Time to do the financial planning for 2009--

Year 2009 has already knocked our door for future and it’s the right time to learn lessons from the current financial turmoils.We must set specific goals for personal finances as it is rather not going to cost us anything but inturn will increase ROI.Some timely goals and baby steps that can help you do your financial planning.

Control your expenses & stick to the budget:You are more likely to face financial problems, if you have been extravagant in your expenses. you need to adhere to some financial disciplines.Always remember that a rupee saved is a rupee earned. Therefore, stick to the discretionary budgets so that you can handle the uncertainty in the non-discretionary expenses.
Take control of your investments:Resolve to protect your finances as the market storm rages on. Take the time to build up your emergency fund, and set reminders to regularly review your portfolio’s asset allocation.
Turn the problems into opportunities: Look hard enough and you can find a silver lining to just about every aspect of the struggling economy, from falling home prices (lower property taxes) to bankrupt retailers (great close-out sales).Look out for bargain on all-time favourite stocks and mutual funds to accumulate for longer term.
Be debt free: In the falling interest rate scenario, it is good to repay all your debts. In recessionary periods, it is always better to be debt free and use cash more often. Be better about savingThe easiest, most painless way to build a nest egg is to choose a low-cost, diversified investment plan and authorize the plan/fund to deduct a set amount from your account every month.
Have an emergency fund in portfolio: Having an emergency fund in your portfolio is an ideal way to tide over a family crisis or meet unexpected expenses. Therefore, the need for maintaining emergency funds, particularly keeping some cash at home or in a bank account, has always been emphasized by our forefathers.
Have realistic expectations: There’s nothing wrong with hoping for the ‘best’ from your investments, but you could be heading for trouble if your financial goals are based on unrealistic assumptions.However, it doesn’t mean that you should always expect the same kind of return from the stock markets. The current market meltdown is a case in point.

Hope you all will keep an eye on your investments and management of personal finances with the right plan of action.Wish you all a very Happy and Prosperous New Year!!

Why Invest in International Equity Mutual Funds?

Studies have consistently shown that investing in a mix of U.S. and foreign stocks has produced better returns - with less risk - than investing in the U.S. equity market alone. While investments in all mutual funds involve risk, investing in foreign securities presents risks such as currency fluctuations and changes in political, regulatory or economic conditions. All of these factors may result in greater share-price volatility.The simplest way to invest in international equities is through a mutual fund, which offers investors the following advantages, as stated by Iris Greenberger:

Diversification: Diversification helps reduce the risk of loss associated with any single investment. While diversification cannot eliminate risk entirely, it smoothes portfolio performance during periods of market volatility.

Professional Management:Most investors have neither the time nor the expertise needed to manage a large portfolio of securities. Mutual funds are managed by portfolio managers, who track the fund's holdings daily and decide what stocks to buy and sell.

Liquidity:Having liquidity means that any or all of your shares can be redeemed on any business day. You will receive the value of your investment at the close of the market. The value of the fund fluctuates with market conditions, and therefore, at redemption, the value of an investor's shares may be more or less than their original cost.

Convenience:The mutual fund handles all administrative aspects of share ownership. You will receive account statements, which include information on the tax status of any capital gains and dividends you receive.

To know more about the investing reasons in international equity fund,check this article: Why Invest In International Equity Mutual Funds?, by Iris Greenberger

Toggle Note --An Innovative way to keep defaulters low !!.!!

A PIK Loan is a type of loan which typically does not provide for any cash flows from borrower to lender between the drawdown date and the maturity or refinancing date, not even interest thus making it an expensive, high-risk financing instrument. PIK (payment in kind) is to be interpreted as interest accruing until maturity or refinancing. Toggle note is such a payment-in-kind bond, where the issuer has the option to defer an interest payment by agreeing to pay an increased coupon in the future. With toggle notes, all deferred payments must be settled by the bond's maturity.

