Despite popular belief, investing in the Stockmarket does not have to involve high risk, extortionate commissions and fees, punitive restrictions, specialised knowledge or even much effort on your part. There are many different ways to invest your hard earned money to create wealth. Some routes involve higher risk than others.

Depending on your objectives, your aim should be to choose the lowest risk route for your investments.

The ideal conditions to make your investments worthwhile would depend on your individual circumstances but there are general conditions that most people expect. Usually these are:

1. High return
2. Minimal Risk
3. Low Maintenance
4. Low Fees and Commissions
5. Easy Access
6. Maximum Flexibility
7. Tax Efficiency

Refer to part one for the discussion on High Return, Minimal Risk and Low Maintenance.

Low Fees and Commissions

You want to pay as low fees as possible. You cannot avoid paying charges altogether if you are investing in the Stockmarket. However, there are acceptable and unacceptable charges.

What you do not want is to pay extortionate fees for a service that you can get elsewhere for far less. Also, a higher charge does not necessarily constitute a better management service. High fees and unnecessary charges can severely constrain the growth of your investment, which will eventually affect its value.

Pension funds and endowment policies have demonstrated the exemplar damage that high charges can have on your money. The bulk of commissions and charges on pensions and endowment policies are front-loaded, which means the fees are taken out in the first couple of years before the investment has had a chance to grow. These charges adversely affect the growth of the funds.

Some financial advisors argue that their fees may be as little as 3 - 5 % of the overall investment. But what that does is rob your investment of the initial vital growth and reduce the compound growth. Do not underestimate the damage a few per cent charges can do to your money.

Fortunately, there are a number of investments that can be set up without initial payments to third parties masquerading as financial advisors. You will still pay a management fee and you can scout the market for reasonably low fees.

Easy Access

Back in the early nineties, it seemed the fashion for everyone to buy insurance policies, mostly endowments. Why on earth should you continue contributing to a plan that you have no access to when you need it? Insurance policies have maturity dates before which you cannot access your money without incurring punitive penalties.

Pension plans can also only be accessed when you retire, which makes them impractical for other things in case you need access to your money before retirement. The aim of investing your money is to generate wealth for your future, which includes important critical times of life and not just for retirement.

Understandably, the aim of pension plans is to provide funds for retirement, which is justifiable. What you need are additional investments that you can access at any time.

The ability to access your money is crucial, whether you are responding to a crisis or acting on an opportunity. Without easy access to your money, the concept of having wealth sounds meaningless.

On the other hand, though, one has to develop the discipline to avoid raiding your investment until it has had a chance to grow, as this will seriously impede its long-term growth. Self-discipline is important and the onus is upon you to determine what constitutes an emergency that requires the use of your Prosperity Account.

Look out for Part Three

About the Author

Wealth and prosperity coach Margaret Ntifo specialises in empowering people create ideal lives filled with more Money, Wealth and Prosperity.

For more information, and a free 7-Day e-course visit: Money, Wealth & Prosperity TIPS.

You may freely distribute this article in its entirety providing this copyright notice remains intact.

Further information contact: Margaret Ntifo

Copyright 2006: All Rights Reserved

Openwave Systems Inc. provides Communication Service Providers (CSPs), including wireless and wireline carriers, Internet Service Providers (ISPs), portals, and broadband providers worldwide, with the software and services they need to build boundary-free, multi-network communications services for their subscribers.

Openwave has a very unique and valuable business in the wireless data market. It has a dominate market share of 50% in both the browser and in the gateway transitions for mobile phones. Both products are a core element in the data cell phone market.

Our philosophy is to own the critical elements in markets that appear to have revolutionary growth. In January 2004 we wrote an article saying the wireless revolution has begun. Today based on very recent guidance from Texas Instrument (NYSE:TXN) Qualcomm (NASDAQ:QCOM) and other third party data it appears that wireless data market is actually accelerating. That appears opposite common wisdom judged by the way the world equity market and Openwave stock is trading for the last month. Usually revolutionary growth acceleration is misunderstood. I believe that robust growth from wireless data will catch many people by surprise when it is fully recognized.

