Category Archives: Business/Technology

I created this blog to learn more about business, economics, and technology and then share that knowledge with the world.

Mutual Funds 101: Demystifying Investment

Definition: Mutual funds are an investment strategy which pools money from many, many different investors to construct a portfolio of stocks, bonds, real estate, and/or other securities, depending on its charter. Each investor in the fund gets a slice of the total pie.

What are the perks to investing in mutual funds? Diversification, one of the basic rules of investing in general is varying your portfolio. Diversification is a technique that mixes a wide variety of investments within a portfolio. This is meant to yield higher returns for lower risks because while you might take hits in some parts of your portfolio, the positives—if chosen correctly—will offset those.

“Studies and mathematical models have shown that maintaining a well-diversified portfolio of 25 to 30 stocks will yield the most cost-effective level of risk reduction.” – Investopedia

Another pro to the mutual funds game are the relatively low minimum investment amounts. Some you can join with just a few hundred dollars, spreading the risk across to more people, allowing investors to make some riskier decisions with higher potential returns.

So, there’s active management and passive management.

Active Management:

Is the actual practice of picking your stocks and market timing to pick securities which will beat out the market. This is the most common type of management. The high volume of trading results in higher expenses.

Passive Management:

These funds do not attempt to meet the market, but to match the risk with the return of the stock market. These usually track a market index such as the S&P 500. Those that follow this index, for example, tend to hold the stocks within the S&P 500.


1. The percentage of fees paid to the company to manage and operate the fund is less in passive funds than in active funds.
2. Lower mutual fund capital gains distributions.

A good analogy I found regarding the difference between active and passive investment management is the distinction between the actions of one individual vs. the actions of the group as a whole. “Active investment is like trying to bet on who will win the Super Bowl, while passive investing would be the ability to profit as all the NFL teams collectively made money on ticket and merchandise sales.”

Now, let’s move on. There are two different types of funds I’d like to talk about today: stock (equity) funds and bond funds.

Equity Funds:

Mutual fund that invests primarily in stocks; equity funds typically have their own distinct styles. Some focus on the different sizes of companies such as the size of businesses (small-cap versus large-cap) and their geography while others might buy shares within particular sectors such as health care or entertainment. These are sometimes referred to as “specialty stocks.”

Bond Funds:

Bond funds come in many different colors as well. There are safe investments with lower yields such as government bond funds, high-risk (and hopefully high-yield) bond funds. These can get extremely complicated, but if this is something you’re interested in, click here to be taken to a page which does an adequate job of explaining what type of things to look for to determine whether or not these bonds will be safe investments.

But don’t forget to pay your taxes. Regardless of whether or not you sell your fund shares, if you’re raking in money, you could be hit by a pretty hefty tax for both your dividends and capital gains. That sounds pretty painful doesn’t it? What if I told you that you’re stuck paying taxes even when your funds have declined in value? Well, the truth of it is that you’re going to end up paying taxes regardless of how your fund performs, but since there’s not much to be done about that, my only advice here is to be aware of this undeniable truth. According to CNN Money, the most tax-efficient funds avoid rapid trading.

CNN Money also advises investors to not chase winners and to look for consistency in the long-term rather than those particular funds which might be ranked highly at this one point in time. Investors are also told to not be too quick to dump underperforming funds as any fund can have an off year. Just make calculated decisions, watch for a pattern, and come up with a few forecasts.


1. Value funds: look for cheap stocks. Either big companies/corporations which have been suffering in recent days and are selling shares at lower, discounted prices, or smaller companies which have been beaten out by competition or other investors but could have brighter days ahead.
2. Growth funds: varies depending on how aggressive the investor might be. Tend to favor established names, but look for rapidly growing companies as well. Good for long-term investors who should build around such funds in their portfolios.
3. Sector funds: as I mentioned before, these investors focus on particular sectors such as health care, entertainment, technology, etc. Just be aware that entire sectors are also liable to head south.


