Who Makes Money in Wall Street and How

It is interesting to see the diversity of methods aimed to generate income in the trading scene. Whether it's mathematical trading or value investing, there are countless methods out there. This post aims to review some of the most common methods used in each area, and it's most well known earners.

Mathematical Trading

What is it: After Black and Scholes found the formula for pricing an option, it was becoming clear that mathematical trading will become a major influence in the financial scene. What is known now as Financial Engineering, has become very popular among university students. The mathematical sophistication is constantly increasing, and people who work in this industry are known as "quants". The most famous "quant" is probably Emanuel Derman, who also published a book titled "My Life as a Quant: Reflections on Physics and Finance". In these days, most of the financial firms hire quants.

Notable Quant Oriented Firms

DE Shaw

Founded by David E. Shaw. Having a Ph.d in Computer Science could not have hurt Shaw. He made a fortune building automated trading systems which exploited anomalies in the stock market. Fortune magazine referred to him as "King Quant". The firm manages approximately US $ 29 billion in aggregate capital.

Employment opportunities at DE Shaw are known to be extremely competitive. A notable past worker at DE Shaw is Jeff Bezos, the founder of Amazon.

LTCM

Long Term Capital Market was a hedge fund founded in 1994 by John Meriwether. It had Myron Scholes and Robert Merton on its board, two Nobel Prize Winners! At its peak, it made about 40% return for its investors. After being heavily leveraged, it went bankrupt.

The LTCM example teaches you that no matter how smart you are, there are some things that are out of our reach. A good book on LTCM is "When Genius Failed: The Rise and Fall of Long-Term Capital Management"

Speculating

What is it: Speculating is simply having a philosophy about the market, and acting accordingly.

Notable Speculators George Soros

Arguably the best speculator of all time. Soros is known by his concept of reflexivity, a concept you can read more about in his book, The Alchemy of Finance: Reading the Mind of the Market

Whether is theory is true or not, his record proves it. In Black Wednesday (September 16, 1992), Soros rose to fame when he sold short more than $ 10 billion worth of pounds, which eventually caused the Bank of England to devalue it's currency. He earned an estimated US $ 1.1

Although not active anymore, Soros is the prototype of a speculator.

Victor Niederhoffer

Although he went bankrupt twice, Niederhoffer is still considered a top speculator. In 1996, MAR magazine ranked him the number one hedge fund manager in the world. Mixing his philosophical ideas about the market with statistical methods, his new Matador Fund, reportedly returned 56.2% in 2005!

Niderhoffer has also authored several books which describe his philosophy towards the market. One of them is, Practical Speculation.

Trend Followers

What is it: Trend followers believe that the market exhibits trends, either upward or downward. They strive to find systems to identify the trend and "ride" it to make financial gains.
Notable Trend Followers

John Henry

Manages over $ 2 billion in client assets. He was born to a farming family and loved baseball from the time he was 9 years old. He has described himself as having average intelligence … and attended community colleges and took numerous night courses but never received his college degree. He is also the owner of the Boston Red Sox.

Bill Dunn

Bill Dunn manages Dunn Capital Management which has a minimum initial investment of $ 10 million in order to enter. He is considered a legend among trend traders.

Value Investors

What is it: Buying shares that appear under priced by some forms of fundamental analysis, and holding them.

Notable Value Investors

Warren Buffet

Not only Warren Buffet is the most notable Value Investor, he is also the most notable investor in the world! He was ranked by Forbes as the third-richest person in the world as of April 2007, With an estimated current net worth of around US $ 52 billion!

Joel Greenblatt

Less known than Warren Buffet, Joel Greenblat is chairman of The St. Lawrence Seaway Corporation and a value investment guru. He advocates buying "cheap and good companies."

He has achieved annual returns at the hedge fund Gotham Capital of over 50% per year for 10 years from 1985 to 1995 before closing the fund and returning his investors' money!

Could Macartney's Mission to China in 1793 Have Succeeded?

The debate surrounding the question of why Macartney failed in 1793 can easily become reductive by over-emphasising Macartney's failure to perform the kowtow to Chinese standards of ritual. This however explores only a partiality of the debate by solely focusing on the event and Macartney; which in turn becomes a westernised perspective with no in-depth understanding of the Chinese geo-political context during the Eighteenth-Century. The argument must take into account Western goals and aims surrounding Macartney's embassy venture to China, and why they conflicted with the values ​​and principles of Chinese Confucianism, and the conformity of traditional Chinese culture by the Celestial Empire. As Byng and Levere (1981) surmise, 'the embassy's failure is shown to reveal fundamental differences in British and Chinese Eighteenth-Century responses to Science; and has wide cultural implications'. The article attempts to approach the debate of Macartney's embassy from the scientific context of cultural analysis rather than mere historical significance of the event which creates a transitory debate of Macartney's character and refusal to perform the kowtow.

Cultural and scientific understanding will be the approach of the debate put forward. As Attwell highlights, 'on the surface this failure appeared to turn on Macartney's refusal to follow Chinese protocol … in Chinese imperial terms, of the emperor's pre-eminent position in the Celestial hierarchy'. Attwell's argument demonstrates the importance of identifying the Celestial viewpoint of the Qing Empire, Chinese culture of traditionality and disinterest and ambivalence towards the 'Western Ocean barbarians'. This develops the argument that the mission due to the cultural conflictions of the two empires was doomed from the onset. But, importantly, retaining a comprehensive overview of the contexts from both Empires will be essential for understanding whether the mission was capable of success or not. The argument will take the position that Macartney was doomed to fail from the outset, not because of his failure of protocol kowtow, or his character, but because at this point during the eighteenth century the two empires were polar opposite's geo politically and firmly rooted in there differing and conflicting world views. The 'embassy, ​​indeed, was rejected before it arrived'.

Firstly, the rise of the British Empire during the eighteenth century explains the coinciding mentality of Enlightenment that the British increasingly adopted and applied domestically as part of its culture; and the measure of dealing with foreign powers to determine how civilised they were in comparison to British achievements. The values ​​and principles of the Enlightenment were ones of rationality and observation; as a result the scientific method grew out of the Enlightenment period and spread to the use of state and fields such as historical enquiry. The British world view became increasingly scientific, and the 'scientific explosion' of knowledge during the eighteenth century contributed to Britain's growing faith in the Sciences. The Enlightenment and the promotion of continuous progression and Science was a concept completely alien to China; deeply imbedded in the world view of Confucianism and Celestial pre-dominance. As Attwell surmises, 'for Qing China … peoples were evaluated according to their level of civilisation relative to the perfection of the Celestial Empire.

For the British, this positioning had to do with their level of scientific achievement '. The mere concept of the Enlightenment was the awakening of new ideas and methods, new norms of study and progress, which resulted in Britain adopting the method of industrialisation that would make Britain the largest empire during the eighteenth century. The Chinese on the other hand were not aware of the progress of Britain and Europe scientifically and economically as powers, this lack of awareness, and concern, is what makes the Macartney debate historically significant and interesting for enquiry because it marks the contrast between the two civilisations, particularly as a context of the times. The Chinese did not believe that those outside of its Celestial borders would contribute to the greatness of the heavenly empire, with the 'Son of Heaven' as the ruler. The Chinese as expressed by Gregory 'were secure and confident in their world'. These themes of cultural division, and cultural priorities, are themes which are directly at the core of Macartney's failure to secure the goals of Britain's embassy in 1792. These cultural differences and conflict of cultural norms is the root and essence behind the failure of Macartney's embassy , and it is because of these, that Macartney could not achieve a successful embassy regardless of a successful kowtow or no kowtow.