The browser and the gateway business are key’s to Openwave’s success. Again it is our philosophy to own critical monopolistic elements inside an industry. We often equate our philosophy to a roof over your head and the gutter that controls the flow of water. Most water when it rain will land on a shingle but will collect in high volume in the gutters. Thus a single gutter can control as much water as all the shingles combined. This model of finding the essential elements or monopolist companies, judged by the many top rankings awarded to us by third party profession indicates a very successful approach.

In wireless data market the gateway and the browsers form what we believe are that critical element in the industry with Openwave a dominate position in both those markets. This dominance of the critical element/monopoly creates a natural mote or barrier as Openwave is in a better position to bundle, integrate, and test its products, thus become a natural extension of their browser and/or gateway for every new service they enters. This bundled approach as Microsoft has proven over time not only has a higher comfort advantage for it’s users but also often could be produced at a far lower cost which the phone companies enjoy. These many economies of scale of a dominate player is attractive to the phone companies when they are both reviewing new or existing services. Put yourself in the place of a large carrier do you want to work with a new firm, with no proven history which would include additional integration, testing, billing plus on going maintenance or would you prefer an existing firm to increase their service or possibly just bundle the service into a existing product. That’s why it’s very hard for new wireless firms to make a presence in the wireless data market and the more established companies to consolidate when newer wire data services form.

It appears industry wide that the consolidators including Comverse Technology Inc. (NADSAQ: CMVT) and Amdocs Ltd. (NYSE:DOX) appear to have advantage over many newer companies. Both of those companies specializes more on the back end. The higher growth market for phones will be with the data services and in my opinion Openwave is the best positioned as the industry continues to consolidate.

About 60% of Openwave quarter is already booked not including about an addition 10% is pay as you go. That means Openwave needs about 30% of addition new revenues in the quarter. That indicates that Openwave has far smaller hurdle rate than most companies. The data supports that the number of new data phones growing combined with the rising usage of each phone with no new major competitive threats entering the market the probability of carriers to reorder is increasing.

Openwave’s high valued license revenues.

Last quarter Openwave reported that licensing revenues was over 50% of total revenues and it had 97% gross margins. The licensing revenues make up over 70% of Openwave’s gross profit. Understanding Openwave’s business model is very simple if the licensing long term grows so will the profits so if licensing long term declines so will the profits.

The last quarter the licensing saw some of the best quarter over quarter growth of (16%) and year over year growth of (34%). Over the last two year period Openwave’s licensing revenues grew at a 23 % annualized rate.

Valuation.

Openwave is now valued at about 12 time future earning and when you add up its dominance in market: The profitability of it core business and the business outlook for the wireless data industry. My opinion is this company should trade at a premium to its data wireless peers.

Risk.

The market value of Openwave stock and the wireless data industry have had many very large fluctuations in stock market value over time compared to their peers. Investors seeking to lower volatility should look to other investments.

The major risk is that management underperforms. Since this is still a relatively new management team and the stock market saying with its large sell off of Openwave’s stock that this quarter will be a very difficult quarter, it’s now time to see if the management team can execute. The stock market in my opinion has already priced in a earning problem and any minor miss by management while still retaining their long term forecast , I believe would be rewarded.

Conclusion.

It’s my opinion this is what you look for in an investment, a company that has repeatedly demonstrated, since the new management has been in place, they are achieving their goals, and have echoed repeatedly said it’s on track for the long term. Openwave has a dominate position that is becoming more embedded in most major carriers every day. With it very high margins core business over time it can become very profitable business. It appears the market for its core products is accelerating and its stock market value is down significantly; again this is what I look for when I invest.

Randy Durig manages several portfolios’ including the Monopoly Technology Portfolio to see the full list go to http://www.durig.com or http://www.money-manager.us

Durig’s Monopoly Blue Chip Portfolio National Performance Rankings: 3rd In the United States, Ranked by 3 year annual return, for Large Capitalization Blend, 4th Quarter 2005, By Money Manager Review.

