ENTERPRISE RESOURCE PLANNING (ERP) AND POWER BI

In today’s business landscape, Enterprise Resource Planning (ERP) systems are crucial for managing operations, resources, and data. On a day-to-day operation, for example, businesses across various sectors regardless of their size grapple with a multitude of data points and often are reaching into hundreds or thousands of reports. However, questioning whether it is overwhelming for businesses to struggle with such a massive amount of data collection on a daily basis is not necessarily the case. This is because the key lies in utilizing and analyzing a myriad of substantial information simultaneously can be done by implementing the so-called Power BI as an ERP solution which offers a strategic approach to effective business operations.

To kick things off, we need to understand what ERP is all about and how the so-called Power BI can be a powerful tool to assist business activities on a daily basis. According to Oracle, Enterprise Resource Planning or popularly known by its acronym "ERP" basically refers to a type of software that organizations use to manage day-to-day business operations such as accounting, procurement, project management, risk management and compliance, as well as supply chain. The ERP system, in its implementation, ties together a multitude of business processes and enables the flow of data between them. By collecting an organization’s shared transactional data from multiple sources, the ERP system eliminates data duplication and provides credibility on the data retrieved with a single source of truth. In short, such ERP systems are critical for managing thousands of businesses of all sizes in all industries, and they are regarded as indispensable as the electricity that keeps the lights on.

Furthermore, when it comes to discussing what could be the benefits of utilizing such ERP systems, a good ERP system offers many advantages which can vary and depend on how the system is deployed. The benefits of Cloud ERP, for instance, are different than the one on premise type. That being said, several benefits applied to all modern ERP solutions are as follows:

1. High Productivity. Streamline and automate your core business processes to help everyone in your organization to perform more with fewer resources.

2. Accelerated Reporting. You can fast-track your business and financial reporting easily thus this will prompt you to act on insights and improve your organization’s performances in real time.

3. Lower Risk. You can maximize your business visibility and control while ensuring compliance with regulatory requirements in order to predict or prevent such potential risks.

4. Simpler IT. By using integrated ERP applications that share a database will help you simplify your IT procedures and render everyone an easier way to work.

5. Improved Agility. With efficient operations and ready access to real-time data, you can quickly identify and react to new opportunities that may occur.

On the other hand, such an ERP system or also called an ERP suite is made up of integrated modules or business applications that communicate with each other and share common a database. Besides, each ERP module typically concentrates on one business area, yet, they work together using the same data to meet the company’s needs. As an example, the finance, accounting, human resources, sales, procurement, logistics, and supply chain are among the popular starting points where companies can pick the module they want, and they can add on their scale as needed. After all, the ERP systems also support industry-specific requirements either as part of the system’s core functionality or through application extensions that seamlessly integrate with the suite, which can be purchased via a cloud subscription model (software as a service) or a licensing model (on premise).

Meanwhile, integrating Power BI and ERP (Enterprise Resource Planning) opens doors to data-driven decision-making. This synergy, in fact, transforms data into actionable insights, streamlining operations, enhancing satisfaction, and fostering competitiveness. As businesses embrace digital transformation, such integration between ERP and Power BI (Business Intelligence) becomes pivotal for business success. Therefore, the so-called Power BI as an ERP solution will enable organizations to streamlines their data management, consolidation, analysis, and automation in real-time; catering to diverse data types and capable of handling various facets of business operations, such as:

1. Customer information.

2. Sales & Marketing data.

3. Transaction records.

4. Insights of customer interactions.

5. Product details.

6. Employee-related data.

7. Supply chain metrics.

8. Operational processes.

9. And many more.

Above all, Power BI’s integration with ERP indeed holds immense potentials which organizations can benefit from. With dynamic visualization and analytics, the so-called Power BI (Business Intelligence) empowers foresight, optimization, and innovation in today’s digital era. As businesses embrace data-driven strategies, the integration of Power BI with ERP envisions real-time monitoring, predictive analytics, and AI-driven efficiency.

Note: Below here are some of the most recommended Power BI providers which you can opt to better optimize, automate, and streamline your data management in real-time.

