A few stories I would love to share
TRUST is a very important factor for all relationships. When trust is broken, it is the end of the relationship. Lack of trust leads to suspicion, suspicion generates anger, anger causes enmity and enmity may result in separation. A telephone operator told me that one day she received a phone call. She answered, "Public Utilities Board." There was silence. She repeated, "PUB." There was still no answer. When she was going to cut off the line, she Heard a lady's voice, "Oh, so this is PUB.Sorry , I got the number from my Husband's pocket but I do not know whose number it is." Without mutual trust, just imagine what will happen to the couple if the telephone operator answered with just "hello" instead of "PUB".
STORY 1:
A man asked his father-in-law, "Many people praised you for a successful marriage. Could you please share with me your secret?"
The father-in-law answered in a smile, "Never criticize your wife for her shortcomings or when she does something wrong. Always bear in mind that because of her shortcomings and weaknesses, she could not find a better husband than you."
We all look forward to being loved and respected. Many people are afraid of losing face. Generally, when a person makes a mistake, he would look around to find a scapegoat to point the finger at. This is the start of a war. We should always remember that when we point one finger at a person, the other four fingers are pointing at ourselves. If we forgive the others, others will ignore our mistake too.
STORY 2:
A person visited the government matchmaker for marriage, SDU, and requested "I am looking for a spouse. Please help me to find a suitable one."
The SDU officer said, "Your requirements, please." "Oh, good looking, polite, humorous , sporty, knowledgeable, good in singing and dancing. Willing to accompany me the whole day at home during my leisure hour, if I don't go out. Telling me interesting stories when I need companion for conversation and be silent when I want to rest."
The officer listened carefully and replied, "I understand you need television."
There is a saying that a perfect match can only be found between a blind wife and a deaf husband ,because the blind wife cannot see the faults of the husband and the deaf husband cannot hear the nagging of the wife. Many couples are blind and deaf at the courting stage and dream of perpetual perfect relationship. Unfortunately, when the excitement of love wears off, they wake up and discover that marriage is not a bed of roses. The nightmare begins.
STORY 3:
Many relationships fail because one party tries to overpower another,or demands too much. People in love tend to think that love will conquer all and their spouses will change the bad habits after marriage. Actually, this is not the case. There is a Chinese saying which carries the meaning that "It is easier to reshape a mountain or a river than a person's character." It is not easy to change. Thus, having high expectation on changing the spouse character will cause disappointment and unpleasantness. It would be less painful to change ourselves and lower our expectations..
STORY 4:
There is a Chinese saying which carries the meaning that "A speech will either prosper or ruin a nation."
Many relationships break off because of wrong speech. When a couple is too close with each other,we always forget mutual respect and courtesy. We may say anything without considering if it would hurt the other party.
A friend and her millionaire husband visited their construction site. A worker who wore a helmet saw her and shouted, "Hi, Emily! Remember me? We used to date in the secondary school."
On the way home, her millionaire husband teased her, "Luckily you married me.Otherwise you will be the wife of a construction worker."
She answered ,"You should appreciate that you married me. Otherwise, he will be the millionaire and not you."
Frequently exchanging these remarks plants the seed for a bad relationship. It's like a broken egg - cannot be reversed.
STORY 5:
Different people have different perception. One man's meat could be another man's poison. A couple bought a donkey from the market. On the way home,a boy commented, "Very stupid. Why neither of them ride on the donkey?"Upon hearing that, the husband let the wife ride on the donkey. He walked besides them. Later, an old man saw it and commented, "The husband is the head of family. How can the wife ride on the donkey while the husband is on foot?" Hearing this, the wife quickly got down and let the husband ride on the donkey. Further on the way home, they met an old Lady. She commented, "How can the man ride on the donkey but let the wife walk. He is no gentleman." The husband thus quickly asked the wife to join him on the donkey. Then, they met a young man. He commented, "Poor donkey, how can you hold up the weight of two persons. They are cruel to you." Hearing that, the husband and wife immediately climbed down from the donkey and carried it on their shoulders. It seems to be the only choice left. Later, on a narrow bridge, the donkey was frightened and struggled. They lost their balance and fell into the river. You can never have everyone praise you, nor will everyone condemn you. Never in the past, not at present, and never will be in the future. Thus, do not be too bothered by others words if our conscience is clear..
This is a true story which happened in the States.
A man came out of his home to admire his new truck. To his puzzlement, his three-year-old son was happily hammering dents into the shiny paint of the truck. The man ran to his son, knocked him away, hammered the little boy's hands into pulp as punishment. When the father calmed down, he rushed his son to the hospital. Although the doctor tried desperately to save the crushed bones, he finally had to amputate the fingers from both the boy's hands. When the boy woke up from the surgery & saw his bandaged stubs, he innocently said, " Daddy,I'm sorry about your truck." Then he asked, "but when are my fingers going to grow back?" The father went home & committed suicide. Think about this story the next time someone steps on your feet or u wish to take revenge. Think first before u lose your patience with someone u love. Trucks can be repaired.. Broken bones & hurt feelings often can't. Too often we fail to recognize the difference between the person and the performance. We forget that forgiveness is greater than revenge. People make mistakes. We are allowed to make mistakes. But the actions we take while in a rage will haunt us forever.
