money / 6 posts found

What happens when management fails?

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The Art of Management

Capital efficiency

In principle at least, the main function of management is the efficient use of capital in everyday decision making. Managers have to satisfy three main beneficiaries of the company, namely the employees, bondholders, and the investors. Company employees benefit by earning a salary, while bondholders gain by receiving interest on their held bonds. However, both these beneficiaries are more concerned with short term gains, whereas investors, who are the residual owners of the company, are more concerned with long term gains. Investors receive benefit from the company by either receiving a cash dividend, and/or capital gains on the price of the stock.

Smart About Managing Debt

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Almost everyone who has debt think about it frequently. In fact, debt is blamed for millions of days off work every year, and general feeling of sickness for many others.

These are many symptoms of stress that can manifest itself in your life. It can manifest itself as headaches, inability to sleep, feeling depressed and irritable, with an inability to concentrate on what you are doing. Check with yourself if these symptoms are cause by excessive debt. If you are thinking about it constantly, then it is a problem.

What is Value Investing?

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The idea of value investing is credited to Benjamin Graham in his 1934 book “Security Analysis.” In the book Graham spoke of two essential qualities: The degree of safety of principal, and a satisfactory rate of return. In his margin of safety principle, which Warren Buffett later adopted, Graham noted that there should be a sufficient difference between the price of a stock and the intrinsic value of a company. A buying opportunity would be when the price is at least lower by two-thirds of the intrinsic value of the company to provide a sufficient safety cushion. The intrinsic value is obtained by multiplying the estimated earnings of a company by an appropriate capitalization factor then adding the net real assets of the company.

Three Problems with Mortgage Insurance

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In Canada, when you took out a mortgage, you may remember the lender asking you if you wanted a mortgage payment protection insurance. Most probably, you glazed over it as expensive and unnecessary. However, insuring your mortgage is extremely important as it can mean the difference between keeping a roof over your head or having your home repossessed. However, insuring your mortgage is best not done with a mortgage insurance, but rather with a life insurance – and here is why.

Size Doesn’t Always Matter

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Here’s an investment question to consider: Two years ago, would you have invested in company “A” which had zero debt, an income that increased by 61 percent, and which had just become the world’s largest firm with a market cap of $600 billion? Or would you have invested in company “B” which had 16 percent debt, and whose income had decreased by 27 percent?

Investing Fast and Slow in Inequality

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What we can learn from Africa.

If you suspect life is unfair, Oxfam just gave you the numbers to back it up. In a recently published report, the anti-poverty charity presented a staggering statistic: the world’s 85 richest individuals now own around $1.7 trillion, which is as much as the poorest half of the world’s population of 7 billion. In fact, the 1 percent richest people in the world own $110 trillion, which is 60 times the wealth of the poorest 3.5 billion people.