Hedge funds are investment vehicles that pool investors' money and invest in a variety of financial instruments. The principal differences between a hedge fund and a mutual fund are (1) that hedge funds only accept investments from a limited number of investors to avoid being regulated like a mutual fund - this limit is usually 100 investors or less, (2) because of this investor limit, the investors in hedge funds are not public or retail investors but very wealthy individuals or institutional investors like banks, insurance companies, pension funds, and college and university endowment funds, and (3) hedge funds offer a wide spectrum of investments including investments in illiquid securities and interests, sophisticated strategies that capitalize on directional bets on the market or segments of the market (such as capitalizing on a declining market by shorting stocks), and sophisticated and often complex strategies to exploit inefficiencies or perceived inefficiencies in the pricing of securities. Also, unlike open-end mutual funds, investors in hedge funds usually cannot redeem their investments at any time, but must comply with the hedge fund agreements as to when the investors can request liquidity.

During the recent financial crisis, the criticism of hedge funds was principally directed at their leverage, and the effects of their de-leveraging. That is, hedge funds until recently could borrow funds from banks based in the assets in the hedge fund. Thus, a bank might lend a few to several times the actual invested amount in a hedge fund. The hedge fund managers would then invest that borrowed money along with the invested funds to enhance returns. The borrowed money would be paid back to the bank plus a fixed interest rate, and if the hedge fund earned a return in excess of what it had to pay the bank, any excess return over the cost of the bank debt redounded to the hedge fund investors and managers. However, leverage of a few to several times the invested capital can and did lead to swift and dramatic losses if the hedge fund's strategies are wrongly positioned for the moves of the market. In that event, which did occur during the volative market moves of 2008, the banks usually will call in some portion of the loaned funds to reduce the bank's risk of repayment. These call-ins of bank debt are akin to margin calls on a retail investor. The calling in of loans for repayment in the hedge fund industry is usually not a problem unless it is done on a large scale, and then hedge funds are forced to liquidate assets to raise cash to repay the banks. If many hedge funds in the same market niches are required to repay the banks at approximately the same time, then the sudden flood of sell orders on assets in that market niche can quickly become a death spiral on assets values when there are few buyers and lots of sellers.

If major financial institutions are also holding those types of assets on their books at the time of massive selling by hedge funds, then the values of the financial institutions' assets suffers the same precipitous decline as the value of those assets on the books of the hedge funds. That is what happened in the mortgage-backed securities market and the structured products market this year, and caused many large financial institutions to become technically insolvent because their asset values dropped below their aggregate liabilities. Many hedge funds failed during this period of time, leaving their investors with claims of just pennies on the dollar.

Can this leverage risk be attenuated with regulation, and is that beneficial to the economy at large? The risk of over-leveraging could be addressed by the SEC simply prohibiting leverage beyond certain ratios. However, the SEC does not know the optimal level of leverage for any particular assets class. If the SEC regulated in this area, it would be guessing at the right ratios, when the ratios appropriate in any given situation might differ and change over time. For instance, should real estate assets be leveraged at 3-to-1 or 1-to-1, and that might depend on the interest rates in the economy and the general level of financing availability. If the SEC is guessing on real estate assets, what about real estate investment trusts, mortgage-backed securities, or publicly-traded debt instruments on automobile companies? Since no regulator is going to know either what is beneficial to the hedge fund's investors nor what is beneficial for the economy either, it is most likely best for the SEC to not regulate in this area. The SEC or any regulator is likely to do more harm than good and chill or prohibit value-enhancing voluntary transactions among financial actors.

Hedge funds are managed usually under the 2-and-20 rule, which is that hedge fund managers get a 2% management fee each year on committed capital, and they receive 20% of the profits of the fund (known as the “carried interest” or the “carry”) once a certain rate of return has been earned for the investors (known as the “hurdle rate”). Sometimes the management fee is offset against the success fee (the 20%). Aside from Congress considering taxing the 20% carry at ordinary income rates - it is currently taxed at a capital gain rate - does the regulation of fees confer any benefits to investors or to the economy at large? The answer here is clearly no; these sophisticated investors are on an equal footing with the hedge fund managers and can easily protect their own interests. They can ask for that information before investing and do not need the protection of the securities laws to provide an effective mechanism for establishing their rights.

