Haste Makes Waste in Investing

 Patchy Knowledge of the Markets Can Backfire

A smattering of knowledge can be more harmful than helpful for the investor. An example is a disjointed grasp of cause and effect which provokes moves that are not only feckless but detrimental. In this regard, at least, the field of investing is no different from any other domain.

In many cases, scrappy information paints a false picture of the financial arena as well as the real economy. The faulty impression sets the stage for a universal form of blunder: an overreaction by the antsy investor. A case in point is a punter who flees a foreign market in the wake of a local flap; yet a bombshell which looks menacing to the players living abroad could well be business as usual for the locals.

A second type of gaffe is a misreading of a given event due to an incomplete knowledge of the larger context. For instance, a gripping event which looks like the sign of a turning point might just be another symptom of a chronic condition.

A third form of bungling is a blind reliance on a rough guideline. As an example, the stock market is widely regarded as a harbinger of the economy at large. On the other hand, the bourse has a habit of breaking down for reasons that have nothing to do with the innate condition of the financial forum or the larger economy.

The three types of mistakes may crop up separately or jointly. In the case study presented here, the trio of goofs rocked the stock market and the local currency in Thailand.

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Market Trends

Large-scale Trends for Competitive Strategy and Investment Planning in a Global Market

A raft of market trends play a central role in competitive strategy and investment planning in a global economy. The articles in this collection examine the large-scale forces and their multiplex offshoots in a variety of domains ranging from common stocks and foreign exchange to raw materials and emerging regions. Another core theme involves the practical import of market trends as the groundwork for ironing out a global program of competitive strategy for the enterprise as well as investment planning for the individual.

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Armageddon in Real and Financial Markets - Regulation of Hedge Funds Driven by Speculation and Leverage

Hedge funds entered the public spotlight in 2008 for the dominant role they played in taking down the financial system and the real economy. The ensuing blowup was the greatest wipeout of wealth and the worst takedown of the global economy since the Second World War.

Until the financial crisis burst upon the scene, it was the stuff of sheer fiction to picture a single outfit or a small crew of actors that could tear apart the fabric of civilization as we know it. Yet the debacle of 2008, along with its aftershock, was the shot across the bow for a laid-back populace. On current trends, a calamity that lays waste to the trappings of modernity is not only possible but inevitable.

On the bright side, though, the outcrop of doomsday could be forestalled by a mere act of forethought along with the legislation to match. The fitting course of action would be plain, quick and wholesome.

On the other hand, the feat will be far from easy to pull off due to the mass of opposition from lobbyist groups. The sensible approach will require the courage of statesmen along with the backing of their constituents.

The recent crisis has shown that extreme levels of leverage can bring down the entire system of finance and economics. Thus far, the annihilation of wealth has amounted “merely” to trillions of dollars and millions of jobs in each of the major countries of the world.

Yet the carnage will not always remain so slight in the future. Whether the assailants happen to be hedge funds or other rabid players, it would make sense to defang the forces of armageddon before they have a chance to do some serious damage.

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Investing

A Guide to Investing in Financial Markets and Real Assets in a Global Economy

To a growing extent, investing is a crucial aspect of everyday life in the modern era. The ranks of investors all over the world have been swelling in absolute numbers as well as relative figures compared to the population at large.

Against this backdrop, the articles in this collection are designed to provide a coherent approach to investing in a global economy. The topics at hand span the spectrum from large-scale trends and short-term patterns in the marketplace as well as hidden threats and promising strategies for the investor. Meanwhile, the types of vehicles for investment planning range from common stocks and foreign exchange to real estate and precious metals.

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Financial Forecasting in Practice

 Of Human Bondage and Mental Reach in Financial Forecasting

One way or another, financial forecasting is an integral part of investment planning. Whether an outlook happens to be an explicit forecast or a vague impression, the investor has to envision the outcome downrange in order to make an intelligent decision today.

