Saturday, March 31, 2012

Advertising Research

Advertising Research - Definition

Definition: Research conducted to improve the efficacy of advertising. It may focus on a specific ad or campaign, or may be directed at a more general understanding of how advertising works or how consumers use the information in advertising. It can entail a variety of research approaches, including psychological, sociological, economic, and other perspectives.
(Source: )

Advertising has many options and advertisers and advertising agencies have to choose best the portfolio among these options to maximize the benefit of advertising spend for the organization.

Kotler in his 9th edition quoted Forrester statement that no more than 1/5 of 1% of total advertising expenditure was being used to achieve understanding of spending the remaining money.  It is important to do an advertising campaign in one or two cities first and evaluate its impact to take a decision to roll it as a national campaign.

Kotler pointed out that communication effect research and sales effect research can be two categories of advertising research.

Communication-effect research

It is used to test whether the ad is communicating effectively. It is also known as copy testing. It can be done before placing the ad in the media or after its appearance in the press. Three major methods are used in it. One direct testing where the opinion of the participant is asked for a particular advertisement. In portfolio test, number of advertisement are shown to the participant and he is asked to recall the advertisements. In the third category of laboratory tests, the participants are shown the ads and their physiological responses like heart beat, blood pressure, pupil dilation etc. are measured.

Sales-effect research

In this type of research, experimental designs with various advertisements and levels of expenditures can be done in selected places and the variation in sales among the territories or places can be analyzed to find out which advertisements effective in increasing the sales.


Philip Kotler, Marketing Management,

Research Papers on Advertising Research

The Psychological Impact of Advertising on the Consumer, 2008 research paper, Sandra Jakstiene et al.

Entrepreneurial CEO Versus Maintenance CEO

Entrepreneurial CEOs oversee development and introduction of new products, new processes, new plants and new markets. An entrepreneur is defined that way. An entrepreneur is born when he is able to combine the factors of production in a different way and create value.

Maintenance CEOs are good at producing and selling the existing products in the existing markets using existing processes in a growing or stagnant phases. But many times in stagnant phases, some entrepreneur CEO achieve extraordinary results, and there is a demand all around for more entrepreneurial CEOs and the maintenance CEOs come under pressure.

Entrepreneurial CEOs have talents that are different from operational CEOs: Marc Effron,  October 2011
_____________ _____________

Friday, March 30, 2012

Principles Centered Profits - How Is Important - Dov Seidman's Thought

How is the answer - Book by Dov Seidman
_____________________ _____________________

 Dov Seidman UCLA Commencement Speech uploaded March 2012

Why Leaders Need to Get Involved in Shaping their Colleagues' Behavior?  Interview of Dov Seidman 30 March 2012

Thursday, March 29, 2012

Organizational Behavior Revision Article Directory

Article Directory
These articles are written to facilitate revision of organization behavior by management professionals.
These articles are written to facilitate revision of organization behavior by management professionals.
They are primarily based on the text by Fred Luthans. Various editions were used by me.
These articles reflect my understanding of OB as student of industrial engineering & management and as a teacher of number of management subjects. The exposure to Organizational behvaior subject was  further deepened by detailed study of Sociology and study of introductory books on Psychology and  more books of  Organizational behavior. I wrote revision articles in the subjects of psychology and sociology also.
According to my advocacy, industrial engineers have to make special study of Human sciences both body related sciences and behavior related sciences.
Management knols of Narayana Rao are being posted in the blog Management Theory Review to develop the MBA revision handbook

Article in the series


The academic field of organizational behavior has been around for at least the past thirty to forty years

Cognitive approach emphasizes the positive and freewill aspects of human behavior and uses concepts such as expectancy

Luthans has stated that intelligence has played a major role in psychology but a very minor, almost nonexistent, role in OB.

Emotions have received some attention in organization behavior literature.

Communication is one of important topics of organization behavior. Effective communication is a prerequisite for Management.

Gestalt is a German word meaning “see the whole.” Gestalt practitioners use various methods to help individuals see the whole and focus on present.


The article describes various leadership theories briefly

 Successful Leadership - Effective Leadership

If a leader accomplishes his task it is successful leadership. In the process of successful leadership, the leader maintains or improves morale of his people it is effective leadership.

Leadership style can be changed. But it takes time.