The usual regulator initiative with regard to funds and investment advisors (which many hedge fund managers are anyway) is federal or state mandated disclosure of fees and the nature of the hedge fund's business, who are its principals, and whether they have any criminal convictions or indictments. Would the wealthy and sophisticated investors in hedge funds benefit by greater disclosure of the fund and its activities? That is doubtful, because these investors are so sophisticated that they can usually obtain the information they want by requiring it before investing, and insisting on terms in the hedge fund agreement to provide that information to investors on an ongoing basis. Accordingly, filing disclosure documents with the SEC under the SEC's usual rigid approach to disclosure documents would increase costs on hedge funds and provide little if any benefit to the investors in such funds.

Thus, because of the limited number of sophisticated investors in hedge funds, there is no benefit to those investors to regulation of such funds. Furthermore, there is no discernible benefit to the economy or to financial markets for hedge funds to file disclosure documents about their processes and management with the SEC. Hedge funds, like any other investor, already to file mandated disclosure documents with the SEC if the funds take a greater than 5% position in any publicly-traded company. Other than that requirement, regulating hedge funds will be a costly exercise for all parties to hedge fund transactions and will provide no discernible benefit to any such party or investors at large. Accordingly, regulating hedge funds would result in costs without benefits.

Here are the facts:

• 1 in 6 owe more than their home is worth.
• Oil prices are tumbling down.
• Problems are not just in the US, but worldwide.
• We are giving 700 BILLION dollars to bail-out wall street! Do not rush this, make sure every situation goes well so the market does not explode again!

Important stocks to watch and hope they bounce back up. General Electric, Citigroup, Bank of America, General Motors and Morgan Stanley.

History can be important. In past years when the stock market went down to 8,000 points, it stopped dropping. Many investors believe the stock market will go right back up after it hits its low around 8,000 points. If you remember in the last year, the Dow Jones Industrial Average was 14,280.00 and that was a stock market high.

Keep your eye on a few stocks that are usually strong but are now only hanging in there. General Electric (GE) is around 20 dollars a share. After the stock market hits the low of 8,000. Buy, Buy, Buy! The government will fix this problem in a few days and everything will go back up! So make sure you know what to buy and don't buy stocks just because they are cheap. Smart investments make smart investors.

Image source: msn.com

Insider trading is harmful because it reduces investors' confidence in the stock market. Noninsiders may feel that they are unfairly at a disadvantage in the market and that they are therefore less likely to make a profit. A healthy economy relies on money from investors to finance business expansion, and investors will not invest in a market that they do not trust.

Where We Stand

Over the course of several months the markets ate billions in investor capital. From losses in 401k's to investment brokers, hedge funds, private equity groups and individual traders have all taken a hit just from the action of what should have been no more than a major market correction. This would have been problematic on its own as the markets went forward with the at risk capital reduced by the usual market fluctuations. Billions of dollars had already been eaten by the correction, but this was to be expected. The markets would have eventually found equilibrium and the remaining capital would have fueled the next leg up.

Enter the new, completely re-vamped federal reserve. Complete with shiny new economic socialism handbook and a taxpayer powered checkbook. Suddenly, it is no longer in vogue to allow a free market to correct itself through the time tested method of eating the weak companies and spitting out the efficient, strong companies. No, the usual correction method would no longer do. Uncle Sugar could not allow the depth of its complicity in the sub-prime meltdown to become public in an election year. So rather than a few congress critters hitting the unemployment line, they decided to wipe out tens of billion of dollars in investment capital by federalizing the financial sector and confiscating the remaining shareholder value. With each seizure, the shareholders (traders, investors, mutual funds) were wiped out completely. Rather than allow the companies a chance to merge, or recapitalize and continue, leaving investors some value and the chance at recouping even more, the fed cancelled capitalist opportunity and replaced it with staggering losses to everyone invested in the common stock of the companies.

Could they all have recovered over time and regained some or all of the investment capital? No. But the market would have seen enough survive and return to profitability to eventually at least mitigate the losses and leave some capital to grow with. By removing the opportunity to work their way out of this mess, the companies and the risk capital of many have been taken away by socialist fiat. To top off its appetite for your retirement portfolio, the fed has even given you, your children and your children's children the bill for it's meal.

You Can Not Do That Now, Comrade

With the shorting ban extended on the financial sector and the wiping out of tens of billions of private investment capital by the federal reserve, the question begs to be asked. What's next?

