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Of Market Analysts and fools to strategy …

Do you want to make quick money?

What do we do to make quick money? Work hard, beg, borrow, steal? Well, Well, there are plenty of ways to do so 😉

Lets see about speculation in shares and research on them and how quick advices leads to leaps into uncharted territories.

One way is to seek analysts who will provide lots of data through business news, which is easy to begin with and fun, indeed analysis done, data provided is making lots of money, but not for common man, it’s for the analysts, by the analysts.

Looking at the data patterns provided, and constant change of thoughts on a particular financial instrument seems ridiculous when a common man ponders about it.  Why? yes of course, one seeks experts because they need some direction and advice to make right decisions, and one would assume that the analysts will do perform thorough research before saying out something.

What happens really is a great misnomer.  Day 1: Say there is a share of a company ACME, analysts will pour their thoughts, oh yes you should buy this now, start accumulating it, this company will do great in the next 6 years and so forth.  Day 2: There is glitch in world, somewhere the oil price rose, somewhere there is an inflation, somewhere there is a deflation reported, now the poor ACME is rated from buy to neutral.  Day 3: The situation worsens and the ACME is facing some tough times, now the rating is sell sell sell, get out  of it.

That’s not what I seek from analysts, ‘coz that’s the trend birds follow “birds of the same feather flock together”, or in other words, in a rat race, all of us just do it with the urge/greed to make more money.  Now had the ACME fundamentals been researched, to view the core corporate goals, the charter of the company, past performance, the vision one can take a guess that ACME is strong and then we should continue to buy it for few years and let the company perform over time, ACME would out perform analysts expectations.  So the views shared by them are just views, and not information that can be used to make SMART decisions.

Even the best of the breeds could not figure out what is to come, and how the future is.  So why share the views that changes  so often and make one look like a fool? Ridiculous isn’t it.

In my humble opinion, any business that is out there is like an apple tree.  It takes lots of time for a seed to grow and be a tree that it is, nurturing it, feeding it with the right growth hormones, letting the right vision settle in will make things happen, but not in a day or two, rather over a period of time, after which there is supply of fruits.  So to get the right apples, one must seek the right trees and have patience and perseverance to see the best come forward, which does not need any analysts views, but analysts “real analysis” which does not change so often and lets the plant succumb and deteriorate even before the first leaf sprouts out.

If you want to invest, do so, but make sure that you give some time for the tree to grow and fruit, weather gets rough at times, but the sun-shine and rain will return.  All you need to do is to get the right apples, go for the right trees, watch out, as it can be found just anywhere and investing in tough times is best, as now is the time to find the right trees, ‘coz tree strong enough will not be uprooted by the roughness of the present weather, perhaps just a branch or two will be affected, but the tree will have fruits on time for one to relish.

Analysts are just weather forecasters, not the one who grow trees.

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Recession Proofing

The past will be a lesson, the present is an opportunity and the future is a dream!

That’s how I see the current global recession which is touching most of the lives on this planet. Few will be lucky to survive the downturn, but for the rest it’s each individual for thee where one will end up struggling until the gloom is lifted off.

So where does it all start?

Perform a search on your favorite search engine for “global recession” and you’ll get back 100’s of articles outlining the crisis. The one that grasped my eyes is http://en.wikipedia.org/wiki/Recession, here there is an history which clearly depicts the way things have gone since ages. One such thing is ups and downs, and that goes well with the saying, what goes, comes around. One of the observation that is lead me to think about the down turn is the return of “the recession” on an average every 9.4 years in the US [since 1797] and every 10 years in the Europe [since 1880]. The trends gets interesting especially between 1920-present. Each recession (what ever you can term it – economic depression, recession, unemployment blah, blah, blah) it has lasted at least for 2 years on an average.

Most of the recession has been led by US causing Europe to panic during these times, and today we have a global one that touches each country. Refer to world recession map [Year 2008] http://en.wikipedia.org/wiki/File:Recession_2008.png, virtually it touches most of us. Now finding out why this economic problem comes over and again is not in my power, there are great leaders who are acting upon it to control the menace.

What I have to share is a thought (Simplicity of life): History:

  1. Recession (I will call it downturns in what ever form they occur) occurs on an average 10 years
  2. They last for at least 2 years on an average
  3. Because of globalization, it affects each of us – blame it on coupling of world economies.

Action Plan

Quick Recovery

  1. Reduce spending on luxuries – blame it on recession – everybody will have to bring down operation costs – be it business, personal or national
  2. Strictly avoid speculation; however there will be some strong business to invest it – do research and buy them (stocks, companies).
  3. Pay off unwanted debts – High interest credit cards, loans; Use your assets to get mortgage on low interests.
  4. Work and do your business smartly – look for opportunities.

Long Term preparation (Since the cycle repeats too often)

  1. Have Sufficient Savings each year – this will help one to fight tough times. Usually buffer of 6x earnings should help in tough situations.
  2. Accumulate immovable assets – Gold, Land, Silver (Money is literally virtual, it is not guaranteed, nor can be guaranteed by anyone, they worth nothing over long time frames)
  3. When everybody is buying assets, stocks – You sell yours: When everybody is selling, you buy them.

I believe strongly in the above principles, they have been my guiding force since a decade, and I hope it benefits other individuals like me. If there are any thoughts that you like to pour in, please do let me know.

Disclaimer: What ever I have expressed here is just my personal thoughts.