Modeling for Top Stock Picks in a Business Upswing

An understanding of business linkages is a great way to top stock picks as the market prepares for the bulls. Some models are more obvious than others. Improvements in energy efficiency, and alternative fuels are obvious gainers when crude prices rise as they have done during June and early-July 2008. However, the stock gains from subtle linkages are generally greater. India’s use of uranium to produce power for example will boost business prospects of engineering firms, construction companies, and of course, international uranium suppliers. This is why the powerful corporate lobbies of Washington are so extraordinarily keen that India signs on the dotted line.

Investment decisions based on macro linkages and politics are fraught with risks. Weather is the greatest creator and destroyer of stock values from week to week. Meteorology is not able to make reliable forecasts for more than a few days at a time. That is why forecasts of farm production can vary so widely. The smart stock investor will prefer models based on micro factors, rather than speculate on how central aspects of economies might move in future.

Executive actions are the most reliable drivers of business models. New brand launches, cost effectiveness initiatives, and investments in new capacities, are typical examples of signs that stock investors can use to spot top picks. Independent market surveys and management audit reports are generally the most objective sources of information in this regard.

Cash flows are also useful modelers. A rising stock market does not mean that competition will get any less. Companies with high retained earnings will hit the ground running as the business climate improves. Highly leveraged ones, and those with extravagant Payout Ratios may present attractive pictures, but will probably lack resources to glean and to hold market shares.

Put on fresh investing spectacles because the stock market is poised for take-off. Make sure that you have a ring-side view for this spectacular show.

Get Ready for Stock Market Take-Off

We have to put academic matters aside until further notice. The stock market nightmare that started with U.S. sub-prime in September 2007 is about to end. Some folks surface from slumber in stages. So may it be with stocks in July 2008. A market is up one day, and down shortly thereafter. This is not range-bound trading, but a gradual consciousness that dawn is on the eastern horizon.

Attrition strategies must now yield center-stage to rapid growth and vigorous profits. Business managers and stock investors should gird their loins to ride crests of demand waves. Balance and a sense of timing distinguish the best surfers. It will not help to buy the wrong stocks just because the macro outlook is so enticing. How can we find the right beach-head?

Foreign institutions may pour money in simply because the U.S. Fed backs them with cheap cash in dollars of declining worth. Corrupt politicians are limited to recycling ill-gotten gains through promissory notes managed by the trusted but incompetent. No bull run is famous for logic. Lookers-on could get hurt if they try the stunts that so thrill. The riddle of what to buy is clued by who buys. You cannot beat a buy-back by a block owner.

Stock market celebrities may have ego reasons to shore up their stocks. However, intelligent investing rather than emotions have made them successful in the stock market ring. They take-over stocks they once offered the market because they can see a bright spot hidden from public view. No business magnate increases stock-holding without sound reasons. You are well-advised to follow such herds.

Here is an example of a stock battered throughout June 2008, which has become a top pick following management buy-back in July 2008:

http://www.dlf.in/wps/portal#

There is a second approach to knowing when to start buying after a bear phase. Let us dwell on this tomorrow.

Discriminatory Cash Flow Management for Business and Stock Portfolios

The post before this one was about conserving resources to deal with extreme adversity. The aim today is to set priorities for whatever is available. Here are some starter ideas on how to use scarce funds for financial planning in the business environment of July 2008.

1. Favor probability over profit. Put money in deposits with reputable banks run by professional executives. Check on their control systems for derivatives, outsourcing, and speculation. Avoid the ones that curry favors from discredited members of an administration in the autumn of its mis-rule. Bonds of organizations that stick to budgets are other parking slots for cash relieved from the clutches of stocks on a slide.

2. Focus on children and other compulsions. Stay invested in food, beverages, clothes, footwear, educational supplies, pharmaceuticals, and security. It may appear contradictory, at first sight, to favor beer, tobacco, and entertainment. However, we need more stress relief not less when stranded on proverbial islands and beaches in the Pacific.

3. Fear nothing. Anxiety will only cloud your vision. Even bankruptcy may not be worse than what you have heard about Guantanamo. Material losses can be made good over time, provided that spirit and integrity remain intact.

4. Fight your irrationality. Conserving the contents of a water can in the desert is tough. You keep thinking that this may not last. That is right, but it is probably premature to blow the last of your resources today. Beware of mirages. TV anchors may have reasons to proclaim stock market rallies. Are you paid for this as well?

5. Find hidden help. Put your break from day trading to good use. Take an online course. Learn Chinese, Russian, or even Spanish. Start a web log better than this one. Contrive to meet by chance with old friends. There are sure to be some bargains in your garage-sales of better days.

The next step is to hit the stock exchange running once the sun breaks through again. Let us discuss this tomorrow.

Paradigm Shifts for Business and Stock Investing Today

How should we respond to business and stock market conditions in July 2008? There have been difficult trading conditions in the past. However, the tragic succession of sub-prime crime, instances of regulator duplicity, flagrant violations of the Basel II norms, crippling shortfalls of farm produce, and ascendancy of oil-rich countries, make a deadly brew that we have not faced before.

Business mimics war. It is time to resort to financial planning in the way of a soldier under siege. Established methods will not work in extreme adversity. Retreat, charge, and attrition are three major options available when an enemy force threatens to over-run you. Guerrillas excel in emergency practices compared to organized armies, because they are more accustomed to making as much as possible out of scarce resources. How can battle-field survival principles be used in a Board room or on a stock trading screen?