Therein lies the quandary any investor or trader faces as we go forward. Will the shorting ban be lifted? In my opinion, maybe. But I wonder why the fed would lift it now that it will be the fed being shorted, in many cases. As the 800 pound gorilla in financial equities, it is not in the feds interest to have any curbs on its portfolio.

When the market for financial securities recovers and the fed see's its holdings rise in value, what reason would it have to allow that rise to be limited to true value? Creating yet another bubble would be beneficial to the federal coffers and who is their to tell them no? Congress no longer even pays lip service to it's constituency, we just got $700 billion worth of proof of their disdain for the American public. The executive branch cheered it on, congress has now joined in as a willing accomplice and the judicial branch has thus far given its tacit approval all of the way to the Supreme Court by it's failure to cry foul at the unlawful seizure of American citizens property. The shareholders own the companies, the assets of the companies are collateral for the capital exchanged for each share of the company. That makes those companies assets shareholder property in the event of a failure of the company. By nationalizing those companies the federal reserve has confiscated the property of the shareholders without benefit of due process.

Where Does It End

As time passes and the current financial mess gets straightened out, there will surely be more casualties on the correction front. The difficulties that other sectors face are mounting with each passing day. The airline industry has huge problems, the automotive industry is on taxpayer life support already, to the tune of $50 billion and rising. Trucking and distribution are on hard times due to energy cost's. Construction has all but stopped. Telecom and Tech sectors both face major hurdles in growth. Healthcare is just beginning to feel the pinch from the retiring baby boomers, a segment that grows daily and will continue to for some years to come.

So which sector do investors and traders move their capital to now? In the face of a nationalist takeover of troubled sectors, what is the route we should take?

The automotive sector, perhaps the weakest after financial, may well be next on the federal hit list. The options for traders and investors here are far fewer than those that were available in financial. Guessing wrong on whom the feds leave standing out of the few industry members may well be an unpalatable risk to many. It is quite sobering to realize that one can go to bed owning a part of a hundred billion dollar company with your life's saving's and wake up with a note from Paulson that reads” Gotcha!”.

There have already been congressional rumblings about nationalizing the oil companies, so that venue is already on shaky ground. One more profit report that the congress doesn't like and, bam!

The airline industry is so dependent on low fuel costs and high rates of expendable consumer cash that any further increase in fuel costs or decrease in consumer spending will leave aircraft idled the world over.

Healthcare is the one area where growth is certain and economic downturns have the least effect. Healthcare is also the one area most talked about as being socialized, and with the new, improved version of democracy we see in the government, this industry is on quicksand.

A Troubling Outlook

I know that I am painting a somewhat bleak picture here, ordinarily I lean toward a brighter future and increasing opportunity for economic events. I have never feared a correction, they come and they go. However, I do not see this downturn as a correction any longer. The massive intervention of not only the American government, but in Europe as well has changed the investment risk / reward model greatly. By attempting to quell uncertainty in a single economic sector, the rules have been changed forever for all sectors. In a global market the interlocking nature of sector with sector coupled with no rulebook for the new interventionist model makes for even greater uncertainty. The apparent willingness of congress to bankrupt our grandchildren for the sake of a single election cycle is not only ludicrous, but the lack of protection for the huge amounts of taxpayer capital lends even greater uncertainty to the situation.

I would be interested to hear what the Supreme Court thinks about this new found nationalist power that the Legislative and Executive branches wield. The silence from the judicial branch is deafening. And we ordinarily can't shut them up.

Troubling, at least to me.

God Bless and Good Luck

What are stocks?

When you buy stocks, or shares, you're buying part of a company. A company will offer a number of shares for sale. You can buy some, hold them as long as you like, buy more, or re-sell them.

Buying and selling is also known as trading. Once trading begins, the price of the stock can rise or fall.

Most stock is bought and sold at a stock exchange. Examples of stock exchanges are Nasdaq, the New York Stock Exchange, and the London Stock Exchange. You can also buy over-the-counter (OTC) stocks, which are not listed on stock exchanges.

You don't buy and sell stocks yourself, but act through a stock broker or brokerage firm. Usually you make the decisions, and the broker represents you on the market. You can also choose to let the broker invest your money for you.