Another obstacle to the success of Macartney's venture was China's deep rooted Confucianism; these principles had existed within China for hundreds of years and were inherently part of the Chinese national identity and cultural life. The enlightenment contradicted the principles and virtues of Confucianism, particularly the Celestial power of the emperor which Confucianism bolstered, as highlighted by Byng and Levere 'according to Confucian theory, the virtue of the Emperor, as Son of Heaven and universal ruler, would inevitably attract the barbarians to his Court … see for themselves China's superiority '. The Chinese believed that through exposure to their country and through the tribunal offerings to the Emperor, foreigners were therefore accepting subservience to the Celestial Empire and accepting the hierarchy of the universal leader. The letter Chang-Ku ts'ung-Pien I, pb cited by Byng, provides an insightful understanding into the Chinese mind-set of interpreting Western motives. The letter is from the 'Grand Secretiat' to the governors of China, the letter reads, 'naturally we ought to grant their request in order that they may satisfy their sincerity in sailing across the seas in their longing for civilisation'. The position assumes through the statement of 'longing for civilisation' that the Chinese are the ones who possess this civilisation and that the foreigners are searching for it via the Celestial Empire's culture. The British however did not see China in this way, appreciating China with curiosity but not as a superior power. Macartney coincidentally would not accept this implied proposition of subordinating his sovereign King to a foreign Emperor. A conflict of British and Chinese world views became an ego conflict, each believing in their own superiority, however the British wished to open the Chinese to diplomatic acceptance of British power.

The Chinese remained introverted, in its centre world, neither willing nor interested in accepting Britain's scientific advancements. Two worlds apart, and Macartney's event shows the disillusionment of the two continents, as Gillingham cites Alain Peyrefitte, 'a collision of two planets … one celestial and lunar; the other with its feet firmly on the ground, mercantile, scientific and industrial '. The remark is one of condescending sentiment on behalf of the Chinese attributes of the statement, but accurately reflects the extensive nature of the cultural divide between the two powers. Furthermore, the significance of identifying 'euro-centric accounts' of China's culture is important for historical conclusions because it is implied by Gillingham's citation that the scientific method adopted by the West was the successful or superior discourse as opposed to China's seemingly negative virtues at that time. Another example of such a statement from Gillingham, 'striking instance of a clash between a dynamic, advanced society and a traditional and unchanging one', shows the Westernized accounts of change according to the measurement of success based on industrialisation principles such as trade and economy . The Chinese description of a successful nation and culture were completely differently from the British; the scientific method represented a methodology and quantification alien to the Chinese hierarchy, as Pritchard highlights there were 'problems of early intercourse with the West which grew out of divergent practices and ideas'. The Chinese had differing and alternative methods of dealing with foreigners; the embrace of expanding celestial borders was not an interest of the Qing dynasty.

The subject of trade became a prevalent issue which resulted in the failure of Macartney's embassy. The British conducted trade for economic power and free trade, the Chinese however did not trade with foreigners for economic benefit but rather out of 'compassion' for the foreign trader's dependent on the tea and silk trades of China; which Britain was becoming increasingly dependent on due to increasing demand. The Chinese had an alternative belief in trade; trade was meant for the self-sufficiency of the country not overindulgence, this approach was in accordance with the values ​​of Confucianism; an approach described by Landes cited by Attwell as a result of 'cultural triumphalism combined with petty downward tyranny made China a reluctant improver and bad learner'. The statement does not reflect however an understanding of the eighteenth century context of Chinese cultural values, China as argued, did not wish to change or adapt to the British paradigm of scientific methodology and societal progression. A more accurate account of the Chinese culture would be to emphasise the geo-political landscape of egocentrism and introversion of China's relationship with foreigners. As Cramner- Byng identifies, 'the Macartney embassy had no success in piercing the armour of cultural superiority as typified by the tribute system of the Chinese Empire'. The argument reflects the cultural division and the conviction that Macartney could not have succeeded regardless of the procedure kowtow performed according to Chinese official standards. But Britain's motivations and objectives are just one facet of the reasons as to why Macartney was inconceivably doomed from the moment he left Britain.

The East India Trading Company was particularly concerned with the success of the embassy to China, it wished to set up new trading standards that would benefit Britain by giving access to potentially desirable ports for merchant profiteering; Gillingham abbreviates that 'there were nevertheless frustrations at the rigid controls imposed on the one port into China which was open to overseas trades'. The Company took such an interest and pursued dedication to the embassy that they set up a commission to oversee the mission, 'the secret and superintending committee'. The committee however did not have a grasp of Chinese Hong merchants and their elite leaders' aspirations. The Macartney embassy therefore did not have full preparation of ceremonial concepts within Chinese culture and the effect regarding the status implied towards the emperor. Macartney, on requesting for his sovereign to be the recipient of his kowtow did not understand, or more likely underestimated, the hierarchical supremacy of the Emperor; as Zewei states, 'under the whole heaven, there is no land that is not the Emperor's, and within the sea-boundaries of the land, there is none who is not a subject of the Emperor'. Confucianism served as a doctrine to support the Emperor's Celestial power over Chinese society and the world around China, but the kowtow served as a means of social control over the Chinese and foreigners visiting the Celestial Empire to pay homage to the centre world. The idea was one of conversion, as Byng and Levere cite, 'they could see for themselves Chinese superiority … barbarians would naturally be eager to come to be transformed'.

Macartney's embassy although a failure marked an important period for China, the realisation of its external world forces, and the changing balances of power shifting to the Western colonizers. As Byng declares, 'the Macartney embassy was the writing on the wall, a warning that Chinese exclusiveness could not be maintained for ever'.

However, the implications of Macartney's kowtow are of relevance to the question of Macartney's perceived failure. The Chinese perspective is central to understanding why Macartney's refusal to Chinese ceremonial customs undermined the embassy's key objectives. The Chinese believed the British embassy was a standard procedure of 'tribunal ceremonial homage', and carried banners stating that Lord Macartney had come to pay tribunal respect to the Emperor. The British however had several goals including the opening of several trading ports and an official for the British inside the Chinese capital. These goals went against the Chinese, the Chinese Hanshen arguing that no such 'precedents' had been established with any of the other Western Ocean countries. The embassy was a tribute, and treated as such, Mungello states, 'the Chinese placed a banner on Macartney's barge that clearly identified him as a tribute-bearing envoy from Britain'. The British wished to stand out as an embassy from their European counterparts but the Chinese could not accept differentiating Britain as different; to do so would admit Britain as of superior standards of treatment and set the precedent of conciliations amongst the other Western Ocean powers. Macartney's failure can strongly be attributed to China's reluctance to separate Britain as different from the other powers, as Mungello concludes, 'British attempts to receive special treatment from the Chinese were doomed by the obligations of guest ritual to treat all nations equally'.

'In many ways the timing of the embassy could scarcely have been any worse.' The Macartney expedition was a failure, but nonetheless proved insightful for the British, the Chinese romanticism of the Jesuit period was far gone, and China's flaws and egocentric concept of themselves and the world exposed. Macartney hoped for a diplomatic solution, but the Opium Wars were an indictment of lost patience with the Celestial presence by the British. The context of two different cultures, cultures of confliction is what caused Macartney's failure. China was unwilling to embrace the trading and scientific values ​​of the West, a move that would prove destructive for China in the Opium Wars. But China, appeared stable, far across the lands from the European continent. As Byng remarks, 'Ch'ien Lung and his officials seemed quite unaware that the position of Chinese supremacy in the world was being challenged'. The failure of the kowtow was merely a response to the cultural divisions, and firm convictions from both Empires of their supremacy of values ​​across the globe, akin to an ideological struggle of culture. The kowtow, represents the facet or face of cultural apprehension and incompatibility between China and Britain as Hevia identifies, 'the contingency of ceremonial performance is important to highlight because both in the nineteenth century and later, it was asserted by diplomats and scholars that the rigidity of rites, and the Chinese refusal to make alterations, lay at the core of Sino-Western conflict '. The implication on Macartney's embassy is evident in its failure.