1. U.S. government bond funds: bonds issued by the U.S. Treasury or federal government agencies. Seen as extremely safe, so you shouldn’t expect extremely high returns with these. The longer you hold on to the bonds, the higher your yield. So if you’re comfortable with sitting on them—they fluctuate with the interest rate—then you probably might as well be in it for the long run.
2. Corporate bond funds: bonds issued by corporations. Each corporation has a credit quality issued to them, the highest being AAA. The longer the average maturity, the greater the volatility.
3. High-yield bond funds: focus on smaller and/or riskier companies. Expect a few defaults here and there. Shouldn’t be a huge proportion of your portfolio unless you’re comfortable taking risks for the chance of seeing higher returns.
4. Municipal bond funds: issued by cities, states, and other government localities. Are tax-exempt. Don’t have much more to say about these myself, so just click through the link if you’re interested in safe, low-yield prospects.

Now that we’ve hopefully demystified mutual funds (or at least opened a few doors for you) you might be wondering why exactly some active funds underperform. The costs of research, administration, management salaries, and other expenses are borne by the shareholders.

If you’re new to the game and want to try to get your own slice of the market, explore U.S. Securities and Exchange Commissions’ page to get started. Look for more posts on the subject of investing in the days and weeks to come!

Sources:CNN Money, Investopedia &

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Posted by on March 23, 2011 in Business/Technology


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YouTube vs. Hulu

It was only a matter of time before YouTube (owned by Google) made a definitive move to branch outside of its current role as merely a video hosting site. According to a New York Times article, last week (Monday, 03/07/2011), YouTube acquired Next New Networks, which is a video production company. It appears that YouTube hopes to break into the markets where sites like Hulu, which (legally) provides episodes of many television shows and movies. The appeal to Hulu is that viewers can depend on the site for providing the television shows and movies listed on the site, whereas YouTube can not necessarily make these same guarantees due to copyright laws, among other issues.

If my memory serves me correctly, YouTube provides a movie rental service as well, though this has not, apparently, garnered enough of the market for the company to remain satisfied. The acquired company was reportedly acquired for less than $50 million, which seems like a steal for YouTube. Next New Networks has already established itself among its various projects, including Barely Political, Indy Mogul, Hungry Nation, and it’s various works on iTunes and Vimeo.

One of the most visible changes viewers can expect from YouTube is the production value of the videos created and uploaded by YouTube’s many partners, who are determined based on how many unique hits they receive on their videos and how many subscribers they accumulate. But the bottom line is that Google has got its eye on bigger and better things and is currently preparing it’s visual media arm, YouTube, for war over the growing market segment currently dominated by Hulu and a few other sites. So long as this healthy competition breeds higher quality products and services, I don’t see how we can complain!

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Posted by on March 16, 2011 in Business/Technology


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LinkedIn Expands

LinkedIn, the social networking site used predominantly by professionals, has apparently felt neglected as of late. It’s been wondering why its 90 million users haven’t been giving it as much attention as they’ve been directing towards Facebook, Google News, and Yahoo News. LinkedIn has been taking this sort of abuse for quite some time now, but it appears that the site has finally decided to act on its dissatisfaction.

A New York Times article has announced the company’s new service which provides relevant links to and summaries of the daily news on its site in a move that places the site in direct competition with other new aggregators such as the aforementioned Google and Yahoo general news services.

“We want to give you what you need to know to be better at what you do,” said LinkedIn’s chief executive, Jeff Weiner.

To gain access to one of their newest features, “Maps,” click here!

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Posted by on March 15, 2011 in Business/Technology


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A Bittersweet Boon

To be honest, the subject of rape and sexual assaults make me greatly uncomfortable. The fact that I’m writing a post about an instance of rape surprises me to no end. But the reality of it is that these things happen all over the world, even in the most progressive and forward thinking societies. And unfortunately the small town of Cleveland, Texas, with a population of about 9,000, was no exception.

According to a New York Times article, a total of eighteen local males have been charged with participating in the gang rape of a young, eleven-year-old girl. The males range from players on the local high school basketball team, to middle school students, to previous felons, etc. What basically happened is that the victim, who had a history of hanging around older children – according to one interviewee- accepted a ride from a nineteen-year-old man who then kidnapped her and took her to a location where several other men were waiting for them.