You might buy stock at a low price, and sell at a higher price to make a profit. Or, you might invest in companies that will pay regular dividends over several years, for a more stable flow of income. The stock you buy depends on your financial goals, and your personal investment style.

There are two types of stocks: common, and preferred.

• Common stocks give you voting rights in the company. If you want to stage a hostile takeover, you would buy up as many voting shares in the company as possible. In general, common stocks give you a say in the way the company is run. Dividends fluctuate, depending on the fortunes of the company.

• Preferred stocks return a fixed amount, with regular payments, but you have no voting rights. If the company has financial problems, the dividends on preferred stocks are paid before those of common stocks.

A company pays dividends in cash, or in shares. Taxes may apply to cash dividends.

Price of Stock

What determines the price of stock?

Broadly speaking, the price of stock depends on supply and demand. The more people buying the stock, the more its price rises.

The market price of a stock is not the same as its intrinsic (real) value. A stock price can rise, simply because other people are buying. People may buy in hopes of quick wealth, or because they have emotional ties to the product or service - or, just because everyone else is doing it.

Scams, such as Pump and Dump, take advantage of this. Worthless stocks become inflated in price by increased buyer activity, based on hype and high-pressure sales.

Avoid stock market scams and bad investments, with five simple rules.

1. Research, research, research.
   
   Research is your best friend on the stock market. Usually, companies offering stock for sale must disclose financial statements and other company information. Know the company history, the key players and company structure. Look at past performance, and strategies for the future. Know the industry as well as the company. Examine the economic factors affecting its success or failure.
   
   Never invest in a company or industry you don't understand. If you do, it's not an investment. It's a blind gamble.

2. Put personal feelings aside

   Emotional factors can affect the price of stocks. Often, stock prices are driven by greed, emotion, or pure ignorance.
   
   Keep a cool head. Don't buy out of impulse or passion.
   
   Don't buy into wind power, for example, because you believe in saving the environment. Buy because the company has a solid performance record, a strong demand for its product or service, and good potential for growth and profit.
3. Diversify your stock portfolio
   
   Buy stock in more than one company. If you're just starting out, choose at least three or four different companies. Even the most reliable stocks can take a sudden dip.
   
   For instance, Maple Leaf Foods (MFI) stock was $16 a year ago. Recently, several people died of listeria found in Maple Leaf meats. In August of this year, stock hit an all-time low of $7.60.
   
   MFI stock is now rising again, largely due to investor interest in the low prices. The company has a solid history and will probably bounce back. However, this illustrates the potential for a sudden price dive even in established companies.
   
   If your portfolio includes several investments, you have a backup if one or two do poorly. Even seasoned investors make mistakes, or are subject to factors beyond their control.
4. Know when to hold 'em
   
   If a company's revenues go down, so do the stock prices. Is it temporary, and will the company recover? Wise investors know when to hold their stock, and when to cut losses, and sell.
   
   Don't listen to gossip or rumors. People will offer stock market tips, or claim to know stock market secrets, wink wink nudge nudge. Inform yourself, do your research, and make your own decisions.
5. The greater the risk, the greater the reward
   
   In general, the more risk you're willing to take, the more potential for high return. Also, the more chance the investment will fail, and you lose your money.
   
   Reliable companies command higher stock prices. Returns are less, but so is the risk.
   
   If a stock offers high return with low risk, be wary.

Experiment without Spending

Before investing your hard-earned money, set up a mock portfolio with several stocks. Follow your investments online, and chart their progress. Amend your choices, "buy and sell", and watch them perform in real time, without risking a penny.

What is the Capital Gains Tax?

As usual, the tax man is after a piece of your pie. If you sell your stock at a profit, a capital gains tax applies. Taxes may also apply to stock dividends.

You have a capital gain if you sell your stock for a higher price than you paid. If you sell your stock for less than you paid, it's known as a capital loss.

If you hold your stock for longer than a year, it's a long-term capital gain. Under a year, you have a short-term capital gain. Short term capital gains are taxed as regular income.

Long-term capital gains holders pay a tax of up to 15%. However, in 2008, investors in the 10 - 15% tax bracket paid a long-term rate of 0%. This won't change until the year 2010, when the rate will go back to 15%.

Be aware of the tax advantages or disadvantages of any stock you purchase.

What's Your Investment Style?

Are you a hard-nosed rogue or an armchair softie? Does losing money fill you with stress and worry, or do you hunger for challenge? Are you looking for a quick profit, or a long-term retirement strategy?