Fiedler, Garcia, and Vecchio have focused attention on the role of intellectual and other cognitive abilities on lea...





Related Article Series

  • Psychology Revision Article Series - Directory 
  •           Management Knowledge Revision Articles - Directory
Original knol - 136

Wednesday, March 28, 2012

CSR Stage of Damage and Punishment to CSR Shirker Corporates

The Rise of Caring Corporation and Destruction of Environment Damaging Corporation

David Jones in his book. "Who Cares Wins" argued that this decade in evolution of CSR is the age of damage. CSR activists use social media to highlight the CSR shirking posture and activities of business concerns, and there are enough social media mega-shares to take the message to internet masses and digital native masses and inflict serious damage to the businesses. Do corporates realize this? Examples of Censure of Companies for CSR Shirking.

Bank of America's 2010 Shirking Responsibility Report

Why Ninetendo? May 2010


Corporate Social Responsibility Audit is important in this respect. Shareholders have to demand social responsible audit, Board of Directors have to take steps to arrange for conduct of social responsibility audit. Suplliers, employees and banks and other financial institutions have to demand social responsibility so that companies do not shirk the CSR and thus make the company die.

What is a Corporate Social Responsibility Audit? January  2012

Corporate Social Responsibility Audit: From Theory to Practice  2004

Small Business Online Resources

Online Resources for SMEs
Website, Webpages, Blogs and Knols for supporting Small Businessmen, CEOs and Executives

November 2011

How to use social media to promote your small business


Interesting Articles

March 2010

Fortune Small Business 100 List and Company Snapshots

Budgeting For Small Business

Built to Sell - Book Review

Business Plans by Entrepreneurs - Wharton Professor's Suggestions

Cloud Computing for Small Business

Small Business Netbook Guide

Financing in Tough Times

Ten Ways to Stretch Your Marketing Budget

Small Business Sites

Business Week Small Business  (gs5)

Small Business Computing  (gs6)

Small Business Finance Tips (gs7)

SME Toolkit  (Supported by IFC and IBM) (gs8)

Small Business Trends (gs9)

Small Business Bible (gs10)
wiki for small business (20,348 entries on 16.3.2010) (gs2)

Knol search link for small business - Small business,
Magazines and News Papers - Small Business Sections
Business Week Small Business  (gs5)

Services for Small Business is the trusted online community that helps small and mid-sized businesses save money, make money, and grow. makes it easy to procure services from trusted service providers.


For Propsective Entreprenurs

Fosering Entrepreneurship Worldwide - Kauffman Foundation
Entrepreneurship Videos

IVY League Business Schools

Harvard Business School Working Knowledge - Faculty Papers on Entrepreneurship

INSEAD - Entrepreneurship and Family Enterprise

Standford University's Entrepreneurship Corner

Wharton Entrepreneurial Programs

Country Specific Sites




____ (gs3)


National Entrepreneurship Network, India


India Institutes

EDI, Ahmedabad

Indian Institute of Entrepreneurship (IIE)
IIT BOMBAY Entrepreneurship Cell


ah! Ventures
Post Seed Pre VC Finance

SME World
Books and Reports
BusinessWorld SME Whitebook 2009-10
Technological capabilities of SMEs in Maharashtra





Services for Small Businesses is the trusted online community that helps small and mid-sized businesses save money, make money, and grow. makes it easy to procure services from trusted service providers.


MIT Entrepreneurship Center
Network for Teaching Entrepreneurship

Original Knol - 2382

Popular Knols - Articles - Essays - Papers in Business Management

Notes on Business Management List of popular knols, essays, papers, notes on business management

Searchlink - Use search query to find the latest knols on management  Search Query

Knol started at 9.00 pm 21.5.2010 (IST)

Selected Knols in Business Management in the order of popularity

Popularity - Page Views Above 10,000

Marketing Management, 13th edition, Philip Kotler, Book Information and Review
Marketing Strategy - Differentiating and Positioning the Market Offering
Principles of Management – Koontz and O’Donnell
Car Dealer Search Engine Reputation Management
Implementing total quality management: the role of human resource management.