Truely sad stories...
From: Jeff
A good general not only sees the way to victory; he also knows when victory is impossible.
Introduction on reading stocks
9 steps on stocks introduction:
Step 1:
For all of its numbers, charts and ratios, trading is more art than science. And just as in artistic endeavors, there is talent involved, but talent will only take you so far. The best traders hone their skills through practice and discipline. They perform self analysis to see what drives their trades and learn how to keep fear and greed out of the equation. In this article we'll look at nine steps a novice trader can use to perfect his or her craft; for the experts out there, you might just find some tips that will help you make smarter, more profitable trades, too. Step 1. Define your goals and then choose a style of trading that is compatible with those goals. Be sure your personality is a match for the style of trading you choose.Before you set out on any journey, it is imperative that you have some idea of where your destination is and how you will get there. Consequently, it is imperative that you have clear goals in mind as to what you would like to achieve; you then have to be sure that your trading method is capable of achieving these goals. Each type of trading style requires a different approach and each style has a different risk profile, which requires a different attitude and approach to trade successfully. For example, if you cannot stomach going to sleep with an open position in the market then you might consider day trading. On the other hand, if you have funds that you think will benefit from the appreciation of a trade over a period of some months, then a position trader is what you want to consider becoming. But no matter what style of trading you choose, be sure that your personality fits the style of trading you undertake. A personality mismatch will lead to stress and certain losses. (For more, see Invest With A Thesis.)
Step 2.
Choose a broker with whom you feel comfortable but also one who offers a trading platform that is appropriate for your style of trading.It is important to choose a broker who offers a trading platform that will allow you to do the analysis you require. Choosing a reputable broker is of paramount importance and spending time researching the differences between brokers will be very helpful. You must know each broker's policies and how he or she goes about making a market. For example, trading in the over-the-counter market or spot market is different from trading the exchange-driven markets. In choosing a broker, it is important to read the broker documentation. Know your broker's policies. Also make sure that your broker's trading platform is suitable for the analysis you want to do. For example, if you like to trade off of Fibonacci numbers, be sure the broker's platform can draw Fibonacci lines. A good broker with a poor platform, or a good platform with a poor broker, can be a problem. Make sure you get the best of both.
Step 3.
Choose a methodology and then be consistent in its application.Before you enter any market as a trader, you need to have some idea of how you will make decisions to execute your trades. You must know what information you will need in order to make the appropriate decision about whether to enter or exit a trade. Some people choose to look at the underlying fundamentals of the company or economy, and then use a chart to determine the best time to execute the trade. Others use technical analysis; as a result they will only use charts to time a trade. Remember that fundamentals drive the trend in the long term, whereas chart patterns may offer trading opportunities in the short term. Whichever methodology you choose, remember to be consistent. And be sure your methodology is adaptive. Your system should keep up with the changing dynamics of a market. (For related reading, see What is the difference between fundamental and technical analysis and Blending Technical And Fundamental Analysis.)
Step 4.
Choose a longer time frame for direction analysis and a shorter time frame to time entry or exit.Many traders get confused because of conflicting information that occurs when looking at charts in different time frames. What shows up as a buying opportunity on a weekly chart could, in fact, show up as a sell signal on an intraday chart. Therefore, if you are taking your basic trading direction from a weekly chart and using a daily chart to time entry, be sure to synchronize the two. In other words, if the weekly chart is giving you a buy signal, wait until the daily chart also confirms a buy signal. Keep your timing in sync.
Step 5.
Calculate your expectancy.Expectancy is the formula you use to determine how reliable your system is. You should go back in time and measure all your trades that were winners, versus all your trades that were losers. Then determine how profitable your winning trades were versus how much your losing trades lost. Take a look at your last 10 trades. If you haven't made actual trades yet, go back on your chart to where your system would have indicated that you should enter and exit a trade. Determine if you would have made a profit or a loss. Write these results down. Total all your winning trades and divide the answer by the number of winning trades you made. Here is the formula:
E= [1+ (W/L)] x P – 1where: W = Average Winning Trade L = Average Losing TradeP = Percentage Win RatioExample:If you made 10 trades and six of them were winning trades and four were losing trades, your percentage win ratio would be 6/10 or 60%. If your six trades made $2,400, then your average win would be $2,400/6 = $400. If your losses were $1,200, then your average loss would be $1,200/4 = $300. Apply these results to the formula and you get; E= [1+ (400/300)] x 0.6 - 1 = 0.40 or 40%. A positive 40% expectancy means that your system will return you 40 cents per dollar over the long term.