Bibliography

Attwell, William. 'Macartney's failed trade delegation to China, 1792-1794', Quartly bulletin of the National Library of South Africa, vol. 66. No. 1, (2012): 25-34.
Byng-Cranmer, JL and Trevor. H. Levere. 'A case study in cultural collision: scientific apparatus in the Macartney embassy to China, 1793', Annals of Science, 38. (1981): 503-525.
Byng-Cranmer, JL 'Lord Macartney's embassy to Peking in 1793 from official Chinese documents', The British Library: University of Hong Kong (1961): 117-183.
Gillingham, Paul. 'The Macartney Embassy', History Today, (November 1993): 28-34.
Gregory, John S. The West and China since 1500, Basingstoke: Palgrave Macmillan, 2002.
Hevia, James L. 'the ultimate gesture of deference and debasement: Kowtowing in China', Past and Present, (2009): 212-234.
Mungello, DE The Great Encounter of China and the West, Plymouth: Rowman & Littlefield Publishers, 2009.
Pritchard, Earl H. 'The Kotow in the Macartney embassy to China in 1793', The Far Eastern Quarterly (1943): 163-202.
Zewi, Yang. 'Western international Law and China's Confucianism in the 19th Century: Collision and integration', Journal of the History of International Law 13 (2011): 285-306.

The Importance Criteria of UNCTAD

There is no denying the fact that, as UNCTAD's mandate has become multidimensional, so its achievements have therefore been of different kinds. The most significant achievements included. a) the agreement on Generalized System of Preferences (GSP) 1971; b) the setting up of the Global System of Trade Preferences among developing Countries (1989); c) negotiation of International Commodity Agreements; d) the establishment of transparent market mechanisms in the form of intergovernmental commodity expert and study groups, involving consumers and producers; e) the negotiation of the Common Fund for Commodities (1989); f) the adoption of the resolution on the retroactive adjustment of terms of Official Development Assistance debt of low-income developing countries; g) the establishment of guidelines for international action in the area of ​​debt rescheduling (1980); h) the Programme of Action for Least Developed Countries for the 1990s and I) the negotiation of convention in the area of ​​maritime transport. In addition to above UNCTAD made some contributions on matters for implementation in other forums. For example, it has contribution in the improvement of the Implementation compensatory facility for export earnings shortfalls of developing countries; the creation of the Special Drawing Rights by IMF; the reduction of commercial bank debt for the highly indebted countries promoted by the World Bank. UNCTAD had also some contribution in the area of ​​code of conduct for the transfer of technology, computerized systems in the area of ​​customs and debt management.

Although for many limitations as I mentioned earlier UNCTAD could not fulfil all expectations but it has tried and still trying with its limited resources to do its work. For the cause of the developing countries the role of UNCTAD should be strengthen. To make it more dynamic and effective some measures should be taken like as follows:

a) The Third World countries should minimize their differences and have to sacrifice their own interest for the sake of other developing countries. It will be easier for UNCTAD to work in a co-operative atmosphere than of conflict.

b) UNCTAD should give emphasis those issues in which it possesses considerable expertise. Here the proposal is not to alter its earlier position, but to focus more strongly on specific matters which are covered little if at all by other organizations. In trade field UNCTAD should give importance on consensus building. As UNCTAD provides a universal forum for policy analysis, so for consensus on trade policy issue it can help to prepare ground for later negotiations within WTO. UNCTAD and WTO should co-operate with each other in the field of international trade. It is encouraging that two organization has already started their co-operation. In their joint meeting held in 8th Oct. 1996 WTO Director General said "the convergence between WTO and UNCTAD was evidenced in regular meetings between the heads of the two organizations, joint research projects, co-ordinated technical assistance and generally a more intense working relationship at all levels of the organizations." As the main functions of WTO are the implementation and negotiation of contractual trading rules and discipline, there is considerable scope for complementarity between WTO and UNCTAD.The policy analysis and consensus building functions of UNCTAD can make essential contribution to the intergovernmental consideration of trade issues to the point where they can be fruitfully negotiated in WTO.

d) In post cold war economic environment, the need for collective action by the Third World countries to meet the evolving challenges is more important than ever. UNCTAD is the only body in the UN which has some scope to deal with global economic issues from a development perspective. UNCTAD should be equipped for that purpose.

e) UNCTAD's monitoring and analytical capacities should be increased sufficiently.

f) Its efficiency in the area of ​​foreign investment, technology transfer, competition policy regarding Multinational Corporation should be strengthening.

g) UNCTAD should prepare its answer for Third World country regarding liberalization and regional groupings.

Since it has been reorganized to make it more efficient there is no need to dismantle it. Because it still serves a primary purpose to achieve international co-operation in solving international problems of an economic nature. And UNCTAD is the only organization in the world which gives the impression of being trade and development in an integrated way which is very important.

Stock Market 101 – What is the S & P 500 and What Does it Represent?

The S & P 500 is a stock market index that consists of 500 large-cap companies from a diverse range of industries. The index is owned and maintained by Standard & Poor's (S & P), which is a division of McGraw-Hill. S & P 500 is part of two larger indices, S & P 1200 and S & P Global 1500.

All of the corporations included in the S & P 500 are traded in the two largest US stock markets – the New York Stock Exchange and the Nasdaq. The 500 corporations in the S & P are seen as leaders in their industries and therefore are among the most commonly watched stocks in the US stock exchange. Some companies included are Exxon Mobile, AT & T, Microsoft and Procter & Gamble.

It was created on March 4, 1957 as an expansion of the pre-existing S & P 90. Advancements in computer technology at the time made the index possible by calculating and disseminating the index in real time. Since its creation, the S & P 500 index is often used as a benchmark to indicate the future of the market and the US economy. At one time, the Dow Jones Industrial Average (DJIA) was the most notorious index for US stocks, but because the DJIA contains only 30 companies, most people agree that the S & P 500 is a better representation of the US market.

The companies that are included in the S & P 500 are selected by the S & P Index Committee. The majority of companies that are included in the index are American based, but there is a small number of international companies that are widely traded in the US In the future, the Index Committee has announced that only US-based companies will be added though. The S & P 500 is a market value weighted index – each stock's weight in the index is proportionate to its market value.

There are two ways that you can invest in the S & P 500. The first is by buying individual shares. The second is by buying shares of an exchange-traded fund (ETF). One form of an ETF is known as SPDRs or Standard & Poor's Depositary Receipts. The average daily volume of trading of SPDRs is the highest of any US stock at over 200 million shares each day. Another form of ETF are iShares S & P 500, which are similar to SPDRs but they include equal shares of all members of the index.

Widely regarded as the best single gauge of the US equities market, this world-renowned index should be watched if you invest. Although the S & P focuses just on the large cap segment of the stock market, it is also an ideal understudy for the total market. The indicies can be used as building blocks for your portfolio creation.

Textiles Exports: Post MFA Scenario Opportunities and Challenges

Introduction

The Multi-Fiber Arrangement (MFA) has governed international trade in textiles and clothing since 1974. The MFA enabled developed nations, mainly the USA, European Union and Canada to restrict imports from developing countries through a system of quotas.

The Agreement on Textiles and Clothing (ATC) to abolish MFA quotas marked a significant turnaround in the global textile trade. The ATC mandated progressive phase out of import quotas established under MFA, and the integration of textiles and clothing into the multilateral trading system before January 2005.

