Finance for Everybody

Tutorial #4: Setting Multiple Adsense color palettes!

2008-12-22T07:51:00.001-08:00

Tutorial explanation:

This tutorial will explain how to generate code for multiple color palettes for 1 certain ad.

What do you need?

An Adsense account.

Step Number One:

login and go to the AdSense for content setting.

Step Number Two:

Select Ad unit- text and image ads (default). (it actually doesn't matter if what you choose there..)

Step Number Three:

Select an Ad format. It doesn't matter which one..

Step Number Four:

In the color palate, choose 'use multiple palettes'.

Step Number Five:

Select by holding down the 'ctrl button, the palettes you want to use. (you get a preview of 4 different palettes, on the left. If you select more than 4 different palettes, it will still work, but you won't see them all in the preview.)

Step Number Six:

Copy and paste your code into the suitable place.

And that rounds up this tutorial!
Hope it helped you out,
Amigo!

Tutorial #3, AdSense Referral Setup.

2008-12-22T07:51:00.000-08:00

Tutorial explanation:

In this tutorial we will learn the basics of the AdSense referral setup.

What do you need?

An AdSense account.

Step Number One:

- Login to your AdSense account.

Step Number Two:

- Go to the 'AdSense Setup' tab.
- Select referrals.

Step Number Three:

- Choose the product you want to refer to.
(In this tutorial we will refer to Google AdSense)
- Click Continue.

Step Number Four:

- Choose the referral button or link you want.
- Click Continue.

Step Number Five:

- Click inside the code box to highlight it.
- Copy Paste the code into the place you want it to be on your site.

That's it. Wasn't that simple??

Hope I could help,
Amigo!

AdSense Click Fraud in India - How The Whole System Works?

2008-12-19T19:35:00.001-08:00

A recent report on Click Fraud suggests that the maximum number of invalid clicks on Pay Per Click ads originate from India. And this is not the first time - its widely believed there there exists a large “work from home” crowd in India who want to generate “quick cash” by clicking Google AdSense ads.

During a recent trip to Google Hyderabad for BarCamp, I met someone who explained me the whole modus operandi of these secret ad clickers.

Pick any issue of Deccan Chronicle newspaper (the English Daily of Hyderabad) and open the Classifieds section - you will see dozens of ads that promise you regular Google AdSense income while working from home. (see this newspaper clipping on the right).

You basically create a website and then write a few articles to get accepted into the official Google AdSense program. Once you become an AdSense publisher, you join any of these “bogus” AdSense network and are introduced to other members who are in the same boat as you.

Now Google would quickly ban your AdSense account if you click Ads on your own website so what these networks do is ask members to click on Ads appearing on websites of other members. So it like a reciprocal behavior - you click my ads and I will click yours.

Do members of such local AdSense networks make money? I have doubts. They may make a few dollars before Google discovers the click fraud activity, bans the account and returns the accumulated earnings to advertisers.

But in any case, the fraudulent clicks have been generated and added to the global “Click Fraud Index”. No wonder, India tops the chart.

Tutorial #2: Tweak the AdSense BG Color!!!

2008-12-19T19:35:00.000-08:00

Tutorial Explanation:

I will show how in a few simple steps, you can change your AdSense Background colors, to suit any part of your site!

Needed Tools:

- An AdSense Account.
- Adobe Photoshop.

OK! Lets Begin!

Step Number one:

- Open Photoshop.
- Open your website in your browser.
- Press the Print Screen (PrtScn) button, on your keyboard.
- Open a new document in PhotoShop (CTR+N). (settings don't matter..)
- Paste the printed screen into Photoshop. (Simply press CTR+V)

Step Number Two:

- Click on the Brush tool in Photoshop.

Step number Three:

- Hold down the ALT button, on your keyboard.

Step number Four:

- While holding down the ALT button, select and click with your mouse, the color you want your Ad to be.

- After choosing the color, Click on the color palate. (The colored box in the picture)

Step number Five:

- You should now be in the Color Setting. (Like in the picture)

- Copy the content of the box I marked in the picture. (Simply select it, and press CTR+C)

Step number Six:

- Go into your AdSense Account.
- Go into the AdSense Setup page, and select the AdSense for content (or Search..)
- Choose the settings you like for the Ad, and finally, get to the Ad color settings. (it should look like the picture..)
- Select the content of the Background box.

Step number Seven:

remember that when we were in Photoshop, we copied something? Now is the time to use it.

- Paste the content into the Background box. (Notice the ads background change.)

Step Number Eight:

- Simply copy the ads code, into the place you want it, in your website. (Like you always do..)

That's it. Hope it helped you out! I tried to make it as easy as possible!

Amigo. =)

US finance humor

2008-12-19T09:09:00.001-08:00

Some humor before the markets open!!

1. The US has made a new weapon that destroys people but keeps the
building standing,. Its called the stock market - Jay Leno

2. Do you have any idea how cheap stocks are?? Wall Street is now
being called Wal Mart Street - Jay Leno

3. The difference between a pigeon and a London investment banker. The
pigeon can still make a deposit on a BMW

4. What's the difference between a guy who lost everything in Las
Vegas and an investment banker? A tie!

5. The problem with investment bank balance sheet is that on the left
side nothing's right and on the right side nothing's left.

6. I want to warn people from Nigeria who might be watching our show,
if you get any emails from Washington asking for money, it's a scam.
Don't fall for it - Jay Leno

7. Bush was asked about the credit crunch. He said it was his
favourite candy bar - Jay Leno

8. The rescue bill was about 450 pages. President Bush's copy is even
thicker. They had to include pictures - Jay Leno

9. President Bush's response was to meet some small business owners in
San Antonio last week. The small business owners are General Motors,
General Electric and Century 21 - Jay Leno

10. What worries me most about the credit crunch, is that if one of my
cheques is returned stamped 'insufficient funds'. I won't know
whether that refers to mine or the bank's

Poker Affiliates: Use PPC Ads For A Traffic Boost

2008-12-17T05:44:00.001-08:00

As a poker affiliate, you should always be on the lookout for ways to generate more player sign ups. PPC advertising is one such technique that can deliver in this area. Here is a quick rundown of exactly what PPC advertising is and how it can benefit your poker affiliate marketing business.

Pay per click advertising is a search engine marketing technique that involves bidding on keyword phrases and paying a fee when visitors click on the ads. Here are some of the benefits that PPC advertising can provide for your business:

1. You don't need to be a computer genius or SEO guru to run a highly profitable PPC ad campaign.

2. PPC advertising gives you the ability to test ideas and see results immediately.

3. No need to worry about tedious search engine optimization.

4. You can instantly target any keyword phrase that you choose.

PPC advertising is not without negatives however. Here are the downsides to using PPC advertising:

1. Monthly advertising bills to pay.

2. PPC ads are at risk for fraudulant clicks.

3. Pay-per-click pricing can become very expensive over time.

PPC advertising gives advertisers complete control over their ad campaigns. Advertisers can effectively target their audience and determine how much each visitor is worth to them. Pay per click ad networks provide an excellent platform for identifying a desired target audience by geographic setting and subject.

Advertisers have access to various tools provided by PPC ad networks to monitor the effectiveness of their advertising. It is easy to use these powerful tools to track campaigns and tweak them for optimal profitability.

When you begin using PPC advertising to promote your websites, your keyword phrases are extremely important. Choose as many specific keyword phrases as you can and then write an attention grabbing advertisement that uses as many of those keywords as possible.

Also, it is important to remember to stick to your advertising budget. Start slowly and work on improving the effectiveness of your advertisements, avoid placing high bids right out of the gate.

PPC advertising has really caught on in popularity and should continue to grow. It is a relatively new form of online advertising and in my opinion, hasn't yet reached it's full potential. Try using PPC advertising to promote your poker websites today!

How To Boost Blog's Traffic- And Make Money.

2008-12-12T09:36:00.001-08:00

Ok. This is probably the most interesting and exciting part for most of you.

You might be:
- Just an ordinary blogger, and you would be happy if more people visit your blog.
- Just an ordinary blogger, but you would be happy to make some money out of your blog.
- A little more than an ordinary blogger. You write well, and think you deserve a large amount of cash for you blog.
- An exclusive writer, who thinks he can make tons of $ from his blog.

If you can fit yourself in one of the description above, follow these steps.

First step- Look and Feel.

If you enter a blog, and the writing in poor, the outlet is messy, the colors are disgusting and the topic is boring, wouldn't you just leave?
One of the most important things about a successful blog, is first of all the way it looks. When you start your blog, or have already started one and want to improve it, you should first of all think about the person visiting your blog. Ask yourself 'would I like to visit this blog?'
Important rules you should keep:
- Write about interesting stuff.
- Make sure you keep your Blog updated.
- Keep the blog organized:
Make sure your outlet- backgrounds, pictures, text color, text size, all look nice and clean.
- Make sure, or try your best, your punctuation is correct. Look for your spelling mistakes, if you find one- correct it.

If you make sure you keep the rules above, I assure you your Blog will be a great one to visit and read. People will start talking about it, and it will start spreading as fast as the wind. Trust me, I know what I'm talking about.

Next- Make Sure your Blog is easy to Search for.

Their are plenty of different search engines. The main one are Google, Yahoo, Msn and so on. Make sure you let them know about your Blog!
How? For example, log onto google.com, and search for submit site. The site you will find will be the following-
http://www.google.com/addurl/?Continue=/addurl.
Start there, and follow the same process for any search engine you find.

Make sure you don't miss special Blog Searchers! For example- http://blogsearch.google.com/ or
http://www.blogsearchengine.com/ or
http://www.ysearchblog.com/.
And their are plenty more. Just search for 'Blog Search' and submit your site to them.

Check out sites that incourage people to visit your blog. Sites like- http://www.blogmad.net

Next Step- Google Adsense. (coming soon, really soon.)

Amigo.

Why Does Google Allow Ads for AdSense Ready Websites?

2008-12-10T17:57:00.000-08:00

Search for something like "work from home", "Internet jobs" or "make money online" on Google and you’ll see a flood of ads promising easy money through the AdSense program.

If you have ever tried AdSense on a site, you probably know how tough it is to make that first dollar but these ads, which are surprisingly served on the Google network itself, make things look so simple. Just order an "AdSense kit" for a few dollars and the money will start rolling in.

So how do these "get rich quick" schemes work? I called the owner of GoogleCashSense.com - they advertise pretty heavily on Google and here’s what he told me about their program.

The whole package costs around Rs 1,100 and in return, they’ll provide you a readymade website with some 110 pages of content. You then put your AdSense Publisher ID in these pages and wait for others to click on your ads.

When I asked him if people can click their own ads, his advice was to "avoid it" or use another computer. He also shared a couple of websites - websyite.com and 66marketing.com - that seem to use the "Cash Sense" program.

As an active web user, you probably won’t believe any of the "promises" made by these schemes but there are real people (and lots of them) who actually fall prey to them.

And GoogleCashSense aren’t just the only player in town - there’s netjobsinindia.com, GoogleCashCow.com, eJobsJunction.com, myGoogleMoney.com and numerous other sites here that use Google’s own AdWords network to trick people into buying their "Made for AdSense" kits. All have similar websites with fake testimonials and photographs of AdSense checks.

Google policies do not allow ads related to promotion of "miracle cures" then why allow ads that promise "miracle cash". True, you can’t prevent people from running such sites but you can at least block them from using your own ad network to promote their sites.

How Does Google Detects Invalid Clicks - A Must Know For AdSense Publisher.

2008-12-09T05:41:00.001-08:00

A lot of Google AdSense publishers are banned from the Google AdSense program for invalid clicks. Some of these Google AdSense publishers manage to get their AdSense account reinstated. However, majority of them failed to do so. As a result, they are banned from the Google AdSense program.

Google does not reveal any specific details about invalid clicks in order to protect their proprietary clicks fraud detection technology. Hence, you would not know who is generating these clicks on your site or where these clicks come from.

If you are not getting any details of the invalid clicks from the termination letter, it may be a good idea to learn how Google defines these clicks and ways to detect them.

Google defines invalid clicks as:

* Manual clicks intended to increase publisher's advertising
* Clicks by automated tools, robots, or other deceptive software.

-So how does Google detect these clicks and how would they know which clicks are invalid?

Google AdSense team uses three powerful tools to detect invalid clicks:

* Detection and Filtering Tool: Each click on an AdSense ad is monitored by Google system. Google will record the IP of each click, the time of the click, duplicate clicks and various click patterns. Google will use these factors and filter out potential invalid clicks.

* Advanced Monitoring Tool: Google uses its proprietary software to monitor clicks fraud activity. They are constantly working to improve their technology.

* The Google Team: In addition, Google has a team that uses specialized tools and techniques to examine individual case of clicks fraud. When Google system detects potentially invalid clicks, a member of this team will examines the affected account.

Despite the effort that Google put in to improve their clicks fraud detection technology, there are few innocent publishers whose AdSense account has been suspended or banned temporarily for different reasons. For example, a sudden spike in your AdSense earnings would probably raise the red flag in their system and cause your AdSense account to be suspended. If your AdSense account is suspended for invalid clicks which you did not commit, Google provides you a way to make your appeal:

http://www.google.com/support/adsense/bin/request.py?contact=invalid_clicks_appeal

A Piece of Advice

When you are making your appeal via email, you should stay calm and plan the right strategy. You should be patient when dealing with Google and most importantly you should be polite when communicating with them. You may take initiative to provide them with all the documents they need.

The author of this article is Casey Yew, Thanks!

Amigo!

Adsense; Improve Your Earnings by 5 Folds

2008-12-05T05:56:00.000-08:00

You may find many Adsense Gurus on the net, offering you thousand ways to improve your Google adsense earnings! Mind you guys, just buying some genius adsense template and expect it to produce thousand dollars a day is a sure impossibility!

I am telling you with my practical experience that nothing would work unless you are prepared to go that extra mile. You should get hold of the adsense secrets that are unique to your site. You must be prepared to make continuous changes and measure effectiveness on a continuous basis.

Following are simple but effective steps successfully followed by the author, which may help you to improve your adsense earnings by five folds or even more! However, keep in mind that nothing would work unless you customize these options to suit your requirements.

The Best Position - This is always the demarcation point which decides you should be earning in hundreds or thousands! You must identify the most likely position where the reader would be most tempted to click. At first you might have to follow what Adsense Gurus have suggested. However, you must keep in mind that what they have said is not unique to your site.

You should be bold enough to do your own research and identify the best positions unique to your site, 'cos there could be exceptions to what Adsense Experts have proposed. Best example I can quote is 'Plentyoffish.com' a dating site which earns half a million Dollars a month just by displaying a single Google ad in each page with completely different link color format than the rest of the site using!

White Is In Demand - Having more white space around the article and the Ad will definitely increase your click through rate. In my case, this is one of the real secrets behind the high click through rate in my Adsense ads. Your objective should be to get the reader's attention to the Adsense ad and the article. Therefore, it is important to have other areas blank as much as possible to centre reader's attention to the Ad and the article. Remove all unnecessary items which are cluttered around the article and the Ad and have more white space on either side of the page.

What is Your Ad Size? - Highly effective Ad formats are 336x250 and 768x120. However, it is up to you to find out the best size for your site. These are the widely tested and accepted sizes. Tyr them out and see the outcome.

Be Discreet - I personally don't prefer to server image ads in my Adsense campaigns because they dilute the effectiveness of the Ads. It is starkly obvious to the reader that they are clicking on Ads and the sole purpose of putting them is to make money! Just don't make it so obvious! Instead, include text ads which are relevant to the theme. Place the ads where the reader is likely to seek a break while reading the article or your copy.

Artistic Way To Be Discreet - The font, color and texture should match with the rest of the page. This will make the ad looks like part of the article. You have the options to use either an ideally matching color or a contrasting color. Either way is effective.

Use The Maximum but Have a Balance - Always try to use maximum number of adsense ads in each page. Don't lose balance however! Ads should not dominate the page.

Measure the effectiveness of Ad units - Always make use of Google Adsense channels to identify which position or format has produced high click through rates. Be prepared to change the Ad format, color and position according to your findings. These simple but effective methods surely drive you more income you never ever expect if you are prepared to follow those in your own way. Find out your way out today.

Adsense: Why Bloggers Don't Get It

2008-12-03T19:25:00.001-08:00

In doing the research for my series of Adsense articles, two common ideas kept getting repeated:

My Adsense ads are horrible, they only pay out (insert low dollar figure here)

My Adsense CTR is horrible, I only get a (insert extremely low CTR here)

To be fair these comments weren't coming just from bloggers, but bloggers did make up an overwhelmingly large percentage. I think this stems from a misconception on the part of the bloggers that they are entitled to high payout and CTR. I'd like to spend a little time to share my feelings on this subject. In the early days a blog may just have been an online diary or journal, but like the days of the Nehru jackets, they are gone. What a blog is now is Chronologically Structured Content Management System, as opposed to the classic web hierarchical structured implementation. Let's be clear, you can still use a blog as your online diary or journal, but nowdays it's just as likely to be used as a commercial blog. Yes, I did just say commercial blog, and no the earth didn't open under my feet and swallow me whole for saying it. Let's take some time to look at a your typical blog.

You may post about commercial related subjects like your job, what you like to buy, or even your hobbies. However these posts are all about your life, they are no more commercially viable or attractive than say Aunt Millie's Holiday Newsletter. Yes we all have an Aunt Millie in our family, every year she sends out a finely crafted newsletter in a coordinating envelope she ordered from paperdirect.com telling us all about her family. We learn how hard her husband works, how many activities her kids are in and how good they are at them. We also read the details of how her scrapbooking business hasn't taken off yet, but she promises to spend more time on it right after New Years. So if you were a business owner would you want to advertise anywhere on Aunt Millie's Newsletter? Then why would a business want to pay you top dollar to advertise on your blog? What's that, you say your blog gets (insert a high number here) of readers per day, surely that has to be worth something? Well did you know Aunt Millie sends out over 800 copies of her holiday newsletter to 17 countries, on 4 continents? Now before you get all fired up about it, understand that I don't have a problem with you having a personal blog or sharing it with the public. However your expectation that it has value outside of your family/friends/community, is a serious misconception.

So what exactly is a commercially viable blog? Don't think of it as publishing a blog, think of it as publishing an online magazine. You need to start out with good content or articles about a small area or niche topic. You will need lots of content, and unless you are well known, don't expect much to happen until you've written at least 100 and more likely over 200 articles. Yes you will have to devote some time and effort to publicizing and marketing it as well. Once you've got a significant focused reader base, that's the time to slowly ad in the advertising. Now here's the one that causes lots of people to freak out. BE PREPARED TO GIVE UP SOME PRIME SCREEN REAL ESTATE, IN THE CENTER, ABOVE THE FOLD, TO ADVERTISING. If you've worked with print media at all you will know the middle of the right hand page is the most desirable spot inside of a magazine (excluding the cover pages). I've sat through meetings where people have said " … you know we need more right hand pages …". If you want people to click on your ads, you will need put them where they can see them, above the fold in the center of the screen, in a prominent location. Yes I can almost here the keys typing for the flame comments and emails now. Before you hit that send button though, ask yourself this, are you building a space sough after by advertisers, or are you working on Aunt Millie's Newsletter? No I don't think your pages should be filled with ads, in fact quite the opposite, there should always be more content than advertising, ALWAYS!