Popularity - Page Views Above 7000

Introduction to Basis Instruments Contracts (BICs) for Mathematics, Finance, and Economics
Organizational Buying Processes and Buying Behavior
Human Resource Management - Introduction - A Revision Article
Marketing Communication: Channels and Promotion Tools

Popularity - Page Views Above 5000
Project Management - Ten Golden Rules of Successful Projects
Recruitment and selection process
Theory Z - Type Z Organizations
Process Safety Management (PSM)
The Financial Value of Talent Management

Popularity - Page Views Above 4000

Human resource management
Enterprise Risk Management, COSO and Banks
Top 3 Management FMLA Slip-Ups
Business Service Management

Marketing and New Product Development
Healthy Organizations from Conflict Management
Frederick Herzberg
Managing Product Lines and Brands
Project Management in the Automotive Industry

Popularity - Page Views Above 3000

Planning - A Management Process
Consumer Behavior
The Future of Knowledge Management
Market Segmentation and Selection of Target Segments

International Management: Culture, Strategy, and Behavior
RFID Jewelry Management
Custody Services and Risk Management
United Nations Results-Based Management System - An analysis
MANAGEMENT OF INNOVATION (MOI): Leading Innovation Strategy and Process in Firms

Popularity - Page Views Above 2000

Management Accounting: Brand Valuation
Managerial Skills
Budget, Budgeting and Budgetary Control
The Importance of Project Closeout and Review in Project Management
Change Management - an introduction

Project Management
The Process of Strategic Change – Product-Market Combination Change
Aligning Employee Values to Organizational Objectives: How Some Management Theories Cannot be Applied in the 21st Cen...
Identity Preservation In The Supply Chain
Marketing Management Article Directory – KVSS Narayana Rao

Impact of Knowledge Management on Individuals and Teams Within an Organization
The Five Relationship Management Attributes Necessary For Successful Leadership
Supply Chain Management
Marketing Channel Management – Important Issues
Forex Hedging

Optimal Span
Project Management Systemic Thinking
Stress Relief Breathing Exercise
Quality Management
Kaizen Costing and Kaizen Cost Management

Popularity - Page Views Above 1000

Sales Force Management
Islamic Finance - Risk Management
Distinguishing evaluation from other processes (e.g. monitoring, performance management, assessment, quality assurance)
Distinguishing Features of Project Management in the 21st Century
Scanning of Environment for Marketing Ideas and Decisions

Teamwork Management
Supply Chain Management, Operations, ICT & E-Commerce of IKEA
Security Risk Management
Conflict Management
Supply Chain Management

Management of Change (MOC) in the Process Industries
Challenges in SAP Project Management
Supply Chain Management: Chopra and Meindl - Book Information and Review
Project Management - 3 Key to Project Success

Earned Value Management (EVM)
Unified Threat Management and Identity-Based Security
Management Information And Control Systems
Four Categories of Expenses
Records Information Management

How to get started in the Project Management Feild
The Brand is the Business is defined by Brand Assets including My Brands.
Risk Management Made Simple
Portals for Workflow and Business Process Management
Handbook of Management Knowledge Revision





Original knol - 2utb2lsm2k7a/ 2520

"Who Cares Wins" Book by David Jones - Summaries, Reviews and Videos

Who cares wins CSR Day Presentation by David Jones Himself
__________________ __________________
________________ ________________
________________ Highlights of the day >br/> ________________

Branded Entertainment Content Marketing

Branded entertainment content is also referred to as branded content. It  is a relatively new form of advertising medium (in 2012) that blurs conventional distinctions between what constitutes advertising and what constitutes entertainment. Branded content is essentially a fusion of the two into one product intended to be distributed as entertainment content, with brand promotion embedded into it.  Branded content is content created to entertain as well as promote brand. Hence it generally funded entirely by a brand or corporation rather than by a movie studio or a group of producers who produce content to earn revenue directly on the content.

Branded entertainment content marketing is actually the same type of marketing that was pioneered by soap manufacturers in the early days of radio and television that became famous as  the soap opera.

Sources for further information

__________________ __________________

Red bull has 1703 videos on YouTube (on 28.3.2012)

Investment Analyst or Security Analyst - A Job Description

INVESTMENT ANALYSTS work in the field of investment securities.  Sometimes

they are called Securities Analysts or Financial Analysts.  Their services

are required by investment brokers, banks, pension funds, investment banking

firms, investment management and counseling firms, and insurance companies. 

