lot many fresh MBAs have too much of an air about them.

"Starting off with advertising was a great experience. It helps you keep your ego completely down to very realistic levels," he quips.

"Many fresh MBAs place less stress on making a contribution at the workplace and much more on the almost completely irrelevant historical fact that they have an MBA and some others don't" says Balu, tongue firmly in cheek.

In an interview with rediff.com's Prasanna D Zore Balu discusses his career -- that saw him work with Yahoo! Mobile as regional director, Asia Pacific, based at Singapore, Hutchison Max Telecom as the head of value added services and itspace.com as its vice president for marketing and business development, and STAR TV as the marketing head. He also shares the lessons learned working at these diverse companies.

At the time of going to press news was out that Balu had put in his papers at IMG India and was planning to start his own private equity firm backed by a global investment bank. Excerpts.

Your journey from childhood to college days:

I was born in Calcutta (Kolkata) and did most of my schooling in Madras (Chennai). I grew up in an environment of learning and reading -- my father was an extraordinary person with interests varying from Sanskrit and mathematics to music and history and hungry to learn new concepts every day. I've always been addicted to books as a result -- and due to a simple supply-demand issue, went on to read a lot of his collection pretty early, sometimes through the night -- ranging from A L Basham, Martin Gardner, Smullyan, Gibbon, Krishnamurthi to Poe and Edgar Wallace.

Don't know how much I understood of some of those authors at that age! Today, it's in the reverse direction, when I sometimes escape to the world of Enid Blyton and P G Wodehouse.

I think I was really fortunate to go to a one-in-a-million school, Sishya -- run by a visionary gentleman called K I Thomas. We had no homework, no exams and no uniforms -- and each classroom had not more than 20 students. It was an idyllic environment in many ways, but not a complete picnic. In such a free space you tend to learn faster and better, and find out what you're really good at.

I was sort of good at mathematics so I was allowed to go ahead. I think we were free from the pressures that most kids today go through, thanks to a creative approach to education.

My entry into IIT was a life changing experience. We lived in Madras but my parents agreed with my choice of wanting to stay in a hostel environment -- Kharagpur was the most acceptable due to its proximity to Calcutta. I think a hostel stint is a must for everybody at some point in time in their academic lives -- there is such an abundance of stimuli from intelligent, slightly crazy people coming together from all parts of the country, and from overseas.

It was at IIT Kharagpur that I started playing a lot of outdoor games (as my childhood asthma had vanished) -- more enthusiasm than talent, and was introduced to a range of music from Shivkumar Sharma to Jethro Tull. I didn't spend a lot of time in the classroom except for a select few professors -- some fabulous concepts like fluid dynamics, artificial intelligence which can keep you spellbound for hours.

But I think you grow up very soon there, some bitter-sweet memories too -- of suicides, of friends losing their balance. You'll also find a lot of trauma in that environment.

You also did your MBA in Finance from IIM Bangalore. How did you manage to crack both the exams?

There's a good component of luck involved in getting through these exams -- I'm not sure that there's much to separate the top five to ten per cent who enter these exams.

Any tips to those preparing for their IIT-JEE scheduled on April 13?

I wrote the IIT-JEE many, many years back and I don't think I'll be able to give any specific tips that can help today.

In a general sense, however, I think any person wanting to get into the IITs should understand that what's really the key is the understanding of concepts that is more effective than solving umpteen problems and hours of studying.

Next, to maximise your efficiency, the key that students should follow is to keep a cool head during the exams -- that's the best way to good results.

I'd also like to add that just getting through the JEE is not enough -- many students who get through to IIT tend to be toppers in their schools, but you've got to be prepared to face pretty stiff challenges in competing with people of the same calibre. That's a shock that many kids face on getting through -- and it's important to accept that quickly with due humility, else that could prove quite traumatic.

What are the lessons gained from your entire career experience till date? Would you share them?

Broadly, I can say that I have learned a little in the area of media, marketing, and investments. I've been fortunate enough to be involved in building businesses in virgin territories, in working closely with numerous start-ups, mentoring a few of them, and in advising venture capitalists, too.

Starting off with advertising was a great experience, as working in that field keeps your ego completely down to very realistic levels, helps you cope with high pressure multi-tasking across a range of brands, and pushes you to use both sides of your brain. In that environment, you quickly come down from the rarefied MBA level to the learning ground of harsh reality and intense teamwork.