Next thing, lose the fancy graphics and eye-candy from your template. Yes I know you may have paid for a fancy template, maybe you had your niece who's a graphic artist design something for you, or you really like the way that spinning flaming platypus looks in your page header. Here's the thing, it's detracting from your content. Graphics should be simple, understated, and support the content, not overpower or compete with it. Now before some art student wearing a beret, corduroy jacket with elbow patches, and smoking a pipe or French cigarette, writes and calls me a Philistine, stop and think. Are you designing a commercially attractive and viable space, or are you designing an intricate macrame border for Aunt Millie's Newsletter? Remember keep it simple and to the point.

Yes I know you feel like I just ripped off the band-aid, and now it hurts. Sorry but someone had to do it. I know some of you are still out there reading saying 'but can't I still have this … do we have to get rid of this … I really like that …'. Well I'm not your second grade teacher who's going to tell you everything's all right, that you don't have to change a thing, and put a scooby-doo sticker on your shirt to make you feel better. If you want a blog that makes you more money than you spend at Starbucks every Tuesday, you will need to get serious about what you're doing.

If none of this sounds incredibly fun, and really sounds pretty close to actual work, here's the way I see it, getting an Adsense check for $5 is fun, getting an Adsense check for $500 or $5000 is work.

Disclaimers:
I don't actually have an Aunt Millie, she's a fictional character. But like you, I do have relatives who send out holiday newsletters.

Yes I know the minimum Adsense payment is $100, so you never could get a $5 check, but I was just making a point, mmkay?

Google Adsense Tips, Tricks, and Secrets- PART 1/2

2008-12-02T18:40:00.003-08:00

Build an Empire?

When you're deciding to become a website publisher you will fall into one of two broad categories:

Publish 100 websites that each earn $1 a day profit

Publish 1 website that earns $100 a day profit

The reality of it is, most people end up somewhere in between. Having 100 websites leaves you with maintenance, management and content issues. Having one website leaves you open to all sort of fluctuations (search engines algorithm's, market trends, etc). You can adapt your plan on the way, but you'll have an easier time if you start out going in the direction of where you want to end up.

General or Niche

You can build your website around general topics or niche ones. Generally speaking niche websites work better with adsense. First off the ad targeting is much better. Secondly as you have a narrow focus your writing naturally becomes more expert in nature. Hopefully this makes you more authority in your field.

If this is your first try at building an adsense website, make it about something you enjoy. It will make the process much easier and less painful to accomplish. You should however make sure that your topic has enough of an ad inventory and the payout is at a level you are comfortable with. You may love medieval folk dancing, but the pool of advertisers for that subject is very small (in fact it's currently zero).

Once you've gotten the hang of how Adsense works on a website, you are going to want to dabble in some high paying keywords, you may even be tempted to buy a high paying keyword list. This does come with some dangers. First off the level of fraud is much higher on the big money terms. Secondly there is a distortion of the supply and demand relationship for these terms. Everyone wants ads on their website that make $35 or more a click, however the number of advertisers who are willing to pay that much is pretty limited. Additionally the competition for that traffic is going to be stiff. So, don't try to run with the big dogs if you can't keep up. If you have to ask if you're a big dog, then chances are, you're not. I have used a high dollar keywords report from cashkeywords.com and was pleased with my results (see cash keywords free offer recap).

New Sites, Files and Maintenance

When you're building a new site don't put adsense on it until it's finished. In fact I'd go even farther and say don't put adsense on it until you have built inbound links and started getting traffic. If you put up a website with "lorem ipsum" dummy or placeholder text, your adsense ads will almost certainly be off topic. This is often true for new files on existing websites, especially if the topic is new or different. It may take days or weeks for google's media bot to come back to your page and get the ads properly targeted. TIP: If you start getting lots of traffic from a variety of IP's you will speed this process up dramatically.

I like to build my sites using include files. I put the header, footer and navigation in common files. It makes it much easier to maintain and manage. I also like to put my adsense code in include files. If I want/need to change my adsense code, it's only one file I have to work with. TIP: I also use programming to turn the adsense on or off. I can change one global variable to true or false and my adsense ads will appear or disappear.

Managing URL's and channels

Adsense channels is one area where it's really easy to go overboard with stats. You can set up URL channels to compare how one website is doing to another. You can also set up sub channels for each URL. If you wanted to you do something channels like this:

domain1.com - 728 banner

domain1.com - 336 block

domain1.com - text link

domain2.com - 728 banner

domain2.com - image banner

domain2.com - 336 block

domain3.com - 300 block

While this is great for testing and knowing who clicks where and why, it makes your reporting a little wonky. Your total number will always be correct but when you look at your reports with a channel break down things will get displayed multiple times and not add up to correct total. Makes things pretty confusing, so decide if you really need/want that level of reporting detail. TIP: At the very least you want to know what URL is generating the income so be sure to enter distinct URL channels.

Google Adsense Tips, Tricks, and Secrets- PART 1/2

2008-12-02T18:40:00.001-08:00

Build an Empire?

When you're deciding to become a website publisher you will fall into one of two broad categories:

Publish 100 websites that each earn $1 a day profit

Publish 1 website that earns $100 a day profit

General or Niche

New Sites, Files and Maintenance

Managing URL's and channels

domain1.com - 728 banner

domain1.com - 336 block

domain1.com - text link

domain2.com - 728 banner

domain2.com - image banner

domain2.com - 336 block

domain3.com - 300 block

Google Adsense Tips, Tricks, and Secrets- PART 2/2

2008-12-01T18:29:00.001-08:00

Site Design and Integration

Once you know you are going to put adsense on your website you're going to have to consider where to put it. If this is new site it's easier, if it's an existing site it's more difficult. While there are some people who will be able to do it, in most cases I'd say if you just slap the adsense code in, you'll end up with a frankensite monster (props to Tedster of WMW for the buzzword). While every website is different, Google has published some heat maps showing the optimal locations. No surprise that the best spots are middle of the page and left hand side. Now I've done really well by placing it on the right, but you should know why you're doing it that way before hand, and be prepared to change it if it doesn't work out.

Google has also has published a list of the highest performing ad sizes:

336×280 large rectangle

300×250 inline rectangle

160×600 wide skyscraper

From the sites that I run, I do really well with the 336 rectangle and 160 skyscraper. My next best performing ad size is the 728 leaderboard, I don't really use the 300 inline rectangle too often. So really it depends on how well you integrate these into your site. Placement can have a dramatic effect on performance. TIP: When working on a new site or new layout you may want to give each location it's own channel for a little while until you understand the users behavior.

Another 'trick' that can increase your CTR is by blending your adsense into your body copy. For example if your body copy is black, remove the adsense border and make the title, text, and URL black.TIP: Try changing all of your page hyperlinks to a high contrast color (like dark red or a bold blue) then change the adsense title to the same color.

The one area where I've found blended ads don't perform as well is forums, especially ones with a high volume of repeat members. Regular visitors develop banner blindness pretty quickly. One 'trick' to keep the ads from being ignored is to randomize the color and even the placement. As with any of the decisions about location, placement and color it's a trade off. How much do you emphasize the ads without annoying your visitors. Remember it's better to have a 1% CTR with 500 regular visitors as opposed to a 5% CTR with 50 visitors. TIP: For forums try placing the adsense ads directly above or below the the first forum thread.

Using Images

One of the latest 'secrets' to make the rounds is using images placed directly above or below an adsense leaderboard. This has been used for a while but came out in a digital point forum thread where a member talked about quadrupling their CTR. Basically you set up the adsense code in a table with four images that line up directly with the ads. Whether or not this is deceptive is fuzzy and very subjective. Obviously four blinking arrows would be 'enticing people to click' and be against the adsense TOS. However placing pictures of 4 laptops over laptops ads isn't, so use your best judgment here and look at it from the advertiser or Google's perspective. If you have a question as to your implementation being 'over the line' write to adsense and ask them to take a look.

As far as using the images, I've done it and can tell you it definitely works. You get the best results when the images 'complete the story the ads are telling'. For example if you have ads about apple pies, use pictures of freshly baked apple pies, instead of granny smith, Macintosh, pink lady, and braeburn apples. TIP: Don't limit yourself to using images only on that size ad unit, it works just as well with the other sizes, like the 336 rectangle.

Added:
I got a little criticizm for this and rightly so, as I wasn't specific as I could have been. Do not use very identifiable brand name or products for your images. Use generic non-specific stock images whenever possible and appropriate.

Multiple Ad Units

Another way to increase ad revenue is to use multiple ad units. According to Google's TOS you are allowed to post up to three ad units per page. Similar to standard search results the highest paying ad units will be served first and the lowest being served last. If there is enough of an ad inventory, place all three ad units. However you should pay attention to the payouts. Current assumption is you get 60% of the revenue (on a $0.05 click you get $0.03). So if a click from the third ad unit is only paying between 3 to 5 cents you may want to omit it from your page. This is one are where giving your ad units channels does have value. If one ad unit is getting a higher percentage of click throughs you'll want to make sure the highest paying ads are being served there. TIP:Use CSS positioning to get your highest paying ads serving in the location with the highest CTR.

Adsense in RSS

With the growth of blogs and RSS feeds you're starting to see adsense included in the feeds now. IMHO this doesn't work, and here's why:

You only get to place one ad unit.

You have no control over finding the 'sweet spot' for the ad unit.

The ads are usually poorly targeted (this is getting better).

People develop 'banner blindness'.

I know people like being able to read full postings in their feed reader, and there are at least a dozen other reasons for full posts from pleasing your users to mobile offline computing, all of which are completely valid. However if your website depends on generating adsense revenue to survive, then bring them to the site and show them the ads there.

Affiliate Sites

Placing Adsense on affiliate sites is tricky. Are you giving up a $10, $20, or $30 sale for a $1 click? This is something you have to test on your own to figure out. If you aren't converting now it's definitely worth a try. I like to use adsense on my article pages. For example let's say you had an affiliate website where you sold shoes. You're going to need some related articles to 'flesh out' the site. Things like 'getting a shoe shine' or 'finding a shoe repair shop' these are excellent spots for adsense. While you won't get rich, they will usually provide a small steady income and cover things like hosting costs.TIP: If you find you have pages getting more than 50 clicks per month add more pages about this topic, and link the pages together. Mine you logs for the search terms used.

PPC Arbitrage

This is a dicey subject so I'm going to steer clear of precise examples. Basically you bid on low volume uber niche terms at a very low cost. You set up landing page that contains high payout ads for the related general topic. You are looking for terms with a large gap between the price you are bidding on adwords and the price you are getting on Adsense. If you pay $0.10 a click and get $1.00 a click you make $0.90 each click. To get your adsense ad approved you will need to 'add some value' along the way. You can make a killing or get taken to the cleaners with this one, so make sure you know what you are doing before you try it.

What is section targeting and how do I implement it?

2008-11-30T18:04:00.000-08:00

Section targeting allows you to suggest sections of your text and HTML content that you'd like us to emphasize or downplay when matching ads to your site's content. By providing us with your suggestions, you can assist us in improving your ad targeting. We recommend that only those familiar with HTML attempt to implement section targeting.

To implement section targeting, you'll need to add a set of special HTML comment tags to your code. These tags will mark the beginning and end of whichever section(s) you'd like to emphasize or de-emphasize for ad targeting.

The HTML tags to emphasize a page section take the following format:

You can also designate sections you'd like to have ignored by adding a (weight=ignore) to the starting tag:

With these tags added to your HTML code, your final code may look like the following:

<html><head><title>Section targeting</title></head>

<body>

This is the text of your web page. Most of your content resides here.

</body>

</html>

You can use section targeting to make suggestions about as many sections of a page as you like. However, please be aware that we can't guarantee results, and that it may take up to 2 weeks before our crawlers take into account any changes you've made to your site.

In order to properly implement this feature, you'll need to include a significant amount of content within the section targeting tags. Including insufficient content may result in less relevant ads or PSAs. In addition, please keep in mind that this feature should only be used to emphasize significant sections of your site's relevant content. It is against our program policies to manipulate the ad targeting to result in ads that are not relevant to the content of your pages.

A Simple Calculation! - But Stunning!

2008-11-30T04:10:00.001-08:00

Amazing Growth of INFOSYS

We all know about the growth story of Infosys. How about the stock? Lets find out.

Infosys was founded by Narayana Murthy along with some others in 1981. It came with an IPO in 1993 at the price of Rs. 95.

Everybody who applied got the shares. Many missed the Diamond opportunity by not applying.

Suppose that a person applied for 100 Shares. It would cost him Rs. 9500.

Let us assume that he is holding the same position till today. What will be the value now?

Let us calculate.

Remember that in these 13 years Infosys would have offered many dividends.

Let us keep this aside and calculate the value of shares alone. Soon after IPO, Infy gave 1:1 bonus in 1994.

So, our 100 shares will be 200 in 1994. Again they gave 1:1 bonus in 1996.

That will take the count to 400 shares. And again in 1998 they offered bonus of 1:3 shares. That will take our count to 1600 shares.

In 2000, they split the stocks (Rs. 10 FC to Rs. 5 FC). This will take our count to 3200 shares. In 2004, again they announced 1:1 bonus. It will take our count to 6400 shares.

Recently, two months back they gave bonus shares in the ratio of 1:1. Now, the count of ours would be 12800.

Today(13/10/2006), I checked the CMP of Infosys. Its Rs. 2070. So, what will be the value of our shares?

12800 x 2070 = Rs. 2,64,96,000. Yes, its Two Crores Sixty Four Lakh and Ninety Six Thousand only.

What other investment would have taken to this level? Real-Estate? Bank Deposit? Gold? I don't think so.

A Bank deposit of Rs. 9500 in the same year at the rate of 12% would have hardly fetched us Rs.38,000 by this time.

Can u find ONE MORE INFOSYS..................

Tips For Maximum Adsense Content Relevancy

2008-11-29T20:05:00.000-08:00

One of the most essential aspects of getting the most out of your involvement with Google's Adsense program is to be certain that Google serves up the most relevant ads possible on your site. The concept is easy to grasp--visitors travel to your sites in search of certain content on their topic of interest. If they see advertisements directly related to those content desires, they are far more likely to click on the ads than if they encounter only tangentially related material or, in a worst case scenario, ads that are not even related to their interests. As such, it is in your best interests to make sure your site displays relevant ads. Here are few tips for improving your content relevancy to produce more accurately targeted contextual

FIRST THINGS FIRST. Before you even begin to use Adsense as a monetization tool, make sure there are relevant ads for your site or pages. In most cases, you will have determined this long before you even embarked on site design or content development. However, if you are thinking of adding Adsense to an existing site built with other monetization strategies originally in mind, you may not have bothered checking to see if other advertisers were going after that particular market. Be sure you are addressing a topic for which ads exist in sufficient quantity. If related advertising is sparse, it will difficult to avoid irrelevant ads.

KEYWORDS MATTER. You do not want content that is overstuffed with particular keywords to point of destroying readability and value, but you do want to make sure your materials make liberal use of on-topic keywords likely to spawn the most relevant possible ads. Experts maintain that using keywords with your titles and H1 tags is an excellent way to assist in getting the most relevant possible ads. This has added advantages in terms of search engine optimization, as well.

METATAGS. Once upon a time, metatags were a critical aspect of search engine optimization in general. Although the engines rely upon metatags far less than they once did, there is some evidence to suggest that using ad-triggering keywords in your pages' meta-tags may increase the relevance of the advertisements displayed. This strategy may help, and it certainly cannot hurt.

LOOK FOR LACKLUSTER CONTENT. Many sites to a great job of supplying content related to particular themes or keywords in the main portion of a page, but have sidebars, headers and footers filled with less targeted terms and material. Take a long look at your navigational elements and other "side of the page" text and remove keyword terminology that may be leading to irrelevant ad service. Alternatively, you can use Adsense's section targeting tool to remove those areas from Adsense's consideration completely, so long as you do not plan to display ad blocks or ad link units in those areas.

TIGHT THEMING. You want to keep content tightly themed. That means you do not want to feature long, rambling articles that cover multiple topics. Instead, rely upon materials that address singular issues. You also do not want to feature multiple chunks of content on disparate matters on the same page for that very same reason. The value of tight theming may extend past individual pages. Many publishers argue that Adsense tends to reward tightly-themed overall sites with more relevant ads, as well. Even though this aspect of theming is not as well researched and proven, it makes sense to follow the practice, because of the search engine optimization advantages of having a focused site.

BLOCK THE BAD ADS. Monitor your site regularly and take note when irrelevant ads appear. Then, take the time to add them to your blacklist for the site. Google does give you the ability to block individual ads via the Competitive Ad Filter. If you block out commonly served irrelevant ads, you may improve your chances of featuring more ads upon which your visitors will actually click.

The more contextually relevant the ads appearing on your site are, the more clicks you can expect to see. As such, it is important to make an effort to use a combination of proven SEO methods that also work well with Adsense and some program-specific maneuvers to secure the best possible ads on your site.

Protect Yourself From Clicking Your Ads Accidentally

2008-11-28T17:00:00.000-08:00

You are aware that clicking on your own AdSense ads will lead to the termination of your Google AdSense account. To protect your Google Adsense account, you adhere to the Google AdSense terms and conditions. Because you are constantly working on your AdSense page in order to improve your Adsense earning, you fear that someday you may click on the AdSense ads accidentally.

Well, fear no more. There are two ways you can protect yourself from clicking on your AdSense Ads accidentally.

1. Disable Your Browser Javascript

If you disable browser Javascript setting, the Google Adense ads will not be shown while you are working on your AdSense page. The following steps will show you how to disable Javascript in Internet Explorer and Firefox.

Internet Explorer 3.X
- From the menu bar, select the Tools, then click on the Options.
- Select the "Security" tab page
- Uncheck "Run ActiveX scripts" to disable Javascript
- Restart the browser

Explorer 4.x
- From the menu bar, select the Tools, then click on the Internet Options.
- Select the Security tab page
- Select Custom and click on the Settings... button
- Select Disable under Active scripting to disable Javascript
- Restart the browser

Explorer 6.x
- From the menu bar, select the Tools, then click on the Internet Options.
- Select the Security tab page
- Select Custom Level... button
- Select Disable under Scripting > Active scripting to disable Javascript
- Restart the browser

FireFox
- From the menu bar, select the Tools, then click on the Options.
- Select the Content tab page
- Uncheck Enable Javascript to disable Javascript
- Restart the browser

You should be aware that by disabling Javascript in the browser, you may not view any PPC ads or use any Javascript related application in your browser

2. Edit the Hosts File In Your Computer

Open the host file in your PC with Word Pad/note pad and add the following entry in the host file of your PC:

- 127.0.0.2 pagead2.googlesyndication.com

Save the hosts file and restart your browser. You will not see the AdSense ad while you are working on your website.