The Agreement on Textiles and Clothing

ATC is a transitory regime between the MFA and the integration of trading in textiles and clothing in the multilateral trading system. The ATC provided for a stage-wise integration process to be completed within a period of ten years (1995-2004), divided into four stages starting with the implementation of the agreement in 1995. The product groups from which products were to be integrated at each stage of the integration included (i) tops and yarns; (Ii) fabrics; (Iii) made-up textile products; and (iv) clothing.

The ATC mandated that importing countries must integrate a specified minimum portion of their textile and garment exports based on total volume of trade in 1990, at the start of each phase of integration. In the first stage, each country was required to integrate 16 percent of the total volume of imports of 1990, followed by a further 17 percent at the end of first three year and another 18 percent at the end of third stage. The fourth stage would see the final integration of the remaining 49 percent of trade.

Global Trade in Textile and Clothing

World trade in textiles and clothing amounted to US $ 385 billion in 2003, of which textiles accounted for 43 percent (US $ 169 bn) and the remaining 57 percent (US $ 226 bn) for clothing. Developed countries accounted for little over one-third of world exports in textiles and clothing. The shares of developed countries in textiles and clothing trade were estimated to be 47 percent (US $ 79 bn) and 29 percent, (US $ 61 bn) respectively.

Import Trends in USA

In 1990, restrained or MFA countries contributed as much as 87 percent (US $ 29.3 bn) of total US textile and clothing imports, whereas Caribbean Basin Initiative (CBI), North American Free Trade Area (NAFTA), Africa Growth and Opportunity Act ( AGOA) and ANDEAN countries together contributed 13 percent (US $ 4.4 bn). Thereafter, there has been a decline in exports by restrained countries; the share of preferential regions more than doubled to reach 30 percent (US $ 26.9 bn) of total imports by USA.

The composition of imports of clothing and textiles by USA in 2003 was 80 percent (US $ 71 bn) and 20 percent (US $ 18 bn), respectively. Asia was the principal sourcing region for imports of both textiles and clothing by USA. Latin American region stood at second position with a share of 12 percent (US $ 2.2 bn) and 26 percent (US $ 18.5 bn), respectively, for textiles and clothing imports, by USA. In most of the quota products imported by USA, India was one of the leading suppliers of readymade garments in USA. Though China is a biggest competitor, the unit prices of China for most of these product groups were high and thus provide opportunities for Indian business.

Import Trends in EU

EU overtook USA as the world's largest market for textiles and clothing. Intra-EU trade accounted for about 40 percent (US $ 40 bn) of total clothing imports and 62 percent (US $ 32.5 bn) of total textile imports by EU. Asia dominates EU market in both clothing and textiles, with 30 percent (US $ 30 bn) and 17 percent (US $ 8 bn) share, respectively. Central and East European countries hold a market share of 11 percent (US $ 11.3 bn) in clothing and 7.5 percent (US $ 4 bn) in textiles imports of EU.

As regards preferential suppliers, the growth of trade between EU and Mediterranean countries, especially Egypt and Turkey, was highest in 2003. As regards individual countries, China accounted for little over 5 percent (US $ 2.8 bn) of EU's imports of textiles and over 12 percent (US $ 12.4 bn) of clothing imports.

In the EU market also, India is a leading supplier for many of the textile products. It is estimated that Turkey would emerge as a biggest competitor for both India and China. However, with regard to unit prices, India appears to be lower than both Turkey and China in many of the categories.

Import Trends in Canada

Amongst the leading suppliers of textiles and clothing to Canada, USA had the highest share of over 31 percent (US $ 8.4 bn), followed by China (21% – US $ 1.8 bn) and EU (8% – US $ 0.6 bn) . India was ranked at fourth position and was ahead of other exporters like Mexico, Bangladesh and Turkey, with a market share of 5.2 percent (US $ 0.45 bn).

Potential Gains

It may be noted that clothing sector would offer higher gains than the textile sector, in the post MFA regime. Countries like Mexico, CBI countries, many of the African countries emerged as exporters of readymade garments without having much of textile base, utilizing the preferential tariff arrangement under the quota regime. Besides, countries like Bangladesh, Sri Lanka, and Cambodia emerged as garment exporters due to cost factors, in addition to the quota benefits.

It may be said that countries like China, USA, India, Pakistan, Uzbekistan and Turkey have resource based advantages in cotton; China, India, Vietnam and Brazil have resource based advantages in silk; Australia, China, New Zealand and India have resource based advantages in wool; China, India, Indonesia, Taiwan, Turkey, USA, Korea and few CIS countries have resource based advantages in manmade fibers. In addition, China, India, Pakistan, USA, Indonesia has capacity based advantages in the textile spinning and weaving.

China is cost competitive with regard to manufacture of textured yarn, knitted yarn fabric and woven textured fabric. Brazil is cost competitive with regard to manufacture of woven ring yarn. India is cost competitive with regard to manufacture of ring-yarn, OE yarn, woven OE yarn fabric, knitted ring yarn fabric and knitted OE yarn fabric. According to Werner Management Consultants, USA, the hourly wage costs in textile industry is very high for many of the developed countries. Even in developing economies like Argentina, Brazil, Mexico, Turkey and Mauritius, the hourly wage is higher as compared to India, China, Pakistan and Indonesia.

From the above analysis, it may be concluded that China, India, Pakistan, Taiwan, Hong Kong, Brazil, Indonesia, Turkey and Egypt would emerge as winners in the post quota regime. The market losers in the short term (1-2 years) would include CBI countries, many of the sub-Saharan African countries, Asian countries like Bangladesh and Sri Lanka.

The market losers in the long term (by 2014) would include high cost producers, like EU, USA, Canada, Mexico, Japan and many east Asian countries. The determinants of increase / decrease in market share in the medium term would however depend upon the cost, quality and timely Review of Indian Textiles and Clothing Industry The textiles and garments industry is one of the largest and most prominent sectors of Indian economy, in terms of output, foreign exchange earnings and employment generation. Indian textile industry is multi-fiber based, using delivery. In the long run, there are possibilities of contraction in intra-EU trade in textile and garments, reduction of market share of Turkey in EU and market share of Mexico and Canada in USA, and thus provide more opportunities for developing countries like India.

It is estimated that in the short term, both China and India would gain additional market share proportionate to their current market share. In the medium term, however, India and China would have a cumulative market share of 50 percent, in both textiles and garment imports by USA. It is estimated that India would have a market share of 13.5 percent in textiles and 8 percent in garments in the USA market. With regard to EU, it is estimated that the benefits are mainly in the garments sector, with China taking a major share of 30 percent and India gaining a market share of 8 percent. The potential gain in the textile sector is limited in the EU market considering the proposed further enlargement of EU. It is estimated that India would have a market share of 8 percent in EU textiles market as against the China's market share of 12 percent.

Review of Indian textiles and Clothing Industry

The textiles and garments industry is one of the largest and most prominent sectors of Indian economy, in terms of output, foreign exchange earnings and employment generation. Indian textile industry is multi-fiber based, using cotton, jute, wool, silk and mane made and synthetic fibers. In the spinning segment, India has an installed capacity of around 40 million spindles (23% of world), 0.5 million rotors (6% of world). In the weaving segment, India is equipped with 1.80 million shuttle looms (45% of world), 0.02 million shuttle less looms (3% of world) and 3.90 million handlooms (85% of world).