Read More

THE ROLE OF A FINANCIAL MANAGER

Any company, be it a small or medium size to the large corporations such as IBM, Google, Microsoft, Amazon, etc. needs money to operate their business. In order to generate revenue, they must first spend their capital/equity (money) on inventory and supplies, equipment and facilities, employee wages and salaries. With that being said, finance is undoubtedly critical to the success of all companies. Although it may not be as visible as marketing or production, however, the art of managing a company’s finances is just as much a key to the firm’s sustainability.

Basically, financial activities of a company is one of the most important and complex activities. And, in order to take care of these activities, a financial manager is the one who is in charge of performing all the requisite financing activities. At the heart of every financially successful organization, for instance, you will surely find a financial manager – a professional who plays a vital role in steering the financial ship towards organizational profitability and growth. Although the role of a financial manager has long been one of the key positions at any organizations operating with significant turnover, however, for those who have been working in the financial field or for those who possess a strong grasp of numbers and good analytical and communication skills may be the ideal fit for the position.

Furthermore, the typical financial managers have a complex and challenging job. They analyze financial data prepared by accountants, monitor their company’s financial status, and prepare and implement financial plans. One day, they may be developing a better way to automate cash collections and at other times, they may be analyzing a proposed acquisition. This is simply one of the main responsibilities of being a financial manager. Since there are other critical functions that a financial manager performs, below here are some of the multifaceted roles that are embedded in the financial manager’s duties or responsibilities.

 

1. TRANSFORMING A COMPANY’S REAL ASSETS INTO FINANCIAL ASSETS

One of the core responsibilities of a financial manager is to ensure that the company has enough funds to finance its expansion and meet its obligations. In order to do this, the company issues securities (equity and debt), and the financial manager sells them to financial investors at the highest possible price. In today’s capital market economy, for instance, the role of a financial manager is less a buyer of funds with an objective to minimize cost and more a seller of financial securities. In other words, a financial manager must have the ability to maximize the value of these financial assets while selling them to the various categories of investors.

 

2. FINANCIAL PLANNING AND ALLOCATION OF FUNDS

Financial managers are technically the architects of a company’s financial future. They work closely with top management to develop long-term financial goals and strategies, which includes assessing the company’s current financial position, forecasting future trends, and devising plans to achieve financial objectives. By carefully analyzing data and economic indicators, financial managers help organizations to make informed decisions about investments, expansion, and risk management.

Aside from being a strategic financial planner, one of the primary duties of a financial manager is to allocate funds. Simply put, they allocate resources efficiently in order to ensure financial resources are utilized to the fullest. This involves setting the spending limits for various departments, monitoring expenses, and adjusting when necessary. Needless to say, the effective budgeting that a financial manager executes will help companies control costs, maximize profits, and maintain financial stability.

 

3. MAXIMIZING A COMPANY’S VALUE

The main goal of a financial manager is to maximize the value of the company to its owners. For a publicly owned corporation, for example, it is measured by the share price of its stock whereas for a private company, the value is gauged by the price at which it could be sold. To maximize the company’s value, a financial manager has to consider both short and long term consequences of his company’s actions.

Perhaps, maximizing profitability is one approach; yet, it should not be the only one determining aspect. This is because in some cases, such an intuitive approach favors making short term gains over achieving long term goals. As a quick illustration, questioning what would happen if a company in a highly technical and competitive industry had done no research and development? In the short run, profits would be high because research and development is very expensive. However, if it is in the long run, the company might lose its ability to compete because of its lack of new creativities and innovations.

Read More

FDI – FOREIGN DIRECT INVESTMENT

Theoretically, the FDI which stands for "Foreign Direct Investment" refers to an investment in the acquisition of foreign assets with the intent to control and manage them. In fact, such companies can make an FDI in several ways, including purchasing the assets of a foreign company; investing in the company, new property, plants, equipment; or participating in a joint venture with a foreign company which typically involves an investment of capital. Normally, FDI is primarily a long-term strategy where companies usually expect to benefit from it through an access to local markets and resources, often in exchange for expertise, technical know-how, and capital. Subsequently, a country’s FDI can be both inward and outward where the inward FDI refers to investments coming into the country, and the outward FDI are the investments made by companies from that country into foreign companies in other countries. Thus, the difference between inward and outward investments made is called the net FDI inflow, which can be either positive or negative.

