Monthly Archives: August 2013

Recommended Books on Behavioral Finance

Recommended Books on Behavioral Finance

  • 'Money Game' by Adam Smith (ISBN 0394721039)
    Money Game: Adam Smith gives a great explanation of essential topics such as mass psychology, fundamental analysis, technical analysis, equity valuations, mutual funds, random walk theory, and the players who play the financial markets. Adam Smith is believed to be the Harvard- and Oxford-trained George J. W. Goodman.
  • 'Decision Traps' by J. Edward Russo (ISBN 0385248350)
    Decision Traps: J. Edward Russo details the ten common pitfalls that entangle the decision-making process and how to reduce biases in decision-making because of errors in the process.
  • 'Investment Psychology Explained: Classic Strategies to Beat the Markets' by Martin J. Pring (ISBN 0471133000)
    Investment Psychology Explained: Classic Strategies to Beat the Markets: Martin J. Pring describes how psychology is perhaps the most significant part for trading and how every investor’s worst enemy is himself and his emotions – greed, panic, fear, anxiety, and hope.
  • 'Extraordinary Popular Delusions and the Madness of Crowds' by Charles MacKay (ISBN 1604594411)
    Extraordinary Popular Delusions and the Madness of Crowds: Charles MacKay studies the psychology of crowds and mass mania throughout history. A classic that was first published in 1841, this book describes the cycles and patterns of greed-based ignorance and group frenzy in the social, political, and economic affairs of the world.
  • 'How We Know What Isn't So: The Fallibility of Human Reason in Everyday Life' by Thomas Gilovich (ISBN 0029117062)
    How We Know What Isn’t So: The Fallibility of Human Reason in Everyday Life: Thomas Gilovich focuses on the inherent biases that must be recognized and overcome, and common errors we make when trying to understand the world and shape our opinions and reactions.
  • 'Why Smart People Make Big Money Mistakes and How to Correct Them' by Gary Belsky, Thomas Gilovich (ISBN 1439163367)
    Why Smart People Make Big Money Mistakes and How to Correct Them: Gary Belsky, Thomas Gilovich on lessons from the life-changing science of behavioral economics. A brief chronicle of the field of behavioral finance and how to avoid making common financial mistakes.
  • 'Hare Brain, Tortoise Mind: How Intelligence Increases When You Think Less' by Guy Claxton (ISBN 0060955414)
    Hare Brain, Tortoise Mind: How Intelligence Increases When You Think Less: Guy Claxton challenges long-held assumptions that actual thinking involves effort, anxiety, and our verbal capabilities. Claxton shows how we unconsciously register patterns of data, and such patterns tend to guide our actions.
  • 'The Inefficient Stock Market' by Robert A. Haugen (ISBN 0130323667)
    The Inefficient Stock Market: Robert A. Haugen introduces inefficiencies in the capital market and in market behavior. how they can be take advantage of to gain an edge over other investors.
  • 'The Moral Animal: Why We Are, the Way We Are: The New Science of Evolutionary Psychology' by Robert Wright (ISBN 0679763996)
    The Moral Animal: Why We Are, the Way We Are: The New Science of Evolutionary Psychology: Robert Wright introduces evolutionary psychology: why we are naturally disposed to behave in particular ways and how we might manage behavioral tendencies that might be detrimental to others and ourselves around us.
  • 'Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing' by Hersh Shefrin (ISBN 0195304217)
    Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing: Hersh Shefrin challenges foundational assumptions about investing and the capital markets, and exposes psychological traps that preclude investors from achieving higher returns.
  • 'Influence: The Psychology of Persuasion' by Robert B. Cialdini (ISBN 006124189X)
    Influence: The Psychology of Persuasion: Robert B. Cialdini on how one could use psychological techniques of persuasion to influence others into doing things they did not originally plan doing. The six “weapons of influence” are reciprocation, commitment and consistency, social proof, liking, authority, and scarcity.
  • 'The Psychology of Judgment and Decision Making' by Scott Plous (ISBN 0070504776)
    The Psychology of Judgment and Decision Making: Scott Plous offers a wide-ranging introduction to the field of psychology and human behavior with a strong spotlight on the social aspects of the decision-making processes and how we make decisions under ambiguous, multifaceted, or non-linear circumstances.
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Posted in Investing and Finance

Gandhi’s List of the Seven Blunders of the World

Mahatma Gandhi

On their last afternoon together, Indian nationalist Mohandas Gandhi gave his grandson, Arun Gandhi, a list of seven errors to avoid. Over time, Arun Gandhi added one to this list.