Many fresh MBAs place less stress on making a contribution at the workplace and much more on the almost completely irrelevant historical fact that they have a coveted degree and some others don't.

People who inspired you:

I have been lucky in working closely with a number of inspiring people, but it's important to be able to learn from almost anybody, not just the obvious corporate names. An opera-singing taxi driver in Singapore, the man who used to deliver bread to our apartment in Mumbai after a full day at the factory, our maid who went through incredible sacrifices to make sure she could send her daughter to the same school as our neighbour -- these are all sources of inspiration.

Most importantly, I've taken a lot of inspiration from my father. He always made me understand the importance of learning, of honesty, hard work. And, of course, caring for people -- he had helped many, many people around him. On the domain front, I owe my interest in mathematics, cryptography, music and chess to him.

On a more distant level, I've always been inspired by mathematicians -- Gauss (A German mathematician and scientist) and Euler (a pioneering Swiss mathematician) among others. Sometime in the future I plan to spend more time on exploring the mathematical basis for musical preferences.

Advice to youngsters who would want to emulate you:

My primary advice is not to try to emulate anybody else! Every individual has a unique identity, and needs to chart their own path. In a general sense, I would emphasise the importance of instinct over analysis in making career decisions, and of the need for killer instinct to achieve goals.

Risks that an entrepreneur must take to succeed:

Risks are a fact of life -- whether you are working as a career professional or starting out on your own. I'm only starting out on an entrepreneurial path, so my thinking is largely a level removed. I think the biggest risk one can take in life is to under-utilise the innate talent, energy and resources that one is given.

I've always known that I needed to take this route; it was only a mater of timing. I've come close to starting something on my own quite a few times in the past, but (in some cases, luckily, in hindsight!) hadn't taken the entrepreneurial plunge. This wasn't limited to just the predictable Internet start-up concepts -- I had serious plans to start a resort on an island in Orissa some years back.

It's important however, to be pulled by the concept of entrepreneurship, and not be pushed into it for whatever reason.

Buffet On Investing

On Financial Advisers:

"People who expect to earn 10% annually from equities during this century are implicitly forecasting a level of about 24,000,000 on the Dow by 2100. If your adviser talks to you about double-digit returns from equities, explain this math to him ... Many helpers are apparently direct descendants of the queen in Alice in Wonderland, who said: 'Why, sometimes I've believed as many as six impossible things before breakfast.'"

On Capital Investment:

"A company that needs large increases in capital to engender its growth may well prove to be a satisfactory investment. ... It's far better to have an ever-increasing stream of earnings with virtually no major capital requirements. Ask Microsoft or Google."

Future-Proofing the Data Center: Will you be seen as a Visionary or a Fool?

Written by Ken Salchow, Jr
Wednesday, 13 February 2008

Innovation is rife with tales of visionaries and fools; the difference between the two is often simply the application of time. Some innovations are touted as visionary breakthroughs, but quickly become dim memories, simple fads, or punch-lines. Other innovations are seen as pure foolishness and only through many years and societal changes are they realized for the vision that they embody.

For example, take the new Airbus A380 “superjumbo” jet. As the largest commercial passenger jet ever built, it has been heralded as model of modern technology and achievement. Despite the hundreds of technology advancements included, it is its sheer size and capacity that have captured most people’s imagination. And yet, this modern marvel is still, in some ways, surpassed by another plane built more than 60 years ago and seen as a madman’s delusion—the Hughes H-4 Hercules, better known as the “Spruce Goose.” What a difference 60 years can make. Who knows how history will treat the A380 when another 60 years goes by?
The technology industry is often very similar.
Who knew at the turn of the 21st century that dedicated electronic books would exist, that the market would nearly completely fail less than three years later, or that they would be resurrected less than 5 years after that? This capitulation and uncertainty makes it hard to predict what the technological landscape will look like in the future, something many technology pundits have learned the hard way (Bill Gates, Ken Olson, etc.). IPv6 has been around for nearly 15 years and service-oriented architecture (SOA)—with all the associated protocols and standards encompassed by it—remains an often talked about, but rarely implemented ideal. So what is the modern technologist, IT Manager, or CIO going to rely on when trying to build the best, visionary solutions for the future without looking like a fool down the road?

