Margin Trading - Short-selling

"Going short" is the opposite of buying long and investors do it when they expect the price of a stock to fall in the short run and profit from this drop. Lets say, you tell your broker you want to short-sell 100 shares of Tata Tea which are currently priced at Rs 40 each. This quarter's results of the company aren't encouraging enough and you are convinced the stock price will take a beating within a few days. The broker looks for someone who has 100 shares of Tata Tea and borrows them on your behalf for a short period and with the guarantee that you will return them in few days. You in turn sell these borrowed shares at Rs 40 each and hence get Rs 4,000. Now, if what you had hoped for does happen, and the price of the stock falls to say, Rs 20 after two days, you will do what is called "cover the short position". That means you buy back the 100 shares by spending Rs 2,000 and your broker in turn returns them to the person borrowed from. So, by short-selling you have earned Rs 2,000 (of course, slightly less after adjusting for the transaction costs and expenses for borrowing the stock). The advantage of selling short is that you get to sell borrowed stocks without putting in your money.

Short selling can be perilous. Suppose if the Tata Tea shares fall but only do so marginally, you might just be able to recover your money. Or if the shares take a much longer time to reach the Rs 20 level than you had hoped for, your interest on the money with which the broker had borrowed those shares will surmount. Additionally, there will be constant pressure from the lender to return the stocks. Worse still if instead of falling the stock price rises, you will immediately enter into a loss.

Both short-selling and buying long require a good reading of the market and correct timing.

Margin Trading - Buying Long

When you strongly feel that the price of a stock will go up and so much so that you don't mind taking some risk or added expense. You can make money by buying the stock now and selling it later when the price has increased. But what if you don't have the money to buy? Well, you could "go long" on that stock, i.e. you ask your broker to buy the stock without paying him the full amount now. Instead, you can pay him a token amount called the margin money. When you buy on margin you are actually buying stocks on credit.

Your broker will lend you the part money if you have enough collateral in the form of adequate stocks in deposit with the broker. Since it's a loan the broker is giving you he will also charge an interest. You could have also borrowed money from some other sources to buy those stocks. But usually brokers try to offer interest rates lower than other sources.

When the stock's price has indeed gone up, you sell the stock, pay the broker the price at which you had purchased it and pocket the difference (less the interest cost of the broker's loan and the transaction cost).

Buying long allows you to buy more shares than you can afford. And, if your hunch about a stock's price rise turns out to be correct, you stand to gain more than what you could have without a margin buy. But the longer it takes for the stock to rise to the price level you had expected less will be your gain. To be safe the stock price should rise enough to pay off the loan amount, the interest incurred and the transaction cost.

Buying long becomes risky if your calculations go wrong. If it takes a much longer time for the stock price to reach the level than what you had estimated, your profits will reduce because by that time the interest cost on the borrowed money would have also risen. And if your estimate completely goes wrong and the stock's price falls you immediately start making losses. To be safe the stock price should rise enough to pay off the loan amount, the interest incurred and the transaction cost.

Why Blogging ?

T Bray lists out ten reasons on Why Blogging is Good For Your Career :

1. You have to get noticed to get promoted.

2. You have to get noticed to get hired.

3. It really impresses people when you say “Oh, I’ve written about that, just google for XXX and I’m on the top page” or “Oh, just google my name.”

4. No matter how great you are, your career depends on communicating. The way to get better at anything, including communication, is by practicing. Blogging is good practice.

5. Bloggers are better-informed than non-bloggers. Knowing more is a career advantage.

6. Knowing more also means you’re more likely to hear about interesting jobs coming open.

7. Networking is good for your career. Blogging is a good way to meet people.

8. If you’re an engineer, blogging puts you in intimate contact with a worse-is-better 80/20 success story. Understanding this mode of technology adoption can only help you.

9. If you’re in marketing, you’ll need to understand how its rules are changing as a result of the current whirlwind, which nobody does, but bloggers are at least somewhat less baffled.

10. It’s a lot harder to fire someone who has a public voice, because it will be noticed.

One year of blogging

It was on this day that I started blogging last year i.e. Ganesh Chaturthi. It's a good experience sharing your thoughts publicly. It's a good way of getting opinion on what you think, provided if you have time to do it.

Anyways, will continue blogging till I keep getting time. Even if it is once in a week i.e. on Sundays or on public holidays.

Bulls in action

This refers to my post exactly a year ago. Both, stock and real estate markets have witnessed an astounding growth with stock markets fetching rougly around 30% returns in a year's time.

With Indian economy booming with an annual growth rate of around 6.5%, further handsome growth can be expected in the stock market. New set of FIIs from Japan and Europe have opened up there funds to invest in Indian markets. This will further fuel up the index to the soaring heights of 10000 mark within next one year.