You have to make every shot count when you are surrounded. No bullet should be wasted while you wait for reinforcements to arrive. Cash is your ammunition in today's business environment and stock market. Impose a zero budget discipline with immediate effect. Do not spend money merely because that is your habit. Question all expenses. Be wary of small-ticket items. They add up faster than people think. Similarly, clamp down on purchases on credit. You are at risk of failing to meet commitments that others have made on your behalf. Make sure that your receivables are real. Negotiate discounts to liquidate book assets early. Phase expenditure so that financial closure can be brought forward. Scale down mega projects. Involve your entire team in cash flow crisis control.

Women, children, food, and water are top concerns of a garrison facing disaster. You also need power, communications, and medicines. Tomorrow's post will be on how to deploy scarce cash.

Exit Lessons for Business and Stocks from Horse Racing

A mark of etiquette is to know when to leave a party. It is the same in the commercial world. Entries are enthusiastic and full of dreams. Expectations are often exaggerated. Disappointments are nearly inevitable. How long should one hang on to a business or a stock?

A cash crunch may force an exit. The benefits of predicting the course of events are clear. A professional business manager or stock investor is like a reliable astrologer or a meteorologist. You have to be able to predict the future. The latter holds only possibilities and no certainties. Does this make business and stock investing forms of gambling?

President Bush has distinguished horse racing from online betting. His administration banned people from gambling online, while steadfastly refusing all requests to extend this bad habit to horse races. This discrimination was not because of any personal gains, as democrats and communists may like to suggest, but for world freedom and security. What can we get out of this?

Observe the ways of a successful punter. He or she will not bet on each and every race. Weather, turf, lineage, and the rider, must all be weighed before you double your bet or call it quits. You can also learn when to exit a stock or a business by finding out why the damned have lost fortunes on race tracks.

Motivated rumors, crooked jockeys, sick horses, and oddly-shaped race courses, may turn jackpots in to baskets of disaster. However, bookies never lose. They are only brokers. Similarly, publishers of racing forms make their bucks even before a race starts.

Please post or email StockWay.MyView@gmail.com if you are a horseracing enthusiast. We need your help with business moves and stock picking for the week that starts today.

Pinch Business and Stock Market Bottoms at Will

Only Italian men can wear unspeakable habits on their collective sleeves with abandon. However, bottom-fishing is an accepted and even a praise-worthy habit of a stock investor.

How should we deal with the stock trading week that will start tomorrow? It is no consolation anymore that world stock exchanges now seem to act in concert. Where can a global investor park money? Obviously, gold retains its legendary luster in this respect. However, market movements for this metal last week indicate that prices are already ascendant.

Contrariness is a hall-mark of successful stock investment. Theory says that it could be time to buy now. What if prices fall further? Sitting on the fence is not an option because money costs money unless you are part of an Islamic banking system.

We have to put money in to stocks that stand to gain from turmoil. Companies that can carry on business regardless of inflation, recession, inclement weather, and civil unrest threats are top picks for the week ahead.

Switzerland and the United Arab Emirates are the best countries in which to invest at this time. Investors with dollars are lucky because they can participate in stock exchanges of these countries, even if they live elsewhere. Global corporations based in these countries may offer investment opportunities in your local stock market, through listed subsidiaries. Here is an example:

http://www.nestle.in/inside_StockFin.aspx?IR=3&id=1

You cannot be sure that you have really touched a nadir with any stock, but the ones from professionally-managed companies, with classic brands from essential sections of the economy, will climb faster than the rest of the pack, and see you through to a pole position when the ongoing free-fall finally ends.

Post below or email StockWay.MyView@gmail.com if you have a great stock investing idea for the last day of the terrible month of June 2008, and the rest of the coming week. You can also ask for custom portfolio advice.

Lying Business and Stock Market Statistics

Information was not considered to be an express resource when business management was born as a vocation. The stock market is different in this respect, because the Great Depression was as much about rumors as related to facts.

Sociologists recognized the power of propaganda before business school professors. Paul Virilo's writings predate any other genre of scholarly publications. His jargon of 'dromology' and the 'information bomb' has also remained exclusive.

Stock market analysts and TV business channel anchors play on the powers of incomplete information. You can trick competing investors to buy and sell stocks at wrong times by using information as a weapon. Tell the truth, but not the whole truth. This is the technology of presenting lies as facts.

What does this mean for you today?

The world stock market has climbed on June 25. Is this a sign of a bottom?

World leaders met in Riyadh last Sunday. Crude oil prices have not registered any stable decline. Neither Chavez, nor Iran have withdrawn their threats to take this resource price still higher.

China still reels under excessive precipitation, while the vast majority of India's farmers wait anxiously for moisture to save their crops. Early rains and a normal monsoon are not the same thing by far.

The worst news is that politics continues to score over economics. Major governments, like Nero, fiddle while we burn.

How can we extend this example of dromology to acquire skills of separating grain from the chaff of media stock market news?

Here is a free and easy tip: modeling and simulation confirm or deny facts presented by numbers.

Do post or email Stockway.MyView@gmail.com if you want to know more.

Disbelieve every stock market of June 25 2008 in any case.