The Principles of Investing

For over two years now, the market has been range bound, oscillating between the 16,000 to 20,000 points range. Just when it looks like the shackles are lifting comes the turnaround and just as investors start fearing an imminent crash, the index manages a recovery and rebounds.

Consequently, most investors are in a dilemma and quite don’t know how to play out this situation. While some have preferred to wait out the volatility by staying out of the market, others are indulging in chasing returns by dabbling heavily in gold, silver and other commodities. Yet others are gung-ho on FMPs and fixed deposits where in some cases the returns on offer are in the region of 10% - 11% p.a.

However, the truth is there is no reason for investors to get antsy. While desiring a good return is fine, having a rational perspective is crucial. In an effort to earn 11% p.a., one could run the risk of losing 100% in no time! Chasing returns is always risky and its best to avoid greed. Towards, this end, let’s review some of the lessons that one learns along one’s journey as an investor. Some of these learnings emanate out of personal experience, some out of the experience of others and some is wisdom provided by those who have been fairly successful investors themselves.

First up - the market is like a class room where we are taught lessons. The same lesson is taught to you time and again till you learn it properly. Once you have finished your learning, you move on to the next class room where you are taught another lesson. Successful investors are those who learn the most lessons along their investing life.

And the very first lesson in this classroom is regarding the virtues of long-term investing. Actually, the term ‘long-term investing’ is nothing but an euphemism for the combination of the powerful twin forces of compound interest and time. Compound interest in solitude means little. And time without the company of compound interest is equally meaningless. However, most retail investors lack the patience, conviction, heart and stomach required in combining these two forces for any meaningful length of time.

So here’s what one can and should do. Investing all your money in any one type or class of instrument is always risky, no matter what the instrument is. Instead, consciously spread your investments regardless of the external environment. Amidst all the noise, do not let go of the basics. Keep it simple, keep it real. While investing in gold is indeed desirable, have no more than around 15-20% invested in the metal. Don’t buy physical gold, instead use Exchange Traded Funds (ETFs). Allocate another 20% to relatively safe bank fixed deposits or short-term income funds. Cash can command around 15%. The balance can and should be invested in equity, not in a lump sum but in a staggered manner through Systematic Investment Plans (SIPs or STPs). This way, you can let compound interest do its work in the company of time. If the market falls, you get the same stuff cheaper. If the market rises, since you are anyway participating, you make profits. Either way, you win. It is really as simple as that.

Don’t borrow to invest. Ever. Do not listen to tips that your neighbour, train friend or office colleague is so gung ho about. Even if you listen, do not act upon the tip. Instead keep it in mind and be sure to check after a year or so what actually did happen to the hot stock that everyone was so excited about. That is, if it is still traded. Invest with mutual funds with an established track record of at least five years. Choose plain vanilla diversified funds. Then hold fast, hold tight and hold out.

Of great relevance in the current situation is a quote from Warren Buffet. He has said – “Five years from now, ten years from now, we'll look back on this period and we'll see that you could have made some extraordinary (stock market) buys. That doesn't mean it won't get more extraordinary a week or a month from now. I have no idea what the stock market is going to do next month or six months from now. I do know that the economy, over a period of time, will do very well, and people who own a piece of it will do well. Just don't borrow money to buy your piece.”

While Mr. Buffet’s statement was to do with the US market, it can literally be copy-pasted for our market too. Over the next five-ten years, in spite of its politics and politicians, India (as compared to the West) will do well. Do participate in this prosperity. And the best way to do this is by staying invested over the long-term. Do not try and time the market. Despite all the upheavals and turmoil that we go through, at the end of the day, we are progressing. And this progress will manifest itself in the stock market one way or another. The timing is irrelevant, that it will happen is certain. 

Or in other words, making your money make money is really so simple that it becomes difficult. However, if you try and actually apply the above principles, day in day out, month in month out and year in year out, the chances of losing are virtually nil. To benefit from these lessons is up to you. The question is --- are you up to it?

Seven Guideposts to Achieving the Impossible

It won’t take you long to recall the last time at work somebody resisted changing something. From the mundane and unimportant like changing the stationary, the look of the bulletin board, the type of coffee in the coffee machine or the traditional venue for the office holiday party to much more serious like changing the organization’s name, dropping a product line, merging to survive or closing regional offices.