But, small investors beware of this flaring fire. Invest smartly, that they don't burn out your pockets. Recent reports show FIIs share in top Indian blue chips is more than their Indian counterparts. If someday FIIs were to pull out then, do I need say something further... ? This negative scenario can only happen in a very untoward circumstances which might dreadfully affect Indian economy. Otherwise, currently stock markets are easily discounting the situations that in the past had once wounded the sensex.

Until FIIs and MFs are happy with the markets keep enjoying the safe game and merry making profits....

Alchemist

I experienced what Alchemist says even before I read this great fable The Alchemist-By Paulo Coelho. Infact, I would say I got this book as I was thinking to acquire it.

It happened so,.... that I was ryzing and came across a page on which the name of this book was mentioned. I thought of reading this book and was googling the book to know about it's review. As was reading the short description and reviews about the book, my friend Vivek appeared from behind and saw what I was reading. He instantly told me about the book and also told that he possessed the book and that it is available with him at that very moment.

He immediately took out the book from his drawer and graciously offered it to me. Now what should I call this, a coincidence or world conspiring to help me achieve what I wanted. It seems that my urge for the book was so strong that it was made available to me instantly.

Picnic to Dive Agar

Last Saturday I had been to a place called Dive Agar in Raigad District. We started at about 7:00 am (7:30 am to be precise IST). Travelling absorbed almost 5 hrs of our time. Generally, it takes 4 hrs but, multiple stoppages, added an hour and a half extra to the normal time.

We parked our luggage at the hired cottages and changed for a visit to the beach. Before that, luncheons were important for the starving stomachs. A typical konkan thali(servings) consisting of chapatis(Indian bread) made up of rice made a good combination. It was delicious and very different from our regular wheat chapatis.

Soon after we left for the beach - laughing and cracking PJs(Practical Jokes) on the way. Beach formed a good playground for a football match and thus were divided into two teams, each consisting of 11 players being lead by Riyaz and Rajesh respectively. That proved to be a great fun. An hour later, at a break, Matti and Guruprasad also joined in. Everybody enjoyed their free movement of legs on a large playground. Otherwise, we have our fingers moving over a computer keyboard. That showed it's result on monday morning in office which saw everyone walking differently.

Saturday night was a time to enjoy 'Antakshari', around a camp fire on the beach. It was dead dark, until a bonfire was lit and one could only hear loud noises from our hoarse soar throats.

Next day, on Sunday we left to return home. On the way we visited two temples viz., Suvarna Ganesh(Dive Agar) and Harihareshwar. Harihareshwar was too good place and made a good picturesque as it is located next to the beach behind a large hillrock.

Climatic conditions at these places were too humid for us to survive another day however; it is much pleasant when it rains. But as it stops, humidity bounces back. Fortunately or unfortunately we experienced rains when we were leaving Dive Agar. These places are covered with loads of betel and coconut trees which paints them lush green.

Finally, reached Pune exhausted at about 9:00 pm, ending this breathtaking trip.

Three roles of Management

Drucker teaches us three roles of management. The first role is to accomplish the function that is specific to each organization; in other words, to contribute to society through its business. If it is a newspaper company, it is to publish the best paper. If it is a greengrocery store, it is to supply the best vegetables. It is only a monastery deep in the mountains that does not have to contribute to society directly. It is only a gangster connection that does not have any intention to contribute to society. All other organizations must contribute to society, because they are allowed to exist, occupy, and hire the most valuable in society.

The second role is to make work productive and people achieving. Man as a social existence seeks to exert his ability fully, to fulfill his potential, and contribute to society. Especially from now on, we will enter an age when people will leave an organization that cannot make work productive, and satisfy them in achieving through their strengths.

The third role is not to give any negative impact on society, and to contribute society in solving its problems. This is so-called the social responsibilities of the organization.

Star Wars III - Revenge of the Sith

Yesterday, I had been to the late night show of Star Wars III at Inox. Movie started at 23:00 hrs.

Before starting of the show something took me by surprise. Usually, before starting of the movie lots of advertisements and messages are displayed. So, I was not viewing them and was lost in my thoughts. When suddenly I saw everybody around me standing up including my friend sitting next to me. For a moment, I thought, 'is there some bomb hoax and have we been asked to vacate the theatre ?'. When I took a look on the screen, there was a message "Please stand up - for the National Anthem". And I think I was the last person to get up, and that too with a jerk.

I liked this idea of National Anthem before the movie begins. But, the flag cloth that was being picturised on the screen could have been of better quality. Anyways, something better than nothing.

Star Wars as usual had cool graphics and special effects. Anakin Skywalker who saves his master Kenobi and rescues the Chancellor gets promoted to be included in the Jet-I council. But to his dismay he is not designated as a Master(One who becomes the member of the council by default, becomes a Master). This came as a surprise to him. Since he is not the master, his suggestions are not taken into consideration and nor is he being consulted for any critical decisions. Though, his skills were more than anybody in the council.