Understand yourself and your goals before you invest. Read up on the investment styles and strategies of top investors like Warren Buffett, his mentor Benjamin Graham, and people like Kirk Kerkorian or Jesse Livermore. You'll find that their styles are different, but they all believe in the five simple rules listed above.

Stock Brokers

When you're ready to invest, choose a stockbroker or brokerage firm that you trust. Licensed brokers are either full-service or discount brokers.

• Full-service brokers charge a higher fee. They provide information, details and guidance to the investor.

• Discount brokers charge a lower fee, provide minimal information, and usually don't give any guidance.

Decide on the type of service that's best for you. Again, research is your friend.

With a basic understanding of the stock market, you can make confident, informed decisions, and increase your chances of investment success.

Some advisable tips for Portfolio Managers

• You should have an academic background in computer science or engineering physics or biology
• If you are a degree student you have to consider masters degree in business, economics, accounting and math. An MBA degree is the most important and popular among portfolio managers.
• A professional designation is to choose the Financial Chartered Analyst charter. In order to consider this, candidates must demonstrate a proficiency in financial and accounting terms and techniques, economics and quantitative analysis as well as prove the required work experience.
• In a firm or company, analyst post is the background training for becoming a portfolio manager
• Incase if you enter in to a professional environment, you may want to begin by picking and choosing stocks in a mock portfolio club/online simulator

Types of Portfolio Manager Positions

There are various positions with in the realm of Portfolio mangers. The positions are following types -

Investing Style

This depends upon specialize the equity or fixed-income investing. The range of investment styles includes using hedging techniques, a growth or value style of management, small or large cap specialties, and domestic or international fund investing.  

Size of Fund

A Portfolio Manager should manage the assets for a relatively small independent fund or a large asset management institution. A portfolio manager may also manage the capital of a large business such as a bank or an organization that has a large endowment such as a college or university. In such cases, a manger who manages the large asset management institution is known as a Portfolio Manger and who manages the small asset management is known as a Fund Manager.

Type of Investment Vehicles

A manager performs the managing assets for their widely investment vehicles. he range of investment vehicles includes retail or mutual funds, institutional funds, hedge fund, products, trust and pension funds, and commodity and high net worth investment pools.

A Portfolio manager's day life is very difficult to notice, one constant is checking the status of the financial markets and staying on top of current events. A portfolio manager will meet regularly with his or her analysts in order to discuss market developments and the trends of relevant current events.

In addition to meeting with the analysts on staff and monitoring the markets and current events, a portfolio manager has many other responsibilities to attend to. Portfolio managers often meet with high-level investors, or potential investors, in person or over the phone.

Ben Graham is the father of two basic stock market disciplines: security analysis, and value investing.

Graham believed that stock market prices were often wrong, because of the emotional factors involved. He developed the concept of "Mr. Market", an emotional and unstable character, to explain fluctuations in the market.

Mr. Market appears every day in your office, and offers to sell you some stock. One day, he might be hysterical with glee, and the next he's morose and hopeless. The intrinsic value of the stock doesn't change, but the price varies with the moods of Mr. Market.

Graham acquired his wealth by targeting undervalued companies. He looked for companies whose stock prices were temporarily down, but whose fundamentals were sound for the long run.

Ben Graham is the mentor of investment guru Warren Buffett, and has influenced several generations of stock market investors.

Warren Buffett b.1930

Also known as the "Oracle of Omaha", Warren Buffett is the world's richest man in 2008. He uses a value investing strategy influenced by Ben Graham.

Buffett buys companies as long-term investments, at a discount to their intrinsic value. He stresses the importance of research, and looks for companies with strong management, good potential for long-term return, and an attractive price.

His investment strategy involves discipline, patience and value. While he claims no investment favorites, Buffett is currently interested in family-owned businesses in Europe, and predicts hard times for newspapers.

Buffett owns Berkshire Hathaway, whose first-quarter profit plunged 64% this year, with $991 million in investment losses. In July, Berkshire Hathaway offset the loss by announcing the sale of Anheuser-Busch to a Belgian company for $2.49 billion, earning a profit from the purchase price of 1.9 billion in 2005.

The world's richest man pays himself a salary of $100,000 a year. It's a figure that hasn't changed in twenty-seven years.