You can find the hosts file from the following directory of your PC:

- Windows 95/98/Me, c:windows
- Windows NT/2000/XP Pro, c:winntsystem32driversetc
- Windows XP Home, c:windowssystem32driversetc

If this trick is applied, you would not be able to view any Google AdSense Ads from any AdSense site.

Top 10 Ways to Get Awesome Web Traffic Using Blogs

2008-11-27T17:00:00.001-08:00

Like many important people before you - perhaps you've underestimated the power of blogging. Blogs can be used, not only as the single easiest way to get a listing in the search engine for your desired keywords, but also serve the fantastic purpose if building a relationship with your quickly growing list of readers, listeners and viewers.

After a light lunch today, I was left in the greatest mood. So I figured I would sit down and share with you 10 ways you can share my success and popularity using blogs.

1. Use a keyword specific blog title and description. When creating your blog, I just used the free service www.blogger.com you're asked to title or name your blog and give a short description. Take this chance to think a little.

Ask yourself:

a) Who do you want to read your blog?
b) What is your interest or topic - what will you enjoy writing about?

If you have a poetry blog for example - use the word poet or poetry in your title and description. You can research the popularity of your keywords use Overture's free tool here: http://inventory.overture.com

2. Try to update often (short daily entries work great) using hand written or bot generated keyword rich informative content. Give your visitors something they want to read. I love to write so I create all my original posts, but if you have a site that needs traffic or a topic that you don't know much about you can set up an automatically updating feed using other people's blog posts, or articles. Each entry is seen as its own html page, so the engines see your blog as a multi-paged site, that is updated regularly and rich in links and keywords.

3. Create an interesting profile. Searchers and fellow bloggers love the fact you're a real person, this helps to build personal relationships. Again, put a little time and effort into this one. Tons of people peek at your profile, and Blogger.com keeps track of all your views, so open up and share a little. Everything on your profile page is taken as a searchable keyword. Things like: what you like to do, your favorite movies and music, etc. Each one will get you listed under that topic in the blogger.com directory.

4. One way to jump right in and get visitors and feedback immediately is by posting to similar blogs and linking back to your blog. Say you have a poetry blog: you can use Blogger's search tool and your keyword - in this case "poetry" or "poet." (Another way to get a quick high listing is to search Google for example "poetry blog.")

You can post a comment on their blog, just a short personal remark will do. Keep it polite, no one wants to hear negative criticism. Blogs are more personal than chartrooms or forums, and often contain personal views and opinions of the author, so don't go stepping on toes. The point is to make contact, build relationships, and exchange links. More links to your blog equals more free targeted traffic for you.

5. RSS is your friend! Create an RSS feed, by hand or using Feedburner. This gives your readers the option to subscribe to your blog with just a click. What this means to you is 100% deliverability of all the content you write by the readers request - your posts are sent directly to your subscribers via their RSS reader otherwise known as an aggregator. They are personally notified every time you post to your blog. And best of all, no spam complaints ever, and they get every update you make - no blockers or filters. Total word freedom!

6. Spread your feed by submitting to RSS directories. This is a one time deal, and you can either search and do it manually or use the tool I used: RSS Automator (it finds and submits to tons of different directories for you).

Only submit each blog once. This is a lasting deal that could mess up your good standing if you do it multiple times. So to be sure you get a listing, only submit to directories once. (This is not the same thing as pinging; you can ping every time you update your blog.)

7. Ping your blog every time you update using pinging services like pingomatic.com and pingoat.com. This lets the directories know you have updated and added a new post to your blog.

8. Create a personalized or branded RSS reader/aggregator. Talk about top of mind awareness. You don't have to be a programming genius for this one (though it helps.) There are a couple services that for a small one time fee will customize a reader for you, with your logo, header and graphics, and preload it with any media you want. So with this you're sure to be seen and remembered every day. Check out one of the best services here: http://www.tristana.org/publishers/specs

9. People love to read you, but hearing you is even better. Give Podcasting a try - there are tons of ways to get started here. I would personally recommend http://www.Libsyn.com for all your Podcasting needs. It uploads, stores, hosts, and sets up the RSS and pings for you. Like Podcasting for dummies. Then just submit your podcast to different directories and readers like Apple iTunes, and ipodder.org.

10. Radio is great but now you can create a following by imitating the idiot box. Give your subscribers another way to obsess using Video-meets-Blogging or "The Vlog." This is a medium that is far from saturated. The possibilities are endless, and you're only limited to what you limit yourself. Though it has not been promoted too widely, the new Apple iTunes Podcasting feature supports Vlog subscriptions as well.

How To Build A Traffic Highway To Your Website

2008-11-26T10:14:00.000-08:00

Every internet business needs traffic and lots of it. Traffic is the lifeblood of online businesses, therefore, any program you under-take to build a successful company or business online must incorporate numerous traffic generating strategies.

Assuming that you now have excellent products or service to market and all other internal plans well in place, now is the time to get down to real business of directing targeted traffic to your website.

The following tips are designed with you in mind to help creating the website traffic that is so essential to sales and profits online. Advertising is the key to internet marketing and search engine traffic will be the backbone or the main source for that continuous flow.

Yahoo/Overture and Google Adwords are excellent paid advertising to build traffic. It is unlikely that you will get the required website traffic without utilizing some of these paid advertising services, Overture and Yahoo, being so popular, it is futile not to avail yourself of their services.

Search engine advertising has brought real success to thousands of online businesses, why not yours? PPC or (Pay Per Click) is the term given to this way of advertising. With proper keyword selection related to your products or services this advertising method could be just what you need.

Another traffic building tool is to exchange website links with other businesses, this is called reciprocal linking and both parties normally benefit from this exchange of links related in some way to the business. When sites link to each other, they both share in the traffic generated by the efforts of each other. The more reciprocal links exchanged the more traffic that could be generated.

Viral Marketing:

This is a free or inexpensive way to spread the word on the internet about your company, business, product or service. This could be perceived as a sneaky way to advertise, by attaching your company name, product or link to certain media such as a funny video, entertaining games, interesting articles or gossip. People who are attracted to this kind of creative entertainment will pass it on to friends, relatives and acquaintances thus spreading the word wide and far.

Optimizing your website content for high ranking

Search engines rank your site based on well placed keywords and keyword phrases in your site content. Therefore the content on your site should be well optimized to take advantage of this requirement to rank high in search engine results. So, be warned when you write the content for your site.

Write and publish Articles about your business.

Submit your articles to article directories and publishers since they will have a large circulation of sites that will read and distribute the articles, giving you the exposure needed to generate much traffic. Write about special features of your business, product or service. Also include a resource box with your sites description and services plus a link to your website at the end of the article.

Become members of forums and online communities:
As members of these communities, you can write and post helpful articles along with a signature file with links to your business. This builds your credibility online, while creating much needed one way links to your site. This could boost your website ranking and traffic substantially.

Finally, publish a newsletter, as a credible and trusted net marketer, your readers will share this with many others thus creating loyal repeat visitors to your site and you will be able to market to this list forever. This list of traffic building tools is by no means final, with some imagination and creativity more ways can be found to add to these marketing strategies on and off line.

Dave Ramsey’s Plan to Fix the Credit Crisis

2008-11-06T08:57:00.001-08:00

Jesse over at You Need a Budget sent me an email this evening asking my opinion of Dave Ramsey's 3-step plan for fixing the credit crisis. Here's the plan (which you can also download as a PDF here):

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:

Common Sense Plan.

I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.

b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don't do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.

II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.

III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it's not a time for politics. It's time for all of us, as Americans, to
stand up, speak out, and fix this mess.

I think think this plan makes sense. Still, even under this plan we're still going to see a lot of foreclosures. Those who purchased homes using interest-only mortgages and then only paid the interest-portion of the payment will never be able to afford a regular mortgage payment.

Dave's also not quite clear on how we pay for the insurance program. Is this something paid for with tax dollars or is it something charged to the homeowner? I'm assuming it is taxpayer-funded. Regardless, I think this is a lot more tolerable than the massive $700 billion bailout that's being discussed. What do you think?

The Genius That Is Warren Buffett (and a GIVEAWAY to boot!)

2008-11-06T08:56:00.001-08:00

I picked up a copy of Alice Schroeder's The Snowball - Warren Buffett and the Business of Life* yesterday. I had just barely begun reading the book when I came across a section that I wanted to share with you. It's a talk that Mr. Buffett gave at the Sun Valley '99 conference, which was attended by LOTS of techies and the newly-rich from the internet bubble. Here's some tidbits from his talk:

Buffett speaking:

"…I would like to talk today about the stock market," he said. "I will be talking about pricing stocks, but I will not be talking about predicting their course of action next month or next year. Valuing is not he same as predicting.

"In the short run, the market is a voting machine. In the long run, it's a weighing machine.

"Weight counts eventually. But votes count in the short term. And it's a very undemocratic way of voting. Unfortunately, they have no literacy tests in terms of voting qualifications, as you've all learned."

Continuing…

"…What you're doing when you invest is deferring consumption and laying money out now to get more money back at a later time. And there are really only two questions. One is how much you're going to get back, and the other is when.

"Now, Aesop was not much of a finance major, because he said something like, 'A bird in hand is worth two in the bush.' But he doesn't say when." Interest rates—the cost of borrowing—Buffett explained, are the price of "when." They are to finance as gravity is to physics. As interest rates vary, the value of all financial assets—houses, stocks, bonds—changes, as if the price of birds had fluctuated. "And that's why sometimes a bird in the hand is better than two birds in the bush and sometimes two in the bush are better than one in the hand."

The talk goes on for several more pages in the book. The author mentions that the techies didn't much care for Warren's speech because they represented something new and exciting. In other words, they were smarter than everyone else. We all know what happened in 2000! Those pages alone are worth the price of the book!

Anyway, to celebrate the release of the book, I thought it would be cool to give away a copy. If you're interested in winning a copy, leave a comment below. All I ask is that you remember my two rules:

1. You must be a resident of the U.S. or Canada, and…

2. You can only enter ONE TIME!

Highlights From the Barron’s Interview with Jeremy Grantham

2008-11-06T08:54:00.000-08:00

I don't know if you're familiar with Jeremy Grantham or not, but I like him. Barron's published an interview with Grantham ($) in this week's issue. Of course the topic was the credit crisis and market turmoil. Here's just a couple of highlights from the interview.

This first one would be funny if it weren't so true:

Barron's: Do you think we will learn anything from all of this turmoil?

Grantham: We will learn an enormous amount in a very short time, quite a bit in the medium term and absolutely nothing in the long term. That would be the historical precedent.

I thought this one was also interesting:

Barron's: Do you have any closing thoughts about how we got into this financial state?

Grantham: I ask myself, "Why is it that several dozen people saw this crisis coming for years?" I described it as being like watching a train wreck in very slow motion. It seemed so inevitable and so merciless, and yet the bosses of Merrill Lynch and Citi and even [U.S. Treasury Secretary] Hank Paulson and [Fed Chairman Ben] Bernanke — none of them seemed to see it coming.

I have a theory that people who find themselves running major-league companies are real organization-management types who focus on what they are doing this quarter or this annual budget. They are somewhat impatient, and focused on the present. Seeing these things requires more people with a historical perspective who are more thoughtful and more right-brained — but we end up with an army of left-brained immediate doers.

So it's more or less guaranteed that every time we get an outlying, obscure event that has never happened before in history, they are always going to miss it. And the three or four-dozen-odd characters screaming about it are always going to be ignored.

If you look at the people who have been screaming about impending doom, and you added all of those several dozen people together, I don't suppose that collectively they could run a single firm without dragging it into bankruptcy in two weeks. They are just a different kind of person.

So we kept putting organization people — people who can influence and persuade and cajole — into top jobs that once-in-a-blue-moon take great creativity and historical insight. But they don't have those skills.

He may be right on that one but I also think a lot of it had to do with a sort of "to-hell-with-it" attitude that went on in the financial industry. The industry was primarily concerned with making money NOW—to hell with the consequences. I remember reading that mortgage brokers supposedly wrote bad business because they knew that if they declined, the borrower would just go down the street and get the loan from a competitor. It seems sound principles flew out the window.

Lessons From Hell

2008-11-06T08:53:00.001-08:00

I'm getting crisis fatigue. I'm tired of hearing about it and I'm tired of watching the market react negatively. It's funny to me that all the people who were FOR the bailout basically promised us that the market was going to fall IF we didn't approve the bailout. Well, guess what: we did get the bailout and look at what the market is doing. You guys are smart!

So, what can we learn from this credit crisis? I have a few lessons I can think of off the top of my head. There may be more. If I missed something, please leave a comment and let me know.

I present to you JLP's Lessons From Hell:

1. You can only live outside of your means for so long. Eventually, you have to reign in your expenses and bring them in-line with your income.

2. A bunch of crap bundled up together and sold off in chunks is still CRAP! Seriously, who's bright idea was it to bundle up subprime mortgages—the riskiest of all mortgages—and sell them off as "safe" investments?

3. Housing prices don't always go up!

4. There's a difference between what you can actually afford and what you are approved for.

5. READ the fine print—that's where all the nasty stuff is going to be found.

6. Don't trust ANYONE who profits off your business! Sure, there are ethical sales people out there but you can't trust that they have YOUR best interests at heart. Remember too that mortgage brokers make a percentage of the amount they write. The more they write, the more they make.

7. Greed is a deadly motivator.

8. People need a basic education in money management.

9. Don't use home equity to buy stuff or take a vacation.

10. Your home is not a bank.

11. Banks and brokerage houses are managed by people just like you and me. Although they may act superior to us, they really aren't—as evidenced by how stupid their actions were in helping create this crisis.

I'm sure there are more lessons but this was all I could come up with. What do you think of this list? What did I miss? Leave a comment and let me know.

A Conversation With a Friend About His 401(k)

2008-11-06T08:52:00.000-08:00

This morning I got a call from my friend. Our conversation went something like this (I'm pulling a 15 minute conversation from memory so bear with me):

Friend: I was looking at my 401(k) statement last night. One month ago I had $23,000. This month it's down to $17,000. I lost $6,000. What should I do?

Me: Forget about it.

Friend: But if it keeps this up, I won't have anything left.

Me: What do you mean?

Friend: If I keep losing $6,000 a month I'll be out of money in three months.

Me: No. You have to look at it as percentages. You had $23,000, now you have $17,000 so you lost about 40% [I was estimating]. If you were to lose another 40%, you would be losing it off a smaller amount of money.

Friend: Oh, I see what you're saying. How much farther down do you think it's going to go?

Me: I don't know but it's possible your account could go down to $12,000 or so. I really don't know. All I know is that we are closer to a bottom than we were before.

Friend: So what do you recommend I do?

Me: Keep doing what your doing and forget about your balance for now. It's not going to do you any good to worry about it. I will say that cashing out now would be a mistake.

Friend: Okay, thanks.

I want to zero-in on something he said at the beginning of the conversation about losing $6,000 each month. That's not how it works. The dollar-amount of the loss is based on the amount you have invested. If you have $100,000 in your 401(k) and it goes down 20%, you have lost $20,000. If you have $20,000 in your account and the market drops 20%, you have lost $4,000. See, the dollar amount isn't a constant but the percentage is.

In other words, it's highly unlikely your account would go to $0.00 as a result of a down market (unless you are using lots of leverage or you close out your account). I know it's not exactly comforting but it's better than nothing.

The Story of the Bubble that Burst

2008-10-31T20:27:00.000-07:00

Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollar as there were only two pieces of 1 dollar coins circulating around.

1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.

2) B decided to purchase the land from A for 1 dollar. So, A and C now each own 1 dollar while B owned a piece of land that is worth 1 dollar.

3) C thought that since there is only one piece of land in the country and land is non produceable asset, its value must definitely go up. So, he borrowed 1 dollar from A and together with his own 1 dollar, he bought the land from B for 2 dollar.

A has a loan to C of 1 dollar, so his net asset is 1 dollar.

B sold his land and got 2 dollar, so his net asset is 2 dollar.

C owned the piece of land worth 2 dollar but with his 1 dollar debt to A, his net asset is 1 dollar.

The net asset of the country = 4 dollar.

4) A saw that the land he once owned has risen in value. He regretted selling it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollar from B and and acquired the land back from C for 3 dollar. The payment is by 2 dollar cash (which he borrowed) and cancellation of the 1 dollar loan to C.

As a result, A now owned a piece of land that is worth 3 dollar. But since he owed B 2 dollar, his net asset is 1 dollar.

B loaned 2 dollar to A. So his net asset is 2 dollar.

C now has the 2 coins. His net asset is also 2 dollar.

The net asset of the country = 5 dollar. A bubble is building up.

(5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollar. The payment is by borrowing 2 dollar from C and cancellation of his 2 dollar loan to A.

As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollar.

B owned a piece of land that is worth 4 dollar but since he has a debt of 2 dollar with C, his net Asset is 2 dollar.

C loaned 2 dollar to B, so his net asset is 2 dollar.

The net asset of the country = 6 dollar. Even though, the country has only one piece of land and 2 Dollar in circulation.

(6) Everybody has made money and everybody felt happy and prosperous.

(7) One day an evil wind blowed. An evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollar in circulation, I think after all the land that B owns is worth at most 1 dollar only." A also thought the same.

(8) Nobody wanted to buy land anymore. In the end, A owns the 2 dollar coins, his net asset is 2 dollar. B owed C 2 dollar and the land he owned which he thought worth 4 dollar is now 1 dollar. His net asset become -1 dollar.

C has a loan of 2 dollar to B. But it is a bad debt. Although his net asset is still 2 dollar, his Heart is palpitating.

The net asset of the country = 3 dollar again.

Who has stolen the 3 dollar from the country ?

Of course, before the bubble burst B thought his land worth 4 dollar. Actually, right before the collapse, the net asset of the country was 6 dollar in paper. his net asset is still 2 dollar, his heart is palpitating.

The net asset of the country = 3 dollar again.

(9) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollar bad debt to B but in return he acquired the land which is worth 1 dollar now.

A owns the 2 coins, his net asset is 2 dollar. B is bankrupt, his net asset is 0 dollar. (B lost everything) C got no choice but end up with a land worth only 1 dollar (C lost one dollar) The net asset of the country = 3 dollar.

There is however a redistribution of wealth.

A is the winner, B is the loser, C is lucky that he is spared.

A few points worth noting -

(1) When a bu bb le is building up, the debt of individual in a country to one another is also building up.

(2) This story of the island is a close system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.

(3) An overdamped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.

(4) When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the loser. The asset could shrink or in worst case, they go bankrupt.

(5) If there is another citizen D either holding a dollar or another piece of land but refrain to take part in the game. At the end of the day, he will neither win nor lose. But he will see the value of his money or land go up and down like a see saw..

(6) When the bubble was in the growing phase, everybody made money..