The organised mill (spinning) sector recorded a significant growth during the last decade, with the number of spinning mills increasing from 873 to 1564 by end March 2004. The organised sector accounts for production of almost all of spun yarn, but only around 4 percent of total fabric production. In other words, there are little over 200 composite mills in India leaving the production of fabric and processing to the decentralised small weaving and processing firms. The Indian apparel sector is estimated to have over 25000 domestic manufacturers, 48000 fabricators and around 4000 manufacturer-exporters. Cotton apparel accounts for the majority of Indian apparel exports.

Textiles and Garments Exports from India

The share of textiles and garments exports in India's total exports in the year 2003-04 stood at about 20 percent, amounting to US $ 12.5 billion. The quota countries, USA, EU and Canada accounted for nearly 70 percent of India's garments exports and 44 percent of India's textile exports. Amongst non-quota countries, UAE is the largest market for Indian textiles and garments; UAE accounted for 7 percent of India's total textile exports and 10 percent of India's garments exports.

In terms of products, cotton yarn, fabrics and made-ups are the leading export items in the textile category. In the clothing category, the major item of exports was cotton readymade garments and accessories. However, in terms of share in total imports by EU and USA from India, these products hold relatively lesser share than products made of other fibers, thus showing the restrain in this category.

Critical Factors that Need Attention

Though India is one of the major producers of cotton yarn and fabric, the productivity of cotton as measured by yield has been found to be lower than many countries. The level of productivity in China, Turkey and Brazil is over 1 tonne / ha., While in India it is only about 0.3 tonne / ha. In the manmade fiber sector, India is ranked at fifth position in terms of capacity. However, the capacity and technology infusion in this sector need to be further enhanced in view of the changing fiber consumption in the world. It may be mentioned that the share of cotton in world fiber demand declined from around 50 percent (14.7 mn tons) in 1982 to around 38 percent (20.12 mn tons) in 2003, while the share of manmade fiber has increased from 44 percent (13.10 mn tons) to around 60 percent (31.76 mn tons) over the same period.

Apart from low cost labour, other factors that are having impact on final consumer cost are relative interest cost, power tariff, structural anomalies and productivity level (affected by technological obsolescence). A study by International Textile Manufacturers Federation revealed high power costs in India as compared to other countries like Brazil, China, Italy, Korea, Turkey and USA. Percentage share of power in total cost of production in spinning, weaving and knitting of ring and OE yarn for India ranged from 10 percent to 17 percent, which is also higher than that of countries like Brazil, Korea and China. Percentage share of capital cost in total production cost in India was also higher ranging from 20 percent to 29 percent as compared to a range of 12 to 26 percent in China.

In India, very few exporters have gone in for integrated production facility. It is noted that countries that would emerge as globally competitive would have significantly consolidated supply chain. For instance, competitor countries like Korea, China, Turkey, Pakistan and Mexico have a consolidated supply chain. In contrast, apart from spinning, the rest of the activities like weaving, processing, made-ups and garmenting are all found to be fragmented in India. Besides, the level of technology in the Indian weaving sector is low compared to other countries of the world. The share of shuttle less looms to total loomage in India is 1.8% as compared to Indonesia (10%), Bangladesh (10%), Sri Lanka (12%), China (14%) and Mexico (29%).

The supply chain in this industry is not only highly fragmented but is beset with bottlenecks that could very well slow down the growth of this sector. As a result the average delivery lead times (from procurement to fabrication and shipment of garments) still takes about 45-60 days. With international lead delivery times coming down to 30-35 days, India needs to cut down the production cycle time substantially to stay in the market. Besides, erratic supply of power and water, availability of adequate road connectivity, inadequacies in port facilities and other export infrastructure have been adversely affecting the competitiveness of Indian textiles sector.

Conclusions

It is believed the quota regime has frozen the market share, providing export opportunities even for high cost producers. Thus, in the free trade regime, the pattern of imports in the quota countries would undergo changes. The issues that would govern the market share in the post quota regime would eventually be productivity, raw material base, quality, cost of inputs, including labour, design skills and operation of economies of scale.

It is believed that quotas, by limiting the supply of goods have kept export prices artificially high. Thus, it is estimated that there would be price war in the post quota regime, with competitive price cuts. The price and quantity effects would depend on the efficiency in production process, supply chain management and the price elasticity of demand.

Due to the expected fall in prices, developing countries with high production cost have little choice but to compete head-on with the biggest low cost suppliers. In this process, it is presumed that there would be better resource reallocation in these economies.

It is assumed that quota restrictions would continue beyond 2005 in various forms. It is also widely recognized that removal of quota may not directly provide easy and unrestricted access to developed country markets. There would be non-tariff barriers as well. Standards related to health, safety, environment, quality of work life and child labour would gain further momentum in international trade in textiles and clothing.

Strategies and Recommendations

Cost competitiveness in Indian garments sector has been restrained by limited scale operations, obsolete technology and reservation under SSI policies. While retaining its traditional cost advantages of home grown cotton and low cost labour, India needs to sharpen its competitive edge by lowering the cost of operations through efficient use of production inputs and scale operations. Besides, there are needs for rationalization of charges, levies related to usage of export logistics to remain cost competitive.

As fallout to the quota regime, there would be consolidation of production and restriction on supplying countries, which would necessarily mean improved scale operations. Indian players should also integrate to achieve operating leverage and demonstrate high bargaining power.

It is reported that Chinese textile firms have already invested heavily to expand and grab huge market share in the quota free world. In India, organised players in this sector would require huge investments to remain competitive in the quota free world. These players need to expand and integrate vertically to achieve scale operations and introduce new technologies. It is estimated that the industry would require Rs. 1.5 trillion (US $ 35 billion) new capital investment in the next ten years (by 2014) to lap the potential export opportunities of US $ 70 billion. It is estimated that USA and EU together would offer a market of US $ 42 billion for Indian textiles and garments in 2014.

Technology would play a lead role in the weaving and processing, which would improve quality and productivity levels. Innovations would also be happening in this sector, as many developed countries would innovate new generation machineries that are likely to have low manual interface and power cost. Indian textile industry should also turn into high technology mode to reap the benefits of scale operations and quality. Foreign investments coupled with foreign technology transfer would help the industry to turn into high-tech mode.

Internationally, trading in textile and garment sector is concentrated in the hands of large retail firms. Majority of them are looking for few vendors with bulk orders and hence opting for vertically integrated companies. Thus, there is need for integrating the operations in India also, from spinning to garment making, to gain their attention. This would also bring down the turn around time and improve quality. Indian players should also improve upon their soft skills, viz., Design capabilities, textile technology, management and negotiating skills.

Garment manufacturing business is order driven. It would be difficult for the players to keep the workforce full time, even in lean season. This calls for changes in contract labour laws.

Logistics and supply chain would also play a crucial role as timely delivery would be an important requirement for success in international trade. The logistics and supply chain management of Indian textile firms are relatively weak and needs improvement and efficiency. China has already created a world class export infrastructure. Given the volume of projections for exports by India, it may be necessary to create additional export infrastructure, especially investment for modernization of ports. In addition, India needs to invest for creating brand equity, supply chain management and apparel industry education.

To sum up, the ability of Indian textile industry to take advantage of quota phase-out would depend upon their ability to enhance overall competitiveness through exploitation of economies of scale in manufacturing and supply chain. The need of the hour therefore is to evolve a well chalked out strategy, aimed at improvement in the levels of productivity and efficiency, quality control, faster product innovation, quick response to changes in consumer preferences and the ability to move up in the value chain by building brand names and acquiring channels of distribution so as to outweigh the advantages of competitors in the long run.

Source: Export-Import Bank of India, India.

Profit Sharing Plans & Phantom Stock Plans Explained

Incentive Mechanisms that do not Transfer Stock Ownership .