Peter Lynch b.1944

Peter Lynch bought into Automatic Data Processing (ADP) and Yum! Brands' (YUM) Taco Bell, before Wall Street noticed their existence.

Peter Lynch uses a bottom-up approach and concentrates on a company's fundamentals, instead of listening to market chatter. He invests for the long run, and pays little attention to short-term market fluctuations.

His chameleon investment style adapts with the times, but he relies on core principles. He believes that no one can predict economic fluctuations. Lynch advocates research, and warns against long shots for building wealth.

Kirk Kerkorian b.1917

Kirk Kerkorian turned 91 this year, and has a net worth of $16 billion. Known as the father of the mega-resort in Las Vegas, Kerkorian is a self-made man, who started earning money for his family at age nine. As a young man he learned to box. Under his brother's tutelage, Rifle-Right Kerkorian fought his way to the Pacific amateur welterweight championship.

In World War II, Kerkorian learned to fly with the Royal Air Force. After the war, he bought a Cessna and began flying wealthy passengers into the small railway town of Las Vegas.

He quickly saw the potential of Vegas. In 1947, Kerkorian gave up gambling, bought a local airline for $60,000, and renamed it Trans International. He operated the airline for twenty-one years, then sold to Transamerica for $104 million.

His most famous success was a piece of Vegas land, purchased for just over $960,000, in 1962. He leased the land to Caesar's Palace for four million, and sold it to them six years later, for five million more.

His fortune comes from shares in DaimlerChrysler, MGM Mirage (MGG) and Metro-Goldwyn-Mayer (MGM). He has a talent for identifying opportunities early. Kerkorian will buy, sell and then return to a company. He twice sold MGM, then took it over for a third time in 1996.

Kerkorian's recent investment in Ford Motor Co. kept stock trading at its highest levels in almost six months.

Jesse Livermore 1870-1940

Jesse Livermore made and lost millions, and once declared bankruptcy. He was notorious for short selling during the stock market crashes in 1907 and 1929, to the point that JP Morgan asked him to stop.

Livermore focused on markets as a whole, instead of on individual stocks. He would adopt a buy-and-hold strategy in a bull market, and sell when it lost momentum.

His fluctuating fortunes came from breaking two of his own rules: never listen to stock tips; and, always cut losses short.

Livermore always had an exit strategy. He committed suicide in 1940, owing more than a million dollars.

Edward Lampert b.1962

Lampert is Chairman of Sears Holdings Corporation (SHLD) and the founder of ESL Investments, Inc. Lampert created ESL at the age of twenty-five, in 1988. The company's returns average 29% a year, and Lampert is number sixty-eight on the Forbes list of 2008.

He looks for a mature business that is easy to understand, and has a strong cash flow. He targets companies with the potential to generate a large cash flow over the long run. Lampert is less focused on the management team, and willing to bring about changes in the company structure to realize a profit.

His numerous investments in the retail sector include Home Depot (HD). Other investments include CIT Group (CIT) and AutoNation, Inc. (AN).

George Soros b.1930

George Soros is a Hungarian-born American investor, speculator, philanthropist and political activist.

He's infamously known for breaking the bank of England on Black Wednesday, 1992, by selling short more than $10 billion worth of pounds.

His investment strategy revolves around the knowledge that financial markets are chaotic, and prices depend on the human beings who buy and sell. Often, buyers and sellers act out of emotion, rather than cool logic.

Soros looks for opportunities by studying value and market price of assets. He follows a theory of reflexivity, based on the idea that investor bias affects market transactions.

These days, Soros prefers philanthropy over speculation. By 2003 he had given away more than four billion dollars to help the underprivileged, in nations such as South Africa, Central Europe and Russia. In 2007 he gave $100 million to fund internet access in Russian universities.

George Soros holds shares in BUCY - Bucyrus International Inc.; ANR - Alpha Natural Resources Inc. and WIND - Wind River Systems Inc.

Carl Icahn b.1936

Icahn made headlines in 1985 with his hostile takeover of TWA. He's known as a tough negotiator and clever market strategist.

Icahn takes minority stakes in public companies and pushes for change. He does not believe in following trends. Icahn says, "... consensus thinking is generally wrong. If you go with a trend, the momentum always falls apart on you. So I buy companies that are not glamorous and usually out of favor. It's even better if the whole industry is out of favor."