Durig Capital is a registered investment advisor. If you know someone that would like more information about this unique and specialized approach email rdurig@durig.com or call toll free 877-359-5319.

Randy Durig owns Openwave in his discretionary client’s portfolios and in his own account. Past performance is not a guarantee for future returns. All information we believe to be correct but make no guarantee to accuracy.

Imagine you are trying to do car repairs, and the only tool you have is a hammer. Sure, you’ll be able to get some jobs done, but they won’t be done properly and you’ll most likely break something else in the process. Trading stocks online is much like that. There are many ways to trade, but only some of them truly work. Sometimes, investors end up losing money because they didn’t take the time to find the proper investment method or tool. Here are some tips that can help you to trade successfully.

If you want to reduce the risk that comes with holding an investment, you will want to look into the practice known as hedging. One of the best ways to hedge your investments is to take any shares you have in a company and sell them to the company’s opposition.

For stability, you will want to look to investing a pre-arranged amount of money each month into one or more mutual funds. Mutual funds are composed of shares from approximately 10 companies, and often focus on a specific area of the market, such as energy, paper, or currency. Although there is still a risk that you can lose money through your mutual funds, they are much more stable and have a much higher chance of recovery, based on the fact that they center on stocks from more than one company. Be patient if the market takes a downturn; don’t sell your funds or stock immediately. History has shown that if a market goes down, it will also go up.

Another online trading tactic is to look at the stock market and find good, stable companies whose stock has taken a downturn. The way to find them is to look for ones that have dividend yields. Pick several of these companies and invest equal amounts of money in buying stocks from each of them. Although there is risk involved with this method, the history and stability of these companies is often enough to pull them through the slump they may be experiencing. And when their stocks begin to rise in value, you will benefit from this wise trading investment.

Learn about Online Stock Trading and Investment Property at http://www.selfhelppage.com.

India has the potential to be the next great bull market of the 21st century – an opportunity of being a better investment than even China!

Like China, India was stuck with a failed economic system for over 50 years. It was a bureaucratic, socialistic state that led to weak growth, and stymied entrepreneurship and initiative. Famines, lack of investment, and poverty were the result.

But In the early 1990’s, the country changed course and started to open up its economy to the world. Personal marginal tax rates have fallen from 50% to less than 30%. Tariffs and import quotas were slashed, exports are growing at a 20% annual rate, with America being its largest market. Only 10% of its economy is dependent on international trade, insulating it somewhat from external shocks. The banking system is much improved, and non-performing loans have dropped to less than 4% of total bank loans. It has fiscal crisis to accumulating $135 billion in foreign exchange reserves.

Here are six reasons that investors should consider tilting some of their long-term capital towards India and not China.

Unlike China, India is a functioning democracy with respect for property rights and the rule of law. China’s authoritarian state may have the advantage at making quicker decisions and pushing through economic reforms but without democratic political reform it will eventually hit a speed bump the size of the Great China Wall. India’s multi-party parliamentary system with its obstructionist bureaucracy is far from ideal but at least the daily speed bumps on the road to market reform can be overcome.

India is a natural ally of the U.S. as it emerges on the global stage and plays classic balance of power politics. America’s relationship with China will at best be wary and tense. The fact that many Indian citizens speak English is also a significant advantage both commercially and politically.

China’s state-owned companies have staying power but government ownership will limit their growth and potential. Foreign governments will be suspicious of their intentions and likely consider them as an extension of the Chinese government. State ownership will also lead to inefficiencies and an inability to hold onto top management talent.

India’s capital markets are better than China’s. India’s stock market was established in 1870 and has 6,000 publicly-traded companies and a more modern financial and banking system that allocates capital fairly well. Only 10% of bank credit in China goes to private companies. India has 100 companies with a market cap over $1 billion.