Step 6.
Focus on your trades and learn to love small losses.Once you have funded your account, the most important thing to remember is that your money is at risk. Therefore, your money should not be needed for living or to pay bills etc. Consider your trading money as if it were vacation money. Once the vacation is over your money is spent. Have the same attitude toward trading. This will psychologically prepare you to accept small losses, which is key to managing your risk. By focusing on your trades and accepting small losses rather than constantly counting your equity, you will be much more successful. Secondly, only leverage your trades to a maximum risk of 2% of your total funds. In other words, if you have $10,000 in your trading account, never let any trade lose more than 2% of the account value, or $200. If your stops are farther away than 2% of your account, trade shorter time frames or decrease the leverage. (For further reading, see Leverage's Double-Edged Sword Need Not Cut Deep.)
Step 7.
Build positive feedback loops.A positive feedback loop is created as a result of a well-executed trade in accordance with your plan. When you plan a trade and then execute it well, you form a positive feedback pattern. Success breeds success, which in turn breeds confidence - especially if the trade is profitable. Even if you take a small loss but do so in accordance with a planned trade, then you will be building a positive feedback loop.
Step 8.
Perform weekend analysis.It is always good to prepare in advance. On the weekend, when the markets are closed, study weekly charts to look for patterns or news that could affect your trade. Perhaps a pattern is making a double top and the pundits and the news is suggesting a market reversal. This is a kind of reflexivity where the pattern could be prompting the pundits while the pundits are reinforcing the pattern. Or the pundits may be telling you that the market is about to explode. Perhaps these are pundits hoping to lure you into the market so that they can sell their positions on increased liquidity. These are the kinds of actions to look for to help you formulate your upcoming trading week. In the cool light of objectivity, you will make your best plans. Wait for your setups and learn to be patient.If the market does not reach your point of entry, learn to sit on your hands. You might have to wait for the opportunity longer than you anticipated. If you miss a trade, remember that there will always be another. If you have patience and discipline you can become a good trader. (To learn more, see Patience Is A Trader’s Virtue.)
Step 9.
Keep a printed record.Keeping a printed record is one of the best learning tools a trader can have. Print out a chart and list all the reasons for the trade, including the fundamentals that sway your decisions. Mark the chart with your entry and your exit points. Make any relevant comments on the chart. File this record so you can refer to it over and over again. Note the emotional reasons for taking action. Did you panic? Were you too greedy? Were you full of anxiety? Note all these feelings on your record. It is only when you can objectify your trades that you will develop the mental control and discipline to execute according to your system instead of your habits.Bottom LineThe steps above will lead you to a structured approach to trading and in return should help you become a more refined trader. Trading is an art and the only way to become increasingly proficient is through consistent and disciplined practice. Remember the expression: the harder you practice the luckier you'll get.
Ever hear someone say that a company has "strong fundamentals"? The phrase is so overused that it's become somewhat of a cliché. Any analyst can refer to a company's fundamentals without actually saying anything meaningful. So here we define exactly what fundamentals are, how and why they are analyzed, and why fundamental analysis is often a great starting point to picking good companies.
The Theory Doing basic fundamental valuation is quite straightforward; all it takes is a little time and energy. The goal of analyzing a company's fundamentals is to find a stock's intrinsic value, a fancy term for what you believe a stock is really worth - as opposed to the value at which it is being traded in the marketplace. If the intrinsic value is more than the current share price, your analysis is showing that the stock is worth more than its price and that it makes sense to buy the stock. Although there are many different methods of finding the intrinsic value, the premise behind all the strategies is the same: a company is worth the sum of its discounted cash flows. In plain English, this means that a company is worth all of its future profits added together. And these future profits must be discounted to account for the time value of money, that is, the force by which the $1 you receive in a year's time is worth less than $1 you receive today. (For further reading, see Understanding the Time Value of Money).
The idea behind intrinsic value equaling future profits makes sense if you think about how a business provides value for its owner(s). If you have a small business, its worth is the money you can take from the company year after year (not the growth of the stock). And you can take something out of the company only if you have something left over after you pay for supplies and salaries, reinvest in new equipment, and so on. A business is all about profits, plain old revenue minus expenses - the basis of intrinsic value. Greater Fool Theory One of the assumptions of the discounted cash flow theory is that people are rational, that nobody would buy a business for more than its future discounted cash flows. Since a stock represents ownership in a company, this assumption applies to the stock market. But why, then, do stocks exhibit such volatile movements? It doesn't make sense for a stock's price to fluctuate so much when the intrinsic value isn't changing by the minute. The fact is that many people do not view stocks as a representation of discounted cash flows, but as trading vehicles. Who cares what the cash flows are if you can sell the stock to somebody else for more than what you paid for it? Cynics of this approach have labeled it the greater fool theory, since the profit on a trade is not determined by a company's value, but about speculating whether you can sell to some other investor (the fool). On the other hand, a trader would say that investors relying solely on fundamentals are leaving themselves at the mercy of the market instead of observing its trends and tendencies.