Firstly, there are two main categories of international investment – portfolio investment and foreign direct investment. Portfolio investment refers to the investment in a company’s stocks, bonds, or assets, but not for the purpose of controlling or directing the firm’s operations or management. Typically, investors in this category are looking for a financial rate of return as well as diversifying investment risk through multiple markets. As for the FDI which stands for "Foreign Direct Investment" in other definitions, it refers to an investment made from a party in one country into a business or corporation in another country with the intention of establishing a long lasting interest. This is what generally differentiates FDI from foreign portfolio investments where investors passively hold securities from a foreign country, and a foreign direct investment in contrast can be done by obtaining a long lasting interest through the expansion of one’s business into a foreign country.

Secondly, there are two forms of FDI in the realm of international business, namely are horizontal and vertical FDI. The horizontal FDI occurs when a company is trying to establish a new market such as a retailer, for example, that builds a store in a new country to sell to the local market. Whereas the Vertical FDI refers to when a company invests internationally to provide input into its core operations, which is usually in its home country. To illustrate this further, a company may invest in production facilities in another country. When a company brings the goods or components back to its home country (e.g. acting as a supplier), this is known as the backward vertical FDI. However, when a company sells the goods into the local or regional market (e.g. acting as a distributor), this is referred to as forward vertical FDI. In any cases, the largest global companies often engage themselves in both backward and forward vertical FDI depending on their industry.

Thirdly, many companies engage in the backward vertical FDI. The auto, oil, and infrastructure which include industries related to enhancing the infrastructure of a country such as energy, communications, and transportation are good examples of the backward vertical FDI. Companies from these industries invest in production or plant facilities in a country in order to supply raw materials, parts, or finished products to their home country. In recent years, these same industries have also started to carry out forward FDI by supplying raw materials, parts of components, or finished products to newly emerging local or regional markets.

Meanwhile, there are different kinds of FDI – two of which the "Greenfield and Brownfield" are increasingly applicable to global companies. The Greenfield FDI occurs when multinational corporations enter into developing countries to build new factories or stores. These new facilities, in addition, are built from scratch which is usually in an area where no previous facilities existed. As the name originates from the idea of building a facility on a green field, such as farmland or a forested area, companies build new facilities which can best meet their needs as well as create new long-term jobs in the foreign country by hiring new employees. Bottom line, many foreign countries tend to offer prospective companies tax breaks, subsidies, and other incentives to set up the so-called Greenfield investments.

On the other hand, the Brownfield FDI takes place when a company or government entity purchases or leases existing production facilities to launch a new production activity. One application of this strategy is where a commercial site used for an "unclean" business purpose, such as a steel mill or oil refinery to be cleaned up and used for a less polluting purpose, or a commercial office space and a residential area. Usually, the Brownfield investment is less expensive and can be implemented faster, yet, a company may have to deal with many challenges including existing employees, outdated equipment, entrenched processes, and cultural differences.

As we know, many governments encourage FDI in their countries as a way to create jobs, expand domestic technical expertise, and increase their overall economic standards. Such countries as Hong Kong and Singapore long time ago realized that both global trade and FDI would help them grow exponentially and improve their citizens’ standard of living. As a result, Hong Kong (prior to its return to China), was one of the easiest places to set up a new company where the guidelines were clearly available and businesses could set up a new office within days. This is also similar to Singapore albeit the country was a bit more discriminatory on the size and type of business, however, its government offered foreign companies a clear streamlined process for setting up a new firm.

Read More

WEBSITE ANALYTICS TOOL – MANGOOLS

In the realm of digital marketing, it is not uncommon to notice that many website owners utilize certain analytics tools to help them implementing the best SEO practices for the sake of increasing the visibility of their websites in order to drive more traffic and boost product conversions. Aside from the utilization of business analytics tools that they often use, they also employ the so-called web analytics tools in order to gather data pertaining to their website visitors so that they can have a thorough overview of what parts of their website and product interest users and potential customers the most. Obviously, there are many popular web analytics tools offered on the internet. Yet, out of those web analytics tools that I find incredibly powerful and user friendly on a personal basis is none other than Mangools.