The analyst's job is to make assessments of the economic performance of

individual firms or whole industries and to make investment recommendations.


Investment Analysts must stay current in the fields of industrial technology,

business, finance, and economic theory.  They assess complex technical data

and present written and oral reports.  Acting in the capacity of economist,

financial detective, and forecaster, analysts help direct much of the

professionally managed capital of this country.


In the research department of a brokerage house, bank, or insurance company,

Investment Analysts produce reports on general economic trends, individual

corporations, and entire industries to advise the firm's representatives and

clients in investment decisions.  They present comparisons of the various

securities of a given industry and develop opinions regarding their relative

quality.  Also, the current market price of a security is evaluated in terms

of its value as an investment.  Some of the factors involved are historical

and subject to statistical measurement; other factors require the exercise of

judgment in weighing intangibles, including the changing psychology of the

investing public.


In making a detailed study of a company, analysts determine the economic

position of the entire industry, how it is affected by new products, new

processes, and competition.  They summarize the financial position of the

company, analyze past experience, review dividend records, note capital

structure and comment on managerial effectiveness.  Often the analysts strive

to uncover hidden meanings in balance sheets and other financial reports. 

Finally, they develop a recommendation on the investment status of the equity.


Investment Analysts in an underwriting house must prepare a complete

financial picture on companies before their firm undertakes the financing of

them.  After the underwriting house is convinced of a company's soundness,

the analysts recommend the types of equities that will best suit the

company's needs and will also be attractive to the investing public.  They

then determine the price at which the security should be syndicated and

offered to the public.
Original knol - 2utb2lsm2k7a/ 987

You want to develop a Business Plan for a New Business?

What is your idea for the new business?

Do you know what Joseph Schumpeter of Harvard said about entrepreneurship?


According to Schumpeter, the main task of the entrepreneur is to reform or revolutionize the pattern of production by exploiting an invention, or an untried technological possibility for producing a new commodity or an old one in a new way, by opening up a new source of supply or materials or a new outlet for products, by reorganizing an industry, and so on.



What is your idea?


New product developed by you?

New product developed by others?

New technology developed by you?

Implementing new technology developed by others?

You found a new source of supply of raw materials?

Somebody else found a new source of supply of raw materials. You want commercialize it?

You are creating a new market?

You have developed a new type of sales distribution outlet?

You have a new type of organizing the business that gives more efficiency?

You found an under serviced market area and want to service it?



You need to come out with an answer to one of the questions above or similar questions to justify your entrepreneurial ambition. Ambition alone is not sufficient. The opportunity has to be there. You have to develop capabilities in various areas of business and search and identify the opportunity ideal for you to venture.


If entrepreneurship is a hobby, one can start something based on interest and ambition. The expenditure on the venture can be treated like consumption expenditure. You have to money to spare and spend and hence you spend it.


When entrepreneurship is professional activity, through which you want to earn your bread and butter, you have to be on firmer ground. Don’t leave your present professional activity till you find a venture that gives good odds of success.


Don’t believe when somebody says I took the risk and benefited. Don’t believe, if you take the risk, only return will come. Then it is not risk at all. If you take the risk return may come or loss may come. Hence first of all take a risk with proper odds of success. Then have plan for coping with failure.


If you come to the conclusion based on your answers to entrepreneurial opportunity questions, you have to develop a business plan to gather resources from your own property and wealth, wealth of parents, relatives or friends, and professional investors like angels and VCs.


What need to be the contents of a business plan?


Description of the product/service to be produced and marketed

Market research information that supports launch or growth of the product/service

Production model

Model for generating awareness in the market

Sales model

Competitor analysis and scope for success of the business in the industry

Management capabilities of the team

Growth plan

Financial projections

Financing model

Web References



DIV> 2utb2lsm2k7a/ 44

Tuesday, March 27, 2012

What is Business Strategy?

Ansoff’s View[1]


Business strategy is a complex concept. It consists of a set of management guidelines which specify the firm’s product-market position, the directions in which the firm seeks to grow and change, the competitive tools it will employ, the means by which it will enter new markets, the manner in which it will configure its resources, the strengths it will seek to exploit, and conversely the weaknesses it will seek to avoid. Strategy is a concept of the firm’s business which provides a unifying theme for all of its activities.