How many times has someone said to you, “Oh, you can’t do that. In this organization that’s just impossible.” Workplace inertia is so common it is parodied everywhere, from popular TV shows to comic strips.

In part the impossible is held back by risk aversion and fear of change. Change is feared everywhere, but nowhere more than in the workplace. Corporations everywhere are littered with mediocrity, a mediocrity that is simply accepted “because doing that is just impossible.” So, organizations are run within ever-narrowing parameters with grudging acquiescence to never achieving what others see as impossible.

I believe ordinary, accomplished people in organizations, often those in middle management, can achieve the impossible. That belief is grounded in the experience of my Corporate Relations team at Diageo North America.

Instead of focusing on what’s possible, this team has spent the last 10 years striving for the impossible and making it a reality, proving it is not always the Nobel Laureates or Apollo 13 astronauts who have the power to impact real change. Ordinary, accomplished people in organizations, especially those in middle management, can achieve anything. They can and do achieve the impossible.

The first step is simple: eliminate personal beliefs and social pressures that new ideas, large-scale changes, and innovations cannot be achieved by ordinary people. Reframe what is possible. To do this, I believe all we need to give our teams is the motivation – and the support - to strive to achieve more than others think is reasonable or possible.

I’ve worked in the White House, had to get stuff done in Baghdad, Kabul, Sarajevo and Pyongyang, and in some of the biggest companies in the world where I’ve seen this idea in action. Now, as Executive Vice President of Corporate Relations for the North American operations of Diageo, I am privileged to lead an incredible group of individuals who initiated fundamental change in our industry that many deemed impossible from the start. Through use of simple motivational tactics that provide critical structure and support, this team has confounded an entire industry through their achievements.

By utilizing the “The Seven Guideposts to Achieving the Impossible” my team has been the driving force behind some of the largest scale, transformative changes the beverage alcohol industry has seen since Prohibition, remaking the social and regulatory landscape of their industry – something believed impossible just a decade ago.

Managers and their teams can apply these essential ideas by personally connecting to The Seven Guideposts to Achieving the Impossible:

1. Believe in yourself. Life-changing and market-leading achievements require individuals and team members to believe in their ability to accomplish the task. This creates a critical starting point, giving one a sense that there are no barriers too big to overcome.

2. Believe in the Mission. From the start, everyone on the Diageo Corporate Relations team understood what we were working toward, creating a common goal that supersedes all else. But we didn’t stop there. Everyone carried the fundamental belief that what he or she needed to accomplish was of enduring value, even when others refused to believe achieving it would be possible.

3. Be willing to change the rules of the game. Change is one of the most common and most feared concepts – in business and in life, especially in corporate America. Yet one of the keys to achieving the impossible is being willing to change the rules of the game. It takes the ability to look into the future and see that “the game” can be played differently. Diageo first changed the rules of the game when we stopped treating critics as “the enemy.” Instead, Diageo shifted to a practice of openness and “constructive engagement” that created real dialogue and progress.

4. Have the humility to ask for and use help. Athletes are trained to support their teammates with an RBI, an assist, a pass, whatever. This is a natural part of teamwork and working against a common opponent. In the business world, however, “the team” and “goal” are often not nearly so obvious. To make corporate teams truly effective, they need to develop a clear, shared vision and identify the issues that truly require shared focus and effort. But asking for help does not come naturally to all people. In addition, many corporate teams are not structured to engage in this way, and in actuality, are not really a team at all. The Diageo North American Corporate Relations team clearly held a shared purpose, and many of its projects required true collaboration, starting with asking for help from others who have the knowledge, skills or resources that you do not, taking that help freely to accomplish the task at hand.

5. Focus all available assets against a single objective. To make substantial change, the individual and the team have to assemble a broad range of resources and commit these resources to the shared goal. This is when the impact is most evident.

6. Have the tenacity to relentlessly, tirelessly persist. Making fundamental changes in any complex environment takes a great deal of persistence. One has to have a vision for the future and persevere toward that vision, working day after day, week after week, year after year, to accomplish the end goal.

7. Use your knowledge, skills, experience and training. People with training in a profession or skill have changed their definition of impossible because they have learned and practiced the component skills necessary to achieve seemingly impossible tasks. Even when a new situation appears impossible to the well-trained individual, his or her training “kicks in” and helps that person figure out how to create success out of certain failure.