(7) If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A ) and take part in the game. But you must know when you should change everything back to cash.

(8) Instead of land, the above applies to stocks as well.

(9) The actual worth of land or stocks depend largely on psychology.

Public Sector Banks impose virtual ban on personal loans

2008-10-31T10:35:00.001-07:00

The number of defaults has been on increase due to which banks are not willing to sanction personal loans to the customers. Some of the public sector banks have even imposed a virtual ban on personal loans (which are also called clean loans as they carry no security on them), while in private banks there has been a considerable slowdown in the pace of these loans.

So if you have any plans of taking personal loans to meet any expenses then it is better to go for any other option.

While some public sector banks have imposed a virtual ban on personal loans (which are also called clean loans as they carry no security on them), there has been a significant slowdown in these loans in private banks.

"It is true that the personal loan market is tight and there is more caution among the banks. As some banks would be Basel-II compliant by the end of this month, there is more focus on risk mitigation," Mr Amitabha Guha, Managing Director, State Bank of Hyderabad (SBH), told Business Line.

According to sources many banks, including State Bank of Hyderabad, Andhra Bank, Vijaya Bank and Bank of India, have taken back the power from the branch manager of sanctioning loans and the zonal offices have been given the discretion or the centralized retail asset processing centers have been authorized with this power. "Clean loans are a strict 'no' in our bank now though you cannot get any thing on record. The increasing defaults and recovery difficulties are behind this," a senior official of Andhra Bank said.

However no coverlet ban has been imposed officially, the bankers are devising their own ways of discouraging the customers.

Mr Nagendra, who works for a private firm have sought for a personal loan from Central Bank of India branch, confirms this that the banks are not willing to sanction personal loans.

"I have been asked to produce salary certificates and bank statement for last three years besides property documents in my name for a clean loan of Rs 50,000," he said.

Even the major private banks like ICICI Bank and HDFC Bank have tightened up their procedures by revamping the score system.

"Compared to last year, there has been a 30-35 per cent increase in the rejection of personal loan applications in the last six months due to tough due diligence," an ICICI Bank official said.

"The fact that banks are ready to lose a lucrative interest income ranging up to 22 per cent shows things are not well," an official in SBH Retail Assets Central Processing Centre here said.

Fitch Ratings expects defaults in unsecured personal loans in India to increase

2008-10-31T10:34:00.003-07:00

Personal loans are usually fixed rate loans, and are unsecured in nature. They do not carry any guarantee, collateral or guarantor. Given their unsecured nature, personal loans are not pleasant to the same recovery efforts that are seen in other asset classes.

Fitch Ratings said personal loan financing in India is very competitive business and this might have pushed many institutions to initiate loans in riskier segments.

According to Fitch Ratings defaults in unsecured personal loan sector in India will continue to increase. In its recently published report titled 'Indian Unsecured Personal Loan Transactions', Fitch has stated that the loan performance has continued to worsen in India since July 2007. In support to this, the rating agency had noted that delinquencies in the personal loan sector have been higher than those seen in other asset classes.

"Since then, loan and recent events have seen some lenders criticized for their recovery strategies, which in some cases may have led to other borrowers willfully becoming delinquent," Fitch said.

In response to the advertising of the engagement of recovery agents, the Reserve Bank issued draft guidelines to all scheduled commercial banks in its medium-term review of the annual policy for 2007-08 in November 2007.

In its report the rating agency stated that the immediate impact of rising delinquencies in unsecured consumer loans is on declining collection efficiencies in personal loan transactions mainly because banks are resorting to a softer recovery approach in the form of legal notices and increased phone calls.

In the long run, the regulator seems to make banks more accountable for their third-party recovery agents.

Banks going for strict norms for personal loans to keep borrowers at bay

2008-10-31T10:34:00.002-07:00

When you enquire from the banks whether they are going slow on personal loans you will get answer as No. But there are some subjective evidences which points towards it. The banks have intentionally stopped promoting it as a product and laying more stress on home loan and educational loan melas.

Then what is the reason for this becoming an unpopular product? There are a number of reasons for not being too aggressive about this product now. Bankers, not wanting to get his name disclosed said, "The default rates are on the rise; we have to make higher provisioning to cover the risk weights; and this is making the product more costly leading to higher default. The monitoring mechanism is not easy. Borrowers prefer to default on personal loans since there is no collateral that can be seized. It is a vicious cycle."

Banks directly are not rejecting the loan applicants but have fixed more stringent norms to keep such borrowers at bay. Selective private banks in the South when asked they said they have had revised the parameters to make it a 'well-structured' product. One of such new norm says - not to lend loans to people who have held a job for less than 3 years.

Earlier banks used to give personal loans if you had been employed in a place for at least one year time period but now these straightaway rule are going to set as rolling stones for those who hop for jobs every year.

An official maintain that "We found every 10th such account giving us problems. This clause disqualifies those that hop jobs more frequently".

Banks are stressing more on investing in stock market due to which they have started refusing personal loans, for purchase of unapproved site and to those that do not have a monthly salary.

Even the loan amount approved has also come down. The approvals do not exceed five times the gross annual income as compared to seven times the gross income sanctioned earlier.

Though, some banks are stepping ahead of sanctioning loans for conducting a daughter's marriage or some other personal function at home.

The official referring to the marriage advance said, "Personal loan is relationship banking. And such advances have not gone bad". It seems you have to play the sentiment card to get a personal loan now!

Government to control inflation is attempting to lower personal loan growth

2008-10-31T10:34:00.001-07:00

The government on Friday in a reply to question said in order to control inflation it is deliberately attempting to slow down the growth in personal loans.

Minister of State for Finance P K Bansal told Lok Sabha in a written reply in 2006-07 there was a growth of 23 percent in personal loans which was lower than the overall credit expansion. Adding to this he said government is following a policy to encourage growth while disallowing inflationary pressure.

In reply to another query, he said present there is no scheme before the government to lower the rate of interest to four per cent per annum on crop loans availed by farmers.

He informed that the government is giving interest financial support of two per cent per annum to public sector banks, regional rural banks and cooperative banks on their lending.

With regard to shortage of coins Bansal, in reply to a separate question, said shortages of coins have been reported from various parts of the country around second half of 2006-07, after which the casting of coins and their distribution through RBI has been accelerated and steps are being taken to meet the demand.

The demand for 50 paise and 25 paise coins is less as compared to coins of Re 1, Rs 2 and Rs five denominations, he added.

To another query, he told the RBI has got complaints about few instances where it has been noticed the attempts were made by some persons to use plastic cards other than credit/debit cards at ATMs to effect withdrawal of cash, particularly in Chennai.

Enjoy foreign trip, pay in EMIs

2008-10-31T10:33:00.000-07:00

To go on a foreign tour for vacation is no longer a dream. This vacation enjoy with your family in Bangkok and pay in EMIs, this mantra being chanted by travel agencies to attract customers who wish to go to Bangkok and Malaysia but unable to afford the trip.

The agencies, in alliance with banks, are offering loan facilities for customers to pay for membership in holiday clubs.

Sony Mehta, the owner of Skyline Travels, pointed out that they are providing loan through a tie-up with ICICI Bank.

"We have tied up with ICICI Bank for personal loans. Our customers can pay EMIs according to their convenience. The trend of taking loans for vacations is slowly catching on as several people want to visit places such as Singapore, Mauritius and Bangkok but cannot get the money up front," Mehta said.

He added this has also made possible for the middle class, "easier even for the middle class to enjoy foreign tours, which was not a possibility some time ago".

"They can take a loan for a trip and, in some cases, need to pay EMIs of only Rs 3,200 for three years. This is an easy system," Mehta added.

The travel agent reported that this season the craze to travel abroad on vacations has increased. "We already have 10 clients who are going to Bangkok on bank loans," Mehta added.

Neeraj Singh, the proprietor of Club Mahendra Holidays, said they have introduced a 25-year membership option. Membership fee ranges from Rs 1.31 lakh to Rs 6.65 lakh.

"We have 3,700 resorts all over the country and a member can holiday in any one of our resorts located at places such as Manali, Goa and Bangkok. We have facilities such as kitchens at these resorts," said Singh. Apart from this members can also get a week of free holiday every year.

Regarding the loan repayments Singh said, members can pay EMIs of Rs 3,201. "This summer, demand has been pouring in for memberships and we have approximately 300 to 400 members in Jharkhand. More are joining," Singh added. Anuj Kapoor, a government official, has also planned spending his summer holiday at Bangkok.

"It was through our friend that we learnt about the loan facility for holidays. My family was quite happy to hear about such an option," Kapoor added.

Tips for Improving AdSense Performance

2008-10-31T10:16:00.001-07:00

Tear Down the Borders

Remove borders on your AdSense ads. Web visitors eyes wander around the screen; borders stop them from wandering.

Removing borders from your AdSense ads can lead to a significant boost in CTR.

Use Matching Fonts

Match the font of your site content to the fonts of your AdSense ads.

Use Matching Colors

Match the colors of your AdSense ads to the colors of your site content. Make the ads look like content and more visitors will look at them.

One exception to the color matching rule is sites that are designed to appeal to scammers and spammers. Those sites sometimes perform better with highly contrasting colors.

Use Blue Links

Another exception to the color matching rule is to set the links in your AdSense ads to blue. Blue links tend to have a higher CTR than other link colors, because people have become used to clicking blue links.

Use Large Ads

Larger ads outperform smaller ads. Wider ads also outperform more narrow ads.

The Large Rectangle (336x280) is the best performing ad unit.

Use Lots of Ads

Google allows you to use three ad units and one link unit on each page.

Use them all. The more ads you have, the higher your Page CTR will be.

Place Ads Above the Fold

"The fold" is industry jargon for "the part of the page that the user sees without scrolling down". This will vary depending upon the resolution of the users screen and the size of their browser window.

Place as many ads as possible above the fold. Ads placed below the fold are seldom seen and seldom clicked.

Place Ads on the Left

Web users are accustomed to seeing menus on the left side of the web page. Move your menu to the right and place your AdSense ads on the left.

Use the Heat Map

Use the Google AdSense Heat Map to determine where to place ads. The darker spots are areas where users spend more time looking. Place your ads in the darker areas.

Integrate Ads with Content

Visitors will be reading your content. Keeps your ads as close to your content as possible to ensure that the visitors also look at your ads.

Use Custom Channels

Use AdSense's Custom Channels to test the performance of different ad sizes, placements, colors and fonts.

Don't use Low-Paying Competing Ads

Don't clutter your page with competing ads that don't pay. If a user clicks on an ad that pays you $.01, they are not clicking on an ad that pays you $.30.

Use URL Channels

Use AdSense URL Channels to determine which pages are making you the highest CTR, CPM, and earnings. Focus your efforts on building pages like those.

Use an AdSense Reporting Package

Google only supports 200 channels. If you have more than 200 pages, use AdSense reporting software to give you more insight into your AdSense earnings.

Don't Compete for Other Peoples High Paying Keywords

If a keyword is on a list of high-paying keywords, that means that thousands of spammers are already competing for that keyword.

Don't be a follower. There is no money in being one of the crowd.

Do Compete for Your Own High Paying Keywords

Monitor your AdSense URL channels to determine which keywords are making you the most money. Compete for those keywords. Build more pages optimized for similar keywords. Get inbound links for those keywords. Spend your time and efforrt on the keywords which are making you money.

Increase Traffic

In the long run, the best way to increase your AdSense revenue is to increase traffic to your web site.

I'm trying a new thing.. I took this article from a free article resource:

Grow Your Adsense Piggy Bank: $30 to $300 A Month

2008-10-31T10:16:00.000-07:00

Maybe you've had your own "Aha" moment with Google Adsense.

I had mine earlier this year when I realized I could make more than just pocket change by featuring those now familiar ad blocks on my websites. I had worked hard building my content oriented niche sites and had expected to make decent affiliate income—which never materialized.

You see, most people online (including you and me), are looking for information. I call them "lookey-loos." They want to gather information before making a purchasing decision. This is normal behavior. However, if you are looking to earn or make online money via a web site affiliate program, you'll quickly realize that it takes a lot more than slapping banner ads and links on your site.

Although, I've made a modest amount of affiliate income, it didn't seem enough to make it worth my while, in spite of what the affiliate marketing ebook gurus said. That's the point where I decided to put Adsense on my sites. Got nothing to lose, right?

At first I was like "Cool. A few pennies a day in the piggy bank." I didn't have to do anything extra for it, so it was kind of an easy way to make some "spare change." I didn't care how much I made each day. Anything was better than looking at a big fat zero.

Then something changed. The money accumulating in my Adsense account began to grow. Hmmm. Maybe there's something more to this Google Adsense thing than I realized. Adsense seemed like a pretty decent opportunity to make money online.

This is when I got serious about the potential to make money with Google Adsense. I know I'm just one of thousands of website publishers that has recently discovered that this is one of several ways to make extra money.

So here many of us sit, anxiously checking our stats to see how much money we've made today. What is our CTR (click through rate)? How much are we getting paid per click? And so forth.

While we all hear the tales about those making thousands per day or month with Adsense, most of us web publishers, here in the trenches, are not blessed with having a gazillion visitors that produce big fat checks. We are trying to steadily grow our modest Adsense income fairly and honestly.

But what is the secret to doing that?

**WARNING: If you're interested in information on how to make lots of money quick and easy using black hat techniques or using SPAM website generators, you can stop reading now**

I believe that slow and steady wins the race—and, you'll get to keep your Adsense account for the long run. Let me give you some perspective. Google is worth $120 billion. Google stock is now valued at over $400 per share. A good portion of their profit comes from pay-per-click advertising (Adwords). Yet, online advertising is still a relatively small percentage of total (U.S.) advertising dollars spent. However, things are rapidly changing. Online advertising will see steady growth for many years to come.

The potential windfall for online web publishers is enormous. A web publisher making $30 a month today, could be making $300-$500 per day in a few short years. Those who go for the quick, unethical profits now, but lose their Adsense accounts because of it, may be kicking themselves in the future. To me, it's just not worth it.

Anyway, for those of you who think that you'll never make it to that coveted $100 per month mark so that you can join the Google monthly check club, take heart. There's still plenty of time for you to get there. However, you must get serious. You won't make the big money if you're treating your websites like a hobby.

Ok. So, here's some quick tips on what you can do to grow your Adsense profits (I'm currently making over $300 per month with Adsense by following this very strategy):

***BUILD QUALITY CONTENT SITES***

Content is King.

You will not see good CTR without quality content. Put yourself in the visitor's shoes. What's the first thing you'll want to do when you visit a crap website? Yeah, that's right. Leave. Some web publishers believe that quality content doesn't matter. That people will be less likely to click if they get good information at a site. This is not my experience. Some also believe that a crappy content site will cause visitors to click on Adsense ads to "escape" a bad site. I think this is B.S. When's the last time you clicked on an ad to escape someone's site? It's too easy to hit the "back" button or close the browser.

Your job as an online web publisher is to give people quality information. The ads are an added benefit to your visitors. If they want more information on a product or service related to your subject matter, then they are more likely to click on an ad. They will trust your site more. And, yes, my sites consistently have really good CTR. That means "high interest."

***BUILD MORE THAN ONE WEBSITE***

While a few lucky web publishers have hit the golden jackpot ($10,000 a month and up) with only one site, most of them had built up a very popular site over several years and already had tons of steady traffic (in the thousands). When they put Adsense on their sites, they saw instant big money, and they continue to reap the rewards.

You and I, down here in the trenches with fairly new sites, cannot realistically expect to achieve these lofty heights overnight. It's gonna take a lot of work to get where they are, if we ever do. Even if we don't, we can still make a nice enough income to achieve our desired financial goals. So quit obsessing over what so and so is making and focus on your own web publishing business.

Now the truth is, the more quality websites you build, the more money you'll make with Adsense. This goes for blogs too. If one site drops in clicks, then another site often picks up the slack. This is my experience. And these sites don't have to be big money makers on their own, or get lots of traffic. It's a numbers game. The more sites you build, the more opportunities you'll have to reap Adsense profits. How many sites you build is up to you, but it's not uncommon for successful web publishers to have between two and 10 sites, some have many more!

Yes, this takes a lot of work. You have to research a niche topic, keywords, popularity potential, design a decent looking site, write or hire someone to write quality content, get your site listed in the search engines, keep monitoring your site, etc. So, you'll be working some long hours in front of your computer. But think of it as building your online empire—one site at a time.

***USE HIGHEST PERFORMING AD BLOCK***

While you can test various Adsense ad block sizes and colors on your website, others have already done the research as to the top performing ad block. It's the 300x250 rectangle. This block should be blended into your web page so that it doesn't look so conspicuously like an ad. People hate ads. They don't like to be sold to. However, if your ad blocks don't scream "advertisement" to them, they're more likely to click. This has been proven.

The best positioning for ad blocks is at the top of the page (center position seems to get more clicks). Also, blue link color gets more clicks than any other link colors. But of course, you're free to experiment with ad blocks on your own site.

***TWEAK AND UPDATE YOUR WEBSITES***

No website is perfect. You can always make improvements. Change or add new (relevant) information. If your website is ranking low, try adding new information. Search engines love websites that have fresh information. You don't have to add something new every week, but you can tweak and update your sites periodically. I've had sites move into excellent search engine positions just by doing a little tweaking.

BEWARE of auto-generated feeds and content. Google is cracking down on sites that have too much automation. The search engines seem to love organic content that looks and reads like the web publisher put some personal effort into it.

***WORK ON GETTING MORE TRAFFIC***

I know. This is the 100-pound gorilla for all of us. By now you know it's not easy getting web site traffic. Whole ebook empires have been built around this very subject. All I can tell you is that there are some proven techniques, but they take work and time. One of the best ways, and the method I use consistently to get great results is writing articles like this one, and submitting them to article directories and lists. It's also a nice way to get new sites indexed relatively quickly.

You MUST keep working on getting more traffic to your websites. Traffic=Clicks=$$$

I know it can be frustrating when your site traffic is in the single digit per day category. Look at it this way, there's nowhere else to go but UP.

***KEEP LEARNING***

An important KEY to increasing your Google Adsense profits is to learn as much as you can about the business of making money online with your website. Knowledge is power. There are plenty of generous people online offering free advice on how you can improve your Adsense income.

I wouldn't be where I am now without taking full advantage of free and paid resources. Remember, you're not alone. There are lots of folks going through the same thing that you are. If you are open to learning, you CAN move forward towards reaching your income goals with Google Adsense.

***SET GOALS***

If you made $30 this month, set a goal to make $40 or $50 next month. If you made $80 this month, set a goal to make $100 next month. Having a monthly goal is a great way to stay motivated while you work on your website business. Trust me, I know. My first month with Adsense I earned a whopping $32.46. It took several months for me to make it into the monthly check club. However, with steady work, and determination to increase my Adsense income, that check has grown bigger every month.