1. H. Igor Ansoff, Business Strategy, Penguin Education, Harmondsworth, England, 1969, p.7.
Original knol - 2utb2lsm2k7a/ 45

Profit Sense - An Important Managerial Skill

Profit Sense - An Important Managerial Skill

Profit sense is an important managerial skill. Manager of a department or section or a full organization has the responsibility to earn profit and assure the survivl of the organization or the organization department or function. Every manager should spot profit opportuniites and evaluate them for assuring that the profit is there in the proposal and select the best portfolio of  profitable projects and initiatives for his department or section periodically for important proposals and on day-to-day basis for many things. 
Engineering economics or economy is the subject that emphasized profit sense for engineers. Joel Dean developed "Managerial Economics" for management students taking a cue from Engineering Economics but as on today, the emphasis on profit sense is not that visible in managerial economics text books.
Management students in undergraduate as well as post graduate courses do managerial economics as well as a basic financial management course and they are expected to develop profit sense from these courses. But still special emphasis is to be given to the concept of profit sense in the list of managerial skills. Is it a technical skill or conceptual skill? May be categorising it as a conceptual skill makes more sense.
Original knol - 2815

Monday, March 26, 2012

Charles Dow on Trading and Speculation - Dow Theory

Security Analysis Article Series
Charles H Dow was the founder editor of Wall Street Journal. Very interesting observations, explanations and comments were made by Dow on trading and speculation in his editorials.

Charles Dow

Charles H Dow was the founder editor of Wall Street Journal.

While many people tried to use the word "investor" instead of speculator, Dow openly used the word speculation and wrote about it his editorials. Probably many of his editorials are not available to us today.

One of the persons/writers of that time S.A. Nelson included 16 of those editorials in a book 'The ABC of Stock Speculation.' The book was published 1903 by S.A. Nelson. Fraser Publishing Company, Burlington, published it in 1964. The fifth reprint of the book was made in 1999.  

Very interesting observations, explanations and comments were made by Dow on trading and speculation in those 16 Editorials.

On speculation

It is, however, part of almost every manufacturer's business or of every merchant's business to speculate in raw materials or goods, and nobody thinks of finding fault with either for doing so. In Wall Street speculation stands alone, without any business disguise, for all men to see. There is no difference between one kind of speculation and another so far as essence is concerned; the only difference is that one is disguised and the other is not.

Scientific Speculation

Dow made very pertinent observations in this editorial on the topic of speculation.

He wrote, the maxim "buy cheap and sell dear" to make profits in trading is ok, but it leaves unsolved the question of when a security or a commodity is cheap and when it is dear. He did hit upon the right issue with this comment.

He quotes the elder Rothschilds' principle that it was well to buy a property of known value when others wanted to sell and to sell when others wanted to buy. This brings into consideration the concept of value.

There is also the belief in professional traders that public as a whole buys at the wrong time and sells at the wrong time. The reason given is that public buys on manipulated advances and after they are well along. It buys at a time when manipulators wish to sell and sells when manipulators wish to buy.

Dow quotes Daniel Drew to bring another idea of speculation. "Cut your losses short, but let your profits run." It means that if a stock has been purchased and it goes up, it is well to wait; but if it goes down, it is well to stop the loss quickly on the ground that the theory on which the purchase was made was wrong.

When a trader finds in his accounts that his profits in profitable trades have been relatively large and his losses in losing trades relatively small, he can pat himself that he learning how to trade.

Dow quotes Jay Gould that his policy was to endeavor to foresee future conditions in a property and then, having made his commitments carefully, to exercise great patience in awaiting results. "Patience" is the important word here. Many find great difficulties in using this method for speculation. Dow provides encouragement to this method also by writing, "The present is always tending toward the future and there are always in existing conditions signals of danger or encouragement for those who read with care."

Thus in one of the editorials Dow quoted three persons and brought out ideas of value, keeping losses to small amounts and patience to be used in speculation.

The Two General Methods of Trading

One is technical and the other is fundamental.

In this editorial Dow mentioned that there were two general methods of trading.