In May, Carl Icahn took on internet giant Yahoo (YHOO). Icahn bought as many as 50 million shares, preparing for a proxy fight to remove Yahoo's Board of Directors. On July 21, 2008, he agreed to join the Board of Directors and end the hostilities ... at least for now.

Philip Fisher 1907-2004

Fisher was a formative thinker in the growth stock school of investing. His book, "Common Stocks and Uncommon Profits", is a standard for investors. Fisher believed in investing for the long haul, and wrote that the best time to sell a stock was "almost never".

Fisher did extensive research to help build his wealth, and preferred the technique he called "scuttlebutt" or the business grapevine, to seek out information.

Fisher bought Motorola in 1955, when it was a radio manufacturer. He held onto it until his death in 2004.

William J. O'Neil

At the age of 30, O'Neil was the youngest ever to have a seat on the New York Stock Exchange. He's the founder of Investor's Business Daily, and author of two successful books.

O'Neil uses a mix of quantitative and qualitative strategies in his investing approach.

His investment style is to seek out the growth stocks that have the highest profit potential and will show a swift price rise. He coined the acronym CANSLIM to identify such stocks.

Bill O'Neil's motto is "buy the strong, sell the weak." He seeks out companies that perform as leaders, with something new to offer, and a proven rise in current and annual earnings.

Every great investment guru has an individual approach, but all follow the same basic rules: know the company and the market; never listen to market gossip; and always keep a cool head.

There are SBA Loans, Micro Loans, Personal, Minority Loans, Investors, Refinancing, and of course your family.

SBA Loans are government loans set aside for first time business owners but, unless your credit is substantially higher than the norm, they will not assist you. This money, in my opinion, is set aside for people just moving into the country. It sets them up for success. If you are in this majority, good for you, if you're not; like I was it was difficult.

I actually had extensive experience in the field but, I don't think that matters a bit.

Microloans are just a little easier to get depending on your credit. You will receive a smaller amount than typical loans. Usually $25K-50K. These are also accessible through the SBA.

Another option is a Personal Loan at your bank. Again, you must have great credit and
when you tell them what the money is actually for, be prepared for a very lengthy speech.

Banks don't like lending money for restaurants. It's highly risky for them and of course most restaurants fail in their first year. However, I do want you to know that restaurants only fail due to lack of knowledge, it's not just about the money.

If you are woman, there are Minority Loans available. You can check them out at www.sba.gov or just put in minority woman business loans in Google and you'll find a plethora of resources.

Investors can also be a good source however, please do your research. It may be easier to get your money from a family member. Use them as an investor.

Regular Investors will normally take more of a cut of the monies than you want to give up. They will want to put their 2 cents in even though they may have had no exposure to restaurant industry. They're not all like this. Hopefully you can find a silent Investor.

A good Google term to search under in Angel Investors.

Refinancing your home. We are all aware of the present state of the housing market but, if you are one of the few that does have some equity in your home, this is a great way to go. I went this way and came out with over $60K. This is a great start.

Let me reiterate. A good start

Depending on the type of business you plan to open, it typically takes up to $150,000 to get you through a year of business. This cost includes: build-outs, inventory, plan reviews, licensing, equipment, small wares, tables, chairs, Serv safe certification, office supplies, credit-card processing equipment, lease money, and so much more.

If you plan on renting a location, you must have the funds for a deposit, first and last month's rent, and about 6 months more of rent money while you wait for your plan review to be accepted by the Department of Business and Professional Regulation.

In this time, you need to make sure you have the money put aside for you to live. You may want to consider keeping your old job until the restaurant opens. I know it's hard, and the excitement gets the best of you but, trust me you have to be smart about this.

I left my job a bit too early and I learned that this was not the way to go.

Nevertheless, I know that if you have knowledge and the patience to make your dreams of owning a restaurant a reality, it will happen. Don't give up, there's always a way.

Imagine, you are private investor and have been downloading share prices from www.marketeye.com and then preparing your own charts. That site has now closed and the only other organization which would supply this information would charge me $10,000 for the privilege whereas marketeye was free!

So runs the most popular query of all. A slew of traders prefer to download stock prices into the spreadsheet program Excel so they can draw their own price charts. Without them they don't have buy and sell signals, and without those, they can't trade.

