7 mistakes that small investors often commit

Here are seven mistakes that small investors often commit.

Small investors do not have the necessary knowledge and temperament required to make money out of these complex products.

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                          1.Speculate with derivatives, exotic products

Legendary stock investor Warren Buffett calls the futures and options segment weapons of mass financial destruction. Derivatives are meant for hedging by institutional investors and high net worth individuals. Retail investors who use these instruments for speculation are only courting financial disaster because F&O trading is not suitable for everyone. "Investment in equity itself is risky and F&O is mathematically 5-6 times riskier," says Ankit Ojha, associate vice-president, research (equity derivatives), in the Mumbai-based financial research and advisory firm, Bonanza Portfolio. One false step and your net worth can get wiped out.

Small investors do not have the necessary knowledge and temperament required to make money out of these complex products. Anybody who is serious about building wealth from stocks should stay away from these instruments.

2. Buy momentum stocks and obscure scrips

Just as a rising tide lifts all ships, the surge in the stock market has boosted all stocks in the past 2-3 months. Some penny stocks and obscure scrips have risen by over 100-200% in the past three months. If a stock was priced at 2-3 about three months ago, there must have been a good reason for it.

The market obviously didn't see value in the stock. Don't get swayed by the momentum when you go shopping.

Study the fundamentals and if what you see isn't quite rosy, avoid the stock. A bad stock will remain a bad investment even if you had bought it when its price had hit rock-bottom.

Now, when the price has risen too high, such stocks have become twice as risky. Sooner or later the fundamentals will catch up with the price and your investment will suffer.



3. Take a short-term view of the markets

Some analysts have predicted that the sensex will touch 30,000 by the end of the year. Their prediction may well come true but don't bank on it. Despite the widespread optimism and enthusiasm about equities, there is no guarantee that the market will deliver 20% by the end of the year. There is also no guarantee that there will be no hiccups in between. "Markets will go up, but not in a straight line," says Dhirendra Kumar, CEO of mutual fund tracker Value Research. The stock market is not a gambling den where you can make big money overnight. This volatility is inherent to stocks. Enter only if you can stomach the risk. Also, don't enter the equity market if your investment horizon is less than three years. That is the minimum time that a new government will require to clear the mess left behind by the UPA government.

4. Invest more in stocks than you have

While F&O can be disastrous for small investors, margin trading is no less dangerous. It is a leveraged position that involves putting at risk more money than you can spare. Brokers encourage investors to use margin money for trading in stocks. It's understandable why brokers want you to trade more. The brokerage you pay for every trade is their bread and butter. Banks and NBFCs also encourage investments. They tell you to unlock the value of your assets by taking a loan against shares, funds, bonds and deposits. Borrowing is a great way to build assets that you can't immediately afford. A home loan is always a good idea because the value of the asset rises over time. But using borrowed funds to buy a risky asset such as stocks can be ruinous. If the markets decline, it can deal a double whammy on your finances. You have to pay interest and also suffer a loss. Borrowing should be determined by your ability to repay, not by your bet on the asset.

5. Think they can outperform mutual funds

If the average small investor does a comprehensive study of his equity portfolio he will discover that his gains from direct stock investments are nothing compared to how much the average mutual fund made during the period. Mutual funds have full fledged research team that look into every aspect of a stock before they include it in their portfolios. They are able to zero in on a multi-bagger much before that stock comes into the limelight. If you outperformed the mutual funds, you are in the wrong profession and should join a fund house as a fund manager. Otherwise, just invest through mutual funds for steady wealth creation.

6. Take exposure to a few stocks

Even if you want to invest in stocks directly, follow the diversification principle of mutual funds. You may not be able to manage a portfolio of 30-35 stocks like a mutual fund, but you should spread the risk across several stocks. Even the best of stocks and the most promising of sectors can sometimes go into a tailspin. Infosys is a recent example. It's a good company, the IT sector is doing well and the future looks bright. But the exit of top level managers sent the stock into a tailspin in March this year. The IT bellwether fell from 3,800 levels in March to below 3,000 in May. The stock price has bounced back a bit now but is still below the March peak.