  1. Wealth without work
  2. Pleasure without conscience
  3. Knowledge without character
  4. Commerce without morality
  5. Science without humanity
  6. Worship without sacrifice
  7. Politics without principle
  8. Rights without responsibilities.
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Posted in Leaders and Innovators

Ten Ways to Be More Optimistic

Optimism

Physical and mental health is the greatest of human blessings. Decline in one’s physical and mental health is very widespread. This is the most feared consequences of the aging process. When you take care of your physical and mental health, you will gain a new perspective that can help you accomplish much more.

Hopefulness and confidence coerces our world forward, and cynicism, glumness and negativity slows it down. Accordingly, the positive outcome of good physical and mental health on the body’s immune system through the increased production of a chemical called Serotonin, the “happiness hormone.” Research has demonstrated that Serotonin influences one’s feelings of well-being. It makes one feel more well heeled, serene, and even peaceful. The majority of anti-depressants work by enhancing the production of serotonin chemically.

  • Have a smile on your face and laughter in your heart. People who laugh frequently and have a sense of humor actually live longer than those who don’t. Smiling gives you a boost of cheerfulness.
  • Engage in a cerebral conversation. A lively conversation can be refreshing. Debate the pros and cons of a topic of your choosing with a friend or colleague.
  • Glass Half Full Learn how to manage and change your feelings. Making your feelings work for you instead of letting your feelings control you can have a massive effect on your life.
  • Rejoice in the wonders of life. Learn to appreciate all that you have. Be thankful for the smallest things. Look around, you can always find something in my life for which to be grateful.
  • Stop thinking in absolutes. There is good and bad in all individuals. One and all needs your love and charity. Therefore, tread life humbly and deal graciously with the circumstances of life.
  • Find your personal calling. Develop a mission statement and describe how you intend to invest your energy, skills, strength and your blessings. Each of our personal callings is as unique as our fingerprints. Discover what you love. Offer it to others in the form of service.
  • Develop a good character. Reflect on the value system you have been raised with. Interrogate it. Decide for yourself your values and ethics and live them consistently. Your character will lead to indomitable self-confidence and intrinsic optimism.
  • Identify opportunity in every conversation. Opportunity is your key to connect with your goals. Speaking positively invigorates your spirit and surmounts self-doubt. Given a place in our thoughts, fear, like an insidious virus, can permeate the whole state of mind and block your positive attitude.
  • Learn to forgive. Forgiveness is essential for your wellbeing. To err is human, but to forgive is human, too. Forgiveness is nothing more than acknowledging that the person who harmed you is more than just the person. Try this exercise on forgiveness: when you recall those who have hurt you, despite your reluctance to let go of your anger and the urge to satisfy your sense of justice, wish them well.
  • Make your dreams happen. The main obstruction to turning your knowledge into actions and your dreams into reality is the propensity to consider talking about something as correspondent to taking action about it. Pay the price to make your dreams come true. Dream big and dare to go all out to achieve them.

Remember, you will not get to the top of your game without confidence and dreaming big. To realize your potential, start to believe in yourself. You don’t have to be perfect, just be courageous and do the best you can. Life is short. Do your best and follow your heart.

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Posted in Life Hacks and Productivity