This debate demonstrates the general difference between a technical and fundamental investor. A follower of technical analysis is guided not by value, but by the trends in the market often represented in charts. So, which is better: fundamental or technical? The answer is neither. As we mentioned in the introduction, every strategy has its own merits. In general, fundamental is thought of as a long-term strategy, while technical is used more for short-term strategies. (We'll talk more about technical analysis and how it works in a later section.) Putting Theory into Practice The idea of discounting cash flows seems okay in theory, but implementing it in real life is difficult. One of the most obvious challenges is determining how far into the future we should forecast cash flows. It's hard enough to predict next year's profits, so how can we predict the course of the next 10 years? What if a company goes out of business? What if a company survives for hundreds of years? All of these uncertainties and possibilities explain why there are many different models devised for discounting cash flows, but none completely escapes the complications posed by the uncertainty of the future. Let's look at a sample of a model used to value a company. Because this is a generalized example, don't worry if some details aren't clear. The purpose is to demonstrate the bridging between theory and application. Take a look at how valuation based on fundamentals would look:
The problem with projecting far into the future is that we have to account for the different rates at which a company will grow as it enters different phases. To get around this problem, this model has two parts: (1) determining the sum of the discounted future cash flows from each of the next five years (years one to five), and (2) determining 'residual value', which is the sum of the future cash flows from the years starting six years from now. In this particular example, the company is assumed to grow at 15% a year for the first five years and then 5% every year after that (year six and beyond). First, we add together all the first five yearly cash flows - each of which are discounted to year zero, the present - in order to determine the present value (PV). So once the present value of the company for the first five years is calculated, we must, in the second stage of the model, determine the value of the cash flows coming from the sixth year and all the following years, when the company's growth rate is assumed to be 5%. The cash flows from all these years are discounted back to year five and added together, then discounted to year zero, and finally combined with the PV of the cash flows from years one to five (which we calculated in the first part of the model). And voilà! We have an estimate (given our assumptions) of the intrinsic value of the company. An estimate that is higher than the current market capitalization indicates that it may be a good buy.
Below, we have gone through each component of the model with specific notes:
Prior-year cash flow - The theoretical amount, or total profits, that the shareholders could take from the company the previous year.
Growth rate - The rate at which owner's earnings are expected to grow for the next five years.
Cash flow - The theoretical amount that shareholders would get if all the company's earnings, or profits, were distributed to them.
Discount factor - The number that brings the future cash flows back to year zero. In other words, the factor used to determine the cash flows' present value (PV).
Discount per year - The cash flow multiplied by the discount factor.
Cash flow in year five - The amount the company could distribute to shareholders in year five.
Growth rate - The growth rate from year six into perpetuity.
Cash flow in year six - The amount available in year six to distribute to shareholders.
Capitalization Rate - The discount rate (the denominator) in the formula for a constantly growing perpetuity.
Value at the end of year five - The value of the company in five years.
Discount factor at the end of year five - The discount factor that converts the value of the firm in year five into the present value.
PV of residual value - The present value of the firm in year five. So far, we've been very general on what a cash flow comprises, and unfortunately, there is no easy way to measure it. The only natural cash flow from a public company to its shareholders is a dividend, and the dividend discount model (DDM) values a company based on its future dividends (see Digging Into The DDM.). However, a company doesn't pay out all of its profits in dividends, and many profitable companies don't pay dividends at all. What happens in these situations? Other valuation options include analyzing net income, free cash flow, EBITDA and a series of other financial measures. There are advantages and disadvantages to using any of these metrics to get a glimpse into a company's intrinsic value. The point is that what represents cash flow depends on the situation. Regardless of what model is used, the theory behind all of them is the same. Next: Stock-Picking Strategies: Qualitative Analysis
Table of Contents
1) Stock-Picking Strategies: Introduction
2) Stock-Picking Strategies: Fundamental Analysis
3) Stock-Picking Strategies: Qualitative Analysis
4) Stock-Picking Strategies: Value Investing
5) Stock-Picking Strategies: Growth Investing
6) Stock-Picking Strategies: GARP Investing
7) Stock-Picking Strategies: Income Investing
8) Stock-Picking Strategies: CAN SLIM
9) Stock-Picking Strategies: Dogs of the Dow
10) Stock-Picking Strategies: Technical Analysis
11) Stock-Picking Strategies: Conclusion
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A good general not only sees the way to victory; he also knows when victory is impossible.
A good general not only sees the way to victory; he also knows when victory is impossible.