Scalability
Certainly, any solution deployed must be capable of handling today’s needs as well as being able to handle the expected load of the future. The fact that the future, by nature, is unknown is the essence of the problem. A smart engineer will apply the simple, yet well proven concept of “buy the biggest, most powerful widget that the budget will allow.” When purchasing a server platform, this might mean buying the system with the greatest number of processor sockets and addressable RAM—even though the current budget may not allow you to fully populate them. At least in this case—if the current system becomes overloaded—you always have the option of adding more processor and memory down the road, without having to replace the entire system or spend all your money upfront for performance you may never need.
This may also mean architecting your solution in such a way as to virtualize as many components within your architecture as possible, specifically the “one-to-many” virtualization that enables you to grow beyond the bounds of a single hardware device or instance. For example, instead of buying a single, extremely powerful server platform, you might consider buying several, less powerful (and less costly) systems, and using the remaining budget to buy an Application Delivery Controller (ADC) to virtualize the application servers. This enables you to incrementally add additional, low-cost servers to the architecture as performance demands increase; this allows you to address future concerns without re-architecting or replacing existing design elements.

Extensibility
Another critical element in architecture design today is the need for extensibility. Scalability helps address the unknown demands of performance in the future, while extensibility helps address the unknown features/functions of the future. Ideally, whenever possible, today’s architects need to find solutions that are not simply point-products. Obviously, products that solve the business need of the project are all viable candidates, but preference should be given to products which, in addition to solving the problem at hand, are also capable of solving other problems through the addition of hardware or software components. Whether or not one can foresee the need for these additional solutions is, often times, irrelevant. The extensible capability of the solution is what will count when you are planning for an unknown future.

Current extensibility should not be the only criteria, however. A visionary technologist will also examine the design and track record of products to evaluate their future extensibility. Software applications built to SOA principles are a perfect example of this: not only does the virtualized and object-oriented nature of them provide robust extensibility in the present, but—depending on the history of the vendor or third-party support—it can provide built-in protection against the unforeseen needs of tomorrow. Products that are inherently designed to have new, unique technology “plugged-in” down the road at least have the potential to adapt to your changing needs; in the case of those without that capability, what you see is what you get.

Adaptability
Just as important as being able to add more capacity and more functionality to the solution, is the ability to adapt to changes in the business need or the unique characteristics of an organization’s implementation. There are two significant reasons for this need. The first is simply a reflection of the de facto 80/20 rule. It is most often more efficient and cost effective to buy shrink-wrapped solutions that solve 80% of the problem as long as they are adaptable, or customizable, enough to allow them to be modified to solve the remaining 20%. Again, many of the commercially available SOA-based software solutions show this trend—providing development platforms on which to build custom applications to solve unique business problems, not the final solutions themselves. The second reason adaptability is so important, is that technology standards today are also built with the ideals of scalability and extensibility in mind. As such, many standards allow for custom modification on a per implementation basis without violating the “standard.” This leads to situations where two similar applications, both built to the same “standard,” may not be able to work with each other. The session initiation protocol (SIP) and hyper-text transfer protocol (HTTP) are two perfect examples where individual implementations (like custom headers) can make integration difficult.

Extensibility
can often help this, as it inherently enables components to be ”upgraded” or modified as well as act as a wholesale replacement or new feature addition. However, the effectiveness of this is contingent on the granularity of the components. A modularized accounting system, with separate components for general ledger, accounts payable/receivable, and so on, can be adapted to changes based on the replacement of modules or even pieces—such as changes in withholding in the payroll module. This allows the system some degree of adaptability through extensibility, but only on a module basis. A more powerful and direct way to achieve architecture adaptability is the inclusion of intelligence through application integration. That is, the ability to modify or adapt the way the module itself behaves to fit changes in need or in direct response to unique business requirements—especially in a dynamic and programmatic way. This not only allows the solution to adapt to necessary changes, like accounting for custom headers used by an ancillary solution, but enables it to act in an intelligent way and continue to work the way it always has.

Manageability
While the architecture you implement today may have limited components with finite capabilities, a design built with scalability and extensibility in mind promises a much more complex tomorrow. Manageability is the final critical component of modern architecture design. The simplification, and consolidation, of managing the diverse components within the system—keeping in mind the components and features not yet implemented (or even imagined)—is an absolute requirement. No one will remember how scalable, extensible, or adaptable the architecture was intended to be if the resultant solution is too costly or complex to manage.