India is a very youthful nation with 50% of its population under 25 years of age. This leads to less strain on its national budget and the hope that the younger generation will drag the bureaucracy and politicians to swifter implementation of market reforms. China’s one-child policy has backfired leading to an aging population which will lead to manpower shortages and tremendous pressure on its national budget. 20% of Shanghai residents are over 60 years old and by 2020, one-third of Shanghai’s population of 13.5 million will be over 60.

India has a more balanced and sustainable economy with 64% of its GDP attributable to consumer spending and 50% of its GDP from service sector. China’s economy is more dependent on foreign investment, exports and resources. India’s 250 million living in poverty is a tragedy but it’s middle class has quadrupled during the past two decades to reach 250 million as well.

For sure India has its challenges: big infrastructure needs, frustrating red tape and a tendency for the government to hang on to large state-owned enterprises to mention a few. It has recently suspended its privatization program, has high levels of public debt, very poor basic services such as elementary education, water and health, rigid labor laws, and still lacks the consensus that exists in China for welcoming foreign investment and placing a high priority on economic growth. India’s infrastructure such as roads, power and ports is also in desperate need for investment. This is one area that China is way ahead of India. The other is China’s ability to attract roughly ten times as much foreign direct investment.

India’s economy is doing well but is still below its potential. Just think if India embraced foreign investment, privatization, had the political will to improve the lives of workers in agriculture by consolidating farms and using more technology to vastly improve productivity. If it can provide its citizens with quality basic education and other services and put in place adequate power and other infrastructure, it can create 100 million new jobs in industry and manufacturing.

Still, compared to China, India does not get much attention except for the outsourcing issue and is – for now – largely under the radar screen of even sophisticated investors. After a strong start this year, India’s 30 company Bombay Sensitive Index (Sensex) index was beaten down more than 20% but has recovered to be flat for the year.

The challenge with investing in India right now is valuations of the leading companies and the limited investment options. Valuations may be getting a bit ahead of themselves with SENSEX companies trading at around 17-18 times next year’s earning projections versus 13 times for emerging markets as a whole.

The Morgan Stanley India Fund (IIF) is a closed-end fund that invests in India’s blue chips trading at $42, quite a bit off its 52-week high of $57. It is a bit pricey right now and trades at a 17 % premium to net asset value so caution is recommended until this premium comes down to the historical average in the low single digits. I would make only a modest allocation at this point. There are also some Indian ADRs trading on U.S. exchanges and these are also expensive and trade at a price premium over the India market price. My favorites are Dr. Reddy’s Laboratories (RDY), HDFC Bank (HDB) and Tata Motors (TTM).

Be patient - there no doubt will be great investment opportunities as well as new investment vehicles to take advantage of this great secular bull market. India presents investors with the opportunity of a lifetime and its democratic government, stronger financial system, market-based interest rates and history of respecting property and intellectual rights may make it a better long-term play than China.

Carl T. Delfeld President & Publisher Chartwell Partners http://www.chartwelladvisor.com/

Carl has over twenty years of experience in the global investment business with a strong background in Asia.

• Author of global investor primer "The New Global Investor"
• President of the global investment advisory firm Chartwell Partners
• Publisher of the Chartwell Advisor ETF Report and Asia-Pacific Growth
• Columnist on global investing with Forbes Asia: "Global Gambits"
• Former U.S. Representative to the Executive Board of Asian Development Bank
• Chairman of the global economic strategy think tank ChartwellAmerica
• Asian specialist with the U.S. Joint Economic Committee and the U.S. Treasury
• Former member of the U.S. Asia Pacific Economic Cooperation Committee
• Former investment executive with Robert Baird & Company and UBS
• Graduate of the Fletcher School of Law & Diplomacy with economics scholarship from U.S.-Japan Friendship Commission
• Exchange student at Sophia University, Japanese Ministry of Education Fellow at Keio University

Which direction is the Stock market moving? Up or down.

The best advice anyone can give you is to ‘find your own simple strategy for investing in the Stockmarket, and ideally one that works for you’. Understand what you are trying to achieve and continually build on what you already know.