Payment-in-kind Toggle notes is becoming an increasingly important part of the arsenal of private-equity firms as they pile debt on their corporate trophies. These "PIK toggle" securities allow borrowers to make a choice. They can keep paying interest on a bond, or they can defer paying interest until the bond matures, and in the process agree to pay an interest rate that is effectively higher. These Toggle notes provide firms with a way to raise debt while staying afloat during times of strained cash flow. When cash is at a minimum, the firm can use the toggle to defer an interest payment.

While this seems like an attractive option for the firm, it does come at a cost. The increased interest rate provides ample incentive to not miss an interest payment. But such new features are definitely in the interest of investors, because they help companies avoid default and complex bankruptcy proceedings.

Money and Brain..!!

A study has found that like the dollar signs in the eyes of cartoon characters, thoughts of money light up visual areas of the brain. An international team, led by California University, has found that thoughts of money light up visual areas of the brain, including a part of visual cortex known as “V1” which represents basic features such as edge orientation and color.

Researchers have based their findings on an analysis of brain scans of a group of volunteers as they chose between red and green targets that varied in value at different times. Selecting a target might yield ten cents or nothing. But those who made the right choices could earn up to $10. The findings revealed that rewards altered brain activation in many areas of the human visual system.

Activation was also seen in the frontal and parietal regions of the brain which have previously been implicated in anticipating and tracking rewards. Researcher John Serences said: “When a target has been valuable in the past — if selecting it had paid off with money — the visual system represented it more strongly. Rewards affected information processing, not just at a high level of cognitive function but right from the get-go. “It raises the intriguing possibility that we see things we value more clearly — much like the way the brain responds to a bright object versus a dimly-lit one.”

Plenty of factors go into decisions about things that we think are rewarding and the instant judgments of our brains may play just one part in a wider picture. For example, Serences said, our choices about eating ice cream or vegetables may depend on things like whether we’re on a diet.

Source:ET

Interesting--Salaried crorepatis double in 2 years !!

When on one hand the world’s hit with the global recession and where every now and then exists a fear of another bank being getting collapsed, on the other hand the number of taxpayers earning more than Rs 1 crore annually has doubled in just two years. And, for this increment the credit truly goes to the buoyant economic growth. Corporate sales and profits have risen by more than 30% in the last few years. That has encouraged companies to pay record salaries to their top managers, say tax experts.

According to data compiled by income-tax department, the number of salaried taxpayers earning more than Rs 1 crore (Rs 10 million) crossed 5,000 in fiscal 2008 from 2,200 in fiscal 2006. The total number of millionaires is much higher as it includes non-salaried taxpayers. The data on millionaires, gathered from employee tax deducted at source (TDS), shows the number of people earning between Rs 50 lakh and Rs 1 crore per annum has also more than doubled. It has increased from 4,400 persons in fiscal 2006 to 10,500 in fiscal 2008. The number of those earning more than Rs 10 lakh also increased to 2.24 lakh in FY08 from 87,000 in FY06.

Talking about the millionaires in India, the majority earns between Rs 10 lakh and Rs 20 lakh. In 2007-08, more than 1.5 lakh employees were earning in this income bracket. That is a 250% jump over 2005-06 .While TDS from those earning more than Rs 1 crore was Rs 4,415 crore, and those between Rs 10 lakh and Rs 20 lakh was Rs 5,770 crore. The number of taxpayers earning between Rs 5 lakh and Rs 10 lakh has also doubled in the last two years.(Source:ET)

But this pace may slow down in 2009-10. India’s GDP grew by 7.8% in the first six months of fiscal 2008 from over 9% in the previous year, and corporate bottom lines have also seen a similar dip.So,that will put pressure on salaries.

3-6-3 Rule - An unofficial banking rule !!