Sharing ownership of a small company with the employees can create numerous conflicts. It is often wise to look to other incentive mechanisms that reward employees for increasing company profit without sharing ownership. Two such alternatives are profit sharing plans and phantom stock plans.

Profit Sharing Plan.

A profit sharing plan is one that provides annual employer contributions (which may be zero), and allocation to employee's accounts according to a formula. The amount of the employer's contribution may be specified by a formula or left to the employer's discretion (possibly within specified limits).

A profit sharing plan can be a "qualified plan." A qualified plan offers tax advantage in that contributions to the plan are currently deductible by the employer. The employee's tax obligation is deferred, however, until funds are distributed from the plan to the employee. To qualify, the plan must meet numerous requirements. There can be no discrimination in coverage or vesting. There are also disclosure and reporting requirements.

Contributions to a non-qualified plan are currently deductible by the employer and currently included in the employee's income. The employee, however, can have immediate access to the funds.

Phantom Stock Plan.

Phantom stock plans are designed to give the employee the same economic result as ownership of company stock. The employee, however, does not actually have an ownership interest or the non-economic rights that come with an ownership interest.

Under a phantom stock plan, an employee's bonus is immediately converted to phantom shares of stock. The phantom shares track the value of the underlying stock. The value of the phantom shares will increase each time there is an increase in the value of the underlying stock. At the time of distribution, the employee will receive cash equal to the liquidated value of the shares in his account. If the underlying stock is not traded on an established market, the value can be determined through a pre-arranged formula.

For example, assume GM's employee would receive a bonus of $ 10,000 in year one. The value of GM shares is $ 100 per share. Under a phantom stock plan, employee would receive 100 phantom shares in year one ($ ie 10,000 bonus / $ 100 per share). The plan would require distribution to the employee in a later year (eg year five). If the value of the shares was $ 200 in year five at the time of distribution, employee would receive $ 20,000.

Generally, a phantom stock plan will be a deferred compensation plan. This means that the employee would not be taxed until he actually receives a cash distribution. Assuming this is an "unqualified" plan, the employer does not receive a deduction until there is an actual distribution to the employee.

Employers can receive a current deduction even though the employee's tax obligation is deferred if the plan is qualified. To be qualified, the plan must comply with numerous requirements. These requirements relate to who must be covered, when are benefits vested, funding, reporting and disclosure obligations.

Crossing the Mangrove by Maryse Conde

"Crossing the Mangrove," by Maryse Conde is set in 1986 on the Caribbean island of Guadeloupe. The story is told through the eyes of the many inhabitants of the island who are uncomfortable with the arrival of a strange foreigner who has come to live amongst them. Francisco Alvarez-Sanchez mysterious story invokes themes of past and present Caribbean life and stories from the villagers are combined to connect the fascinating tale. The novel reflects the Creolite diversity of the inhabitants of Guadeloupe.

In "Crossing the Mangrove," several recurring themes prominent in Caribbean life are evident. Colonization and class perspective are amongst the more dominant themes. Guadeloupe was colonized by France in the 17th century and, like many Caribbean islands, Guadeloupe became a slave trading center. A story told by the strange recluse Xantippe shows how colonization ideals of the past are still present on the island today. As a young man Xantippe was happy go lucky. This gave the French ruled gendarmes (police) reason to interrogate him. They insinuated that he had enemies and burned his cabin down. Xantippe describes how he lost everything and his life was changed for the worse, forever. This activity is reminiscent of Cesaire's equation: colonization = "thingification."

Class perspective exists on the island of Guadeloupe but to a lesser extent than in the previous novels. The Ramsaraz and Lameanes families are upscale. They own land for farming and flower nurseries. They have large houses and they drive French built Peugeots. Although a peasant and servant population exists it is not featured prominently in the novel. Instead, something of a middle class society comprises the majority class of the characters. Moise the mailman, Emile Etienne the historian, and Lucien Evarist the writer are amongst a cast of Francis middle class friends. But it is assumed that Francis belongs to the upper class due to his tales of travel and adventure, his ability to purchase the aging Alexis estate, and daily truck deliveries of household appliances such as a TV set, a refrigerator, a stereo set. The inhabitants of Riviere au Sel are envious of this and question his occupation and work ethic as a writer. They ask, "Was a writer a do-nothing, sitting in the shade for hours on his veranda, staring at the ridge of mountains for hours on end while the rest sweated it out under the Good Lords hot sun." One must get the sense that the class perspective presented in "Crossing the Mangrove," is a good representation of society in Guadeloupe today.

Strong themes that are current to Guadeloupe society are that in a male dominated society women are forced into the practice of arranged marriages. But many of the women of Riviere au Sel have contempt toward their estranged husband's and their fathers who make the unusual arrangements. Forced marriages are common and based in tradition in this island society but oddly enough explanations are not provided as to why a parent would want to marry off their young and attractive daughters to older men with dubious intentions. What is the motivation of the parents who take part in this practice? Yes, these men are wealthy and the young women will live in comfort, but are the parents receiving some compensation for their generous contribution to the men? The young women all seem to come from families that are well established. Do the parents take into consideration the trauma and unhappiness their daughters will suffer?

In Riviere au Sel, Dinah's father arranged for her to marry Loulou. Dinah was in favor of this but later became repulsed by her husband. Dinah said, "It's been years since Loulou slept in my bed. Once darkness has fallen I lock my door and curl up like a fetus between my sheets." Rosa, of Indian decent, is forced to marry Sylvester; the practice of arranged marriages is also common in India where a social caste system still exists. In her passage in the novel she wants it to be known that, "When they married me off to Sylvester Ramsaran, nobody asked for my opinion" and "Sylvester hurt me. He tore me."

Just as her Indian mother before her, Vilma's marriage was to be arranged. Vilma's father Sylvester, arranged for her to marry a man named Marins Vindrex. But Vilma revolted by running away from home saying, "Marins Vindrex. But I do not love him." In the ultimate act of vengeance against her father she took up with the hated Francis Sanchez. Now in a position to forever poison the appalling marriage to the dreadful Vindrex, she allowed herself to become impregnated by Francis. Sylvester is defenseless to act while the questionable motives of Francis intensify amongst the villagers of Riviere au Sel who are already suspicious of him.

Conde connects the vinettes together in "Crossing the Mangrove," by establishing the relationship each villager had with Francis Sanchez as the story progresses. Every member has a strong opinion or emotion about Francis. Some of those thoughts are positive and some are negative. Central to the story is the wake of Francis which is held in Riviere au Sel. It rains a lot in Riviere au Sel and on the Thursday afternoon of Francis wake, it was no different. The rain seemed to act on behave of Mother Nature in cleansing the congregation of friends, enemies, and former lovers who gathered to witness Francis swan song.

Moise, the mailman is the first character that Conde provides us with insight into the relationship he had with Francis. Oddly enough there was some speculation in the community that there may be a homosexual relationship involving Moise and the great womanizer Francis Sanchez. "There were wicked sneers. There was something fishy about that friendship and the two men were Makoumeh! (Homosexuals). Adding even more to the oddity is the fact that many considered Moise a" Misgotten freak, "and 'ugly.' These allegations aside, the two were friends but the friendship was awkward and unusual. One moment we see Moise cradling Francis in his arms when something upset Francis. The next moment we see Francis accusing Moise of stealing money from his mysterious trunk.

But Francis also had his enemies. Both Loulou Lameaulnes and Sylvester Ramsaran have similar reasons for despising Francis. Francis had sexual affairs with their daughters impregnating both of them. To these two men Francis was a villain for his indiscretions but in both cases it was the young women who approached Francis. Both women hated their fathers and hated the lives they led under their father's roofs. Perhaps the fathers should have blamed themselves for forcing their daughters out of their arms and into the bed of Francis. Vilma and Mira both shared the same bed with Francis and both attended his wake. They did not speak to each other. Oddly, Loulou and Sylvester were also in attendance and both felt a strong sense that in Francis death justice had been served.