Over the last decade, Diageo’s Corporate Relations team has consistently worked toward the goal of changing the social, legal and regulatory landscape for beverage alcohol. All along the way, each of us – individually and collectively – knew we were capable of this task, because we were personally connected to each one of these guideposts. It is through accepting and following these tactics any team can achieve the impossible.

How to Create Marketing Strategies that Work

There was a time back in the fifties when microwaves ovens were first seriously marketed. They were marketed to women on the basis of speed. Bad move. Women were afraid of them. Kitchens at the time were small and there was no room.  More importantly, housewives thought that they were shirking their duties by using this new fangled gadget. At that time, women were expected to cook. Not to cook fast, but to slave over a hot oven. 

So some marketing gurus at the time came up with a creative idea. They sold microwaves to men. Men loved the technology so much, that they talked their wives into buying one. They were first used for defrosting, or reheating leftovers. They soon became a staple of modern culture. They forced their way into the lives of people. Kitchens also became bigger.

So it was creative marketers who created the interest in the device. A similar thing is happening with the insipid Keurig coffee machine that makes only one cup if mediocre coffee at a price that rivals gas. They were first sold to coffee lovers who wanted a new show-offy appliance. But the product is trickling down to mainstream America. Yes, I have one, but I digress.

It was marketing and thinking outside the box that created the demand. Call it creative marketing. Now, I have heard time and time again that small businesses have no time for marketing. Is it more fun to write checks than invoices? The object of creative marketing is to make your product or service a necessary part of daily life. Creative marketing is finding a one sentence solution or mnemonic that turns your product or service into a must have – either emotionally or physically. It’s not that hard, once you find a segment of people you want to sell to and hit their “hot button.”

Since you’re reading this on Businessknowhow.com, I can assume you have a business or are thinking of starting one. Let’s say you have a virtual assistant service. Why are you doing that? The common “wisdom” is that computers reduce or eliminate the need for administrative assistants. But do they? Common wisdom is rarely wise. Here are five ways to position a virtual assistant service.

• Market your service to smaller businesses with a paucity of employees. In a small company, everyone does everything. If someone is typing a letter or proposal, then he or she can’t be doing another task. (I wrote this before Staples started their own commercials saying the same thing.)
• Sell your service as a cost cutting measure. You only pay for what you need. If you use a virtual assistant, you only pay for what you need. It’s cheaper than having another employee on staff.
• Sell it to businesses who hate typing, i.e, you’re too important to type, proofread and check formatting for a letter or proposal.
• Pitch your service to people who have trouble getting their ideas on paper. They can bounce phrases and ideas off you.
• You have to worry about ink. Not them. You are always prepared. I mention that because I always need ink and I need to vent.

If you make contact with a buyer and did it professionally you may have made yourself a vital part of your customer’s life. And that’s your goal.

But maybe you don’t have a service. Maybe you have a product like candles you make on a kitchen table. You’re actually selling a service.

• A pleasant way to scent the air
• A backdrop for a cozy date
• A backdrop for cozy sex
• To make an environment pretty
• As a branding strategy (think about it and get creative)

Okay, you now have a product that’s going to become a part of someone’s life. Do you wait for sales to come in? No you’re proactive, using every means possible to get your product in front of a customer.

•  Try social media – there’s a great deal about it on this site
•  Do tiny postcard mailings to your prospects
•  Get involved in community special events
• Consider using your product as a fundraiser. I do volunteer work for a company that teaches people to read, and non English speakers to speak English. Since they have seen their funding cut, they are always looking for new sources of revenues. That’s common to all non-profits.

Sell your product to the people who seem to have the most need. Who are those people? Like the microwave oven inventors, you have to figure it out – or at least guess. It’s part of creative marketing. But what does creative marketing actually mean? It’s selling in new ways people haven’t sold before and creating a need that most people don’t know they have.

To whom? To the people who are most likely to buy your product.

But what do you do if you don’t have a product? Find a problem and solve it in a new way. More about that in future columns. So what is there to know about marketing? Here are the ten commandments. Very successful marketers know them or use them subconsciously.

The Ten Commandments of Marketing:

1. Thou shalt look at the customers interest before thy own.
2. Thou shalt enjoy the thrill of success. And learn lessons from failure.
3. Thou shalt listen before thou speaks.
4. Thou shalt honor the product (it can be you) and nurture it until it grows.
5. Thou shalt immerse thyself in thy customers' wants and needs
6. Thou shalt wallow in the beauty of ideas.
7. Thou shalt use the tools of emotion in every sale.
8. Thou shalt not immerse thyself in self-pity.
9. Thou shalt blaze trails to the customer.
10. Thou shalt respect thyself and thy abilities.