3-6-3 is an "unofficial rule" under which the banking industry once operated and which alludes to it being noncompetitive and simplistic. The banking industry of the 1950s, 1960s, and 1970s is often described as operating according to a 3-6-3 rule .The rule basically explains how bankers would give 3% interest on depositors' accounts, lend the depositors money at 6% interest and then be playing golf at 3pm. This alludes to how a bank's only form of business is lending out money at a higher rate than what it is paying out to its depositors.

In the past when the government implemented tighter banking regulations, the growth of the banking industry became stagnant as the regulations controlled tightly the rates at which banks can lend & borrow money. The regulations also included limits on the formation of new banks and their location However, these regulations loosened in 1980s and the widespread adoption of information technology such as the internet, banks now operate in a much more competitive and complex manner. The world of banking is never the same again! The banks are now providing insurance, brokerage and other forms of financial services.

S0, we can conclude this as :
3-6-3: The ‘unofficial’ banking rule - take deposits at 3%, lend at 6%, go play golf by 3 O’ clock; NINJA : No Income No Job Assets.

Twas the night before Christmas--from investopedia

Here's an interesting poem for the investors and people who are politically involved.I liked it and thought of sharing as it suits perfectly on this festive season..!!

'Twas the night before Christmas, and all through the house

Not a broker was churning, as they were home with a spouse;

The stocks had been researched and purchased with care,

In hopes that high returns soon would be there.

Investors were nestled all snug in their beds,

While visions of ten baggers danced in their heads.

The Investopedia Staff had done their week-long preach,

But they hadn't yet run out of things to teach.

When on CNBC there arose such a clatter,

Investors sprang from their chairs to see what was the matter.

Up to the TV they flew like a flash,

To hear the latest rumors and political trash.

The analyst picks - a normal part of the show;

But smart investors knew it was all so much blow.

When, what to their wondering eyes should appear,

But Warren Buffett, with something for investors to hear.

Click to continue reading further.... "Read more"...........

Wish you all a Merry Christmas-- A day of sharing,giving and rejoicing..!!!!!

Macaroni defense--

If I speak of Macaroni, my taste buds starts demanding it. but in business if you hear about Macaroni beware its not an invitaion for lunch or dinner. Rather it is a defensive tactic used by a corporation trying to defeat a takeover attempt by a raider or unfriendly bidder. The target corporation will issue a massive amount of bonds that must be redeemed at a mandatory higher redemption value if the company is taken over. The redemption value of these bonds therefore expands when the company is threatened-like macaroni when it is cooked-making the takeover prohibitively expensive to complete.

It is a type of shark repellent.Typically established in company bylaws by a Board of Directors, the strategy issues a large quantity of bonds that are redeemable above their face value in the event a company undergoes a merger. As a result, the acquisition price becomes prohibitively expensive and may seem economically unattractive.

To sum up, Macaroni Defense is an approach taken by a company that does not want to be taken over.This is a highly useful tactic, but the target company must be careful it doesn't issue so much debt that it cannot make the interest payments.

About Widow- And- Orphan Stocks --

Widow-and-orphan stock is relatively low-risk stock from well-known firms that pay high dividends. Widow-and-Orphan stocks are generally chosen during bear markets and ignored during bull markets. This is because these companies are perceived to be able to maintain their dividend payment schedule through difficult financial times. A widow-and-orphan stock is a conservative investment with limited possibility for large gains or losses. In brief it is a stock characterized by smaller than average price movements, a relatively high dividend, and little likelihood of dividend reduction or serious financial problems.

In the past, Widow-and-orphan stocks were considered to be among the most desirable of stockoptions . Some widow and orphan offerings were associated with companies that held a monopoly in a given industry. Utilities were/are often referred to as widow-and-orphan stocks because of their monopoly and dividend yield.

A Widow-and-orphan-stock was the blue chip stock of its day. Banks were excluded from this class as the result of their involvement in the bubble and crash of 1929. It was not until several years after the government-instituted regulations like the Glass-Steagall Act, which separated investment banking and "regular" commercial banking, that "widows and orphans" was again applied to commercial banks.