In a global market that grows ever more complex, an entire industry has sprung up to size up the prospects for assets ranging from stocks and bonds to commodities and properties. On the downside, the purveyors of forecasts have a lousy record of foretelling the market. For instance, the gurus as a group make calls that are worse than random guesses on the direction of the stock market. Remarkably, even the top tier of renowned pundits cannot match the performance of a coin toss in predicting the bourse.

On the upside, though, the market displays a variety of patterns which can help the investor in forecasting prices and managing portfolios. Admittedly, the power to predict the market is far from perfect. Even so, a limited ability to anticipate the movement of prices is far better than none at all.

A series of incisive studies by level-headed researchers has shed some light on the chaotic domain of financial markets. The findings provide a better grasp of the forces at work as well as the modes of behavior and the limits to forecasting. To a greater or lesser degree, financial prediction lies within reach for investors with little or no money to spare for oracles, and scarcely any time to devote to the task.

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Heyday of the Tiger: Last Hurrah before Korea Yields to China

As the global economy shakes off the worst recession in modern history, a host of observers have noted the resilience of Asia in general and Korea in particular. According to common perception, the economic tiger is roaring once more and has been leaping from strength to strength.

If truth be told, though, the reality is a bit more complex than that. As in centuries past, Korea is now caught in a pincer movement between the goliaths of China and Japan. Due to the squeeze from both sides, the tiger’s presence on the global stage will continue to lose its mojo over the years to come.

Granted, the slippage of the Asian tiger down the ranks is not inevitable. A ray of hope lies in the efforts of policymakers to bolster the local economy by reshaping the patterns of commercial activity and economic output.

The leading lights in Korea have joined their peers in mid-tech nations around the globe – ranging from Singapore and Malaysia to Latvia and Slovakia – in the call to move up the ladder of creativity and focus on high value-added services. The product lines on the agenda span the gamut from robotic hardware and nanotech compounds to financial services and medical tourism.

On the downside, though, the plans cooked up thus far have been squarely pedestrian and unremarkable. As a result, the initiatives on the table will not enable the nation to keep its position in the front ranks among the trading nations of the world.

Given this backdrop, the future looks cloudy for Korea. Even so, the morrow need not turn out to be bleak.

With a hefty dose of creative effort and a hearty commitment to wholesale change, the prospects downstream could look more cheery. In this sense, at least, Korea is no different from other mid-tier countries around the world.

If the tiger is to remain in the big leagues in the global forum, it will have to alter its stripes in a sweeping fashion. Sadly, though, transforming a lumbering tiger into a nimble fox is easier said than done.

In that case, the golden age of the dynamo will be on its last legs. The way things are going, the Korean tiger is slated to slide into the twilight starting in the late 2010s.

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Global Recovery and Risk of Double-Dip Recession

The global economy continues to recover from the worst recession since the Great Depression of the 1930s. A prime indicator is the volume of world trade. The value of exports in emerging countries rose by 8.7% during the last 3 months of 2009, although the corresponding rate in developed nations was less than half that level.

A popular concern in the business press is the bugaboo of a second meltdown in the global economy. The pundits like to point out that the recovery over the past year was driven by the massive outlay of public expenditures. As the impact of the stimulus packages wears out, the economy could run out of steam in 2010.

Even so, the problems on the horizon are unlikely to lead to any serious injury to the entire population of investors, consumer and producers around the planet. Any flaps on the horizon should be minor compared to the ordeal we suffered through over the past year and a half.

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Data Mining in Business

Data Mining is the Crux of Smart Software for Business Planning

Data mining deals with the synthesis of useful information from a collection of elementary facts. For this purpose, one approach lies in the panoply of traditional tools such as statistical analysis and graphic displays. The classic schemes are fortified by modern tools like neural networks and genetic algorithms.

Thanks to advances in smart software, nifty schemes can be used to automate some or all of the work required to extract fresh information from inert data. In spite of – or perhaps due to – rapid strides in data mining over the past few decades, the breakouts have had only a modest impact in the business environment. In fact, the majority of companies rarely make much use of modern techniques, with the possible exception of neural networks in certain niches.