***HAVE RESPECT FOR ADWORDS ADVERTISERS***

Adwords advertisers respect web publishers who understand that the reason they allow their ads to show up on your website pages is so that you can help bring them quality prospects. Adwords advertisers are looking for a decent return on investment (ROI) for their Adwords dollars. They don't have to run their ads on the content network. Google makes it easy for them to turn that option off—and many do.

So, keep in mind that it's in YOUR best interest to keep the Adwords advertiser's best interest in mind when you build your websites. Advertisers want to see profits just like we do. They want some of those clicks to produce sales. If they don't make enough sales, they will quit using Adwords. That leads to less money for web publishers.

There are some greedy, opportunistic web publishers out there who only care about filling their pockets with quick cash. They don't care about how much money their SPAM pages cost advertisers when they send unqualified, or barely interested visitors, clicking onto the advertiser's site. Poor quality website traffic may make some web publishers a tidy sum, but they risk being downgraded eventually by Adwords advertisers and Google itself. Google is giving their Adwords advertisers more tools to track clicks and sales conversions.

Trust me, you want to be on the good list of web publishers that can be trusted by Adwords advertisers to consistently bring them qualified visitors. That's what they are paying for. And, quit crying over low paying clicks. Google and their advertisers don't owe you a living. If you want to make more Adsense money, then you'll have to work smarter and harder.

***BE PATIENT BUT PERSISTENT***

While Google Adsense is a great way to earn or make online money, it's definitely not a get-rich-quick scheme. It'll take months, maybe even a couple of years before you realize those big check dreams. Meanwhile, keep doing a little bit here and there to build a solid online business.

Actually, what we really do is provide a needed service to people—we provide quality information to help them find what they're looking for quickly and easily. We help the "looky-loos" save time and money. We are information providers extraordinaire!

What a great way to make a living.

Understand the way adsense works:

2008-10-31T10:15:00.002-07:00

In a very simple way, I will explain how google adsense works:

Lets say someone wants to advertise his car rental service. This advertiser goes to googles adword site, and after a short process, he publishes his ad. During this process, the advertiser excepts to pay a certain amount of money, for a certain amount of *page impressions, or a *certain amount of advertisement clicks.

Lets say an advertiser is paying google 10$ for every 1000 page impressions.

Now, you have a web site, and you would like to earn some easy money.
So you go to the google adsense homepage, and create an account.
once you've created your account, all you have to do is decide which formats of ads you would like to put on your website.

Ok, after you have set up your account and after you put the ads on your site, you start earning money.

You remember that advertiser who is advertising his car rental service? well, since your site is about Cars & Motors, google will decide to apply the advertisers "car rental service" in your ads. Why? Maybe because the person who is surfing your site would like to rent one of the cars you have mentioned on you site. Who knows.

I just don't get it. How on earth do I benefit from this?! All I want is to make some quick and easy money!

Ok Ok, I'll get to that right now.

- The advertiser pays google, for placing his ads in appropriate web sites.
- Google pays you, for allowing them to post ads on your site.

The amount of money you earn:

remember that their are two ways the advertiser pays google? Or via page impressions, or via advertisement click.

Google does not tell the exact amount of money you earn from each page impression, or from each advertisement click. However a click in worth more than an impression. And again.. Why? Because its not a big deal if someone enters your site. But entering a site, then spotting an ad, and then clicking on it- takes more of an effort than just entering your page.

I hope this was easy enough to understand.

*Page impression- Every time someone enters your site.
*advertisement click- Every time someone clicks on an advert on your site.

For more information such as:
- How to make more money threw your ads.
- How to increase the amount of people who enter your site.
- and much more,
please continue to visit this Blog.

Google Adsense, start earning money. (part 2)

2008-10-31T10:15:00.001-07:00

Important: If you have not read part one, please do so Here.

Ok, so once you have understood how to get people to visit your Blog, you want to start making money threw it.

Google Adsense is the right thing for you.

For learning how the Google AdSense program works, visit Here.

The way to get the most out of Google AdSense.

Buy now, I assume you've clicked on the Google AdSense link above, and created an account. After learning the basics, you want to how to generate more profits to your account. Or in other words- You want to learn how to make more money.

Important Rules:

- Make sure your ads are blended into your site:

Match the color of the ads, to the color of your background. You can find good and bad examples Here. The Good example is on the right hand side, and the bad examples are all the other ads.

- The AdSense format:

Check which ad formats are best for you site. For ad formats go to Google's AdSense Formats Page. Most people find the Leaderboard (728 x 90) and the Wide Skyscraper (160x600) ads, as the ones which attract the most people.

- Link Units!

One of the new ways for getting lots of clicks is the link unit ad. Again, you can find an example Here. You need to decide which type of link units work best for you. Usually, good blended link units get the most clicks, since they seem as if their just part of your site.

Those were just a few important tips about the Google AdSense program. But believe me, if you follow those rules, you want regret it.

Introducing video units. Good or Bad?

2008-10-31T10:14:00.004-07:00

Good.

It's simple. The more interactive the ads become, the more chances of people noticing them, which means an increase of the amount of clicks you'll get.

So what's it all about?

Introducing video units:
"AdSense isn't just for ads anymore; it's also a place to get video content for your site -- and earn extra revenue at the same time.

We're excited about the launch of video units -- a new way to enrich your site with quality, relevant video content in an embedded, customizable player. Simply embed a snippet of code and have relevant YouTube partner content streamed to your site. You can choose categories of video to target to your site, select content from individual YouTube partners, or have video automatically targeted to your site content. Companion and text overlay ads are relevant and non-intrusive. To further blend the YouTube player into your site, you can also customize the color scheme and layout as well as choose from three different player sizes.

If you're looking to build "stickiness" with your visitors, show quality YouTube partner video on your site, and earn extra revenue along the way, and want to know more, then review our common questions about video units."

How do I earn with video units:

"When you place a video unit on your website, you'll earn revenue from two types of ad formats: companion ads, which sit above your video content within the player and can be either text or image-based, and text overlay ads, which appear in the bottom 20% of the video content area. Ads on video units can be paid on either a cost-per-click or cost-per-thousand impression basis."

What kinds of ads will appear in the video unit?

"Video units may display two types of ads:

* Text overlay ads, which are displayed in the bottom 20% of the video as it plays
* Companion ads, which appear above the video content within the player

The ads displayed can be either contextually targeted or site-targeted, and may be paid on either a cost-per-click or cost-per-thousand impressions basis."

How do I add a video unit to my page?

"Once you have linked your YouTube account and AdSense account, it's easy to add a video unit to your page. Just follow these steps to customize and implement your player.

1. Sign in to your account at http://www.google.com/adsense.
2. Select the AdSense Setup tab, then choose video units as the product.
3. You'll be directed to the YouTube website to customize your video unit. If you're not already logged in to YouTube, you will need to do so.
4. Enter a name and description for this player that will help you remember it in the future.
5. Customize the colors and layout of the player to fit your site.
6. Choose the type of content you'd like to display in this player: automated content that's automatically targeted to your site, or content from specific categories or providers.
7. Click the Generate code button.
8. Copy the code in the box and paste into the HTML source of your page where you'd like to display the video.

Once you've saved and published your page to the web, you'll see targeted videos start to show up right away."

What kind of video content can I choose?

"There are three ways to choose video content:

* Selecting individual content providers, YouTube partners who have chosen to distribute their videos to publisher websites along with targeted ads
* Selecting content categories, topics and themes of video content you'd like to show on your site
* Automatic targeting, in which the video content you display will be automatically targeted to the content of your site. You can assist the targeting by providing relevant keywords."

How often is content in my video units updated?

"Video content is updated frequently and automatically to help ensure there's always something new and interesting for your users to watch."

How will my users interact with the video unit?

"Each video player features standard YouTube video controls, allowing users to play and stop the video at any time. While the video plays, they can click on either overlay or companion ads, and the advertiser's site will open in a new window or tab.

All video units are user-initiated, so they won't be intrusive to your site's visitors. Users also have the option to minimize the overlay ad if they'd prefer."

High Paying Ads. Extremely Important.

2008-10-31T10:14:00.003-07:00

Ok Folks, a totally new subject. High Paying Ads.

One of the most obvious things about different ads is- they are different. (Well Daaa..)

Well yes, maybe it's really obvious, but there are still things you need to know:

Lets imagine together, that a new Hi-Tech company wants to sell a new product they invented. Lets call that company "Techy".

Now, Techy wants to let every one know about their new product, so they produce nice commercials, and they place huge posters on the streets.

Oh! What a coincidence! They also use Google Adwords!

Ok so how is this stupid 'Techy' company story relevant to me? I just want to make some money from my site! (or Blog..)

Well if you want to make money through your Google adsense ads, you better listen hard. (Really hard.)

This Techy company, makes Millions of dollars every month. (Because their product is really good..). Now, remember that Techy is advertising their product through Google Adwords? Good.

Lets continue imagining.
Your Blog/Site, reviews "new High-Tech products", and you also have Google Ads.

If you haven't noticed yet- Google is very very smart, and their technology is amazing. Google knows how to put suitable content in your site's ads. That's how and why their adsense program is so successful.

And back to our story..
As we both now know, your site reviews High-Tech products, and Techy is a High-Tech company, who wants to let the whole world know about their new amazing product.

Since Techy company has Millions of dollars, they wouldn't mind spending a few bucks for Google to advertise their product. Actually, because Techy are so rich, they are willing to pay Google lots of money for each click or impression, of their product.

This is where you and your site come in-
Google will place Techy's ads on your site, and you will earn huge sums of money for each click, or site impression which shows the Techy ad.

You can earn up to 54$, or more, for each click! Look at this short list, of what different company's are paying Google-
$54.33 mesothelioma lawyers
$47.79 what is mesothelioma
$47.72 peritoneal mesothelioma
$47.25 consolidate loans
...

For more KeyWords, just search Google for 'Adsense KeyWords'. You are welcome to use the search box on this Blog.

By now, you must be falling a sleep on your computer's screen. So wait, just one more second.

If you really want to make money from your Google ads, make sure you do not attract 'New Tooth Brush' or 'Check out this NEW Toilet Seat' ads.. I doubt they pay much..

Have a nice day, and make sure you have the right KeyWords.

Google gives out secret trick to Improve CTR!!

2008-10-31T10:14:00.001-07:00

One of the best tricks to improve your CTR (click threw rate), is to constantly make changes to your ads.

I don't know how many of you even know about the option you have in your Adsense account, to select multiple color palettes, for 1 Adsense ad.

What does this option do, how does it work, and why should I use it?

It's very simple. Instead of you manually changing the way your ad looks every now and then, you can set it to be automatic, so it changes constantly with out you needing to do a thing.

You'll have to ask Google exactly how it works.. But what I know is that it simply modifies the code which is generated, to have the option of changing the color palette.

Why should you use it?! That's a good one..
Ok Ok.. I'll explain..

Assuming your site has visitors who come back to your site, or even if you don't, and most of your visitors are first timers and will never come back again, it is good to have a variety of ads. Different ad colors attract different people, and it is good to mix and change constantly.
People who come back to a site they have visited before, will suddenly notice a slight change in your site, and then they will look for the change, and see the different ad. Which means they got attracted to the ad (which is good).

Now, since I know you'd love to have a screen shot tutorial of this terribly complicated process, I have created one.. I made it extremely easy to follow so you'll all be happy.

Charles Schwab’s Thoughts on the Current Market Environment

2008-10-31T10:13:00.001-07:00

Here's Charles Schwab's thoughts on the current market environment:

So what do I say when people ask what they should be doing now with their savings and investments?

I say don't do anything rash . . . stick with your investing plan. That approach has paid off in the past and I'm confident it will again in the future.

But that may seem easy to say and harder to do for many of you and I know there is no piece of advice that applies to everyone. Each of us has our own time frame and our own comfort level with risk.

I also say, don't ride the roller coaster alone. There are people you can trust to help you find your way through this. Reach out to your most trusted advisors to get reassurance about your personal situation. Every one of us approaches these periods differently. This is the time to talk about your particular concerns with someone you trust. Ask questions. Share your opinions and concerns, and get their advice.

The bottom line is that it's not hopeless—there are things you can do. And as a nation, we will get through this and come out healthy and strong at the other end.

I like Chuck.

Three Ways to Approach the “Birthday Dinner”

2008-10-31T10:11:00.001-07:00

I just read a fantastically entertaining Slate article about what becomes of the birthday party between college and marriage: it "transmogrifies" into the dreaded group birthday dinner (an event so agonizing that it led the author to curse his birthday buddy in the title of the column, rendering it relatively unfit for quoting here).

Besides the annoyance of the long tables which often prevent one from even talking to the birthday girl or gal in question, and in addition to the uncomfortableness of forced conversation with his or her college/high school/work friends that you don't know, there is also, of course, the wretchedly exhorbitant tab. Which is an even bigger problem if, "as is often the case at birthday dinners, several different tax brackets were represented at the table."

Here's an excerpt from the author's tale:

Given the built-in gratuity for a party of our size, our waiter clearly realized there was nothing to lose by making the hard sell. He was getting 18 percent of whatever he could push on us, so he might as well give it a healthy shove. For an appetizer, he vigorously recommended the frutti di mare platter—an item accompanied on the menu by the dreaded "market price" designation. Working each flyleaf of the table separately, he managed to sell us three of these massive, adjustable-rate heaps of shrimp and lobster tail. One would have sufficed.

Can you imagine? I would be dying already, and before the actual orders are even taken! Usually in these birthday dinner situations, the tab is split evenly among everybody except the Birthday Person. The math is too complex - and unseemly - to attempt to split it otherwise. According to the author there are three strategies for dealing with the Birthday Dinner order.

Approach Number One:
Boldy secede from the tab. You can offer some justification such as "I'm not drinking tonight" or "I'm just going to have the salad," but however you slice it this strategy requires "unabashed cheapskatedness" the likes of which are rarely seen.

Approach Number Two:
Order as inexpensively as possible, "in an attempt to foster a norm of fiscal conservatism at the table" - or at least to lower the average cost per person. Of course this strategy is not typically successful unless you have a somewhat forceful personality. You could, for instance, berrate your fellow diners directly when they order their 3rd $12 cocktail or the "lobster for two" for one.

Approach Number Three:
Order offensively. This is the author's favorite: "If I'm going to be subsidizing the sybaritic corporate lawyer at the end of the table (who, I happen to know, wouldn't think of ordering a beer unless it was brewed by a Trappist monk), you'd better believe he's going to be paying for a tract of my baked Alaska."

I have to admit I have purposely used approach number three myself more than once. I've been at group dinners where I wanted to stop at 2 drinks, but when others started ordering a third I defiantly did as well. No way was I going to subsidize their orders, but I was somehow OK with purchasing more as long as I consumed it.

What is your strategy when dealing with group dinners?

Oh, People Need an Incentive to Keep Paying Their Mortgages

2008-10-31T10:10:00.002-07:00

From the front page ($) of today's Wall Street Journal:

LOS BANOS, Calif. — In this California city, one of the hardest hit in the national housing crash, there's good news: Homes are starting to sell again.

Investors and first-time home buyers are snapping up foreclosed houses here, with the number of local sales up almost fivefold from this time last year. While the volume of existing-home sales across the U.S. fell 10.7% in August from the previous year, according to the National Association of Realtors, there are signs that the most damaged of markets are starting to heal themselves. Across hard-hit California, sales volumes rose 65% in September compared with a year ago, said MDA DataQuick, a San Diego-based real-estate information service.

Now the part of the article that ticks me off (emphasis mine):

The bad news is that the latest round of sales is unleashing another round of pain in cities such as Los Banos, a commuter community in California's Central Valley. With home prices already down 66% from their peak here, most homeowners owe more on their mortgages than their houses are worth. Successive deals bring new low prices, leaving remaining owners with little incentive to keep current on outsized mortgages.

Some stop paying, pocketing the money while they wait for their lenders to kick them out. A few lose their homes only to stay on as renters, paying hundreds of dollars less a month. Every fifth house in this onetime real-estate boomtown is in some state of the foreclosure process.

What about the incentive of keeping a good name and taking care of your responsibilities even when the times get tough? If the homeowner can afford the payment on the house and it hasn't changed, then what difference does it make if the homeowner is upside down on the mortgage? The only time the amount of the mortgage should come into play is if the homeowner has to move.

I say bring back debtor's prison—then maybe people will have an INCENTIVE to keep current.

The S&P 500 Index May Be Superior to the Dow But Its Performance Is Not

2008-10-31T10:10:00.001-07:00

Check out this comment from my previous post on the Dow Jones Industrial Average:

I definitely agree that the Dow (DJIA) is built on poor math. However, historical charts of the Dow vs the S&P 500 are almost identical. So I don't think it's really that big a deal.

Well, that comment got me to thinking, "Hmm…I wonder how the Dow has performed against the S&P 500 Index over the last twenty or so years?"

I originally tried to go back to the 1950s but I decided to start with 1988 because that was the first year I had monthly total returns for both the DJIA and the S&P 500 Index. I started my experiment on December 31, 1987 and ended it at yesterday's close (October 27, 2008), using the monthly total returns for each index. I also used a beginning base of 100 to make it easier to compare their performances.

Here's what the chart looks like:

I started with a base of 100 for each index on December 31, 1987. The Dow closed yesterday at 706.75 while the S&P 500 closed at 549.45, an average annual rate of return of 9.85% and 8.53%, respectively. That's quite a difference!

From looking at the chart, it looks like the Dow really started outperforming the S&P around the time the tech bubble popped, which would make sense since the S&P had greater exposure to both tech and telecommunications.

Okay, now don't go thinking I think the Dow is better than the S&P 500 just because it has performed better. I was just curious to see how the two performed side-by-side. I'll try do some more comparisons in the future.

Do Landlords of Low-Income Housing Make a Profit?

2008-10-31T10:09:00.002-07:00

I have been a subscriber to the Houston Chronicle for the last several months. It seems like nearly every day there is a front page article about how the low-income housing apartment complexes aren't being properly maintained. Apparantly, these complexes will get sited for some violation and the landlord will just ignore it.

Some of the stories are just horrendous. I remember reading about a cement staircase collapsing on two boys as they were playing. Then earlier this week a 23-month old boy drowned in a pool because he was able to slip through the iron fence that had missing bars (I won't go into why the boy wasn't being watched more carefully). One lady in that story allowed the reporter to go into her apartment. She reported seeing mold, ceiling damage, exposed wiring, and roaches. Pretty bad living conditions if you ask me.

So, here's my question for those of you who may know:

Is it possible to be a GOOD landlord of a low-income housing complex and still make a profit? Is it possible to keep things from falling into disrepair and still make enough money to pay the bills? Are landlords just greedy or are they fighting a losing battle with tennants who don't respect the property?

I ask this because I would consider investing in a low-income housing complex IF I could do it right and still make a profit. I couldn't afford for it be a charity project and I wouldn't want to do anything if I couldn't do it right.

Looking Back: Regulations and Financial Crises

2008-10-31T10:09:00.001-07:00

I think the article Regulation and the Mortgage Crisis is worth mentioning. According to the author, it aims "to provide perspective" on the "finger-pointing about responsibility for the absence of effective regulation that would have stopped or moderated the crisis." It's a really interesting read.