Small investors should not take concentrated exposure to a couple of stocks. Contain the impact on the portfolio by diversifying your holdings across a basket of 8-10 stocks from different sectors.

7. Invest huge sums at one go

The diversification is also necessary across time. In mutual funds, the SIP arrangement helps the investor diversify his investment over time. In stocks, you will have to adopt a patient strategy of buying on dips. Say, you intend to buy 300 shares of a particular company. Split the purchase into 5-6 tranches spread over time.

Individual stocks are more volatile than mutual funds and there will be plenty of opportunities to buy at lower prices in the coming months.

Don't think that this is the last chance to buy the stock at this price.

17 most common ways people screw up tough interviews

How many school buses are there in America? How many ping pong balls can fit in a 747?

Questions like these are notoriously used in case study interviews for top-tier management consulting companies - but they're quickly spreading into other industries, as well.

If you're trying to go into finance, strategic planning, marketing, operations, or even the non-profit world, experts highly recommend that you learn to master the case study interview - which is when you're presented with a business case and asked to find the solution.

Doing well in these interviews is highly rewarding because they can lead to big salaries and careers with a lot of room for growth and responsibility. However, case study interviews are also among the toughest to master, and you might be making career-limiting mistakes without even realizing it.

We spoke with Marc Cosentino, author of "Case In Point: Complete Case Interview Preparation," to find out the most common mistakes people make in their difficult case study interviews:

1. You tried to wing it.

To be truly prepared, people often do live practice of around 30 to 40 cases, and then read 30 additional cases before their actual interview. Cosentino says, " If you're not willing to put in the extra time, it means you really don't want the job." It takes around 100 hours of preparation to be a competitive candidate in the interview process. "It all boils down to confidence," he adds. "The more you practice, the more confident you feel going in."

2. You studied for it like a test.

Nothing beats live practice. Reading through cases is simply not enough to prepare for this type of interview. Cosentino recommends that you practice with real consultants, school alumni, or career services advisers. You could also try the site, Evisors, which offers consultants you can pay to practice with you.

Cosentino's advice is to keep a case journal as you practice, so you can write down the problem, solution, and what you forgot to think about. It will help you reflect on your strengths and weaknesses and also understand how you can improve.

3. You didn't stay up to date with economy and industry news.

In the weeks leading up to your interview, you should be reading the front page of the Wall Street Journal every day. Cosentino says he is also a big fan of CNBC, Satellite Radio, Business Insider alerts, McKinsey Quarterly, and any cutting edge stuff written by practitioners.

4. You didn't warm up the morning of the interview.

"No Major League Baseball player ever stepped up to the plate without batting practice," Cosentino points out. Just before you walk into the office for your interview, try practicing case questions or doing market sizing problems. "You don't want to warm up during the interview," he says.

5. You used technical jargon without understanding it.

Cosentino advises against using words if you don't completely understand their meaning - no matter how impressive they might sound. "If you use jargon in the wrong context, that's basically the end of the interview," he says. "The interviewer wouldn't be able to trust you if you got hired and actually did that in front of a client." Interviewers would much rather have you explain things in your own words than to use complicated terms and get them wrong.



6. You didn't ask for clarification.

Asking questions is a great way to show the interviewer you aren't shy about asking for information under high pressure circumstances. This can also turn your interview into a conversation, which shows you can interact well with clients. Being humble enough to ask questions is a sign of maturity, as long as you don't try to probe the answer out of the interviewer.

When you're facing a market case problem, make sure you understand exactly why the client wants to enter the market, what they're looking for, and what constitutes success for them. It's important to know what your client's expectations are so you can design a strategy around that.

One way to do this is to verify the objective. Even if the client's goals seem obvious, you should phrase your questions like: "One objective is to increase sales. Are there any other objectives I should know about?"