Energy Is Electrical and Magnetic

An energy field surrounds everything. Energy pulses out from objects, interacting with and absorbing other energies. A person's energy field, commonly called an aura, is generated inside the body and extends outward to surround it. Understanding the electrical and magnetic nature of energy is important to understanding healing.

The energy field you generate is created by your beliefs and thoughts. Like a radio tower, you send out concentric pulses of energy that broaden and weaken as they move farther away. An electromagnetic charge exists immediately around your body. This magnetism impacts all it comes in contact with and, by extension, influences the entire universe. Like a strong magnet, your field of energy draws other energies to it and absorbs the power of them. The energies you attract and the ways they are absorbed are influenced by your belief systems. Your beliefs filter and alter other energies as they enter your power source and, in turn, become part of the energy that emanates from you.

This magnetic power draws to you the situations, people, and events that will reinforce whatever it is you believe. If you believe you are a victim, that people constantly exploit you and that you are unlovable, your electromagnetic field will be charged with those beliefs and will draw to you circumstances that reinforce this. If you believe you are a divine being, that all doors of opportunity are open to you, that you are loved by yourself and others, and that good things always come your way, then your magnetic energy will draw to you positive life conditions, which reinforce your positive energy.

Take a moment to think about what you really believe and notice what you are drawing into your life. What do you believe about yourself, about God, about money, about your job, about your family, about your friends, and about life in general? Review your beliefs to understand which energies you attract. If you impart negative thoughts to your energy field, you will attract events and people that manifest negative beliefs. Negative energy begets negative experience, which reinforces negative beliefs. Conversely, if you radiate positive beliefs and thoughts, you will draw the situations to you that confirm your beliefs and reinforce your positive life experience.

The advantage of positive thoughts is that they are electrically charged at a higher frequency than negative thoughts. They also extend out farther and with greater strength into the universe. They leave you with a feeling of expansiveness, growth, and lightness. Negative thoughts are dense and heavy, whereas positive thoughts are light and high in vibration. Observe people's body posture and you can get a sense of how these frequencies affect them physically. People who are self-confident usually hold themselves tall and upright, as though they could lift right off the ground. Their breathing is full and expands the lungs, chest, and abdomen. People with heavy and dense negative energy look as though they are carrying a heavy backpack at all times. Their shoulders are often rounded, their head tilts down, and their breathing is shallow as if there just is not any room for breath in their lungs. They often feel tightness and stress in the upper back and shoulders. The density of negative energy causes the body to collapse inwardly. Healing is the art and science of managing not only these energy fields, but also their root cause.

It is possible to feel the different nature of energies in another person. Try this experiment: Have the person think intense negative thoughts of self-loathing and poor self-worth. Place your hands above their head and try to feel the energy radiating out. You will have the impression of a collapsing, dense aura. Next, help the same person think strong positive thoughts of their importance and self-worth. You can literally feel the difference in the energy as it expands outward with lightness and happiness. When working with someone in this activity, remember to finish on the positive note.

Energy changes with intention, instantaneously and powerfully. Changing your electromagnetic field of energy is not difficult, nor does it take years of study or practice. It is immediate. You can understand this by simply changing your thoughts and noticing the instant shift in the energy within and around you. Through practice, you can better manage, moment to moment, the energy that surrounds you. Your work in self-discovery, digging deeply into your belief system and scrutinizing your core beliefs, will allow you to permanently intensify the positive energy you radiate and attract. You can project energies that contribute meaningfully to a better universe and a better life for all people.

All objects possess an energy field and radiate and attract energy. Energy can transfer and be shared between objects, creating a bond or magnetism. This energy exchange explains the phenomenon of dowsing rods, which have been used for thousands of years to locate sources of water. They are still used today by power companies, which employ them to locate water mains. This shared transfer and bonding of energy is also what psychics use to find missing objects or people. In the case of a missing person, an article of clothing or jewelry provides an energy source, which connects to the missing person and allows the psychic to determine location. I have done many readings for people by holding a piece of their jewelry and intuitively reading their energy. I have received amazing information about their current condition, past experiences, health, and emotional problems.

Invisible energy is powering your visible experiences and you can control it.

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