This made him felt being left out of the activities of the council and he is approached by the darker side of the mission. He becomes the slave of the evil and obeys his command.

Director, George Lucas has very well highlighted this part of the movie where the hero in the begining becomes a complete devil towards the end.

Good movie. Worth watching once....

That bad morning

Yesterday morning, when everything went wrong for me. Here how it goes ..........

When I woke up in the morning it was already 8:30 am to find that my alarm did not rang coz' it's battery had gone down. I hurriedly got ready for office by 9 am, and to mention that I had to skip exercising that day.

By 9 my office starts and here at 9, i was leaving my house. It takes 10 mins to reach office by an auto-rickshaw. But since this was a bad morning there was only stand without any rickshaws. Had to keep walking towards my office, keeping an eye on all the auto-rickshaws that passed my way to find them boarded. After 10 mins found a one. And to add to my woes, this rickshaw driver was not carrying any change, not even a rupe. No option but, left change with him.

At last, reached office at 9:25 am. Quickly ran through my mails and headed towards pantry to have breakfast. Corn flakes with milk was on my mind. On reaching pantry found that it was not readily available which burgeoned the queue.

Sandwhich was the another quicky left. I moved out of the queue, to get sandwhich coupon. To my disguise Sandwhich guy had no chutney left.

Headed towards cornflakes queue, only to know that the bowls that came out have been served. So, took the decision to stand in the general snacks queue and have idlis. Atlast, got some idlis, had them and returned to my desk.

Managed to start my daily work at 10:00 am which was planned to start at 8:30(a day ahead).

I would always remember this morning......

$5m a day EU fine looms for Microsoft

Following the Ballmer-Kroes meeting, the E.U. confirmed that Microsoft was still not complying with the order to stop abusing its Windows monopoly and that time was running out.

"All I can say for the moment is we are still not satisfied," said Jonathan Todd spokesperson for Commissioner Kroes. "Patience is not unlimited. We are talking weeks rather than months."


Steve Ballmer, Microsoft CEO - During the past 20 years, Ballmer has headed several Microsoft divisions, including operations, operating systems development, and sales and support. In July 1998, he was promoted to President, a role that gave him day-to-day responsibility for running Microsoft. He was named CEO in January 2000, assuming full management responsibility for the company.
Todd confirmed on Friday that the clock is ticking.

"Within a matter of weeks rather than months we will have to decide whether we are satisfied that they are complying with the remedies to our satisfaction," he said.

Microsoft may be fined up to 5 percent of its daily worldwide turnover.

Microsoft is appealing the Commission's decision before the EU's Court of First Instance in Luxembourg.

On Friday, the court admitted the European Committee for Interoperable Systems, a business group, as a formal party in oral proceedings on the grounds that it has an interest in the outcome of the case.

That group includes companies such as IBM, Oracle, Nokia and Red Hat.

An oral hearing in the case is expected before the end of the year

Appraisal meeting tips

Here are few things that Avneet Chatwal has pointed out that you can do during your meeting with the Boss at an Appraisal:

1.Understand Its Importance - Make sure you understand the significance of your appraisal review. For instance, your boss should review your job description with you and go over any goals and any change in objectives which the two of you agreed upon at inception or at your last appraisal discussion.

2.Look into your boss's eye - Sit up straight in the chair and look into your boss's eye. Your body language should convey openness, confidence and alertness.

3.Listen carefully without interrupting - Be open, flexible and willing to admit your short comings. Remember you don't have to be perfect. Try to see things from your boss's perspective. Being able to look at and accept your weaknesses is a sign of maturity and strength.

4.Ask for Explanations - If you don't understand or agree how your boss arrived at a particular judgement, ask for further explanation. Ask questions with a motive of achieving a common understanding and a summary of your performance.

5.Respond Objectively - If you disagree over some point, try to respond as objectively as possible. Speak based on facts about your performance and the results that you have achieved.

6.Clear Understanding - Before the appraisal is over, make sure that you have a clear understanding of areas you need to improve on and how you are going to do it. Discuss the possibilities with your Boss.

7.End Positively - Finish on a positive note as an appraisal discussion is an opportunity for you and your boss to understand each other better and strengthen your relationship.

After the appraisal meeting is over, if you don't agree with the discussion, pen down your thoughts and attach them to the appraisal form. Your human resources department probably has a procedure if you disagree with your appraisal. Ask them about it.
Last but not the least, remember that you and your boss are a part of the same team working towards the same goals. Eventually, bosses want their employees to succeed and do well because when you are successful, they have done the job they were supposed to do. So give your Boss an opportunity to rate you. Trust us, you won't regret it.