The term is noteworthy because it was generally used during market bottoms, but today it means something different.Stocks that were once viewed as a safe haven for very risk-averse investors changed .The reason may be because of the change in company's business strategy or the change in the market trends.

It is time to redefine the terms "widows" and "orphans"in this regards. Individual investors have been "widowed" by Wall Street, which, by following only big-cap, highly liquid stocks, has shifted its focus to serving the needs of institutional investors. "Orphan" stocks now are small-cap stocks (under $500 million in market capitalization) that have been abandoned by Wall Street. These widowed investors and orphaned stocks can be reunited, but it will require new ways of thinking by both the parties. Investors must realize that they need to take more responsibility in doing their own before taking investment decisions. In addition, the executives of orphaned stocks must take the initiative to get their information to the market of widows.

Random Walk -- A hypothesis !!

The theory that stock price changes have the same distribution and are independent of each other, so the past movement or trend of a stock price or market cannot be used to predict its future movement. The random walk hypothesis is a financial theory stating that stock market prices evolve according to a random walk and thus the prices of the stock market are uncertain. 

In short, this is the idea that stocks take a random and unpredictable path. A follower of the random walk theory believes it's impossible to outperform the market without assuming additional risk. Critics of the theory, however, contend that stocks do maintain price trends over time - in other words, that it is possible to outperform the market by carefully selecting entry and exit points for equity investments. This theory raised a lot of eyebrows in 1973 when authorBurton Malkiel wrote "A Random Walk Down Wall Street", which remains on the top-seller list for finance books and which posits that past share prices are of no use in predicting future prices.

Random walk theory is diametrically opposed to technical analysis. The theoretical underpinning of technical analysis is that markets react in a consistent way to share price movements. By looking at charts of past price movements, investors can identify patterns which have occurred before, and can anticipate future price movements because the market tends to react in the same way. The actual lack of correlation of past and present can be easily seen. If a stock goes up one day, no stock market participant can accurately predict that it will rise again the next. Just as a basketball player with the “hot hand” can miss his or her next shot, the stock that seems to be on the rise can fall at any time, making it completely random.

The rebuttals to random walk theory are not meant to suggest that the vast majority of individuals are going to suddenly start outperforming the market. Even though this may be true over the past 3 years, history suggests that it is not likely to be the case 10 years from now. In other words, history suggests that this is an anomaly and there will be a reversion to the mean.

Malkiel maintains that a buy and hold strategy is best and individuals should not attempt to time (or beat) the market. Attempts based on technical, fundamental or any other analysis are futile. Admittedly, he does have a point. 

Bailouts & Bankruptcy--

It’s apocalyptic that most of the big financial firms and major Banks all across the globe are running out for their profits .They are trying hard to trim their lending and recover debts and many others are on the verge of collapsing. But many of us get perplexed at the very sight of bailout and bankruptcy. What exactly does it mean? Don't they lead to the same fate?

Bailout is an act of loaning or giving capital to a failing business in order to save it from bankruptcy, insolvency, or total liquidation and ruin. A bailout could be done for mere profit, for social improvement, or the bailout of a company might be seen as a necessity in order to prevent greater, socioeconomic failures.

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed or initiate a restructuring.

Its high time, to find out what has brought the current situation, whether there is excessive lending without considering the credit worthiness of the consumer or a corporate company or any malpractices which have led to this kind of collapse. A pattern has to emerge on the basis of this collapse and this can be taken up for discussion and debated as to what remedy and fail proof policies and laws can be introduced to prevent another BAILOUT.

Lehmann Brother is a fine example of a bankruptcy which has rattled the financial world and some more are coming but its unpredictable as to what extent and what is going to be the aftermath. Introducing parameters for predicting a collapse or a clear analytics on the financial losses made by Banks and financial institutions is the need for the hour and this theory should have been completed by now.

Home Loan Dilemma-- now or later???