7. You forgot to summarize the case.

The first thing you should do is to re-state the case in your own words, so you can show your interviewer that you understand what's going on. It also helps you hear the information a second time and prevents you from answering the wrong question. To help you summarize well, make sure you circle or highlight the important aspects of the case when you're taking notes, so they jump off the page when you need them.

"Your summary is not a rehash of everything you discussed," Cosentino says. "It's simply a little bit of the backstory and then two to three key recommendations you want to remember."

8. You took messy notes.

You may not realize it, but your interviewer pays a lot of attention to your notes. "When these guys aren't looking you in the eye, they're watching what you're writing down," says Cosentino. Interviewers want to see how you write your notes, how you did your math, and if they can read your handwriting. Most firms will take your notes at the end of your interview and keep them in a file as one more data point they can look at.

Make it easier for them by turning your page toward them, drawing your notes, and walking them through your thought process. "If you turn your page toward them, the interviewer is also now leaning over the table going through it with you," he says. "You break through the imaginary plane and make the interviewer feel like a client." When you do this, you also turn your interview into a role-playing scenario, so the interviewer can see you really know how to deal with clients.

9. You didn't organize your thoughts before speaking.

The first thing to do after summarizing the case and verifying the objective is to lay out your structure. It will help you stay focused on the original question asked and not lose track of the objective or framework. If you have clean notes, they will help you recall facts of the case or your potential answers if you blank out.

Organizing your thoughts is most important when an employer asks about pros and cons. Cosentino says, "Most people try to answer off the top of their head and ping pong back and forth between the pros and cons. You want to give me all the pros and then all the cons, so you can come off well organized."

Another advantage for organizing your answer is that if you get cut off mid-thought, you'll be able to easily drop your current point and move to a new one.

10. You didn't look at the big picture.

Let's say your client was an online toy store who wanted to outsource product distribution and they only had one warehouse outside of Boston. Most people would rush into the question, without thinking about the fact that their client is a toy store that does 80% of its business in the last few months of the year. They should take a step back and think about the fact that for the other nine months of the year, the warehouse sits three quarters empty, so they would need to bring in seasonal balance to make the warehouse worth holding onto.




11. You didn't bring graph paper.

"Firms like it when you use graph paper because of the big squares and light backgrounds," Cosentino explains. "They also love it when you graph things." Since you will be dealing with numbers, graph paper can help you present them in a visual way. "Saying your thoughts out loud is a minimum," he adds. "Visually drawing what you are doing is even better." Of course, you should still bring white paper to the interview, so your other notes can stay clean and linear.

12. You tried to give an exact numerical answer.

Case interviewers often like to ask estimation questions, such as, "How many smartphones were sold in the U.S. last year?" Keep in mind that you don't need to give an exact answer and that getting bogged down in the details will waste your time.

The purpose of these questions is to look for your thought process, and how you articulate under pressure, not for your ability to conjure up a magical number. "A case interview is basically a business problem," Cosentino says. "There's no right or wrong answer - just make sure your answer makes good business sense and common sense."

13. You underestimated the importance of your voice and body language.

During your interview, you need to sound enthusiastic and confident in order to show that you really thrive on the challenge of the case. Even if you aren't sure about your answer, Cosentino advises you to never convey that you might be wrong. You should also keep a positive attitude to show that you're not intimidated.

"It's not what you say, it's how you say it," Cosentino explains. "That really carries most of the weight, since your answers are going to be fairly similar to everyone else's." The interviewer is looking for your maturity, poise, communication skills, and whether they would be comfortable bringing you in front of a client.

14. You used a cookie cutter framework for your answer.

According to Cosentino, if you're using the five Cs or the four Ps or the seven S's, you're making a huge mistake, as consultants view all of those as cookie cutter frameworks or simple checklists.

Be careful of using formulas, too. "A lot of people use the 'profits = revenues - cost' formula as a framework for every single case. To me, that's just as bad as using a framework, because you're not showing me any intellectual curiosity or insight," says Cosentino.