Despite the slow uptake, though, the tools of data mining have been playing a growing role in industry. Smart techniques can bring about a wholesale change in the way business is conducted. If the platforms are deployed properly, the result is an uplift in productivity for individuals and organizations as well as the economy at large.

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Market Timing via Monthly and Holiday Patterns

The stock market displays a medley of patterns that can be used as the basis for a timing strategy. A prime example is the frequent surge of the market around the turn of the month as well as the run-up to a holiday.

On one hand, the timing strategy does have its shortcomings. A case in point is the need to dart in and out of the market more than a dozen times a year. Another drawback is the need to deal with the tax impact of short-term rather than long-run capital gains.

In spite of the limitations, though, trading with the calendar can turn in higher profits at less risk than the mundane policy of buying stocks and holding them forever. As a result, a timing strategy based on monthly cycles and market holidays represents a free lunch on Wall Street.

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Valuation of a High Growth Business

Comparing a High Growth Business to Similar Firms on the Stock Market is the Simple Approach to Valuation



The valuation of a high growth business is a key concern for the owners of the enterprise as well as outsiders such as prospective investors. As an example, a corporate buyer that plans to acquire the business has to figure out how much the entire company is worth. The same is true of a savvy investor in the stock market who wants to buy a block of shares in a listed firm.

A simple way to gauge the value of a business is to compare it to similar firms in the marketplace. The matchup against listed firms is of course directly relevant in the case of a public offering of shares. However, the same analysis can serve as a point of reference in other settings. An example of the latter occurs if the owners decide to sell the company, whether in whole or in part, by way of a private transaction.

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Hedge Fund Regulation: How to Avoid a Boondoggle

The central role of wildcat outfits in causing or aggravating blowups in the financial arena has led to widespread calls for hedge fund regulation. Amid the furor, policymakers have responded in their usual fashion by cooking up legislation intended to curb the excesses that led to the wipeouts.

However, past experience suggests that the heap of regulations will merely serve to throw a monkey wrench into the machinery of finance. In that case, the main impact of the legislation will be a mound of paperwork and bureaucracy which does little or nothing to prevent similar fiascos in the future.

If the stumpers are to be tackled head-on, a sweeping change is required in order to blunt the threat of hedge funds armed with weapons of mass carnage. The purpose of this article is to lay bare the real problems along with a cogent approach to eradicating the bogeys.

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Guide to Creating an Investment Strategy

A Sound Program of Investment Strategy Matches Personal Circumstances against External Opportunities

A cogent approach to investment strategy is to align the personal traits of the investor with the external conditions in the marketplace. In the financial arena, as in most areas of life, one size does not fit all. Moreover, the best approach varies over time even in the case of a given individual. The proper choice at each stage will depend on a fluid array of characteristics such as financial resources, risk aversion, and retirement plans.

This article talks about the critical issues involved in thrashing out a tailored program of investment. A trenchant set of guidelines is presented, along with a selection of pointers to additional resources.

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Leadership in Business Intelligence Software

In the age of information, business intelligence software is a mainstay of the modern enterprise. The infrastructure is an enabler of productivity for every type of organization in both the private and public sectors.

In spite of its importance, though, the software in the marketplace tends to lag far behind the state of technology. In fact, existing platforms for business intelligence rely for the most part on digital techniques which were first developed during the 1970s or even earlier.

Another shortfall lies in the fact that the virtual tools are far from easy to use. For this reason, the majority of employees are unable to exploit any features beyond the simplest functions.

On the upside, though, both of these limitations – namely, crudeness and gawkiness – may be tackled in parallel. The trenchant approach is to embed a greater level of intelligence into the software. In this way, the tools will be able provide more useful information to a larger throng of users.

If the platforms were to be upgraded and the functions expanded, then the tools could be deployed in far greater numbers. In that case, a conservative estimate of the potential would be an upsurge of an order of magnitude in the number of users as well as the revenues for the marketplace.

This article presents a cogent approach for building the next generation of digital tools. Once the basic functionality is revamped, the adept software will go a long way toward realizing the full potential of business intelligence software.

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