XBRL and Business

By using XBRL, companies and other producers of financial data and business reports can automate the processes of data collection. For example, data from different company divisions with different accounting systems can be assembled quickly, cheaply and efficiently if the sources of information have been upgraded to using XBRL. Once data is gathered in XBRL, different types of reports using varying subsets of the data can be produced with minimum effort. A company finance division, for example, could quickly and reliably generate internal management reports, financial statements for publication, tax and other regulatory filings, as well as credit reports for lenders.

Small businesses can benefit alongside large ones by standardising and simplifying their assembly and filing of information to the authorities.

Users of data which is received electronically in XBRL can automate its handling, cutting out time-consuming and costly collation and re-entry of information. Software can also immediately validate the data, highlighting errors and gaps which can immediately be addressed. It can also help in analysing, selecting, and processing the data for re-use. Human effort can switch to higher, more value-added aspects of analysis, review, reporting and decision-making. In this way, investment analysts can save effort, greatly simplify the selection and comparison of data, and deepen their company analysis.

Such type of standard XML format for businesses can be boon to the industry mainly when it comes to communicating the data with some alien application.

What is a PSM?

A PSM is a relatively concrete model of a software system that incorporates choices for certain implementation technology/technologies. The acronym stands for Platform Specific Model. PSMs describe the system taking into account the chosen implementation technology. Note however, that it is very likely that the software development process will consist of more than one transformation step. Like a PIM, a PSM could be either input or output of a transformation.

What is a PIM?

A PIM is a relatively abstract model of a software system that does not incorporate any implementation choice. The acronym stands for Platform Independent Model. PIMs describe the system independently of the chosen implementation technology. Note however, that it is very likely that the software development process will consist of more than one transformation step. A PIM could be either input or output of a transformation.


For instance, you could take a business model as input to the first transformation, thus producing an abstract software model representing the data relevant to the system. The software model itself could then be transformed into a less abstract software model, one that divides the system into components with their interfaces. Still this model could be platform independent, because no choice needs to be made whether to implement the system using .NET or J2EE. The model with components could be input to a transformation that extends the model with much of the standard CRUD functionality. Finally, the last model could be transformed into a PSM and from that into the source code.

What is the MOF?

The MOF is a standard that describes how metamodels should be described. (A metamodel is a definition of what a model is.) The acronym stands for Meta Object Facility, as it was meant to facilitate the creation of metamodels. The UML is one of the metamodels described using MOF. In the same way that you need the QVT, you need the MOF to be able to build MDA tools.

What is the QVT?

The QVT is an up coming standard from the Object Management Group (OMG) that specifies how Transformation Definitions can be written. The acronym stands for Query, View, Transformation. Queries and views on models are included in this standard because one could argue that both are very simple transformations that produce from a given input model an output model that consists of only part of the input model. In theory, definitions of queries and views can be considered to be similar to transformation definitions.

What is the MDA Framework?

The MDA Framework is the architecture that enables a series of tools to work together to accomplish the MDA goal. These tools can be generation tools, modeling tools, programming IDEs, etc. Central to the architecture is the notion of model. Each tool should be able to use a model either as input or as output or both. Thereto tools should agree on what the syntax and structure of a model is. That is, they need to agree on a common metamodel, or on a number of metamodels for different purposes. (A metamodel is a definition of what a model is.) Once they agree, the relationship between two models in a different language (that is, built according to different metamodels) can be standardized. This relationship is called a Transformation Definition. Tools that transform one model into another model can than be built according to the standard Transformation Definition. Plaatje!!!

The HTTP Protocol

HTTP communicates over TCP/IP. An HTTP client connects to an HTTP server using TCP. After establishing a connection, the client can send an HTTP request message to the server:

POST /item HTTP/1.1
Host: 189.123.345.239
Content-Type: text/plain
Content-Length: 200

The server then processes the request and sends an HTTP response back to the client. The response contains a status code that indicates the status of the request:

200 OK
Content-Type: text/plain
Content-Length: 200

In the example above, the server returned a status code of 200. This is the standard success code for HTTP.

If the server could not decode the request, it could have returned something like this:

400 Bad Request
Content-Length: 0


SOAP HTTP Binding

A SOAP method is an HTTP request/response that complies with the SOAP encoding rules.
HTTP + XML = SOAP

A SOAP request could be an HTTP POST or an HTTP GET request.

The HTTP POST request specifies at least two HTTP headers: Content-Type and Content-Length.
Content-Type
The Content-Type header for a SOAP request and response defines the MIME type for the message and the character encoding (optional) used for the XML body of the request or response.
Syntax

Content-Type: MIMEType; charset=character-encoding

Example

POST /item HTTP/1.1
Content-Type: application/soap+xml; charset=utf-8


Content-Length
The Content-Length header for a SOAP request and response specifies the number of bytes in the body of the request or response.
Syntax

Content-Length: bytes

Example

POST /item HTTP/1.1
Content-Type: application/soap+xml; charset=utf-8
Content-Length: 250