First of all, comprehending the use of web analytics on a first-hand basis is essential if you have been navigating your company’s website or personal blog. Web analytics by theory is basically the process of analyzing the behavior of visitors to your website by tracking, reviewing and reporting the data generated through the use of  your website and its components such as webpages, images and videos. The goal is to provide actionable insights which can help the website owners to be able to better optimize their website’s user engagement and meet business objectives such as increased traffic, conversions or sales.

The utilization of web analytics, in addition, can benefit any business or individual that owns a website or web application and needs some solutions on how to understand and better optimize its performance. Through a series of data collection and analysis stemmed from the use of web analytics, those businesses or individuals that own a website or web application can come up with effective strategies to attract more visitors, retain more existing customers and even boost their monthly revenues. That is why web analytics is essential because firstly, it provides tangible data that can facilitate decisions and actions regarding a web asset. Secondly, it can serve as a business metric for promoting specific products to the customers who are keen to buy them by identifying which products a specific customer is most likely to purchase. As a result, this can help improve the ratio of revenue to marketing costs and boost the overall revenues, profitability and return on investment (ROI).

Furthermore, when it comes to discussing what Mangools can offer to help website owners to achieve the above business objectives, its service technically provides a toolset for smart SEO practices which is highly suitable for bloggers, affiliate marketers, SEO agencies, SMEs, and so on. Compared to other web analytics tools which are relatively costly and difficult to navigate, Mangools is becoming notably popular because of its user friendly design and ease of use, including the key features such as keyword research, competitor analysis, backlink analysis, rank tracking and SERP analysis.

Given as an example, Mangools has a keyword toolset which helps website owners to see their competitors' rankings for the top keywords, and the toolset will then assist them to discover some of the keyword ideas through historical search volumes and trends. This includes search results for more than 50,000 locations thus marketers can effectively optimize the content on their websites accordingly and get more organic traffic.

On the other hand, the SERP analytics tool is another powerful feature that Mangools can offer to help marketers to figure out how competitive it is to rank on the first page thanks to the details of SERP preview with authority metrics that influence the click-through rate. The rank tracking tool offered by Mangools comes with daily rankings and aggregate metrics that show the overall progress through interactive shareable ranking reports.

In a nutshell, if a user does not wish to subscribe and use its web application, this website analytics tool renders an alternative way which is a browser extension for Chrome and Firefox that employs the key data from its SEO toolset.

Link sign up:

1. https://mangools.com#a66a7bcd96aee0837faa50f55 👈

2. https://mangools.com/kwfinder#a66a7bcd96aee0837faa50f55 👈

Read More

MONETIZING A WEBSITE WITH GOOGLE ADSENSE

If you happen to notice several ads appear on your screen while browsing through this website of mine – Breaking the Habit, or perhaps if you come across reading any articles from multiple sources as you observe that there are plenty of ads popping up on your screen as well while you are trying to look for specific information on the Google search engine, believe it or not, that is precisely how Google AdSense works with its chosen publishers including myself. Unfortunately, far too many website owners or blog publishers out there have been rejected countless times by Google AdSense to be among its networking partners simply because they do not adhere to the policy content guidelines set in the first place. Needless to say, one thing that I realize in order to be easily approved by Google AdSense, a person needs to read very carefully and completely understand over those criteria set forth prior to submitting "become a publisher" application.

First of all, there is no way we can deny the fact that Google AdSense is still perceived as the most popular tool to generate income online in today’s digital era. Using Google AdSense to monetize your website or application traffic with its interactive unit ads is one of the simplest and the most effective monetization methods; yet, relatively challenging I would say to be eligibly qualified to become among its publishers. With its vast network of advertisers, one thing you should know that Google AdSense strictly ensures a steady flow of targeted ads displayed on its networking partners’ websites – usually the ones that often possess great quality with their content which allow them to monetize every page view effectively. Therefore, if your website is still under construction and lacking quality with its content, it is best for you to fix them and make any necessary improvements before sending your application to become one of its publishers.