One is to deal in active stocks relying for protection upon stop orders. Active stocks mean there is enough liquidity at various price points so as to permit the execution of the stop order at the point selected. The importance stop order is very high in this method. The trader need not know much about the value of stock under consideration. But he must have a basis to guess which way the stock will move. After taking a position, if his guess turns out right, he lets his profits run. If his guess turns out to be wrong, he squares up the transaction with the stop order. If he can guess right as many times as he can guess wrong, he can expect profits. This system is based on a rule or logic for guessing the direction of the market and then using stop losses to take small losses in case of adverse moves in the market.
The second system of trading is based on values. The value estimation is based on fundamental analysis. The trader has to feel sure of the value for at least months to come. Dow mentioned that values are related to earnings available for dividends. The trader also has to consider the general trend or tendency of the market, relative moves of the stock with respect to the market. Based on this information, the trader buys the stock at a price below the value and if the price goes down, he will buy an equal amount at the every decline by 1 percent. Dow wrote that stocks on their downward move can go down by 20 to 30 points. So there should be enough capital to buy on the downside and profit when the stock comes up. Traders have to commit capital to trading conservatively rather than taking big positions at a single point of time.
Dow mentioned the saying in Wall Street, "The man who begins to speculate in stocks with the intention to make a fortune, usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes get rich." It is probably another way of saying a few lucky ones make a lot of money.
Dow cautioned traders using value based method to pay attention to the following points.

1. Bull and bear markets run four and five years at a full time. Use the average prices (implying Dow Jones Averages), to determine which one is underway.
2. In a bull market, it is better to always work on the bull side. In a bear market, work on bear side.
3. In bull market buy on declines and in bear markets sell on rallies.
4. Stick to the stock bought until a fair profit is realized or until there is good reason for deciding that the first estimate of value was wrong.
5. Have enough capital to do trading. Dow advised an initial capital of $2500 for accumulating shares starting with 10 share lots.

Three General Lines of Reasoning

Dow mentioned in this editorial that three points were made in earlier pieces.

1. The surface appearance of the market is apt to be deceptive.
2. In trading losses are to be cut short and profits are to be allowed to run.
3. Discounting correctly the future is a sure way to wealth.

The third point shows that Dow supported fundamental analysis based trading also apart trading based on technicals. Many will give credit to Dow only for technicals based trading.

Why the surface appearance of the market is deceptive: The market has to be analyzed as the market is to be considered as having three movements all going at the same time. The first is the narrow movement from day to day. The second is the short wing, running from two weeks to a month or more; the third is the main movement covering at least four years in its duration. This description of three movements is considered to be the essential part of Dow Theory.

The day to day movement should be disregarded by everybody, except traders who pay no commissions. With that statement Dow gave the opinion that extreme short term trading is to be left to persons having brokerage seats and arrangement with brokers to pay flat payments. Now that more and more people are paying flat brokerage payments day trading is increasing.

The medium swing is the one for ordinary consideration. In describing Dow Theory many people say that Dow Theory recommends only main trend trading. But in the editorial Dow clearly said medium trend is the one for ordinary consideration. The outside trader should not attempt to deal in more than two or three stocks at a time. He should keep a chart of price movements of these for months or years so that he can identify the swings.

In charts, apart from price, a record of volumes and any special and interesting facts about the company are to be noted. The trader should also keep a chart of average as they tell about the market more clearly.

The average thirty day swing could be 5 points. So Dow recommends buying a stock which has a value above the price whenever it declines by 4 points from a previous peak in bull market. He recommends buying half of lot at the first instance so that if it declines further remaining quantity can be bought.

Swings within Swings

In this editorial, Dow describes the three swings mentioned above once again and points out the method for taking profits from the market.

The first swing is day-to-day movement which is due to local causes and the balance of buying and selling on that day. The second is the secondary movement that covers a period ranging from ten to sixty days with an average of thirty to forty days. The third swing is the main trend covering from four to six years.

If the main move is up, relapses are speculators' opportunities, but if the main move is down, rallies furnish opportunities. The movement of averages defines the main trend. As long as the average of one high point exceeds that of previous high point, the main trend is up. It is difficult to judge the reversal before hand, as it can be an unusually pronounced secondary trend.

In this editorial, Dow talks of speculation or trading using fundamental values. A value based speculator has to buy when the price declines in the market.