The Best 100 Quotations from Warren Buffett on Investing, Leadership, and Life

Warren Buffett's 100 Best Quotations

  1. Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid.
  2. Only when the tide goes out do you discover who’s been swimming naked.
  3. If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%.
  4. Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.
  5. It is not necessary to do extraordinary things to get extraordinary results.
  6. I am a better investor because I am a businessman, and a better businessman because I am an investor.
  7. Someone’s sitting in the shade today because someone planted a tree a long time ago.
  8. The smarter the journalists are, the better off the society is to a degree. People read the press to inform themselves; and the better the teacher, the better the student body.
  9. Can you really explain to a fish what it’s like to walk on land? One day on land is worth a thousand years of talking about it, and one day running a business has exactly the same kind of value.
  10. In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world. A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond.
  11. Derivatives are financial weapons of mass destruction.
  12. The rich invest in time, the poor invest in money.
  13. The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.
  14. We like to buy businesses, but we don’t like to sell them.
  15. Risk is a part of God’s game, alike for men and nations.
  16. Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised.
  17. The stock market is a no-called-strike game. You don’t have to swing at everything—you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’
  18. The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.
  19. A great investment opportunity occurs when a marvelous business encounters a one-time huge, but solvable problem.
  20. Anything can happen in stock markets and you ought to conduct your affairs so that if the most extraordinary events happen, that you’re still around to play the next day.
  21. Time is the friend of the wonderful business, the enemy of the mediocre.
  22. Beware of geeks bearing formulas.
  23. Turnarounds seldom turn.
  24. I always knew I was going to be rich. I don’t think I ever doubted it for a minute.
  25. With few exceptions when a manager with a reputation for brilliance tackles a business with a reputation for poor economics, it is the reputation of the business which remains intact.
  26. Why not invest your assets in the companies you really like? As Mae West said, ‘Too much of a good thing can be wonderful.’
  27. Risk comes from not knowing what you’re doing.
  28. I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out.
  29. Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.
  30. Price is what you pay. Value is what you get.
  31. If they try to time their purchases they will do very well for their broker and not very well for themselves.
  32. The Stock Market is designed to transfer money from the Active to the Patient.
  33. You ought to be able to explain why you’re taking the job you’re taking, why you’re making the investment you’re making, or whatever it may be. And if it can’t stand applying pencil to paper, you’d better think it through some more. And if you can’t write an intelligent answer to those questions, don’t do it.
  34. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.
  35. We enjoy the process far more than the proceeds.
  36. Always invest for the long term.
  37. Bad behavior is contagious. That’s how human nature works.
  38. We don’t get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely.
  39. Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
  40. Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.
  41. Risk can be greatly reduced by concentrating on only a few holdings.
  42. The best defense in a tough economy is to add the most you can to society. Your money can be inflated away but your knowledge and talent cannot.
  43. Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.
  44. If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.
  45. I get to do what I like to do every single day of the year.
  46. The investor of today does not profit from yesterday’s growth.
  47. With enough insider information and a million dollars, you can go broke in a year.
  48. I do not like debt and do not like to invest in companies that have too much debt, particularly long-term debt. With long-term debt, increases in interest rates can drastically affect company profits and make future cash flows less predictable.
  49. Money to some extent sometimes let you be in more interesting environments. But it can’t change how many people love you or how healthy you are.
  50. Do what you’re passionate about. If you do this, there will be few people competing or running faster than you.
  51. Buy companies with strong histories of profitability and with a dominant business franchise.
  52. For some reason, people take their cues from price action rather than from values. What doesn’t work is when you start doing things that you don’t understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it’s going up.
  53. Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.
  54. It’s never a good idea to wait to do anything; given the uncertainty of life, just get going.
  55. An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.
  56. We believe that according the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a ‘romantic.’
  57. Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.
  58. I really like my life. I’ve arranged my life so that I can do what I want.
  59. If you are in a poker game and after 20 minutes you don’t know who the patsy is, then you’re the patsy.
  60. Enjoy your work and work for whom you admire.
  61. If you don’t feel comfortable owning something for 10 years, then don’t own it for 10 minutes.
  62. The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable.
  63. It’s class warfare; my class is winning, but they shouldn’t be.
  64. Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.
  65. Never invest in a business you cannot understand.
  66. You only have to do a very few things right in your life so long as you don’t do too many things wrong.
  67. Without passion, you don’t have energy. Without energy, you have nothing.
  68. Wide diversification is only required when investors do not understand what they are doing.
  69. You shouldn’t own common stocks if a 50 per cent decrease in their value in a short period of time would cause you acute distress.
  70. A hyperactive stock market is the pickpocket of enterprise.
  71. I buy expensive suits. They just look cheap on me.
  72. The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.
  73. I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for ten years.
  74. There seems to be some perverse human characteristic that likes to make easy things difficult.
  75. A public-opinion poll is no substitute for thought.
  76. We will reject interesting opportunities rather than over-leverage our balance sheet.
  77. Lose money and I will forgive you, but lose even a shred of reputation and I will be ruthless.
  78. If a business does well, the stock eventually follows.
  79. When you are exceptional you jump off the page. There really isn’t that much competition there.
  80. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.
  81. We will only do with your money what we would do with our own.
  82. We’ve used derivatives for many, many years. I don’t think derivatives are evil, per se, I think they are dangerous. …So we use lots of things daily that are dangerous, but we generally pay some attention to how they’re used. We tell the cars how fast they can go.
  83. An investor needs to do very few things right as long as he or she avoids big mistakes.
  84. Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.
  85. If the only reason you find for doing something is because others are doing it then that’s not good enough.
  86. Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.
  87. Focus on your customers and lead your people as though their lives depend on your success.
  88. I have pledged — to you, the rating agencies and myself — to always run Berkshire with more than ample cash. We never want to count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, I will not trade even a night’s sleep for the chance of extra profits.
  89. If past history was all that is needed to play the game of money, the richest people would be librarians.
  90. Read Ben Graham and Phil Fisher read annual reports, but don’t do equations with Greek letters in them.
  91. Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
  92. When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.
  93. You do not adequately protect yourself by being half awake when other are sleeping.
  94. If at first you do succeed, quit trying on investing.
  95. In a commodity business, it’s very hard to be smarter than your dumbest competitor.
  96. It’s us fun being a gorse when the tractor comes along, or the blacksmith when the car comes along.
  97. We’re not looking at the aspects of the stock, we’re looking at the aspects of the business.
  98. You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right — that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else.
  99. It’s not debt per say that overwhelms an individual corporation or country. Rather it is a continuous increase in debt in relation to income that causes trouble.
  100. Only when the tide goes out do you discover who’s been swimming naked.
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Posted in Investing and Finance