Everyone who's working or searching a job or a housewife, husband,Mom,Dad,Bro,Sis , I and who doesn't want to have a home and live a lovely life- a secured one.Until recession struck economy badly, selecting a home loan was child's play. This was because Floating rates  were a few percentage points below the fixed rates.This was an attracting offer for the borrowers.But now if you are looking for a new home? Get ready to sweat it out when you apply for a loan.Home loans are getting more and more difficult to come by as some of the biggest players in the market tighten their mortgage norms. 

Inflation--The spiraling inflation and rising property prices have plunged the prospective borrowers in a dilemma. Moreover it is seen that there is a continuous  increase in the interest rates on home loans.Today if you or anyone for that matter  wants to go for a home loan, you think twice that is it the right time or it would be preferrable to wait for another 2-3 months;as the fixed rates are currently high - to the tune of 13 to 14 percent.Inflation has added the remaining  fuel to fire. RBI recently increased the cash reserve ratio (CRR) and the repo rate by 0.5 percent. Leading banks were quick to pass on the burden of hike to borrowers .Banks are in consultations with the government and the Reserve Bank of India to revise eligibility criteria for disbursing home loans. Currently, the cap is calculated based on one’s capacity to pay the equated monthly instalment (EMI) and other criteria.

In recent times, banks and institutions have tightened norms for some industries like call centres, IT professionals and investment bankers. Chidambaram said housing is an important sector and a major driver of the economy. "Steel, cement, bricks, pipes, wires, electrical equipment, construction, labour everything depends on housing," he added.So we can expect for certain cuts in the interest rates and a review of the eligibility criteria can help many to turn their dreams into reality--- "My Home"

Inflation dives to nine-month low--

India's headline inflation fell to a nearly nine month low of 6.84 per cent mainly on account of cut in domestic fuel prices after nearly 20 per cent decline in the global crude oil prices and declining prices of vegetables, fruits, pulses and iron, steel items-- the lowest in nine months.A Rs 5 per litre cut in petrol prices and Rs 2 per litre reduction in diesel rate on December 6 helped bring down inflation.

At the same time, the government said it was seeking extra spending of about $9 billion for the current fiscal year to the end of March as part of a fiscal stimulus to lift economic growth and offset the impact of the global slowdown. 

Inflation, measured by wholesale price movement, dipped by 1.16 per cent for the week ended December 6 from the previous week, triggering demands from the industry for further cuts in key policy rates by the Reserve Bank.

Commenting on the decline, FICCI secretary general Amit Mitra said, "RBI should cut interest rate expeditiously and by a significant quantum. It must also ease availability of credit further."

Nosediving of inflation to 6.84 per cent coupled with falling oil prices is likely to trigger more lending rate cuts upto one per cent by Banks, economists said . Many state-owned banks and a few private sector banks had slashed their prime lending rates after RBI's monetary measures rate and finance minstry's calls for immediate rate reductions. However, if the decline in the inflation continues in this pace, that may pause policy hurdles by mid-next year.

Hedging programmes,still shortsighted--

Hedging programmes undertaken by companies in India are still generally shortsighted, driven to a large extent by market views and not always aligned with the risk philosophy of companies, revealed a survey conducted by Ernst and Young , a global leader in assurance, tax, transaction and advisory services, released  on titled Commodity Price Risk Management Survey 2008 . The survey pointed out that though companies understood the need for hedging and had the instruments available, the finer aspects of hedging such as basis risk and timing risk, which significantly affect hedge-cash flows are often ignored. 

It is for the first time in the country that a commodity risk management survey has been conducted with a view to throw light on market practices and provide perspective on structuring commodity price risk management operations.  The concept of commodity-price risk management in India has steadily gained ground. With the increasing volatility and growth in the paper markets, the time is ripe for companies to look at commodity-price risk management as an integral part of the strategy to manage their bottomlines, said Farrokh Tarapore, partner and industry leader,financial services, Ernst and Young. The unprecedented volatility in commodity markets has threatened structured margins in fundamental businesses like never before. For the first time, price-risk management is being seen as an all pervasive function touching every aspect of the business cycle. Commodity-price risk management is no longer limited to hedging. It is about managing price risk across the value chain, said Hemal Shah, associate director, financial risk services, EandY.