There are two sectors where more extensive regulation might have made a difference [in preventing the current crisis]. These are the investment banks and the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac. Both sectors were major players in the events leading up to the crisis.

In 2004 the SEC adopted a rule that pretty much allowed the investment banks to regulate themselves. While a number of other factors were involved in this decision, the commission's belief at that time was that self-regulation would be more effective than SEC regulation. This policy was consistent with the free market ideology of the Republican administration.

In 2003, efforts to bring the GSEs under tighter regulatory control were defeated in Congress. This was primarily the work of Democrats, who feared that tighter regulation would crimp the ability of the GSEs to meet affordable housing goals.

The author refers to the decisions of Rebuplicans and Democrats which ultimately helped set the stage for this crisis "a tie" as far as political blame is concerned. He also hastens to add that "an only slightly less severe" crisis would have occurred anyway for reasons below.

Deregulation - defined as the removal of existing regulations - was not a factor in this crisis. The article explains that the only significant financial deregulation legislated in the past three decades applied to commercial banks. "Restrictions on where they could branch, and on their involvement in investment banking, were both removed. Most economists, including me, believe that these actions made the banks stronger than they would have been otherwise."

The author then goes into an interesting historical explanation which explains that regulation itself is a weak defense to financial crises because regulations always tend to look backwards. For example, regulations on the Savings and Loans in the 1970's were very strict - but the regulatory system was geared to preventing S&Ls from taking on too much default risk because, historically, that had always been the major problem. The exposure of S&Ls to interest rate risk was not controlled, which led to the huge financial crisis that many of us remember in the 1980's.

S&Ls were encouraged to make long term fixed rate mortgages and loans with short term deposits. When interest rates spiked in the 80s the cost of deposits jumped, but revenue from loans stayed the same. Enter S&L crisis.

The policy changes that were introduced following the S&L crisis were largely designed to prevent another crisis of that type. Among other things, associations were authorized (and encouraged) to write adjustable-rate mortgages (ARMs) on which rates would adjust with the market. This would make S&Ls as well as banks less vulnerable to swings in market rates. Enter current crisis.

In short, regulations always have unintended (and usually unforseen) consequences which can sometimes cause problems just as bad ans the crisis they are designed to prevent. I'm sure Congress will shortly enact all sorts of regulations that will prevent a similar crisis to the one we've got now from ever happening again. I just hope whatever other consequences they inadvertently cause down the line aren't too destructive…

My Favorite Warren Buffett Sayings

2008-10-31T10:08:00.000-07:00

I was reading through Mary Buffett & David Clark's The Tao of Warren Buffett* this morning while waiting to get my oil changed. It's a great little book that takes different sayings and thoughts from Warren Buffett and explains them. Anyway, here are a few of my favorites from the book:

No. 6

"It is impossible to unsign a contract, so do all your thinking before you sign."

I love it! It reminds me of point number five from my post, Lessons From Hell.

No. 17

"You should look at stocks as small pieces of a business."

As the book points out, when you buy a share of stock, you are actually buying a fractional interest in the business. Follow Buffett's example before you buy a stock: multiply the share price by the number of shares outstanding and then ask yourself if that price would be a good deal or not if you were buying the entire business. If the answer is no then don't buy the stocks. Good advice.

No. 35

"I look for businesses in which I think I can predict what they're going to look like in ten to fifteen years' time. Take Wrigley's chewing gum. I don't think th eInternet is going to change how people chew gum."

I have nothing to add to that!

No. 38

"Read Ben Graham* and Phil Fisher
*, read annual reports, but don't do equations with Greek letters in them."

Buffett's approach to investing is a combination of Ben Graham's approach and Phil Fisher's approach. Ben believed in buying at a low price and Phil said to buy great companies. Buffett likes both.

No. 40

"If principles become dated, they're no longer principles."

The author's explain that Buffett figured out that Ben Graham's approach of buying cheap companies regardless of their underlying economics, no longer worked because there were too many people doing it. So, Buffett had to alter his approach and began buying great companies that had a competitive advantage.

No. 65

"Wall Street makes its money on activity. You make your money on inactivity."

I remember listening to a broker on the phone with her client, telling them that they need to sell a particular stock because it was up 25%. That was her only reason for wanting this client to sell. Oh, and yes, she made a commission on the transaction.

No. 79

"When you combine ignorance and borrowed money, the consequences can get interesting."

Hmmm… Sounds kind of like this credit crisis, doesn't it?

And last…

No. 84

"I buy stocks when the lemmings are headed the other way."

Yes, it takes guts to buy stocks that everyone else is selling but it makes much more sense than buying the same stocks that everyone else is buying. Just be sure you know what you're buying.

Some Interesting Findings From a myFi Survey

2008-10-31T10:07:00.000-07:00

Jonathan Clements, former columnist for the Wall Street Journal and now the Director of Financial Guidance at myFi.com, sent me a copy of the press release for a recent survey that was conducted for his firm.

Here are some of the findings:

If the current financial crisis were a baseball game, the typical American thinks we're at the end of the fifth inning, according to a recent survey of 5,000 people conducted for myFism, short for "my financial life," a new financial service from Citi. myFi is part of Citigroup Global Markets Inc. (member SIPC).

In the study, Americans seem to blame the crisis partly on excessive consumer spending—and many are looking to cut back:

• 63% say they'll spend less on holiday gifts this year.
• 61% plan to reduce spending on major purchases over the next 12 months.
• 56% are looking to spend less on travel and vacations.
• 61% say they will eat out less.

Who's to blame for the credit crisis?

This, too, is interesting:

Who's responsible for the current mess? There's plenty of blame to go around. Among those surveyed, 72% blame the financial crisis on excessive spending by American consumers, 64% blame Wall Street, 62% blame excessive borrowing by homeowners and 59% blame the federal government.

This must have been one of those "choose all that apply" types of questions. I am surprised that nearly 60% of those surveyed blame the government!

Finally, the last thing I want to point out is that only 32% of those surveyed thought now was a good time to buy stocks. This is surprising to me because stocks are down so much this year. How much further would they have to drop in order to be considered a good buy? I have a sneaky suspicion that in the minds of most people, the more stocks drop the less of a bargain they become—even though the opposite is true.

You can read the rest of the press release here. If you have any questions, leave a comment and I'll see if I can get Jonathan to answer them for you.

investissements

2008-10-30T05:29:00.001-07:00

http://www.drivehq.com/file/df.aspx/shareID812131/fileID141824936/investissements.pps

Investing in Indian Equities

2008-10-30T05:28:00.001-07:00

http://www.drivehq.com/file/df.aspx/shareID812131/fileID141657473/Investing_in_Indian_Equities.pps

Where To Put Your Money Right Now

2008-10-28T10:34:00.000-07:00

This is for anyone who has under 250k dollars in stocks and bonds and also has debt.

If you listen to me, I GUARANTEE YOU that you will earn a greater return than 90pct of the richest, supposedly smartest money managers ON THE PLANET. All those Wall Street fat cats, they can’t earn as much on their money for you as I can help you earn.

Sound too good to be true ? Read this and decide for yourself.

First thing to understand is that Wall Street wants you to believe that if you give them money, every month, forever, to buy stocks, that you will most likely will earn 7 or 8pct per year. When compounded, your money will double every 9 or 10 years. Sounds great, right ? One problem with it. You know what you would call someone on Wall Street who made you 7 or 8 pct a year, every year without ever losing money in a year ? Non Existent. Those managers don’t exist.

You can however do what they can’t and even better if you do the following:

1. Write down a list of every penny you owe to anyone and the interest rate that you pay on that amount. Your mortgage, your car payment, your student loan, the Rent A Center TV and Dell Computer Loan, your loan shark, your uncle or grandparents and most of all your credit cards

2. I’m willing to bet that you have absolutely no idea what your true, effective interest rate is on any of the above. Between penalties for using the wrong type of stamp, being 37 seconds late, and moving interest rates that are triggered by every crazy thing, its hard for anyone to know. However, a glance at Citibank Platinum Select Mastercard details as an example, would tell you that if you are late on your payment, your rate is:

“All default APRs equal the greater of (1) the Prime Rate plus up to 23.99% or (2) up to 28.99%. PLUS LATE FEES of 10pct OR MORE ON BALANCES UNDER $250 !!!! (There may be something in the fine print that asks you to bend over too, but my eyes couldnt focus on print that was that small….) “

All of Wall Street would give you the choice of either testicle to be making returns that high. A quick glance at IndexCreditCards.com tell us that not only are the average rates for any card, higher than the biggest promises from the best Wall Streeters, but they have been trending higher.

So in a nutshell, while the interest rate on your credit cards is going up, the return on your investments has been going down. You know what they call someone who keeps on giving money to their stockbroker, mutual fund or 401k, but doesn’t pay off their credit card balance in full every month, BROKE AND STUPID !

The first thing you do with your money is if you have money market funds, you take the money out and pay down your credit card debt. If that doesn’t pay it off. This is what you do next:

You make a list of every stock, bond, fund, whatever you own, and mark what your cost is, the current market price, the current dividend yield on your cost basis, if any and whether it is in a 401k, fund or brokerage account. For any stock or bond at a brokerage account that is yielding less than what you are paying in interest rates on your credit cards, and for which the current price is less than what you paid for it. YOU SELL IT. When you call your broker to get the prices, you do not let them give you a bunch of BS about why you shouldn’t. YOU SELL IT.

You dont hold it to see if you can make money with it. If you love it, you immediately fall out of love with it. ITS A FRICKING STOCK, not a family member, and you sell it. You take that money and you pay down your credit card debt.

Then you start with the stocks/bonds you have made money on. Beginning with the stock/bonds you have made the least amount of money on, if it isn’t yielding you more than the interest rate plus late fees that you pay, you start selling, and selling and selling. Sell as much as you need to until you can pay off your credit card balance.

Once you have sold enough to pay off your credit card balance, you RIP UP YOUR CREDIT CARDS and replace it with a debit card. The only way Credit Cards cost you less than 9pct, or possibly as much as 40pct or more is if you pay it off monthly. Debit cards make that happen automatically. You cant afford to pay 9pct, 40pct or more. Both are far more than you can expect to make in the stock market, or any market. If you have gotten here to this point, and you just tore up your credit cards, YOU HAVE JUST EARNED A GREATER RETURN ON YOUR MONEY IN THAT PERIOD OF TIME THAN ANYONE ON WALL STREET COULD EVER EARN YEAR IN AND YEAR OUT.

If you still arent to the point of paying off your credit card, its time to borrow against your 401k. Switch all your money from whatever funds to insured, guaranteed funds like money markets. Then find out the rate of interest you pay, how long you have to pay it off (usually 5 years), and then borrow the money to pay off your credit cards. I have never seen a 401k that charges more than credit cards in interest. Credit cards accrue interest and penalites a lot faster than you can earn and accrue interest and returns in your 401k. So borrow the money, pay off the credit card, and start paying back your 401k with what your credit card payments were. You will have your 401k loan paid off a lot faster than you could ever pay off your credit cards.

Once your credit card is paid off, then you go to your debt list and pick out the next highest interest rate and start the process all over again until all your debt except your mortgage is paid off.

If after paying off all your non mortgage debt, you still have money left, then you need to sit down with someone who knows your tax situation. Since mortgage loans are usually deductible, ask them to help you figure out what your effective interest rate is on your mortgage and what your outsanding balance is. If you are fortunate and your net effective rate is less than 7 or even 8pct, and you can make the monthly payments, then you probably don’t need to do anything with your mortgage.

If you have a mortgage that is variable in any way , shape or form, you are probably paying more after tax in effective interest rate than you can earn on your money anywhere that is legal. With this information in hand, you and your accountant or whoever you turn to for help (and please make it someone who really knows what their doing, not someone who got a refund using some tax software) can set up a meeting with your banker, or whoever happens to own your mortgage if you can find that person, and start discussions on how to buy down, pay down , buy out, or pay off your mortgage. They may say no, but if you can get them to renegotiate, and these days thats a very real possibility, you should be able to get a greater return from this process than you can get from the money being in stocks, bonds, or any thing else for that matter. This is particularly applicable if you have a subprime , ARM, or any type of variable rate mortgage.

If you have read this far you have hopefully picked up on the basic principle of debt vs investments. The people who lend you money can guarantee you that they are going to charge you a ridiculous percentage, and throw on top of it, any and every fee they can, thereby increasing the effective interest rate you pay. They can do it every year forever.

On the other side, no one in the universe can guarantee you that they can earn you more than what Consumer lenders like credit card companies charge you in interest. No one. If they could, the lenders wouldnt lend the money to you, they would give the money to those people to invest, right ?

If it takes selling every stock, bond and whatever you have to pay off your debts, do it. If it means borrowing against your 401k and paying back yourself instead of the credit card or finance company, do it. It is a far better return than you will ever make putting that money elsewhere.

If none of this applied to you. You kept your debt at levels that you could afford and at rates that were fixed and low, congrats. Hopefully this just reinforced what you already knew.

If on the other hand, this set you on the right path, and you still have money in stocks and bonds, you are fortunate. You probably need to make sure that what you own is very, very safe and not at risk. My recommendation is 6 month CDs, you can probably go to your bank and convince them to pay you 4 or more percent. If you havent heard, there is a bank liquidity crisis. Banks want your money. They have been ripping you off with credit cards all these years, go take some of their money…

One last point. It would not be out of the realm of possibilities to see a collapse of credit card debt like we saw in mortgage debt. Default rates are going to go up. That means credit card company income is going to go down. You know what banks do when their income goes down ? They try to figure out more ways to charge you more money to make it up. Which of course pushs up default rates. Its a viscious circle and you pay the price.

Get out now while you can.

Mark Cuban: Where to Put Your Money Right Now

2008-10-28T10:31:00.001-07:00

Yesterday's Houston Chronicle basically reprinted this October 15th blog post by Mark Cuban: Where to Put Your Money Right Now.

His main point is that it makes no sense to pay interest on debt that is greater than the return on your investments. I agree. However, I'm not sure I like the idea of selling current investments to pay off debt UNLESS that debt is exceedingly high and you have no other means to pay it off.

Unfortunately, I don't know a whole lot of people who have tons of debt on one side of their balance sheet and lots of investments on the other side. Usually high credit card debt is a symptom on poor money management skills and someone with poor money skills doesn't usually have investments. All this means is that IF a person doesn't have the funds available to pay off their debt then they're going to have to make some decisions and come up with a different plan. But, he is absolutely correct in his pleading for American's to get out of credit card debt! I'll second that!

Is a 100% Credit Freeze in Our Future?

2008-10-28T10:30:00.001-07:00

I got this email from a long-time AFM reader earlier this afternoon (modified slightly to protect anonymity):

Through a reliable source, I was told that there is a strong potential for a credit freeze come January 2009. According to this source, absolutely NO loans will be granted…for anything (mortgages, vehicles or otherwise). Although I would appreciate you not listing the bank's name [which I deleted], I thought this may be an interesting 'what if' scenerio for you to write about. I don't have any other details, but thought you'd get a kick out of the topic and possibly want to dig a little deeper into the idea of a 100% credit freeze.

I followed up with this reader to see if I might be able to interview the source anonymously and this was the reader's response:

As for the guy I spoke with, he won't talk to you - nothing personal. It was a social situation when we spoke, but he wasn't exactly open to comment. I tried (on your behalf, of course). He just said that if anyone needs a loan, they needed to get it within the next 90 days - or they won't get one at all. I assume he was speaking of things going on with his bank, but you never know.

Interesting. Possible? Maybe so. But, I can't imagine it lasting for any length of time. But, you never know…

What do you guys think? Anyone with any authority out there want to offer up an opinion?

Oh, and for what it's worth, I trust the reader who sent me this information.

The REAL ‘Victim’ In All This Mess

2008-10-28T10:29:00.001-07:00

Sorry to keep harping on the subject of the housing/mortgage/credit/bailout crisis but I keep reading stuff that just makes cringe. The latest comes from an article I read this morning in the Wall Street Journal about protests at the annual convention for the Mortgage Bankers Association that was held this week in San Francisco.

Here is the part of the article I want to focus on:

"The main point, and the main issue for everyone, is there should be a stop to foreclosures and evictions, and the government should be assisting the victims of the crisis and not the people who created it," said Richard Becker, spokesman for the Party for Socialism and Liberation. The group picketed outside the convention center on Sunday and Monday.

Mortgage bankers should be punished if it's found that they knowingly put people into mortgage loans that people couldn't afford, Mr. Becker said. "Jail them, don't bail them" was a popular rally cry outside the convention center.

Side note: The Party for Socialism and Liberation? Do those two words belong in the same title? I found their website and they actually have a presidential candidate. But, I digress.

I'm tired of people throwing around the word "victim" to include anyone experiencing the consequences for bad decisions. According to Merriam-Webster.com, the definition of victim is:

2: one that is acted on and usu. adversely affected by a force or agent the schools are victims of the social system: as a (1): one that is injured, destroyed, or sacrificed under any of various conditions a victim of cancer; a victim of the auto crash; a murder victim (2): one that is subjected to oppression, hardship, or mistreatment a frequent victim of political attacks b: one that is tricked or duped a con man's victim

Those who purchased homes they couldn't afford are not victims of anything other than their own poor decisions. The REAL victims of this crisis are all of us who CHOSE to do things the right way and live within our means and buy houses we could afford and those of us who are STILL saving up for a house.

Finally, I'd like to challenge Mr. Brecker's comment that mortgage bankers should be jailed if they knowingly put people in loans they couldn't afford. What about those who took on mortgage loans they KNEW they couldn't afford? Can we jail them too?

The REAL ‘Victim’ In All This Mess

2008-10-28T10:16:00.002-07:00

Here is the part of the article I want to focus on:

Side note: The Party for Socialism and Liberation? Do those two words belong in the same title? I found their website and they actually have a presidential candidate. But, I digress.

I'm tired of people throwing around the word "victim" to include anyone experiencing the consequences for bad decisions. According to Merriam-Webster.com, the definition of victim is:

Now’s The Time To Buy - Right?

2008-10-28T10:16:00.001-07:00

So the market is falling - or has fallen. I don't want to use the word "crash," but dropping from 14,000 in October 2007 down to 8,350 today (markets are still trading as I type) is pretty dramatic no matter how you phrase it.

If you believe history - and Warren Buffett - now is an excellent time to be buying stocks. Yes, things could get worse, and yes everything in uncertain, but remember how the whole premise of investing is "buy low and sell high?" Well, stocks are lower than they've been in years. Therefore, now is a better time to buy than we've seen in years. So if you had no problem loading up your portfolio when the Dow was trading around 11,000, you should have even less of a problem now - unless of course you have no confidence in the markets and you think the whole stock market is going to crash and never recover.

I'm on Team Buffett and see no choice but to assume that eventually, the markets will rise again (given the alternative of stocking up on food staples and hoarding any valuables with which I can barter when our financial systems collapse forever). Of course, "eventually" is the key word. I have no idea if it will be next month, next year, or next decade when the markets recover their losses.