Your investment strategy should support the organization of your individual resources in terms of the money you have available to invest and how much time you have on your hands. Start slowly and focus on building up your confidence. With some thought you will be able to establish a place for your money where it can grow without you checking on it constantly.

The four primary ways to invest into the Stockmarket are:

• Fixed cost averaging,
• Buy-and-hold,
• Market timing and/or
• Individual stock picking.

Fixed cost averaging means investing a fixed amount of money at fixed intervals of time regardless of the price of the shares. This is a sensible approach and it takes a lot of the worry and stress out of investing. It means committing yourself to investing a fixed amount of your income every month.

When the price is up, you buy fewer shares, when the price is down you buy more shares. Fixed cost averaging does not guarantee the best results, however it provides the greatest opportunity to get the best price on shares over the long term.

It results in lowering the average cost slightly, presuming that the fund fluctuates up and down. Buying shares this way proves far more effective than buying a fixed number of shares each month. It also eliminates reliance on market timing and stock selection saving you time to focus on other activities in life.

Buy-and-hold is investing a lump sum and never moving it around for a long period.

Market timing involves accurately predicting movement of the stock market in advance. This is the most difficult and time-consuming approach and requires the best of luck not to mention masses of research. From an academic point of view, it is virtually impossible to guess the correct day of the month that the market is going to be at its lowest.

Stock picking is the most difficult and involves identifying shares that are undervalued in the hope that these shares will deliver market-beating returns through research and analysis. Although this can be very lucrative, it is highly dependent on speculation, which is riskier than investing in shares that have held their value consistently over time.

Studies show that both Market timing and Stock picking methods actually reduce performance rather than improve it, while fix cost averaging and buy-and-hold methods perform the best.

The purpose of investing your hard earned money is not to experiment with your essential savings. This is never an option for a beginner, neither is it wise even for the seasoned investor. Stick with fixed cost averaging.

A sound strategy is to settle into regularly contributing to your investments on a monthly basis. This eliminates the need to rely on market timing or stock picking. Pacing your investments this way will give you time to focus on other things.

There’s no such thing like investing at the ‘wrong’ time.

Experienced investors accept the natural peaks and troughs of the market. In fact, troughs are good because you are buying more shares for the same amount of money.

The reality is that no one knows what the Stockmarket will do next. The best the so-called experts can do is to speculate on predicting the short-term direction of the market. You are better off ignoring these.

Fact is: The long-term direction is of the market is up!

Do not be tempted to wait for the better moment to start investing. No one buys at the very bottom and sell at the very top. The most important thing is taking part.

If you plan well, choose well, and leave your money in long enough, you will make good returns in the long run, even if you bought just before a massive crash and had to wait for the market to struggle up.

The general trend is up, so get in, weather the storms and enjoy the sunshine!

About the Author

Wealth and prosperity coach Margaret Ntifo specialises in empowering people create ideal lives filled with more Money, Wealth and Prosperity.

For more information, and a free 7-Day e-course visit: Money, Wealth & Prosperity TIPS.

You may freely distribute this article in its entirety providing this copyright notice remains intact.

Further information contact: Margaret Ntifo

Copyright 2006: All Rights Reserved

Of course they can’t – Well, the economic reality says this could happen. Why?

Well, how about inflation on the rise, interest rates in an upward curve making money more expensive, a real estate market turning down, global economic growth waning, oil prices at near record highs, no end in sight to problems in Iraq and confrontation with Iran looming and a few more!

Maybe, mutual funds and stocks wont fall by 20% but the fact is the future does not look rosy and the chances of good gains on mutual funds in the next few years don’t look good .

Well equity markets are in for a rocky ride so what are ways of making some good capital gains?

It’s not all doom and gloom and you can protect your portfolio with mutual fund alternatives and one of the best is a land overseas. Now, you may never have considered this as an option, but consider these facts:

1. Land investment is one of the best long term investments for getting high returns with low risk.

2. Its cheap and easy to invest in and can be very tax efficient.

3. Its liquid i.e. it can be bought and sold very quickly.

4. Most of the world’s richest people have made money in land. Howard Hughes did it, Donald Trump still does, even funny man Bob Hope did it and many other open minded investors.