Can Project Management Soft Skills Be Trained

Project Management Soft Skills Be Trained

Can project management skills be trained? Some people believe that soft skills can be learned just like any other set of skills. Skeptics say that soft skills are part of your personality and are set for life. Hard skills and technical knowledge can be acquired through learning process. Soft skills involve experience — over time, these soft skills are learned by working with people in changeable situations and therefore cannot be simplified into a series of coachable skills. No wonder many companies have started adapting simulations to teach soft skills.

Project managers who are enthusiastic about honing their skills to improve their own performance and that of their teams can confirm to the efficiency of training because soft skills can developed with practice and learnt from experience.

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Posted in Management and Leadership

15 Factors to Consider for Strategic Partnerships & Alliances

Strategic Partnerships & Alliances

  • Partnerships vis-a-vis mergers and acquisitions
  • Choice of partner vis-a-vis the alternatives
  • Appraisal of fitness (strategic, financial, operational, relational)
  • Conflicts in multi-partner alliances
  • Extent of partnership (progression, duration, termination)
  • Constitution of business elements and restrictions
  • Alignment of reporting structures and goals
  • Exclusivity, competition, technology transfer
  • Personnel and resource sharing and limitations thereof
  • Allocation of investments, proceeds, intellectual property, inventions
  • Future rights to business opportunities and licensing
  • Business processes and points of interaction
  • Governance and role of intermediary leadership
  • Structures for oversight and auditing
  • Management of the entire portfolio of strategic partnerships
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Posted in Business and Strategy

Twelve Ways to Live a Better Life

Live a Better Life

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Posted in Philosophy and Wisdom

Good and Great Managers

Great Managers

As they move up the organizational ladder, most managers do not recognize that the leadership traits that made them successful in their previous roles are not necessarily the qualities that will allow them to stand out in their new roles. These qualities would include helping others succeed, partnering with others, forming coalitions, managing relationships and alliances, determining where and when to shift one’s focus, and learning to appreciate different perspectives. Here are some attributes that differentiate the good and the great.

  • Good managers are excellent performers; great managers make success look graceful.
  • Good managers are passionate and determined to excel; great managers allow for others to be recognized too.
  • Good managers work intensely, more intensely than their peers; great managers control their energies to stay on the rested edge, not the ragged edge.
  • Good managers passionately sponsor initiatives that will help others succeed; great managers know when to hold back and when to let go.
  • Good managers are leaders among peers; great managers enable peers to improve their performance.
  • Good managers understand new ways of doing things, network, and make important connections; great managers stay grounded and make sure that they satisfy all the basic needs while concurrently mastering new concepts.
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Posted in Management and Leadership

The Seven Indisputable Laws of a Life Well Lived

Life Well Lived

  • Any decision you make can change the course of your life forever. Therefore, the next decision you make can become the most important decision you will ever make. Treat it as such.
  • All forms of obvious wealth do not mean anything if they are not harnessed as opportunities for inward growth and the pursuit of happiness.
  • Life will take on a new zest, deeper interest, and greater meaning if you make a conscious choice to pursue excitement and happiness. Tread the path of virtue, pleasantness, and peace.
  • Where one sits depends on where one stands. Do not be indifferent about the future and invite calamities and despair. Embrace the gifts of fortune and fortitude and do not neglect your own interest
  • Embrace courage. Embrace the will to do and dare. Embrace the will to persevere. Difficulties can tempt you to believe in the naysayers and those who discourage.
  • Those worthy of help seldom require your help. Help those who desire to improve not those who anticipate charity. Teach them new trades or put in their way means of wealth and earnest livelihood.
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Posted in Life Hacks and Productivity

Motivations for Forming Strategic Partnerships & Alliances

Strategic Partnerships & Alliances

  • Access to markets and distribution challenges (by product, geography, or customer, overcome ownership restrictions in certain geographies, contend with entrenched competitors)
  • Share risk and reward in putting to the test promising opportunities
  • Shape industry landscape (aggressive growth strategies, locking-in customers)
  • Innovate (new products, accelerated commercialization)
  • Gain operational efficiencies (lower operating costs, focus on core strengths)
  • Add new capabilities (access to technology, established networks)
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Posted in Management and Leadership