But why don't they just let specialist software do the work for them? I prefer using software such as Metastock (Equis.com and Paritech.co.uk), the costlier Tradestation, and OmniTrader 2000. All work with both U.S. and U.K. data. Each generates trading signals based on tested criteria and scans stocks according to your own requirements. Whether you choose end of day data or the more expensive intraday real-time data for the above software depends on whether you are a short-term trader. There is no shortcut to visiting websites and trying the software demo disks. Other popular well-regarded software includes Synergy, FairShares, Indexia, and Sharescope.

Whether you only want share price data or need company data too depends on how you pick stocks; whether you examine just price charts or company valuations too. I prefer having both price and company data for the fullest stock picture.

An alternative to software for plotting prices are websites. Consider Advfn which provide charts and plots company data in visual form for easier and quicker analysis.

For U.S. charts visit my favorites, the free, Quote.com, and BigCharts.

Despite the choices for plotting price charts, if you still prefer data you can plot in a spreadsheet program, visit London Stock Exchange, and Paritech.

For U.S. data visit Reuters Data Link. The novice will prefer starting with charting websites, which tend to be cheaper than software, then trying software demos and only finally investing in software.

Another question is: “Is it possible to get data, for example a table/spreadsheet on all companies including their essential fundamentals such as EPS, p/e ratio and profit?” This is a popular query as traders become increasingly weary about the time spent scouring for good stock picks. Imagine a marketbeating annual 10% return with five hours research a week on a $50,000 portfolio. For a higher rate taxpayer, the return is a mere $11 per hour. Of course the return beats the minimum wage. Our trader wants such data to both increase returns and reduce time spent producing those returns. For U.K. fundamental data try ShareScope software and Hemscott . Both are excellent sources of company data and save hours scouring for stocks. The U.S. web-based equivalents are the exceptional Yahoo and Multex.

More experienced traders often ask about trading psychology:

At the beginning of this year I had a string of losses which knocked my confidence. Checking these trades I found I had allowed extraneous emotions to enter the equation resulting in overreacting, for example, to intraday data and getting out of the trade too early and often at a loss. Do you know of any reference material to help one deal more comfortably with trading stress.

Indeed trading psychology is so important that Bill Lipschutz, in The Mind of a Trader, explained it was “the most important factor in trading success.” Other sites about preventing your emotions from sabotaging your trading include Trading On Target, TradeShare.com , and Dr Relax.

Finally, there is a whole category of questions which begin: “I bought [insert name of formerly popular technology stock] at [insert overinflated price] and now it trades at only [insert 0.1% of previous figure]. Is there any hope?”

Despite the dot-com collapse, innovation on investment websites has accelerated. New products to make all aspects of trading and investing simpler, more efficient, and hopefully more profitable are being launched at a faster pace than even in 1999. The problem is, without the huge marketing budgets of 1999-2000 behind the launches, you could easily have missed some of the latest online tools to make investing a whole lot easier. The value of any tool should be measured by one criterion: does it solve a long-standing private investor problem. These next generation tools all do, moving well beyond providing just stock prices, news, simple charting, and company data.

This is what consumers commonly pay that generally cover all the expenses of the wholesalers, retailers, and manufacturers. When you pay retail, you are paying 100% or more for a product that you are trying to resell in the future. You also may be paying an inflated price due to intangible factors like location, good press, or poor research. If you are a serious investor, you don't ever pay retail!

Wholesale Price –

What middleman vendors and marketers usually pay. These agents can still charge a price profitable for them, yet low enough to appeal to retail sellers. Wholesale purchasers usually purchase in bulk in order to get a lower cost. In most cases, investing in a product at a wholesale price means that there is still a desire in the market for the product, and it can still generate a good profit margin for you.

Fire Sale –

This typically is the manufacturers base price that includes all costs of producing product/service. Investors view this price as a turnaround opportunity and negotiate the lowest price possible and can sometimes get below base price because of poor market conditions or devalued inventory. On the surface, fire sale prices can be attractive because they seem like a bargain. However, investors should be wary of fire sales because there may be unknown or unseen expenses associated with the purchase that will not make it a bargain.

The key to knowing the difference between any of these price variables is making sure you do enough due diligence to be able to make an intelligent decision the next time you are ready to take advantage of a "good deal". Due diligence means comparing apples with apples - matching similiar products in the same industry (stocks) or neighborhood (real estate) and making comparisons based on price.