A better way to answer the various assortment of case interview questions is by categorizing them in your mind. Before your interview, take the time to learn the most popular case questions and how you would approach them.

15. You were afraid to brainstorm.

"Students are reluctant to brainstorm, because they are afraid that if they say something ridiculous, they won't get the job," Cosentino says. "In reality, if they don't brainstorm, it shows they can't work as part of a team or generate new ideas, which makes it more likely for them not to get the job." Consultants actually have a term called "brainstorming without commitment," where they toss out uninhibited suggestions without fear of judgment. They like people who can think outside the box and offer an interesting perspective.

16. You didn't think out loud.

Interviewers are not mind readers, so it's important to explain what you are doing and why you're doing it. Walk them through your thought process, even if it seems obvious to you. However, always make sure to think before you speak, so you can appear significantly more poised and confident.

17. You didn't go beyond the expected answer.

Cosentino spent a lot of time at various schools helping students practice their interviews. Oftentimes, he gave the same case to four or five students and they would all answer exactly the same way. As a result, it was hard for him to differentiate one from the other.

If you really want to exceed your interviewer's expectations, don't just say, "I determined they shouldn't," when asked whether a hypothetical client should enter a new market. Go one step further and offer an alternative plan, Cosentino suggests. "Someone who excels would say, 'We shouldn't enter the market for these reasons, but we could look at entering this other market or try this new plan I came up with.'"

Doing well in interviews is highly rewarding because they can lead to big salaries and careers with a lot of room for growth and responsibility.

Feeling bloated? Try out this seven-day programme

Mumbai: A bloated belly? A regular exercise regime, right food intake and a healthy lifestyle can come to the rescue, according to femalefirst.co.uk.

Here is a seven-day programme to fight the problem:
Day 1: Consuming multi-strain probiotic: According to studies, probiotics rebalance the gut flora, support the efficient digestion of food and regular healthy bowel movements. Bloating is often due to an imbalance of gut microflora. Bacteria and yeasts ferment undigested food, producing gases, which can lead to excessive bloating and flatulence.
Day 2: Food to support digestive function – Always try to consume fresh food. Undigested food leads to bloating hence consider having some apple cider vinegar before each meal, chew your food well and start eating in a quite relaxed environment. The thought and smell of food can elicit the secretion of 30 percent more stomach acid and 25 percent of digestive enzymes.
Day 3: Reduce intake of simple sugars and refined carbohydrates - Avoid processed products such as white pasta, breads and baked goods (cakes, biscuits and pastries) as these can cause more gas.
Day 4: Begin eating more fibre - By trying to consume seven different portions of vegetables and salad each day to keep bowel movements regular. 
Day 5: Homemade bone stock, soups and stews - These are rich in the amino acid glutamine, essential to feed the cells lining our gut where final food digestion and absorption takes place. 
Day 6: Soak legumes - Leaving legumes to soak well overnight will ease their digestion if they cause you bloating.
Day 7: Relax - Including some form of relaxation in the daily routine such as reading a book, yoga, meditation or taking a bath with lavender oil can only be of benefit.

Some people do feel more than others, and it’s all in their genes

A new study has found that some people have a greater emotional sensitivity and are programmed to better recognize and understand what others are going through.
      