The congregation exited the wake with the sober realization that they had just mourned for a man that they hardly knew. Francis had that ability. People were drawn to him but they did not know why. The novel ends with the inhabitants of Riviere au Sel raising the same ironic questions about Francis as when they had first laid eyes on him. "Who was Francis Sanchez? And subsequently," Who was this man that chooses to die amongst us?

Stock Option Credit Spreads – A Low-Risk Monthly Income Technique Used by the Pros

Despite their reputation as a speculative tool for aggressive traders, professional investors also use stock options as a conservative way to gain substantial monthly income – typically in the neighborhood of up to 8-10% per month. If we can produce such a rate of return every month irrespective of which way the market goes, and do so with defined, controllable risk, we are clearly talking about a very nice neighborhood.

Credit Spreads

The vehicle many pros use to obtain a stream of monthly income no matter which way the market goes is the Option Spread, the simultaneous purchase and sale of a pair of Call options (or of Put options) with different Strike Prices that expire the same month .

When we collect more for the option we sell than we pay for the one we buy, the net amount we collect for the spread is our net Premium, and it represents our income from the trade. This kind of spread is referred to as a Credit Spread, and is an ideal technique for generating a recurring income stream.

Why They Can Be So Attractive for Seeking Reliable Monthly Income

  • Credit Spreads are non-directional; the investor can profit no matter which way the market goes.
  • They represent a conservative investment approach. Trade risk is defined and controllable. This conservative option position is appropriate even for retirement accounts.
  • An option Credit Spread requires much less capital than the corresponding number of shares of the underlying security. Consequently, collecting spread premiums every month can represent a large return on investment (ROI).
  • The total provisional profit on each credit spread is paid to the investor up-front. The profit is fully realized at option expiration.
  • Uniquely, time is on the side of the investor in credit spreads. The mere passage of time works in favor of the investor.
  • If you have established your spread far enough away from the current value of the underlying or index, so that the underlying security's price does not reach your spread positions, the premium will go to zero at expiration no matter what price gyrations occur with the stock before expiration. The option expiring worthless is the desired perfect outcome for a credit spread.

Establishing a Credit Spread

Here's how this technique can act as a monthly income "machine," using either options on individual stocks, or options on the broader indices.

The three key elements of every option spread are: Strike Price, Premium, and Expiration Date. Thus selecting optimal values ​​for these variables – your entry criteria – is what the investor does to maximize the likelihood of a successful trade.

STRIKE PRICE: Every option has a Strike Price, the predetermined price at which the buyer of a specific future month's Call options has the right to buy a fixed number of shares of the underlying stock. (The owner of Put options has the right to sell the underlying stock at the Strike Price of his option). You want your selected Strike Price to be far enough away from the current price of the underlying stock that it is unlikely the stock price will reach this level prior to expiration of the option.

EXPIRATION DATE: The exercise of the right to buy or sell the underlying stock or index at the Strike Price ends on the Expiration Date of the option, usually the third Friday of each month.

PREMIUM: This is simply the price the option is trading at when you buy or sell it. If you are buying an option, you are paying the premium; if you are selling the option, you collect that premium. As noted earlier, when you establish a credit spread you are simultaneously selling one Strike Price option, and buying a different Strike Price option that is more distant from the current market value of the underlying stock or index. The difference between the two premiums is the net premium and is the "income" credited to the seller of the credit spread when he establishes the position.

Example Credit Spread Trade

Assume XYZ stock is trading at $ 85 on March 4.

The March expiration option (expires March 18), with a Strike Price of $ 100, is currently trading at thirty-two cents ($ 0.32).

The March expiration option with a Strike Price of $ 105 is currently trading at twelve cents ($ 0.12).

We sell 1 March 100 Call and collect $ 0.32, and simultaneously buy 1 March 105 Call for $ 0.12. Net, we have collected $ 0.20 per underlying share (.32 -.12 = .20).

Since each option represents 100 shares of the underlying XYZ stock, we collect $ 20 premium altogether ($ 0.20 x 100 underlying shares = $ 20).

This then is our position: "short" a March 100 call and "long" a March 105 call for a net premium of $ 20 credited to our account.

We have not "spent" any money at all, but the exchange rules require that we have money in our account (margin) when we place the trade. The margin requirement for this trade is $ 500.

So long as the underlying XYZ stock remains below $ 100 (the Strike Price of our short Strike Price option), both options will expire worthless, which is exactly what we want to happen.

Result: we originally sold the credit spread for $ 20, and the offsetting "buy" transaction never takes place, since the option price at expiration has fallen to zero. So we now realize, ie bank, the entire $ 20 (less commission cost).

Our return on margin employed is 20/500 = 4.0% for just the two weeks we held the position!

Obviously, with $ 5,000 available in our account for margin, we could do 10 of these spreads, and our 4% two-week return would be $ 200.

An analogous trade could have been done using Puts with Strike Prices of $ 70 and $ 65, respectively. The profit outcome would be identical so long as XYZ final price on option expiration day was above $ 70.

Here's dessert! A credit spread investor can, and often does, employ BOTH a call credit spread and a put credit spread on the same underlying. So long as the stock on expiration day is below the call spread Strike Prices and above the put spread Strike prices, the investor keeps both premiums … and at option-friendly brokerages, margin is only required on one of the spreads since it is obviously impossible for XYZ to reach both the Calls and the Puts at expiration.

Note that this doubles the potential ROI because the margin "expense" is the same for the two Spreads as it would be for just one. The trade establishing both a Call spread and a Put spread on the same underlying security is called the "Iron Condor."

Final Considerations: Trade Entry Criteria and Trade Protection

The maximum possible loss on these positions is the difference between the two Strike Prices used. In practice, however, the prudent investor will manage his trade to assure exiting from a spread going the wrong way long before the market price of the underlying stock or index reaches this maximum risk point.

Credit Spreads, properly established, will be successful trades a very large percentage of the time (one can use entry criteria that provide mathematical probability of 90% +). Since the absolute profit amount on any one trade is relatively modest, it is essential not to allow the inevitable losing trade to be a large one. The Credit Spread investor should always make use of contingent stop loss orders to protect every position "just in case."

The criteria for identifying which credit spreads are especially attractive in any given month involve a number of considerations including (1) selected Strike Prices the right% distance from the current market, (2) the current trend of the underlying security, (3) the capital available in your account for margin, (4) eliminating or minimizing "headline risk," etc. Taken together, these will represent your "trade entry criteria," and they can be set to produce 90% or more probability of success.

The further the Strike Price is from the current underlying stock or index price, the less likely it is to be reached by expiration (greater probability of success). But the further that distance is, the smaller will be the premium.

The disciplined credit spread investor should always choose his credit spreads with predetermined, specific trade entry criteria in mind – not on the basis of hunches. That said, as with any kind of investing, the other half of successful market participation is managing the trade, ie, limiting risk in case the position goes the wrong way.

However, once the position is established, the deck is clearly stacked in the favor of the Credit Spread investor because the passage of time works for him … option premiums inexorably decline (as you want them to) as time passes. This option premium time-decay represents a very important advantage to the investor employing Credit Spreads to generate a monthly income stream.