Second of all, focusing on developing original and engaging content which resonates with your audience will not only drive more traffic, but also will cause them to stay longer on your website which can increase the likelihood of ad clicks triggered once you have been officially approved as a partner. And, to be able to effectively monetize or earn money with Google AdSense, it is crucial to blend quality content on every page with smart SEO practices (in case if you have no idea what SEO is all about, kindly refer to my articles which I have already posted under the category of digital marketing). Bottom line, you need to keep in mind as well that aside from adhering to its policy content guidelines, make sure that your ads should be integrated in a way that they are visible and capture attentions, but not the other way round which are intrusive or distracting at the expense of user experience.

Finally, when talking about how Google AdSense technically works, it is when publishers have been approved and they start displaying ads on their website pages. Google AdSense, broadly speaking, is an ad network that connects its publishers with its advertisers. When the publishers begin to display ads on their web pages, and there happens to be a random visitor who has viewed or clicked on one of those ads shown, the publishers in this stage will get paid from a specific portion of the advertiser’s bid for the ads that are being viewed or clicked. Overall, Google AdSense in many circumstances tends to perform well on smaller websites because of their quality content which provides a more straightforward information that a user is looking for compared to the larger ones.

Read More

SEO TECHNIQUES: ON-PAGE Vs. OFF-PAGE

In general, Search Engine Optimization or popularly known by its acronym "SEO" has been around for nearly as long as the internet exists. Since the early periods, many organizations have utilized it to reach new audiences, drive traffic to their websites, spread knowledge, and escalate growth. Over the years since the existence of internet, SEO has become a sophisticated and technical practice informed by web user behavior. With that being said, today’s incarnation of content digitalization employs both on-page and off-page techniques to ensure high-quality websites to make it to the top of search engine result pages.

 

ON-PAGE SEO

The On-page SEO, technically speaking, is the practice of optimizing content on website pages so that they rank at the top of Google and can be easily searched by users. As it focuses more on how to create valuable content so that it looks SEO-friendly, it uses content and technical elements to improve the overall quality of a page. Simply put, the more On-page SEO optimization you do, the more traffic you will drive to your website and the more relevant that traffic will be.

Next, when discussing further about its implementations, there are quite a number of technical aspects of a webpage that can be optimized with On-page SEO to increase your site ranking such as:

- Title tags.

- Headings.

- URL structure.

- Alt text for images.

- Site speed.

- Internal links.

- Meta descriptions.

- Responsiveness.

All those technical aspects must be maximized properly. For example, the meta description you write must comply with applicable SEO rules for which there must be keywords placed and cannot be too long. This has to be performed so that users can find your website instantly on the Google search engine. Not only that, other technical facets such as URL title, title tag, etc. must also be optimized effectively. By placing internal links that are embedded in one piece of your content which will lead to other content on one website, this in turn will slowly increase your website's visibility in search ranking.

Furthermore, relevant and optimized headings are essential when it comes to the implementation of On-Page SEO. Headings are basically the titles you give to your content, and these should be in H1 format for the best results. As they should focus on relevant and descriptive words while you can optimize them with relevant keywords, do not stuff them. Hence, in order for you to break up your content, you can also use subheadings (H2 through H6) by following the same best practices, yet, try not to repeat keywords or phrases throughout your post.

Meanwhile, one of the most critical elements of On-Page SEO is none other than your content because this is what brings traffic to your website. As mentioned, today’s web users are looking for relevant, interesting, engaging, and informative content that can fill their need or offer them a solution. In other words, people must consume the content you have created as authentic as possible, which can come in a number of popular types, such as:

1. Blogs.

2. Videos.

3. Info graphics.

4. Podcasts.

5. EBooks

6. Case studies

7. Reviews

8. Instructional articles

9. And many more.

Above all, the content you create is something that others must be able to link to it which in this case; you should avoid creating content that requires a login, copyrighted material, and certain slide shows.

OFF-PAGE SEO

Aside from the technical elements which are the On-Page optimization, the Off-Page SEO concentrates more on the external factors. It is basically a series of activities carried out to optimize your website from the outside. The so-called Off-Page SEO, on the other hand, refers to the way of promoting your website by executing the practice of link building, backlinks, and so on. Just as the keyword stuffing used to be an acceptable practice, filling your webpages with irrelevant backlinks however will get you penalized rather than being promoted. Although search engines take into consideration the number of your backlinks as well as the number of your referring domains, still, the quality of your content is far more important than quantity. Therefore, a single quality backlink from an authoritative site is worth more than 10 or even 100 of low-quality links.