So with regard to my long term (i.e. "retirement") portfolio, I find some comfort in the fact that my bi-monthly 401(k) contributions are picking up more and more shares as the markets decline. I find so much comfort in that fact that I feel the need to buy as much as possible.

In the last couple of weeks I have invested around $1,000 in stock market index funds outside of retirement accounts (international and domestic) by adding $100 or $200 each time the market set a new "low." That money would have otherwise gone into cash savings. I also boosted my 401k contribution from 8% to 10%. But I still feel the urge to do more. So I came up with a plan.

I'm breathlessly considering increasing my Roth 401(k) contributions from 10% to 20%. That would mean that in 2009 I would max out my 401(k) - which would be so exciting! I wasn't planning to do that anytime soon, because it would require the suspension of all non-retirement savings.

But the thing is, all those non-retirement savings will eventually be spent - either on vacations or a car or furniture or a wedding, etc. So while it's prudent to save for those expenditures, I feel like I'd really benefit more from maxing out my 401k because I really won't touch it for decades. And besides, I may not work for many years at a job that offers a 401k - and Roth 401k's may not even exist for very long as congress struggles to balance the budget, especially since they allegedly only benefit rich people (God forbid). So I should take advantage while I can - right?

Should I do it? My emergency fund would currently get me through several months of living if I lose my job, and of course I can always lower or suspend contributions if I get in a tight spot. Plus I'll put any tax refund and bonus checks into my liquid savings in '09, so it's not like it won't grow…

What do you think??

Okay…Enough Bad Stuff…Here Are 10 Things That Are Going Right!

2008-10-28T10:15:00.001-07:00

I got an email last week with a link to Kiplinger's 10 Things That Are Going Right. Their 10 things along with my thoughts…

1. Oil Loses Its Swagger - prices are down, but I think this is temporary.

2. A Tipping Point for the Auto Industry

3. Interest Rates Are Low and Headed Lower - yeah but will you be able to get credit?

4. Homes Are More Affordable - this is very true!

5. Your Bank Savings Have Never Been Safer -yeah as long as the FDIC can afford to pay!

6. Stocks Are on Sale, and Many Bonds Offer Terrific Yields - can't argue with this one except to say that they could still go lower.

7. The Miracle of Technological Innovation Continues

8. Prosperity Reigns in the Heartland

9. A New Tone and Direction in Washington - no comment…

10. Shoppers Can Expect Great Gift Buys This Holiday Season - true if you can afford to buy gifts.

Anyway, head over to Kiplinger's and read their complete list and their thoughts. It's true that some things are actually going right even with all the turmoil going on around us. I guess it doesn't hurt to focus on the good (even if some of them are a stretch).

Remember Mr. Roubini? Now He Says the Worst is Yet to Come!

2008-10-28T09:59:00.001-07:00

A couple of months ago I mentioned an interview with Nouriel Roubini, Economist and Professor at New York University. It turns out his assessment on the credit crisis was spot-on. Now he's a busy man traveling all over the world, talking to people about crisis and what's to be expected.

Guess what?

He fears the WORST is still to come! From the article:

What does Roubini think is going to happen next? Rather worryingly, in London last Thursday he predicted that hundreds of hedge funds will go bust and stock markets may soon have to shut—perhaps for as long as a week—in order to stem the panic selling now sweeping the world.

That's right, all the stuff we've already gone through is nothing compared to what we face in the near future. Is he right? Let's hope not!

How Each Stock Affects the Dow’s Performance

2008-10-28T09:13:00.001-07:00

Here's a quick illustration of how the Dow Jones Industrial Average is calculated.

Below is a table with all thirty stocks in the Dow Jones Industrial Average. The fourth column shows each stock's daily price change. The last column show's each stock's impact on the Dow's performance, which is found by dividing the price change by the divisor in the fifth column.

Now, before we get a bunch of comments telling us what a bad index the Dow is: I already know that! I just wanted to illustrate how the average is calculated, not critique the index itself.

15 Great Google AdSense tips to earn money

2008-10-27T09:13:00.000-07:00

Google AdSense Tip #1: Find your keywords
Before serving ads on a web page, check its keyword density. A free and advanced tool for finding the most prominent keywords in a page can be found here: SEO Density Analyzer. Copy the most important keywords to a text file ([web page name]-Google AdSense-keywords.txt).

Google AdSense Tip #2: Improve your keywords
Get keyword suggestions from Overture Search Inventory and from Google AdWords Sandbox. Get new keywords that can help you improve your ad relevance. Enter the keywords from [web page name]-Google AdSense-keywords.txt and save the suggestions to [web page name]-Google AdSense-suggestions.txt.

Google AdSense Tip #3: Keep your website focused on a theme
Use the keyword suggestions to enhance your web pages and to build theme-based content. And also try to get your keywords into the anchor text of your incoming links as much as possible. Don't forget that Google Google AdSense is keyword-targeted advertising: Google Google AdSense bases its advert topics on your websites content, this means that content-rich websites of a popular topic should attract a large amount of ads.

Google AdSense Tip #4: Write a new page every day
One of the best tips is to add a new page to your web site every day. The more content you have, the more visitors you will get. Put an Google AdSense unit on each and every content page of your site. But where? You will find more about that from the next Google AdSense tips.

Google AdSense Tip #5: Choose the right Google AdSense format
Wider formats are successful because the ads are compact, easy to read and are complementary to the content. The top three Google AdSense formats are:

336x280 large rectangle

300x250 medium rectangle

160x600 wide skyscraper

Another successful format is the 468x15 horizontal ad links, that can be placed under your navigation bar.

Google AdSense Tip #6: Color tips
When creating your Google Google AdSense ads it is recommended to use the color scheme and style of your website so that the ads blend in well. Ads without background color and borders perfom better than ads within borders with background color.

Create a custom Google AdSense palette:

border color = background color of your web site

background color = background color of your web site

link color = blue, color of your links

url color = black, #999999

text color = black, #333333, color of your main content

You can also rotate your color palette: select multiple color palettes that blend with your site to create variety.

Google AdSense Tip #7: Position tips
Visitors tend to look at the big headlines to see if your page is worth reading. If you get them interested, they will read the text and look for your navigation links.

Place the Google AdSense ads in a prominent place around the top/left part of your page or under your headlines, where your visitors are most likely to look at.

If you have an article page with a long body of text, the bottom of that article is a good place for Google AdSense ads because your visitors read the text and then they want more resources.

Google AdSense Tip #8: Increase the number of ads
If you have a lot of text on a page, use multiple Google AdSense units. You can use up to three Google AdSense units on a page, two Google AdSense search boxes and one unit of ad links.

Link units allow the user to refine what they're interested in. So if they may not be interested in specific ads on your page, they might be interested in a particular topic, and by clicking on a link unit and a link in the link unit, they'll be able to specify that they're interested in that specific topic and get a lot more options and variety on the ads that might appear.

Google AdSense for Search allows visitors to search Google.com or your sites (up to 3 domains). You earn money whenever they click on the ads that come up on the search results. If you click the Open search results in a new browser window checkbox in the Google AdSense for Search settings, you won't lose your visitors.

Google AdSense Tip #9: Preview Google ads
You can find out what ads will be served by Google Google AdSense if you install Google Google AdSense Preview Tool, a very simple tool available only for Internet Explorer 6.0. Click to advertiser sites without generating invalid clicks, and easily add their URLs to your URL filter list. Because Google AdSense uses geo-targeting, Google serves different ads for other countries. Instead of faking your IP or travelling abroad to test your ads, use this Google AdSense tool to see what ads see your visitors from France, Germany or other countries.

It's possible there are no Google Google AdSense adverts available for your webpage. Hide Public Service Ads, using alternate colors or images. Make sure you include the image in a simple html file as a link (use target="_top"). The image size should be the same as the dimension of Google AdSense units. In the alternate url box, enter the absolute url of the html file.

Read more about alternate ads.

Google AdSense Tip #10: What not to do
Don't click your own ads

Don't ask others to click on your Google ads

Don't manually change Google AdSense code

Don't place Google ads on sites that include prohibited content (e.g.: adult sites)

Don't employ cloaking, hidden text or farm links

Don't use Google AdSense ads on the same page with similar ads (e.g.: Yahoo Publisher Network)

Google AdSense Tip #11: Show images above or next to your ads
Placing images above Google AdSense ads is not necessarily prohibited by program policies. However, depending on the method of implementation this could be considered encouraging users to click on ads. So you should include a border line between the ads and the images. Don't show specific products in your images, in order not to mislead the visitors. Just use generic images that will increase the visibility of your ads.

Google AdSense Tip #12: Use section targeting
Use section targeting to emphasize some content in your page. On your site, place this code where you want to emphasize.

Content you want to emphasize.

If you want some content to be ignored, use

Google AdSense Tip #13: Alternate the colors of your ads
Google AdSense allows you to have up to 4 color variations for each variable for which you can specify color. You should do that if you put Google AdSense ads on pages that receive many impressions from the same visitors (for example forums) to reduce ad blindness. For example:

google_color_border = ["628098","628098","000000","000000"];

google_color_link = ["000000","BBB90C","BBB90C","628098"];

google_color_url = ["000000","628098","000000","000000"];

google_color_text = ["628098","628098","000000","000000"];

Great for overcoming ad blindness.

Google AdSense Tip #14: Your Google ads should be visible
Make sure your text ads are visible to the surfers in all screen formats. If you put the ads in a table give sufficient breathing room, i.e. proper cell padding and cell spacing to make the ads stand out from the rest of your content.

Google AdSense Tip #15: Use Google AdSense channels
You can categorize the content of your website into channels and then track your performance. This way you can experiment with different types of ads and see which is performing the best. Instead of buying an Google AdSense tracker, you can enter the most important pages in your site and see how they are doing. Create up to 200 channels for Google AdSense.

William Mok is one of the internet marketing company CEO and he is a successful internet marketer.To receive more internet marketing tips and free e-book , please visit http://www.marketonair.com

Adsense; Improve Your Earnings by 5 Folds

2008-10-27T08:57:00.001-07:00

Poker Affiliates: Use PPC Ads For A Traffic Boost

2008-10-27T08:55:00.002-07:00

How Does Google Detects Invalid Clicks - A Must Know For AdSense Publisher.

2008-10-27T08:55:00.001-07:00

If you are not getting any details of the invalid clicks from the termination letter, it may be a good idea to learn how Google defines these clicks and ways to detect them.

Google defines invalid clicks as:

* Manual clicks intended to increase publisher's advertising
* Clicks by automated tools, robots, or other deceptive software.

-So how does Google detect these clicks and how would they know which clicks are invalid?

Google AdSense team uses three powerful tools to detect invalid clicks:

* Advanced Monitoring Tool: Google uses its proprietary software to monitor clicks fraud activity. They are constantly working to improve their technology.

http://www.google.com/support/adsense/bin/request.py?contact=invalid_clicks_appeal

A Piece of Advice

The author of this article is Casey Yew, Thanks!

How To Boost Blog's Traffic- And Make Money.

2008-10-27T08:49:00.001-07:00

Google Adsense Tips, Tricks, and Secrets- PART 1/2

2008-10-27T08:47:00.000-07:00

Build an Empire?

When you're deciding to become a website publisher you will fall into one of two broad categories:

Publish 100 websites that each earn $1 a day profit

Publish 1 website that earns $100 a day profit

General or Niche

New Sites, Files and Maintenance

Managing URL's and channels

domain1.com - 728 banner

domain1.com - 336 block

domain1.com - text link

domain2.com - 728 banner

domain2.com - image banner

domain2.com - 336 block

domain3.com - 300 block

Adsense: Why Bloggers Don't Get It

2008-10-27T08:46:00.000-07:00

In doing the research for my series of Adsense articles, two common ideas kept getting repeated:

My Adsense ads are horrible, they only pay out (insert low dollar figure here)

My Adsense CTR is horrible, I only get a (insert extremely low CTR here)

Super Cash Flow Company

2008-10-24T07:47:00.001-07:00

"In The Theory of Investment Value, written over 50 years ago, John Burr Williams set forth the equation for value, which we condense here: The value of any stock, bond or business is determined by the cash inflows and outflows-discounted at the appropriate interest rate that can be expected to occur during the remaining life of the asset." - Warren Buffett

The Indian Internet sector is still in the early innings of evolution. Simply put, `connectivity' and `convergence' are powerful secular trends, and a handful of companies will witness a huge growth in market share, owing, in part, to "Network Effects".

Traditional valuation, such as P/Es and earning growth rates, offers little or no guidance to investors trying to value Internet stocks. Like all businesses, Internet companies are valued on their ability to generate cash. If Internet companies have higher valuations than their offline counterparts, the market must believe that they have higher cash flows.

Internet Company has a drastically different cash economics than their Old Economy counterparts. It invests much less in their computers and office space than Old Economy companies spend on bricks-and-mortar and working capital. Its online business model means that it can reach new customers and grow sales without spending lots of cash. This has several benefits. First, because consumers can access web sites from any Internet connection, it can grow its revenues rapidly without having to endure long delays as it scales its physical infrastructure. This increases sales, and allows the company to "lock-in" customers before other competitors acquire them. Second, because it does not have to spend much money to serve an incremental customer, revenue growth translates rapidly into higher margins.

A company's propensity to generate or consume cash through earnings or investments determines the nature of its business model. As Figure below indicates, companies tend to fall into one of four categories:

Traditionally, successful companies have a cash inflow from earnings, and a cash outflow from its investments in working capital and bricks-and-mortar stores or factories. Companies that fit this profile are in the upper-left Profitable Buildout quadrant of the diagram.

But there are some exceptional companies in the Internet space that falls in the upper-right Super Cash Flow quadrant as it has both earnings and investment as a cash inflow. They have negative working capital, which means that their working capital is financed by interest free cash loans from customers and suppliers. They also do not require huge capital expenditure. This is because once the fixed cost of operating a website is spent, it is relatively inexpensive to scale up capacity to meet increased demand. This makes it one of the rare companies with cash inflow from investment.

Thus, a few Internet companies generate a cash inflow from its income statement and balance sheet, making them one of the rare companies in the Super Cash Flow quadrant.

In the past, investors have focused solely on the income statement to find the important source of cash inflow. However, looking at the balance sheet of a New Economy company can unveil an important source of cash. Investors must look at both financial statements, as it is free cash flow, the sum of a firm's cash earnings and investments that drives shareholder value creation.

Stock market explained

2008-10-23T09:35:00.001-07:00

The Stock Market

The
Stock Market simply illustrated...

Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for Rs10.

The villagers seeing that there were many monkeys around, went out to the forest and started catching them.

The man bought thousands at Rs10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at Rs20.

This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further and people started going back to their farms.

The offer rate increased to Rs25 and the supply of monkeys became so little that it was an effort to even see a monkey let alone catch it.

The man now announced that he would buy monkeys at Rs50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

In the absence of the man, the assistant told the villagers. "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs35 and when the man returns from the city, you can sell it to him for Rs50."

The villagers squeezed up with all their savings to buy the monkeys.

Then they never saw the man nor his assistant, only monkeys everywhere!!!!

This is Stock Market!

Warren Buffett

2008-10-22T08:46:00.000-07:00

There was a one hour interview on CNBC with Warren Buffet, the third richest person in the world as of April 2007, behind Microsoft co-founder Bill Gates and Mexican telecom magnate Carlos Slim. In June 2006, he made a commitment to give away his fortune to charity, with 83% of it going to the Bill and Melinda Gates Foundation. The donation amounts to approximately $30 billion. Buffett's donation is said to be the largest in U.S. History. At the time of the announcement the donation was enough to more than double the size of the foundation.

His annual salary of about $100,000 is tiny by the standards of senior executive remuneration in other comparable companies. In an interview on CNBC, he mentioned that his annual salary is equal to the price of the Berkshire Hathaway Class A share price.

Here are some very interesting aspects of his life.

Born on August 30, 1930, he bought his first share at age 11 and he now regrets that he started too late!
He bought a small farm at age 14 with savings from delivering newspapers.
He still lives in the same small 3 bedroom house in mid-town Omaha, that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence.
He drives his own car everywhere and does not have a driver or security people around him.
He never travels by private jet, although he owns the world's largest private jet company.
His company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis.
He has given his CEO's only two rules.

Rule number 1: Do not lose any of your share holder's money.
Rule number 2: Do not forget rule number 1.
He does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch television.
Bill Gates, the world's richest man met him for the first time only 5 years ago. Bill Gates did not think he had anything in common with Warren Buffet. So he had scheduled his meeting only for half hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.
Warren Buffet does not carry a cell phone, nor has a computer on his desk.
His advice to young people: Stay away from credit cards and invest in yourself.

ICICI DUPLICATE SITE - Be careful

2008-10-21T09:24:00.000-07:00

Dear All Please pay attention to the following

ICICI bank's net banking has a duplicate site as details given below. Please be careful while using ICICI net banking.

ICICI Bank Duplicate site-be careful

-----ICICI Bank Duplicate site ----

ICICI Bank Genuine Site

Please forward this mail to all. Its really important as lot of our friends working in companies have salary account in ICICI bank.

Investment tips for crisis times

2008-10-21T09:07:00.001-07:00

In an uncertain market where stock prices are witnessing a free fall, it is time for investors to rejig their portfolio to limit losses and opt for stocks that offer stability and decent returns.

Among the two key barometers of the Indian equity markets, the Sensex has fallen by more than half from its January 2008 peak of 21,206 points. The gradual decline over the last nine months, and the sharp fall over the last couple of weeks, have eroded a substantial chunk of investor wealth.

With the demand situation not looking good and liquidity problems persisting, investors are clueless as to where the markets would be headed over the next year.

The Smart Investor spoke to money managers to assess what their outlook on the market is and what strategies one needs to adopt to tackle the meltdown.

The negatives

The main macroeconomic parameters, be it the GDP, interest rates, the fiscal situation, credit growth, the IIP numbers -- all point to a muted phase of growth over the next few quarters. The International Monetary Fund in its World Economic Outlook projections for 2009 has cut India's GDP growth forecasts to 6.9 per cent.

While this is marginally down from the estimated 2008 GDP of 7.2 per cent, it is substantially down from the nearly 9 per cent GDP growth rate experienced in 2007. Compounding this is the fact that advanced economies, which are engines of world consumption, are expected to grow at just 1 per cent in 2009.

Indian manufacturing activity, too, is down with IIP (manufacturing) growth restricted to 4.9 per cent during April-August 2008 (against 10 per cent in the previous corresponding period); it was just 1.3 per cent in August 2008. Credit growth to the consumer durables sector and autos, good indicators of spending trends are hardly encouraging.

While credit for durables has fallen by 33 per cent for the year till June 2008 y-o-y, auto loans have barely moved registering a growth of just 1 per cent in the same period.