Source: By Commodities Bureau

Inexorable Salary cut continues in FY09--

Facing the economic meltdown the  companies have started laying off people and there's a big chaos in the organizations dealing with the cutting down of the salaries.The executives are scrambling two steps ahead of bankruptcy.It is expected to get worse in the coming six months.

ET reports "Employees in real estate, financial services, information technology (IT) and IT enabled services (ITeS) should prepare themselves for salary cuts of up to 15%. The first quarter of 2009 will see major cut in compensation levels and lower pay hikes," says Kris Lakshmikanth, chief executive of recruiting firm Headhunters India.

Globally, the growth in salaries may be even slower. The International Labour Organisation forecasts in its latest report on wages that they will grow by at best 1.1% in 2009, compared to 1.7% in 2008. In most companies, lower-and-middle-level employees would be the first to face the axe.While companies in services and real estate have already begun the slash-and-burn, the manufacturing industry is waiting for next quarter results before swinging into action.

 

The software sector's other big players, Infosys and Wipro, have already announced plans for single-digit salary increases in FY09. Things look equally grim for executives in real estate companies. The financial services companies ET contacted declined to comment on plans to revise salaries over the next quarter.

This new year can only bring ray of hopes as almost all the industries are having a tough time and will take next six months to get stable to an extent.The year's going to be hard on the executives because of low  or revised pay packages.

Madoff's Ponzi Scandal

Investors sent stocks lower as anxiety over the growing list of firms affected by investment manager Bernard Madoff magnified Wall Street’s concerns about the health of the financial sector. Madoff stands accused of operating an elaborate Ponzi scheme, using cash from new investors to pay off older ones, to the tune of $50 billion. US authorities allege that Madoff delivered consistently strong returns to clients by secretly using the principal investment from new investors for payments to other investors in what is known as a "pyramid fraud." The alleged offenses only came to light because he could no longer raise the money to keep his scheme going, according to the US Securities & Exchange Commission.

The 70-year-old Madoff, well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested as he was suspected of leading a $50 billion Ponzi scheme.Global finance giants have admitted huge potential losses in the suspected pyramid fraud scam run by the Wall Street veteran. HSBC has potential exposure of about $1.5 billion, the Financial Times reported.The Spain's largest bank said its investment fund Optimal has a 2.33 billion euro exposure to Madoff Securities. France's largest listed bank ,BNP Paribas said it has a potential 350 million exposure. Santander, the eurozone's largest bank by market value, said its clients had an exposure of 2.33 billion euros to Madoff's investment funds. Nomura Holdings, Japan’s biggest brokerage, said it had a $303 million exposure related to Wall Street trader Bernard Madoff,

Madoff’s alleged fraud has apparently shook the world. More so because it is stated to the world’s biggest financial fraud till date. Shock waves from Bernard Madoff's alleged fraud spread globally, as charities, wealthy individuals and banks disclosed losses from the prominent Wall Street trader's investment management business.Madoff claimed that he had only 200 to 300 million dollars left, while prosecutors were uncertain how much money Madoff's clients, among them banks, prominent investors and celebrities, have lost.

Bernard L Madoff Investment Securities LLC, operated as an international market broker with a separate investment advisory business for private clients. The advisory business was kept secretive by Madoff and served between 11 and 25 clients with 17.1 billion dollars under his management. New York hedge fund manager and Wall Street legend Bernard Madoff has been charged with what could be the largest Ponzi scheme in history.