Last but not least, writing content that mentions influencers in your field or perform some blogging activities to promote yourself as an expert in your realm is another example of the Off-Page SEO. Although building quality backlinks are the backbone of the Off-Page SEO strategy, there are other techniques you can use to increase site authority and encourage more links, such as:

1. Adding your business website to local listings and internet directories including things like Google My Business, Yelp, Yellow Pages, and other local listings.

2. Getting involved or participating in discussions on sites like Quora while answering questions from others and this will render you an opportunity to introduce them your website.

3. Submitting content to various sharing sites including images, audios, and video sharing sites like Flickr, Instagram, Pinterest, Soundcloud, Dailymotion, YouTube, and so on.

Read More

LEARNING HOW TO READ A COMPANY’S FINANCIAL STATEMENTS

Before you decide whether or not if you should invest in stock market, here are a few questions that would help you make a better decision and push you to think very carefully.

- How much cash does the company already have?

- How much revenue has the company made since it was started?

- How much revenue does the company expect to make in the future?

- Does the company have any debts?

Then, once you have done asking yourself with the above questions, the next step for you to start is by looking at the company’s financial statements. Learning how to read Financial Statements is similar to learning a new language. If you want to order a better dish in a Spanish restaurant, you will probably need to speak Spanish to read the course of menu. This is similar with a company’s business. If you want to find a good stock to invest in, you will need to learn how to speak the language of finance and read their financial statements. Just like learning any new languages other than your mother tongue. It is difficult at first, yet, the more you practice the more fluent you will become.

Broadly speaking, all companies need to keep track of their finance which means that they are keeping track of all the money coming in and going out, as well as other transactions that do not necessarily involve the exchange of money. At the end of each month, quarterly (three months), and year, a company will prepare financial statements which literally are the summary of all its financial transactions in that given period. In the case of a company that is publicly traded where its shares are sold on a stock market, for instance, it is required that the company prepare and file quarterly and annual financial statements so that the government and the public can see how the company is doing.

Actually, there are a lot of parties who will be keen to have a look at the financial statements of a company. First, the company’s management and board of directors will use the financial statements to track performance. The financial statements typically show how the company has done in the past and will help management to make better decisions about the future. Second, Lenders or the so-called creditors such as banks that have provided loans to the company may also want to see its financial statements. Some loans may have certain requirements, such as the company’s debt-to-equity ratio "cannot be more than either 0.3 or 0.4" in order to receive that loan, or the lender may just want to see how much cash the company has in order to estimate how likely it is the company will be able to pay back the loan and interest in a timely manner.

Here’s a quick illustration of a company’s debt-to-equity ratio, and how to calculate it is by "dividing a company's total liabilities with its shareholders’ equity".

On the other hand, investors are very interested in seeing the financial statements. They are making decisions about whether to buy or sell stock in the company and thus they need to know how the company is doing to help inform their decisions. When it comes to a company’s financial statements, there are three types that you need to learn how to read them before you decide to invest or buy its shares.

Firstly, it is a balance sheet. The balance sheet basically shows a snapshot of the company’s assets (its resources that it expects to create value in the future), liabilities (the loans and other obligations due to others), and owners’ equity (also known as shareholders’ equity or stockholders’ equity – the stake that the owners or investors like yourself have in the business).

Secondly, it is an income statement. The income statement practically demonstrates how much revenue the company generated over the year, how much it cost to sell its main products, how much it cost to pay its employees over the year, and how much it owed in interest and taxes for the year. On a very basic level, if the company makes more revenue than it spends in costs, it is a profitable business. However, if the company’s costs are greater than its revenues, then it is not a profitable business.

Thirdly, it is a statement of cash flows. The statement of cash flows technically illustrates how much cash came into the business and how much cash went out of the business. It is important to note here that when we use the term cash in the financial world, we mean not only the currency bills like you normally think of such as dollars or euros, but also checks, electronic transfers, as well as the balance in the bank account. In fact, most businesses will do a lot of their transactions through electronic means (e.g. mobile banking, wire transfers, etc.); yet, they are still considered as the amount of cash which flows in and flows out.