5. There not making land anymore! Fact is, premium land can be sold in the right location for big gains and has low downside risk.

The key to diversifying into land is buying prime land in boom location, so let’s look at one.

Americans in particular are buying land in Costa Rica just 3 hours from the US, land here is being developed for property to house the huge amount of Americans and other foreign nationals retiring or buying holiday homes

What’s the risk to reward?

Prime land tends not to fall, even in recession here. It holds its value and for the last 5 years has been steadily rising and many investors having been doubling or tripling their investments annually.

Check out the facts for yourself it’s a great mutual fund alternative. Lower risk and far higher capital gains.

It’s cheap, easy to do, tax efficient and best of all in the right location can make stunning gains. If you have never considered land as a mutual fund alternative look at the facts, with an open mind and you may be glad you did.

FREE REPORT!

On how to invest in land for big profit potential, is packced with facts on how land could make you fantastic capital gains with low risk and its yours free at http://www.costaricalandlots.com.

While typically investors rely on a combination of fundamental, technical, and macroeconomic indicators to help their investment purchases, in the case of Pegasus Wireless Corporation (PGWC), the stock’s price seems to abide by only the technical features of price and volume. Found in the technology sector as a company focused on providing wireless networking, recent volume increases have led many to take special heed on the volatility this particular equity is engaged in.

With a beta of near 16, the company has experienced recent ups and downs concerning its price over the last few weeks encouraging a risky situation for potential investors. While the stock may not have the same risk as buying a Milken junk bond, the small cap stock does have an immense interest from potential investors looking for a quick profit. Down from its high prices of 2002 of nearly $1200 (adjusted for splits and dividends) to close to $7.00 currently (July 2006), Pegasus presents itself as a great buying opportunity. Looking at the fundamentals such as its P/E ratio of nearly 900 and its EPS of 0.01, the situation may seem meek in terms of placing bets for this stock, and having only mediocre cash flow growth and decent revenue growth only add to the negativity of purchasing this stock. While the argument is valid and can be ascribed to the falling prices experienced over the past few years, with increased volume there is a different attitude towards this stock which rests on technical analysis.

Unequivocally over the past few months especially, this equity has had ups and downs which could have unequivocally provided an investor with nearly 50% capital gains or losses in a period of less than a month. While some may argue that the trend is strictly based on the market fluctuation of supply and demand, the occurrence of almost equally spaced out opportunities equate itself of being something of note. With a standard support level of near $4, and a resisting level which has fallen but still remains close to the $10 mark, the question now does not concern at what price is the best for buying the stock, but how long will it take to complete this almost cyclical pattern.

While some may say that the stock is closely following economic news in the form of interest rates, pressure in the Middle East, or increasing oil prices, the situation that the equity presents is an uncommon one and lends itself to believe that technical analysis may have more validity than originality argued for especially in relation to fundamental analysis. While I cannot confirm if the stock will continue in such a cycle, I do recommend taking special notice of the price in the next few months to see if it continues this journey, and I also recommend that this small cap stock as a buy at any price between $4-5.

For more information email Dennis of BirayNetworks at dbiray@gmail.com, or to view other articles written by him visit http://www.biraynetworks.co.nr/

While some investors may argue that when dealing with equities it is important to diversify your portfolio in different sectors combating one another so you do not obtain high capital losses. While the statement may be true in times of volatility, during inflationary periods such as the one that is cautiously approaching and worrying the Federal Reserve, I would recommend avoiding such mutual fund tactics and encourage the purchasing of inelastic stocks.

When I mention the word inelasticity I am referring to how much a certain quantity of goods or services demanded or supplied will change relative to the change in price. Typically when you see prices rise due to inflation, quantity demanded for a particular good such as a car or computer will decline. Now the key for this report is how much will the quantity of that good will decline in terms of a percentage. If the percentage is larger than the change in price, the good is said to be elastic meaning it is volatile in terms of price fluctuations. However, if the percentage of that quantity supplied or demanded is less than the change in price, the good or service is said to be inelastic, taking little to no heed if prices increase. Typically if a good or service is inelastic profits and revenue will bolster during periods of inflation while elastic goods or services will suffer.