Importance of Equity Research in Today's Equity Markets

Talk of equity shares or investing in the equity market and most laymen would shy away considering it to be a very risky domain and associate it with gambling of sorts and high risk associated while investing in it. Let's delve a bit further to understand the actual reasons why investing in equity shares or in equity markets is perceived as risky business by the common man. The financial meaning of the word equity signifies a stock or any other security representing an ownership of interest. Equity markets are in general volatile due to its direct relation with many other local and global dynamics involved. Thus a better understanding by means of equity research will allow us to have better insight over the fluctuations of the equity market and aid in the process of achieving desired financial objectives.Thus equity research bears paramount importance and findings by equity research analysts is carefully followed up by all stake holders right from large companies to individual investors who invest a part of their capital in the equity market.

Equity research involves carrying out critical analysis to evaluate the fair value of stocks owned by a particular company. On a broader role it is also used to signify the possibility of growth or decline in share price of the company. It is a known fact that growth or decline in the share price is driven by the probable operational and financial performance of the company in a few years and this forms the analytical backbone on which research analysts take decisions. Also since equity analysts meet the management of companies they know the real picture of affairs in the company and they are also in regular informal briefings with other research analysts which helps them to be in a position to prudently recommend a position of the company. These findings by them is what would enable them to observe patterns regarding growth and decline of a particular company and their recommendations would be sought after by investors at large to ensure their investment objectives are met.

With growing volatility in equity markets, decision makers depend upon equity research analysts who excel at preparing premium equity research reports to estimate value of equity shares of a particular company, as well as try & decipher the probable future course of its fair price after studying trailing equity research report patterns. Along with the demand of quality equity research reports there has also been a growing demand of equity analysts who are skilled to evaluate company fundamentals thereby guiding the investor on his position with the stock of the company.

Using the tools hence premium of equity research reports and skills of a Competent research analyst the investor is much better Armed to make more prudent and Informed investment decisions in the equity market . Equity Investment when done in a systematic manner along with research recommendations can be considered as good calculated risk which has proven to return many fold for a good number of investors.

Does Warren Buffett Have Asperger's Syndrome and Does This Make Him Financially Gifted?

Before I tell you about Warren Buffett, I first need to lay some groundwork for the article because there are some very common misconceptions about Asperger's Syndrome, and in this particular case, I mean it as a compliment to Warren Buffett's extraordinary abilities to think that he has this.

Asperger's Syndrome (sometimes shortened to "aspergers" or "AS") is the name now used for a mild form of autism that is thought to affect as many as 1 out of 300 people. People who have Asperger's Syndrome are often affectionately referred to as "aspies" by those who love them. Most experts do not consider Aspergers to be a "mental disorder" but rather an uncommon neurological phenotype. Aspies often come across as "eccentric." They are sometimes deemed to be "oddballs" by others but many blend in so well in society that no one would ever guess they have aspergers. It just depends on the person.

Many aspies have a very high IQ's. In fact, some exhibit "off the charts" intelligence. The most famous aspies throughout history have mostly been highly gifted artists and scientists such as Mozart and Einstein or technical people like Bill Gates. However, aspies can also be financial geniuses because many are very good with numbers and possess other traits that can make them exceptionally good at understanding business and picking stocks (see below).

Warren Buffett, the most famous investor the world has ever known and certainly considered to be quite eccentric, is widely rumored to have aspergers or some other closely related form of mild autism. This of course is a "pop diagnosis" because, to my knowledge at least, there has never been any official announcements of Warren Buffett being officially diagnosed with aspergers. At the very least, however, he demonstrates many of the traits and quirks that are commonly associated with aspies.

Many aspies are highly resistant to change, especially in their personal lives. It is quite interesting that one of the richest men in the entire world still lives in a very humble home in Omaha Nebraska, the same home he has lived in since 1958! He eats at the same restaurant almost every day and orders the same rather bland food almost every time. Most of his day, every day, is spent reading financial reports and periodicals and he very seldom varies from this routine. In fact, he has fixed routines and does not like these to be changed. He considers them to be "distractions" from his ability to work.

People with Asperger's Syndrome usually have some problems interacting socially with other people. They also often have some inner-personal emotional issues with the people they they are closest to. They really are not "anti-social" as some people assume because they do like to be social sometimes (just not all the time) and they do seek out close bonds with family and friends. However, they do often struggle in this department.

Many of those who have worked with Warren Buffett over the years have commented on how odd he is and how he can sometimes blurt out "inappropriate" statements. They sometimes comment on his lack of other social graces. Buffett has freely admitted in interviews how socially awkward he was when he was young. Just the thought of standing up in front of people and talking made him want to throw up. He was not very successful in the girlfriend department either and many classmates considered him a "smarty pants" and hard to get along with. However, as a young man, Buffett discovered Dale Carnegie's book, "How To Win Friends and Influence People," and he put it to the test in his real life. He was quite impressed with the results and later took Dale Carnegie's leadership training course. Buffett credits this course to his success in business and in other aspects of his life. He proudly displays his certificate of completion in his office but does not display his college diplomas! That should tell you how much he values ​​his Dale Carnegie training.

Regarding his abilities with interpersonal emotional issues, Warren Buffett's family, including his deceased first wife and his son, have made public statements about how difficult it is and was to connect with him emotionally. It is quite clear that he loves his family very deeply but expressing this seems to be more of an issue than with most people.

There are many other traits that Warren Buffett exhibits too that are known traits for mild autism. It is well known that he can be painfully honest – some say "honest to a fault." Although he usually wears a business suit, he is often disheveled, As a child, he had some very unusual interests. He would read toy railroad train catalogs for hours, roll pennies down the bath tub and time them over and over again, record the license plates of passing cars, memorize unusual facts, and sit and stare for hours at a time.Even today, he still has some very unusual "hobbies" such as spotting the square roots and cube roots of large numbers on license plates. It has been pointed out by experts that these are very "aspie-like" traits.

It is easy to see how some of Warren Buffett's traits that could be considered to be asperger-like have helped him to be the extraordinarily gifted investor that he is. For starters, he has the uncanny ability to hyper-focus for very long periods of time and he can do this on subjects that would bore most people to death. Plus, he has has continued to do this for years. This hyper-focus is just not a trait that can be duplicated by most people no matter how hard they try and it is a known aspie trait.

"Fluid intelligence," which I personally believe Warren Buffet likely has, is a special kind of intelligence that has been shown to be present in highly intelligent aspergians. It is a true gift and allows one to see connections between topics that most people, even intelligent people, can not see. It also allows a person to very easily recognize patterns and trends. I believe this "fluid intelligence" may be another critical key to why Buffett is such a talented investor and why it is very difficult to truly imitate him.

Warren Buffett does not seem affected by the same "peer pressure" that most investors are subject to. In fact, he seems to pride himself on being different and bucking Wall Street paradigms. He does not seem to much care if he is different. This is very much an aspie trait that I believe has allowed him to amass a fortune by developing his own very unique and very successful style of trading which has evolved over the years to accommodate his ever increasing amounts of wealth.

Most aspies develop what is usually termed "special interests" which are intense interests in subjects that are esoteric and / or unusual. Aspies will go to great lengths to learn absolutely everything there is to know on their special interest subjects. Often times they have a genius level savant ability in their special interest. These usually start in childhood and Warren Buffett's interest in making money and the financial world certainly started in childhood. Further, he continued to pursue this special interest with an intensity that is very seldom seen in other individuals.

In interviews, Warren Buffett himself has said that he thinks he is "wired differently" than most people. From my research, I agree with him and I believe he demonstrates many traits that are common in those who have been diagnosed with Asperger's Syndrome. I also believe that these very special traits are the reason he is so financially gifted. The human race is quite lucky to have these rare individuals come along ever so often. Given all that he has taught other investors and the enormous donations to charity that he has recently so generously given, he has become one of the most influential people of all time and I believe will continue to make a positive impact for many generations to come.