If you can’t help but cry every time you go to a wedding, or if you think that handling so many emotions all the time is really hard work, you may belong to the 20 percent of the population that has high sensory processing sensitivity (SPS), an innate trait associated with greater empathy.
Dr Elaine Aron from Stony Brook University in the US has created the highly sensitive people (HSP) concept to describe those who are emotionally reactive, pay very close attention to little things and process information more thoroughly. Along with social psychologist Dr Arthur Aron and a team of researchers, she developed a test to see if indeed HSP have a more intense reaction to others’ emotions.
The researchers recruited 18 married persons with either high or low SPS, and scanned their brains using functional magnetic resonance imaging (fMRI) while the volunteers saw pictures of sad or smiling strangers and/or family members.
When the HSP subjects viewed these images, their brain activity increased, particularly in areas associated with awareness, action planning and processing sensory information. The mirror neuron system, which is strongly associated with empathetic response, showed increased activity as well. The brains of non-HSP didn’t show increased activity in these areas.
"We found that areas of the brain involved with awareness and emotion, particularly those areas connected with empathetic feelings, in the highly sensitive people showed substantially greater blood flow to relevant brain areas than was seen in individuals with low sensitivity during the 12-second period when they viewed the photos," said Dr Arthur Aron in a news release. "This is physical evidence within the brain that highly sensitive individuals respond especially strongly to social situations that trigger emotions, in this case of faces being happy or sad."

Turning an old 2 liter bottle into a broom

With a sharp scissors and knife you can take three 2 liter bottles and turn them into a glitzy witch broom. First remove the label and cut the bottom of the first bottle. Cut the body of the bottle into thin strips. Now take the second bottle and cut off the neck and the bottom. Make strips of this bottle too. Then fit in the first bottle which has a neck through hole near the neck of the second bottle. Take a third bottle and cut it one third from its top and fit this on to the first bottle’s neck. Drive a wire or a nail through the three layers of bottle so that they stay together. Finally take a stick and fit it tightly into the neck of the bottle broom. Your witch broomstick is ready!

World Cup sculpted!

Art work ranged from abstract to realistic styles. While some might make you emotional, others will make you chuckle. Seen here: Sculptor Pavel Mylnikov's completed work.

Aleksei Diakov, of Russia, details his sculpture. The organizers added a new element called Cheecoting for the attendees. The racing game which was developed in Italy after World War II uses plastic marble-like balls on a sand course.

Sculptor Jooneng Tan, of Singapore, details his sculpture. People of all nationalities collaborated to create these dynamic pieces of sand art.Twenty competitors from around the world took part in the sand sculpting competition that took place on the beach at Pennsylvia Avenue in Atlantic City. Seen here: Sculptor Sudarsan Patnaik, of India, works on his sculpture during the final day of the competition. 

Mark Anderson, of the United Kingdom, works on his unique creation. The sand bought in has small amount of silt and it holds up to rain better.

Competitors from around the world line up for a group photo to mark the opening day of the Sand Sculpting World Cup competition.

Five hundred tons of sand from Tuckahoe Sand and Gravel Company was bought in for the competition. Seen here: Jooheng Tan, of Singapore, works on his sand creation during the singles event.

Make money writing for Hubpages

Over the last month or so I have been running a little bit of an experiment.

                                                                                                   
 Basically, after hearing from some others that there is money to be made with Hubpages, I decided to give it a go.

What is Hubpages?

Before I start getting into detail, I should explain the basics. Hubpages is a website that basically allows you to publish an article on their site. I use the term “article” loosely because it can be as short as an article or more like a single page website. It is completely up to the user. A hub (their lingo for article) can be about any topic you could possibly want to write about. You could create a hub explaining 10 things you wished people knew about you, how to play guitar with your toes, or facts about albino grizzly bears.
You do not need to be a great writer and honestly, I have seen some people who are terrible writers do quite well. All you need is the ability to say a little bit about something. And who knows maybe hubpages will be the first step to helping you make money from a blog?

So how do you make money with Hubpages?

There are actually a variety of ways, but the simplest and most effective way I have found so far has been by using Google Adsense. After you finish your first hub you can install your Adsense ID and you will begin sharing the revenue with Hubpages for your hubs.
If you pick good keywords (which I will get to in a minute) you will likely begin getting traffic from the search engines within 24 hours of publishing it. If these visitors click on the ads you will get a cut of that revenue (I think it is 60%).

My results during July

I spent most of July trying to create a hub every day or so and I am now up to 23 hubs. I didn’t do the best job with keyword research and did very little if any work after creating the hubs and yet adsense still made $47.14 in July.