It is important to note that the management system itself is also a business solution. This means that the same characteristics of scalability, extensibility, and adaptability of management need to be considered. In addition to providing a virtual view of the entire architecture, management systems need to provide the scalability to grow with the architecture, the extensibility to integrate with new features/solutions down the road, and the adaptability to meet the unknown issues of tomorrow.
Visionary or Fool?

The real difference between the visionary and the foolhardy is that the visionary anticipates the unknown and incorporates “wiggle-room”; the fool makes finite decisions based only on what can be known at any given moment. The problem with systems analysis and design, as taught throughout the world, is that it remains fairly focused on analyzing and solving the specific requirements on a single system based on concrete information. This has been the bane of information security for years since users rarely mention security as a requirement, no one can anticipate the security threats of the future, and, therefore, without an organizational mandate, it never becomes a priority. With the ever-increasing rate of technological change and complexity, it is essential that the concepts of scalability, extensibility, adaptability, and manageability also become primary stepping stones in solution design and data center architecture. No matter how technologically advance an architecture is the day it goes live, the real test is the test of time; how will that solution look when tomorrow comes? Will your architecture prove you to be visionary or foolish?

About the Author: KJ (Ken) Salchow, Jr. is the Manager of Technical Marketing at F5 Networks

Intellectual Property Rights

Intellectual property rights (IPR) cover the legal ownership of new ideas or brand names. They can be sold or licenced - and can also be used to stop people exploiting assets without permission.

The term covers:

* patents;
* registered designs and the design right;
* registered trademarks; and
* copyright.

Patents:
Patents are often associated with gadgets and gimmicks, but virtually all machines, products and processes (and their individual parts) are patentable. To be patentable they must be new, inventive and capable of industrial application.

If you invent something, you don’t have to patent your invention. You may choose to exploit your invention alone. However, without a patent your invention may be invented and exploited independently by someone else and you will have no legal protection. The Patent Office is responsible for granted patents, registered designs and registered trade marks. Ex: The UK Patent Office grants rights that are effective in the UK only.

Designs
The outward shape and configuration of products can be protected in two ways: either by registered design (which requires an application to the Patent Office) or by the (unregistered) design right, which gives automatic, but weaker, protection.

For example, A new mechanism in a camera will be patentable but the look of the casing that encloses the mechanism will be protectable by a registered design or the design right.

Trademarks
Trade marks are signs which distinguish the goods and services of one trader from those of others. They provide protection for the goodwill and reputation of a firm in its products and services.

Trade marks do not have to be registered. For example, if sufficient reputation and goodwill has been built against a particular mark, a degree of protection is afforded at common law against others who may wish to pass off their goods and services as those of the person entitled to the reputation of the mark.

Copyright
Copyright offers rights to the creators of literary, dramatic, musical and artistic works, published editions of works, sound recordings, films and videos, broadcasts and cable programmes, and computer programmes. Some databases may also be protected by copyright.

Copyright protects these creators from other people copying, adapting, publishing, performing or broadcasting protected material without permission.
Copyright is automatic. This means you don’t need to register but you do bear responsibility for proving the right is yours. Unlike other intellectual property rights, material does not have to have novelty value to be protected by copyright. It simply has to be the result of independent intellectual effort.

International protection
If you do not obtain protection abroad, others are free to exploit your product or services in those territories without protection. Most countries have intellectual property laws but particular provisions may vary.

Talking to others!!!

Talking to the right people can inspire all kinds of new ideas and help you to test the ideas you already have.

Talk to your customers. What improvements would they suggest? Does your product have a group of 'expert users' who are already adapting it and using it in ways you had not thought of?

Look at your competitors. How do their products and services differ from yours? Seek the opinions of your suppliers. Sometimes they will have thought of something you have not. You can meet both these groups at trade and industry fairs, where you can also encounter those outside your local business environment - sometimes 'new ideas' are already being used by your international competitors.

You can get new ideas and test existing ones by doing research on the web and in print media. Who are the experts in your field? Look up the authors in the material you research. Contact universities with departments covering technology applicable to your business.

Do not forget to test your most innovative ideas by doing patent searches to ensure they are original. During such searches you may even find technology you can license and use to meet your customers' needs.