Now what does that mean in relation to equities? During inflationary times a company that produces an inelastic good or service will see its revenue, operating margins, net profits, and production usually increase making such a stock desirable to buy juxtaposed to an elastic based company. If these figures ascend creating great cash flow, optimistic future guidance, and increased earnings, a certain inelastic company will be in good position to appease shareholders. While an inelastic producing company may experience some growth typically during inflation the rest of the market may experience lower than expected values creating capital losses.

So what types of sectors should you look at in relation to this inelastic wonder? Probably in times of inflation the best area would be consumer staples and healthcare. Both areas produce goods and services which are required by some of their consumers regardless of their price. Good options would be large capitalization companies such as Coca-Cola, Pfizer, Altria, and Procter & Gamble. All of these companies produce goods such as soft drinks, medicines, cigarettes, and household necessities such as toothpaste which will rarely be affected in terms of quantity demanded if prices rise. If toothpaste, for example, rose one dollar from $3.00 to $4.00 more than likely the average consumer will not stop his or her purchase of toothpaste even with a 33% increase in price because this product is a necessity and worth the sacrifice regardless of price. Returning to equities, statistically all of these companies have done well during earlier periods of inflation, and because they are all low risk stocks with relatively small betas there should be a strong optimism concerning capital gains during an inflationary period.

Sectors that should be avoided during times of high prices are found in technology and retail. Companies such as Dell, Nike, and other corporations found in these sectors typically do not have great capital gains if any during periods of inflation. Since prices have increased for many goods, a bigger portion of a consumer’s income (especially fixed income) will be going to the necessities such as toothpaste while at the same time sacrificing other luxury goods such as new high-tech computer or brand named sneakers. The unfortunate effect is that companies such as Dell will post lower earnings and revenue creating capital losses for its shareholders.

Thus while you may argue that there are more fundamental and technical evaluations that can be utilized for or against the purchases of a few sectors, a good rule of thumb can be attributed to the laws of elasticity and how consumers react to it. Again, to reiterate, if you as an investor are planning to purchase a stock during a time of inflation be sure to check its prospectus and other reports regarding its products and services as the rudimentary checkup may become an incredible determent to your overall gains.

Dennis Biray presents advice on all kinds of topics ranging from finance and investing to fitness to sports. For more information email him at dbiray@gmail.com, or to view other articles written by him visit http://www.biraynetworks.co.nr.

There are a few trading rules that have stood the test of time and enable traders to trade profitably, yet a lot of people fail to follow them. The rules are no secret to anyone as you will find them in many trading books and other materials. The rules like ‘cut your losses’ and ‘follow the trend’ have worked for hundreds of years yet most people ignore them!

Money is something that affects people’s emotions and your natural instincts with money will often encourage you to break some of the time tested risk management rules, for example ‘cutting your losses’ and ‘keeping your trades small’. Most traders focus on making money and realising a loss goes against the aim of making money. Similarly, when you have a position that is performing strongly, a small part of you wants to sell that position to realise the profit. This is perfectly natural. Letting your profits run and not selling too early is also an important time tested rule, however because of the focus on money, some people can be very quick to sell shares when in a profitable situation.

If you find it difficult to accept an initial small percentage loss in a trade, what makes you think it is going to be easier later on to sell the shares when the position has lost 30% or more? Yet, when you consider the influence of trends in the market and how important it is that you manage risk, the best time to sell the shares is when you are faced with only a small loss.

Thoughts often appear about holding on to shares that are falling in value because one day in the future, they will increase in value and return to the price that you purchased them at. This is unfortunately a myth that many people have about shares in the market. Some people believe that shares will always return to previous values, presenting them an opportunity to sell them at break even. There is a chance that the share price will never return to the price you bought them at.