In the example given, Dow talks of 10 point decline of a good stock from 108 to 98 in a bull market. The value based speculator can buy it, because the 10-point decline in the bull market would be almost certain to bring in bull market more than 5 points recovery and full 10 points would not be unreasonable. Dow advises even this investor to put a stop order after the 5 point rally from 98 and allow the profits to accumulate. This is techno fundamental trading. The trader uses fundamental value to enter the trade and then uses stop orders to continue the trade.

Methods of Reading the Market

Dow gives the following methods of making some judgments on the market. He says it is doubtful if any have been or can be wholly satisfactory. But many are in practical use and give some suggestions for action in the market.

The first is the book method. In this method price changes are noted by 1 point sizes. The price moves up or down are shown by diagonals and small price changes will be captured in horizontal lines. A long horizontal line indicates accumulation or distribution. This description resembles somehow point and figure charting. But not exactly.

The second method is mentioned is that of double top. Dow gives the caution once again that there will good many exceptions and many times without this signal market goes down.

The third method says some people trade on the logic over a period of time up days will equal down days.

The fourth one, described as more practicable by Dow is the theory that a primary movement will have a secondary movement in opposite direction. The opposing move can be at least three-eighths of the primary movement. If a stock advances 10 points, it is very likely to have a relapse of 4 points or more. The law seems to hold irrespective of the size of the advance.

Dow comments that it is impossible to predict in advance the length of any primary movement, but the further it goes, the greater the reaction when it comes, hence the more certainty of being able to trade successfully on that reaction.

Dow makes a point about great operators. The thought with great operators is not whether a price can be advanced, but whether the value of property which they propose to buy will lead investors and speculators six months hence to take stock at figures from 10 to 20 points above present prices.

Dow concludes this editorial with the statement 'To know values is to comprehend the meanings of movements in the market."

Dow is normally thought to be the advocate of technical trading. But these editorials seem to indicate that Dow is equally a strong advocate of trading based on fundamentals.

Related Articles

Fundamental Analysis – Graham–Rao Method
 Security Analysis Article Directory

Knol Directory - Main Categories

Original knol - Knol number 148

Cash Flow Statement or Statement of Cash Flows

 Index of concepts
  1. Aa to Az
  2. Ba to Bz
  3. Ca to Cz
  4. Da to Dz  
Ea to Ez
  6. Fa to Fz
  7. Ga to Gz
  8. Ha to Hz
  9. Ia to Iz
11. Ka to Kz
24. Xa to Xz
: Investment Analysis

Chapter/Topic: Financial Statement Analysis


Concept Definition and Explanation

 Discounted cash flow valuation techniques use cash flow as the basis for valuing a security. Cash flow statement or Statement of cash flows is now made a mandatory statement to be provided by corporate concerns to their existing investors. Prospective investors in the secondary market of securties also use the same information for their investment and trading decisions.
The statement of cash flows has three sections:
1. Cash flow from operating activities
2. Cash flows from investing activities
3. Cash flows from financing activities.
1. Cash Flows from Operating Activities
In this section, the sources and uses of cash that arise from the normal operations of a firm are given as line items of the statement.
The sum net income, noncash expenses minus non cashsrevenue and net decrease in work capital items provides a positive cash flow figure from operations.
2. Cash Flow from Investing Activities
Business firms keep investing in physical assets as well as financial assets. Increases and decreases in noncurrent assets or accounts are considered investment activities. These activities normall use resources and hence decrease cash flow. But sometimes significant asset sale can give a positive figure or increase cash flow of the company
3. Cash Flows from Financing Activities
Bond and stock issues act as sources of funds. Payment of bonds and repurchase of shares and payment of dividends are uses of funds. Sources of funds and uses of funds in the financing activity are shown in this section.
For the exhibit of of statement of cash flows of IBM statement of cash flows of IBM
Reilly, Frank and Keith Brown, Investment Analysis and Portfolio Management, 7th Edition, Thomson-South Western, 2003



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Charles W. Mulford, Charles W. Mulford Eugene E. Comiskey, Eugene E. Comiskey
Brian Coyle, Alaistar Graham
Rob reider, Peter B. Hailer

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Cash Flow 1 Statement of Cash Flows Format

Cash Flow 2 Operating Activites


Cash Flow 3 Investing Activites-Investments

Cash Flow 5 Financing Activites

Research Papers


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Original knol number 858