Third Party Marketing Contract--

Third party technique is a marketing strategy commonly employed by Public Relations (PR) firms, that involves placing a premeditated message in the "mouth of the media."While Hedge Funds may enlist prime brokers, or sometimes may have internal departments at their disposal to liaise with investors, Third Party Marketers (TPM's) provide the benefits of specialization and exclusivity to facilitate the connection between Fund managers and investors.

Although third party marketers usually require an exclusive agreement and 20% of earnings on assets raised, they provide services such as strategy and market positioning, market intelligence, identification of potential investors, creation of marketing materials and a slew of other benefits that maximize a fund’s ability to establish and maintain investor relationships.

A  third party marketing consultant unlike a prime broker, can benefit the fund manager with global connectivity. A third party marketer often may specialize in a certain fund strategy, allowing them to effectively target the investors most likely to gravitate toward that specific arena.Also, an exclusive arrangement helps bolster the credibility of the fund, as investors have the convenience of dealing with only one third party marketing consultant and manager.

The contractual relationship between a third party marketer often stipulates:

1. The third party marketer being licensed as a broker dealer with the SEC, FINRA and with the states it will pursue investors.
2. Who the manager is, including everyone controlled by that manager in order ensure the third party marketer receives it full compensation from all relevant investors.
3. Who the investor is- since the third party marketer must be compensated for ANY investment made within the term of agreement, this clause protects the third party marketers compensation.
4. The exact nature of the compensation-must include all payments due to the third party marketer, including profits made post-termination derived from investments made during the tenure of the contract.
5. Exclusivity-this involves not just the agreement to be mutually exclusive but also dictates the duration of the term.

Source:http://thirdpartymarketing.com/2008/10/third-party-marketing-contracts-hedge.html

Stock Repurchase or Share Buyback--

The term literally refers to a company’s move to repurchase its own shares. By doing so, the company reduces the number of its shares available in the open market. 

This will lead to the rise of earnings per share (EPS) and the return on assets of the company, indicators on the balance sheet of an improvement in the performance of the company. As an investor, it will mean an increase in his/her stake in the company. The companies generally indulge in a buyback when they feel that their share price in the market has fallen drastically. At other times, it may simply be a way of using excess cash. However, there are also cases when this may be an attempt at preventing a takeover of the company.

But the question is how a company repurchases its own shares??A company can buy back shares either using tender offer or in an open market buyback . Under the first method, the company issues a tender offer with details regarding the number of shares that the company plans to repurchase and indicates their price range. An investor keen on accepting the offer needs to fill the form & send it back to the company. 

But the most common share repurchase method is the open-market stock repurchase,(especially in US) representing almost 95% of all repurchases. According to SEBI guidelines, if the company has decided to accept your shares, then it needs to intimate you in 15 days after the closure of the offer.

Any details regarding buybacks are available from the stock exchange as it is mandatory for the companies to intimate them of such resolutions or on the SEBI website.

 

 

 

 

Trade Cycle--

Trade cycle is a cyclical process. The trade cycle refers to the ups and down in the level of economic activity which extend over to a period of several years. The trade cycle come in the capitalistic economies. J.M. Keynes says, "A trade cycle is composed of periods of good trade characterized by rising prices and low unemployment percentage, with periods of bad trade characterized by following prices and high unemployment percentages." This shows how economic growth can fluctuate within different phases, for example:

i) Prosperity or boom (which is high growth causing inflation)
ii) Peak (top of trade cycle)
iii) Downturn or Recession ( fall in economic growth)
iv) Recovery (upturn of economic growth)

A trade cycle is composed of periods of good trade a characterized by rising prices and low un-employment percentage. The average length of trade cycle is a little more over eight years. The course of a trade cycle is generally traced through its various phases. Each of the phases is characterized by different economic conditions. In each phase the business face the different situation and pas through different experience.