India's current account balances too are precarious as compared to China's, which continues to attract investments on top of a huge trade surplus. While FIIs together own only 25 per cent of Indian equity, it is their high ownership of free floating stock that makes it difficult to stop the markets slipping down dramatically when they decide to pull out and which results in a worsening of the current account deficits.

While factors such as fund flows and economic growth are external, elections to state assemblies and to Parliament over the next six months are internal factors which will significantly impact sentiment. Pre-poll uncertainty, a vote-on-account Budget and a delay in investment and policy decisions mean that positive cues may emerge only in the third quarter of 2009.

The positives

However, all the information is not negative. Inflation, which has been responsible for the monetary policy tightening and subsequent rise in interest rates, and which has also brought spending and investments to a grinding halt, is trending down at 11.4 per cent for the week ended October 4.

A dip in commodity prices (crude oil and metals) means that the figure would dip below the double digit market much before the current fiscal runs through. A cut in interest rates, which is on the cards sooner than later, could boost business and consumer confidence and keep the sentiment quotient on the markets high.

Thus, analysts believe that while fundamentals might take some time to improve, sentiment (the other key determinant of equity prices) might improve as speed of response is much better now than in the past crashes. Says Nilesh Shah, deputy managing director, ICICI [Get Quote] Prudential AMC, "The response to the 1929 crisis came four years later in 1933 and was to the tune of $ 78 billion in value. The response to the current crisis has been much swifter. Governments across the world have swung into action and pumped more than $3 trillion so far."

However, the bounce back won't come in a hurry. Says Amitabh Chakraborty, president equity, Religare Securities "Don't expect a V shaped recovery, there is still pain left in the system." A more prolonged U-shaped recovery would mean that markets are likely to be move sideways for at least two quarters. While the fiscal situation due to high oil prices has worsened, Srividhya Rajesh, fund manager, Sundaram BNP Paribas, believes that India's growth numbers, though lower, will top most other markets.

Combined with cheap valuations, a 10 per cent downside from these levels and falling commodity prices, she believes, could make the markets attractive once more to domestic and foreign investors.

What should you do?

While the list of unknowns seem quite long and affect every company large and small, experts advise that you be prudent with decisions related to your equity portfolio.

While existing investors, who do not have need for funds, should not panic and exit their equity holdings as they are likely to book heavy losses, for new investors with a surplus to invest this is a good time to fish for quality stocks at reasonable prices. Says Hemant Rustagi, CEO, Wiseinvest, an investment advisory, "Adopt a bottom up approach and commit smaller amounts rather than make a lump sum investment at one go and time the market." Agrees Dinesh Thakkar, CMD, Angel Broking, "Invest 25 per cent of your surplus now and the remaining in dips spread over the next three months." This way you will not only benefit from an upside in stock prices but investment at these levels will also keep your downside to a minimum.

But, coming back to existing investors, they must also learn to book losses (reshuffle portfolio), if need be. That's because, if you don't, you may get stuck with companies that may be going nowhere, thereby losing an opportunity to make good the losses (by investing in a better company). Stocks like DSQ Software, during the dotcom rally in 1999-2000 are proof of the pudding.

Where to invest?

Stick to disciplined investing and do your homework thoroughly before committing your funds or you will be speculating which is not advisable on both counts of managing risk and enhancing returns. Preferably, add companies that are leaders in their respective businesses. In that context, let there be no size bias. But, what is important is that the companies should have reasonably decent prospects, sound management and strong entry barriers, apart from healthy financials that will help them tide the current rough patch. Besides these qualities, there are some more factors that need to be considered. They are:

High cash, low debt: To benefit from your investment in the current environment, follow the traditional conservative principle of cash is king. Look for companies which have a record strong positive free cash flow as it can be used to buy out businesses at firesale prices or strengthen operations. Moreover, in a worsening situation where equity markets are down and debt comes at a high price, raising money is not only going to be difficult, it might stretch the balance sheet. Companies that are less leveraged can expand and do not have to cough up cash at regular intervals to pay for interest costs.

While software and FMCG companies bring in a lot of cash due to high margins and low leverage, investors need to keep an eye out on how global demand plays out before investing in the IT sector. While FMCG and pharmaceuticals are defensive sectors, within the sector one could look at ITC (a diversified play), Ranbaxy [Get Quote] (valuations) and Sun Pharmaceuticals (growth prospects).

Funding blues: Resources locked in a current expansion or funding of acquisition allow little flexibility in operations. Notice that the market is already punishing companies, which have taken up huge expansion plans and need funds to take them forward.

Here, an example could be Jaiprakash Associates [Get Quote] (50 per cent price erosion over the last month), which is building India's largest private sector hydroelectric project at a cost of Rs 5,600 crore (Rs 56 billion), tripling its cement capacity and has aggressive plans in the real estate sector.

The company's intention to raise funds through the rights issue route also indicates its need for capital and comes at a time when established names such as Hindalco [Get Quote] and Tata Motors [Get Quote] have struggled to get their pricing right for their issues in a bearish market.

In contrast, NTPC was sitting on a cash pile of Rs 15,000 crore (Rs 150 billion) at the end of FY08 and can fund its mega plans by a combination of internal accruals and debt. It is also generating a cash profit of about Rs 10,000 crore (Rs 100 billion) a year. The fixed return nature of the power sector and internal accruals will ensure it grows at stable rates irrespective of market conditions.

Substantial price decline=value buy?: A sizeable decline in the share price of a company does not qualify automatically for investments. Some also tend to look at stocks in relation to their valuations a few months back, indicating that after a 50-60 per cent decline, their valuations look cheap.

But, that does not necessarily hold true. Says P K Agarwal, president, research, Bonanza Portfolio, a financial services firm, "Companies (in the capital goods sector for example) which performed in the earlier bull run might not be the best bets due to high interest rates, large capex and muted industrial and economic growth." Avoid construction and realty stocks which have dropped substantially as they require large amounts of capital to sustain their business.

Another stock that looks cheap is Reliance Communications [Get Quote] considering the scorching pace of growth in telecom. The company, however, is in the middle of a pan-India expansion of GSM network and is expected to spend Rs 50,000 crore (Rs 500 billion) in FY08 and FY09.

Despite sound business potential and growth prospects, the markets have drubbed the shares by 35 per cent over the last month. If you can handle volatility and adopt an aggressive approach to stock buying, you could add this to your portfolio.

Among other sectors where one can find stocks that offer value are financials, believe fund managers such as Sandip Sabharwal, executive director-equity and CIO of J M Financial AMC. He says that, with a likelihood of interest rates easing, investors could look at companies in the banking and financial sector space (PSU banks) which are available at cheap valuations and will outperform the market.

Other parameters: Dipping equity prices also make high dividend earning stocks a good idea. Check for past dividend record and the cash flow situation in the first two quarters and you will get a fair idea of what the annual picture will be like to arrive at a list of companies that are likely to make higher payouts.

Bongaigaon Refineries and Chennai Petro with a high dividend yield are two names that come to mind and fit the high dividend yield criteria at current prices. For investors who wish to invest in markets but don't have the patience or time to track every company, try index funds.

The benefit? You get a diversified collection of the bluest of the blue chips packaged in one instrument which is not only easy to track but is the cheapest low cost mutual fund scheme available in the market. Here, the Nifty BeES from Benchmark Mutual Fund could be looked at.

Despite a gloomy outlook and uncertainty, the current levels offer a great opportunity to invest. Historically a price-earnings multiple of 10, or 50-60 per cent off the top signals a bottom. At a consensus FY09 EPS of Rs 980, you are getting the entire Sensex basket, at just a little over 10 times.

While an investment now could give a substantial boost to your equity portfolio over the next two years, expect the medium term (up to 12 months) to be choppy in light of the global turmoil (still far from having achieved stability), domestic slowdown and impending state and national elections.

Only the new government will be able to bring significant reforms aimed at bolstering economic growth. So, for the time being, give a higher weightage to safety and thereafter, ensure that you don't pay a high price for stocks, even if they are expected to report robust numbers.

Do you feel let down by your mutual fund investments?

2008-10-21T09:04:00.001-07:00

Few would dispute that the year 2008 has been tough on investors. This holds especially true for first-time investors i.e. the ones whose tryst with equity markets only began in the last few years. After having seen the markets surge to record highs, the downturn has certainly caught several investors off-guard.

And the despondency is not restricted only to those who have participated in equity markets via the direct equity investment route. Even investors in equity mutual funds have borne the brunt of falling markets. As a result, several investors are in panic mode. Some are even contemplating redeeming all their mutual fund investments and instead making investments in risk-free avenues like fixed deposits and bonds.

But is that the right course of action? We don’t think so. To begin with, investors must conduct an honest appraisal of their risk profile and investment horizon. Also, they must candidly answer the question – why did I get invested in a given mutual fund?

If an investor truly believes that he can take on higher risk and is willing to stay invested for the long-haul (at least 3-5 years), then we believe there is no reason to panic. In fact, given the attractive valuations, investors should consider adding to their investment portfolios. As regards, the reasons for getting invested – if it was to achieve a predetermined investment objective, then it’s all the more reason to stay the course.

Conversely, if the answers are on the lines of ‘have a low risk appetite’, ‘wanted to make a quick buck’ or ‘to ride the rising markets for the short-term’, there is a cause for concern. Such investors got invested in avenues that were wrong for them or made investments for the wrong reasons. In either case, they would do well to work out an exit strategy in consultation with their investment advisors.

As for investors who have the requisite risk-taking ability, investment horizon and clearly defined objectives backed by investment plans, it’s a good time to evaluate if they are invested in the right avenues i.e. in this case, the right mutual funds. Even the best of plans will not deliver if poorly-managed funds are deployed to achieve them. However the evaluation process needs to be a proper one.

To begin with, investors would do well to understand the fund’s nature and investment style, before evaluating its performance. For example, an aggressively-managed equity fund that professes to take stock and sector bets should be expected to deliver above-average results in rising markets. On the other hand, when markets move southwards, such a fund is likely to be worse hit as well. This is keeping in line with the fund’s high risk – high return investment proposition. Comparing the fund’s performance on the downturn with that of a conservatively-managed equity fund would be unfair, akin to comparing apples with oranges.

Similarly, understanding the fund’s investment universe is vital as well. For instance, a professed mid cap fund would be predominantly invested in stocks from the mid cap segment. Expecting it to feature among the top performers at a time when large caps are rallying would be unfair.

Another common mistake is considering funds in isolation. Any advisor worth his salt will emphasise on the importance of diversification. Hence the norm is existence of investment portfolios, instead of investments in single funds in a standalone manner. The key to a well-constructed portfolio is that the downturn in an investment avenue can be offset by an upturn in another. Similarly in a mutual fund portfolio, the presence of diverse investment propositions and styles should help the investor’s cause. Broadly speaking, so long as the investment portfolio is on course to accomplish the predetermined investment objectives, investors should be fine.

Clearly conducting an appropriate evaluation is easier said than done. Hence investors would do well to engage the services of their investment advisors for the evaluation exercise. The next step is to take corrective measures.

Now depending on the specifics of each case, it could vary right from altering the allocations to various funds, exiting some funds and investing in new ones to doing nothing. Surprised? Don’t be. It’s possible that investors are already invested in funds that are right for them and in the right allocation as well. And it is not uncommon even for the best of funds to hit a rough patch. If no material changes have occurred in a fund’s investment proposition and its ability to deliver over the long-term is undiminished, keeping the faith and staying put wouldn’t be a bad idea.

The importance of the evaluation exercise, especially in testing times cannot be overstated. From an investor’s perspective, the key lies in striking a balance between pressing the panic buttons and being complacent. Also, engaging the services of a competent investment advisor is vital.

Curtains for 'SIP plus insurance'

2008-10-21T08:53:00.001-07:00

Recent media reports suggest that the ‘SIP (systematic investment plan) plus insurance’ phenomenon will shortly come to an end. Leading life insurance companies under the aegis of an industry association have taken a decision to that effect. An eminent personality from the insurance industry was quoted stating that insurers would not offer insurance cover on savings and investment products offered by competing entities. The statement should be read with reference to Asset Management Companies (AMCs) managing mutual funds.

Ever since unit linked insurance plans – ULIPs emerged as ‘bread and butter’ offerings of life insurance companies, fund houses and life insurers started vying for the same space. By offering insurance plus investments under a single product, insurance companies (in some ways) introduced a product that competed with mutual funds. Furthermore, not too long ago, media reports also suggested that AMCs approached the market regulator i.e. the Securities and Exchange Board of India seeking permission to sell insurance products to their investors. Perhaps the decision made by life insurance companies was the culmination of all of the above.

Whatever might have prompted the move, we believe this is a welcome step from the investor’s perspective. At Personalfn, we have never been enthused by the ‘SIP plus insurance’ offerings. There are several reasons for the same.

First, by opting for a mutual fund, simply because it offers an insurance cover as an add-on benefit, investors run the risk of getting invested in a fund that may not be right for them. Typically, a fund should find place in an investor’s portfolio for its investment proposition and its ability to help the investor achieve his long-term financial goals. Investing in a fund simply because of the add-on insurance benefit, would certainly not qualify as a good reason for getting invested.

Second, in the ‘SIP plus insurance’ offerings, the insurance cover is linked to the SIP amount and its tenure. This is certainly no way to buy insurance. Ideally, the insurance cover should be sufficient to indemnify one’s nominees against any financial loss arising on account of the individual meeting with an eventuality. Hence, the concept of Human Life Value must be put into play. By linking the insurance cover to the SIP amount and tenure, the offerings often deprive investors of the opportunity to be adequately insured.

Again, the definition of insurance in the ‘SIP plus insurance’ offerings needs to be looked into. In some cases, the insurance implies the unpaid SIPs i.e. if the eventuality occurs, the SIP installments that haven’t been invested as yet, will be invested on behalf of the nominee and on maturity, the requisite sum (based on market price) will be remitted to him. This would barely qualify as an insurance cover.

In cases where there is an insurance cover separate from the unpaid SIP, it is linked to the SIP amount. That the insurance cover is often capped (at Rs 1 m or Rs 2 m) doesn’t help. The situation is further complicated by the fact that the insurance cover is only available upto a certain age or the tenure of the SIP; based on the facts of each case, the investor might require an insurance cover over a longer tenure.

Simply put, in several cases, the ‘SIP plus insurance’ schemes were guilty of misleading investors to believe that they were adequately insured.

Finally, investment advisors had a gala time peddling the aforementioned schemes under the garb of financial planning. The mantra was, by combining insurance and investment under a single avenue, investors’ financial planning needs were being taken care of. Nothing could be farther from the truth. Any financial planner worth his salt will vouch for the fact that there is much more to financial planning than just investing in an investment plus insurance avenue.

In conclusion, we believe that investors would do well to address their insurance and investment needs separately. This will ensure that neither takes precedence over the other and in the process, investors give adequate weightage to both objectives. As mentioned earlier, irrespective of the reasons for the curtains being drawn on the ‘SIP plus insurance’ phenomenon, it is a positive step for investors.

FMPs: Beware of the credit risk

2008-10-21T08:50:00.000-07:00

For some time now, FMPs (fixed maturity plans) have become a regular feature in the investor’s portfolio. In particular, FMPs have found favour with the investor with a low risk appetite. While FMPs have always had an element of risk, until now it was largely restricted to the actual yield (return), which can vary from the indicative yield mentioned at the time of launch. Now FMPs could be exposed to another risk – credit risk.

Before elaborating more on the credit risk associated with FMPs, let’s first understand how FMPs work and the value they can add to the investor’s portfolio.

How FMPs work
FMPs target a pre-defined yield (return). To achieve this, they lock in the same at the time of investing and stay invested till maturity. In turn, investors who stay invested in the FMP till maturity are virtually assured of clocking the given return.

Actual returns could vary
The yield on the FMP mentioned by the fund house at the time of launch is at best indicative. Being market-linked, there can be no guarantee that the FMP will attain that return. Hence, some deviation from the indicative returns cannot be ruled out.

Scenario is changing
FMPs are still being launched in the same fashion like they were launched earlier. So what has changed? Put simply, the investment scenario has changed dramatically over the last few months. As a result, the characteristics of the FMP’s investments have also undergone some changes.

Credit risk
Apart from the risk of earning less than the indicative yield, there is another risk i.e. credit risk that investors must be wary of, particularly in the present investment environment. The credit risk on an investment is the risk of loss due to non-payment of the principal or interest (coupon) or both. Fund houses have taken note of the escalation in credit risk, which explains why some FMPs have started declaring upfront that they will not have investments in certain sectors like real estate, broking and non-banking finance companies (NBFCs).

What investors must do
Investors on their part would do well to take cognizance of the higher risks in FMPs while making an investment decision. While we are not implying that investors hit the panic button and shun FMPs or redeem their existing investments; nonetheless, they need to be conscious of the risks associated with an investment.

For instance, before investing in FMPs investors must consider a few points:

1. At present, some FMPs with an investment tenure of 1-Yr are offering an indicative yield in the 10.00%-10.50% range.

2. Several banks/institutions are offering fixed deposits (FDs) in the 9.00%-9.50% range for a comparable tenure. Most of these FDs have the highest credit rating i.e. minimal risk.

3. Apart from the attractive coupon yield, for the investor in the highest tax bracket, FMPs also offer a superior post-tax return vis-à-vis FDs. Clearly, if return is the parameter being considered, FMPs have an edge over FDs. However, the investor is also taking on higher risk by investing in market-linked avenues like FMPs.

In our view, so long as the investor is comfortable with the idea of taking on that additional degree of risk to clock a higher return, he can consider investing in FMPs. However, if the investor does not want to take on that extra risk and expects to be invested in an avenue offering assured returns, FDs are more suitable.

Global Economy. Where you stand.

2008-10-20T07:44:00.000-07:00

Investments

Bank Deposits- Tops the list of concerns, but collapse of any bank highly unlikely. Stay put: while cash is king, keeping it at home is not a good idea.
Stocks- With high risk and volatility, tough to bet the market bottom. Think long-term; courageous investors should focus on liquid, large-cap stocks.
Mutual Funds- For equity, think long-term and large-cap funds; conservative investors should look at government securities or fixed maturity plans.
Gold- Volatile and rising, looks attractive in these uncertain times, but the upside may be limited.
Housing-Makes sense to wait as prices will fall further; desperate builders are not finding many buyers.

Housing Loans

Interest rates expected to come down, so wait a while; good time to pre-pay part of the loan if it is not tax-efficient.

Jobs

Increment- Big impact across the board, expect most companies to be conservative now.
Hiring- Some sectors will be hit; across the board, employees will take more time, seek to bring costs under control.
Placements- Too early to say, beginning to become a bit of a question mark.
Bonuses- Will be hit badly without doubt, particularly for services like consulting, banking and financial services.

Spending

Prices- Crashing commodity prices should reduce headline inflation over time, for now household essentials remain highly priced
Diwali- Spending sentiment is subdued, particularly for cars; but other consumer goods companies say Diwali is far from a washout.
Travel- With dipping business travel, this segment is a major casualty of subdued sentiment.