Furthermore, whilst you may have absolute confidence that a share price will return to levels that you purchased them at, consider if it is worth holding on to them and waiting for that time to come, if it does. Would it not be better to sell those shares and move on by committing your trading capital into a company whose share price is clearly trending up at the present time? Often people will think about how they will feel if they sell shares and in 12 months time, the share price returns to where they purchased them. There is a feeling of, ‘I should have just held on to them’. Meanwhile however, over that 12 month period whilst you may have been waiting for the share price to return, your trading capital was elsewhere obtaining solid returns for you.

All of these emotions and others can paralyse you and force you into not making a decision. Remember the old adage that says that taking no action is an action. Successful trading is all about sound decision making and you need to ensure that some of these emotional impulses do not freeze you or cloud your judgement.

Stuart McPhee is recognized as a leading trading coach and expert when it comes to developing solid and profitable trading plans.

Discover what most traders never realise which leads to their downfall. Learn about the importance of having the right trading mindset, sound money management and a solid method - The 3 Ms! Click Here ==> http://www.trading-plan.com

Receive Stuart’s free trading tips by signing up for his ezine at: ==> http://www.trading-plan.com/ezine_registration.html

Before we start discussing the Microsoft case here is a teaser for you.

You have started a hotdog outlet with 5 of your friends in a remote area and it is at present just generating $100 a profit every day which you shares equally with your friends.

For you it is a decent return on initial investment $2000 you invested in the beginning.

One day one of your friends come and declares that he is willing to buy share if any of you is willing to sell and set the price range of 1800 to 2100. The lowest bid will be accepted first.

What will be the first thoughts on your mind?

- Why he wants to increase his share in the company.
- Is there are opportunities which I can’t see.
- Next will be what will be the future of the Hotdog selling business.

The same mechanism is at work in Microsoft buyback of shares worth $20 billion through Dutch auction starting from July 21st to August 17th.

The price range of proposed dutch auction is $22.50 and $24.75

There are two mechanisms at work here –

First Microsoft wants to give the least possible amount to its share holders and it is for the shareholders to decide how they perceive company’s future.

Suppose the company is willing to buyback 1000 shares in the market and it received bids for 100000 shares. The break-up of 100,000 shares is as follows

A $ 22.50 - 100 shares

B $ 23 - 700 shares

C $ 23.25 - 200 shares

D $ 23.50 - 10000 shares

E $ 24 - 89000 shares

The Microsoft will just pay $22.50 for 100 shares, $23 for another 700 shares and finally $23.25 for the last 200 shares it wants to purchase. The people who want to sell at $23.50 won’t able to sell any of their shares.

Secondly by buying back shares from open market, the management is increasing the worth of remaining stockholders holding (jargon) in the company, more often than not it ended up increasing promoters holding in the company as they control the decision making at the highest level and have better information about future prospects of the business.

What will happen to Microsoft share at Wall Street?

Historically once the company starts buying back, the prices of the shares rises as investors believe that the company has something in tank.

Personally I believe that the range is on the lower side as Microsoft share is already been traded at $24 (1st August, 2006) and shareholders have a very low incentive to sell their holding in the company.

Looking in terms of return buyback will increase the earning per share (EPS) and enable the investors a higher return than the present range of $0.26 to $0.37.

The good thing the buy back will do to Microsoft shares is that it will increase the support price of the shares in open market. As per the historical trends and technical charts – that data is less relevant in the present case as none of the companies before had that much strength as Microsoft does now.

Finally the to my mind the real gainers of this buy back will be the one who won’t sell their stocks as technically tech stocks are bottomed out after the thrashing they received since April this year. Secondly Microsoft will be launching its next version of operating system – Vistas early next year so that will help in boosting the bottom line.

Boris Mann did his Master’s in finance. He regularly advises clients on personal finance issues. He is a contributing writer on Financial issues for Write Term Papers .com. You can contact him for college term papers and other financial queries at Write Term Paper .com.