Here's History of Credit Card--

Most of us use credit card.Today every individual needs or desires to have a credit card as its easy to carry and is known as "anytime_money". But do you know the real history or beginning of the credit card.Many of us won't be knowing and before seeing this video even I wasn't aware of it.So,here I am sharing an interesting video, which will help you to know the history of credit card. 

So enrich your credit card knowledge by watching this video. 

Denmark to enter recession in 2009

The Danish government slashed its growth forecasts for 2008 and 2009, predicting that the economy would contract by 0.2 per cent in 2009 after growing 0.2 per cent this year. 

"Financial turbulence and the weak international growth outlook will along with the wavering housing market and weakening competitiveness lead to weak GDP (gross domestic product) growth in coming years," the Finance Ministry said in a statement. 

Denmark's economy is not expected to grow before 2010, when its GDP should rise by 0.7 per cent.The government also said it now expected Danish unemployment to double from this year's 1.7 per cent to 3.5 per cent in 2010. The Danish economy can not avoid being affected by the global financial crisis and the poor outlook abroad.

 

 

200 million dollar note--WOW..!!

Inflation-wracked Zimbabwe plans to introduce a 200 million dollar note just days after a 100 million dollar note came into circulation.The 200 million dollar not will bring to 28 the number of notes put into circulation by the central bank this year alone, as the country struggles with the world's highest inflation rate of 231 million percent. 

The central bank introduced 100 million, 50 million and 10 million dollar notes while at the same time increasing withdrawal limits for individuals and companies. Cash  can now only be withdrawn once a week from banks, according to the latest measures by the central bank. Ordinary people can withdraw 100 million dollars a week while companies are permitted to withdraw 50 million dollars. This is strange and insecure as the cash has to be kept in houses or in wallets or in the corporate treasury.

Can you relate the rising of the prices of basic goods and services when the 100 million dollar note was introduced? The 100,000 banknote is worth only one US dollar on the widely-used parallel black market and is only half the amount needed to buy a loaf of bread. 

The Finwikian: Your Two Cents on Personal Finance—

Those who are interested in Blogging and love finance would always wonder like me that "Why there's no wiki of personal finance and PF bloggers?"So the good news for everyone whose interested is that , there is something now for us called as The Finwikian: Your Two Cents on Personal Finance.

                            But,What is The Finwikian?

    

 

A community has grown up around personal finance blogs. As a librarian-type, I felt compelled to organize it into a useful resource. Obviously, no one site will ever capture the multiplicity of viewpoints and experiences found in the individual sites. However, I hope that this one will be valuable for bloggers and for those looking for information.

For example, each blog page links to tables of blogs—such as Personal Finance Bloggers, Tax Bloggers, or Frugality Bloggers. These tables allow you to discover other blogs with similar interests, to learn a little bit about them by visiting their Finwikian pages and then to visit the blogs themselves if you’re interested.That makes it an excellent tool for writers and readers, you can share your blog with others, you can contribute to pages on other blogs you read, and hopefully you will discover new blogs in the process.

 

So all my  PF friends can add their blog to the wiki list, it will also increase the traffic to your blog. 

For further updates, you can also visit http://blog.finwikian.com 

Layoffs mount as crisis drags on--

 

The big job cuts are the evidence that the global financial crisis is unrelenting for any industry battered by heavy losses and weak markets. The 5,300 layoffs by the Swiss bank and a further 1,000 in London by Japan's biggest broker are the latest in the global financial sector .Of these, more than 50,000 were at Citigroup, which has made more write downs than any other bank in the world during the crisis. 

     It really cannot be predicted currently what’s in store for people next. It depends on sentiment, which will in turn drive credit markets, which in turn will weigh on banks or not. From the United States to Asian export giant Japan to European powerhouse Germany, the world's top economies is now in recession as the global crisis deepens. They are not the only ones with Singapore, New Zealand and Hong Kong also joining in. 

     The losses at banks are increasing continuously. Investment banking had a significant pretax loss, reflecting the challenging conditions in the financial markets in the quarter and the costs associated with risk reduction.