Read More

THE SEVEN GOLDEN RULES OF SUCCESSFUL INVESTING

Being successful at anything requires following a set of rules. Good rules are the accumulation of decades of wisdom summed up into the few components that really matter. Successful football players, given as an example, win because they avoid penalties and because of the way they undergo a series of rigorous training. This is similar to academic learners. Successful students get A’s because of the way they study. The point is that investing in the stock market is no different except that when you succeed in investing, you make a lot of money.

 

RULE NUMBER 1 – THINK LONG TERM

Trying to time the stock market or risking it all to double your money in a year is at best speculating which is similar to the worst gambling. You may as well just take your money to Vegas and lose it there. However, those who are able to successfully navigate the stock market are not speculators or gamblers, but they are investors. Needless to say, they know they can beat the market because they think differently, they think smarter, and they think in a longer-term period.

 

RULE NUMBER 2 – GOOD COMPANIES MAKE GOOD INVESTMENTS

People need to understand and keep in their mind that investing is not like placing a bet on whether the Cowboys will cover the spread against the Packers in the big game. Investing is not trying to get the quarterly press release a microsecond before the other person. It is not even about trying to predict which stock that you think will go up the most. Fundamental Investing is all about buying a tangible piece of a business, or a share of that business. What’s more, your investment portfolio (the collection of all the different shares you own) is only as good as sum of the companies in that portfolio.

If you buy shares of high quality companies at reasonable prices, you will end up with a high quality portfolio with less risk. And good companies are the ones which have a unique advantage that others may not be able to imitate. They are simply the ones which generate high returns on capital, as they do not need to borrow a lot because their business is self-financing.

 

RULE NUMBER 3 – BUY WITH A MARGIN OF SAFETY

When it comes to investing, a margin of safety is formed when one buys an investment at less than its value while using conservative assumptions. The idea of a margin of safety is that you want to buy a business at a price that is low enough with consideration that your assessment could be completely wrong and therefore you would not lose that much.

RULE NUMBER 4 – DO YOUR OWN HOMEWORK AND KNOW WHAT YOU OWN

There is no substitute for your own work. You wish to buy a stock because CNBC recommends it, or because your uncle suggests it or perhaps the stock chart on your laptop screen looks good enough to convince you. Well, the truth is that all of these are a sure way to lose your money. Successful investors, in case if you are wondering, know exactly what they own. They buy stocks of companies with products they believe in. Not only that, but successful investors go the extra mile to analyze the financials of the companies’ stocks they own in order to make sure they are not missing anything. Remember, most of the extraordinary gains made in the stock market come after a stock is punished, or after it has already risen a lot but you are not going to have the conviction to stick with it unless you really know exactly the companies’ shares that you put your eyes on.

 

RULE NUMBER 5 – STAY CALM AND BE RATIONAL

The typical buyer’s decision is usually and heavily influenced by those around him, which is to buy when others are buying, and to sell when others are selling. Unfortunately, this is a recipe that is bound to backfire. The best investors are the ones who can fight this urge and remain calm through a storm on the sidelines of a market bubble.

RULE NUMBER 6 – DO NOT PUT ALL YOUR EGGS IN ONE BASKET, BUT YOU DO NOT NEED TO HAVE TOO MANY BASKETS EITHER

Diversification is one of the most critical business strategies for your portfolio so that if one stock blows up, it will not sink the entire ship. As much as you think that you will not make a mistake, you will do just fine. Even the masters do and that is why you are highly advised to not put all your eggs in one basket. When it comes to having diversification, research suggests that 90% of diversification benefits can be obtained in most markets with a portfolio of just over 20 stocks. In other words, the more you diversify beyond that, the less you know about each investment you make. After all, your first and second best ideas are always better than your 100^th best idea so while diversifying is crucial, make your best ideas count!

RULE NUMBER 7 – NEVER STOP LEARNING!

Perhaps the most important rule is to learn more and then keep learning. The fun thing about investing is that the markets are always different and companies are constantly changing. Hence, never stop learning about businesses, never stop learning from other great investors, and never stop learning from your own mistakes. Humility and an eagerness to learn are two traits found in all of the great investors. Even the world’s greatest investor "Warren Buffett" credits his partner Charlie Munger by teaching him that it is better to buy a great company at a fair price than a fair company at a great price.

Read More