There are, however, a few redeeming points to this story:

1. The victim walked away with her life and is attending school in a different district.
2. The perpetrators, or at least a great many of them, have been detained.

What makes this story remarkable is the way in which the crime was brought to light and the wrongdoers identified. Several (I’m using plural though it may have, in fact, merely been one person) of the individuals who were present at the time of the assault had taken video on their cellphones. This video circulated around the town, even permeating the elementary school. In fact, it was one of the girls in the elementary school who brought the video to the attention of a teacher as it included her classmate. I applaud this child who stepped forward and did the right thing at her young age, when dozens of others who had either witnessed the crime itself or heard about it later did nothing.Needless to say, it will be a long time before this little town recovers from these shocking events.

I came across this incredibly dimwitted poll as I was looking for an appropriate image for this post and thought I would include it to share with you all how ignorant some people can be: Poll: Is the 11 year old girl from Cleveland, Texas to blame for being gang raped?

For another post on defeating crime with cell phones, click here.

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Posted by on March 14, 2011 in Business/Technology


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Wal-Mart Unveils New Web Program

One of the most appealing aspects of online shopping, aside from the anonymity of the whole process, is the convenience to the consumer. Online shopping allows for shoppers to avoid the time wasted browsing up and down the aisles looking for specific goods and even allows for them to customize their products of choice. Nowadays, most chain retailers offer online shopping services, though the success of each company varies greatly.

According to government census figures, the value of electronic shopping and e-commerce sales between 2007 and 2008 totaled about $222,464 million. The decision makers at Wal-Mart, however, have made some not-so-slight modifications to their business plans. Instead of delivering the products to your home from a warehouse, customers will have the opportunity to shop for in-store inventory at specific store locations then pick up the selected items on-site. If the selected products are not available at the store location of your choice, then they may be shipped to that store for free. In fact, you will be texted—if you so desire—when your order is ready to be picked up. I think that this is a brilliant example of corporate America adapting to technology and participating in the phenomenon of constant connectivity.

Wal-Mart has been testing the program since October in about 750 stores to successful results and is planned to include about 40,000 items. I believe that this system will largely be successful so long as Wal-Mart approaches the marketing aspect of it in a way that promotes efficiency. So long as the consumer believes that participating in this program will save them time—and perhaps even money—then the company can rest assured that online sales will increase.
Wal-Mart’s in-store traffic, however, has been declining over the last few quarters, and this move is believed to partly be aimed at reversing that trend, as consumers will be picking up their packages at Wal-Mart stores and might be inclined to do some more shopping while they’re in the vicinity.

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Posted by on March 13, 2011 in Business/Technology


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Rovio, the Future of Angry Birds

The mobile device application brought to us by Rovio, “Angry Birds,” seems to have received its second…or third…or fourth wind. According to a New York Times article, with its holiday releases—Halloween, Christmas, and Valentine Day—“Angry Birds” has reached almost approximately 100 million downloads.

“Angry Birds” is fascinating in how its reported development cost was only about $150,000 when games like Sony’s “God of War III” came out to a $44 million expense. Typically, companies the size of Rovio are unable to absorb flops in the games they develop. But with overhead costs as low as what they incurred and the amazingly high popularity they achieved, there seems no place else for the company to go but up.

“We’re building an integrated entertainment franchise where merchandising, games, movies, TV, cartoons, and comics all come together, like Disney 2.0,” said Peter Vesterbacka, the head of Rovio’s business development.
And Mr. Vesterbacka’s Disney reference shouldn’t be taken lightly, either. Rovio is essentially following in the footsteps of early Disney in how they’re trying to brand the characters in their little series through their flourishing line of merchandise like cute plush toys much like how Mickey Mouse was first established by Steamboat Willie and was cemented by similar toys, comics, cartoons, and even his own video game series’ .

What’s most interesting about Rovio is its potential for expansion. The company has recently secured $42 million in a financing round led by venture capital firms Accel Partners and Atomico Ventures. But why would the company need to secure fundraising when its profit margins are as high as they are now? Surely the ad revenue itself should have supplied the company with enough money to create another sequel, even if they spent over ten times the amount to develop it as they did the original game.

But Mr. Vesterbacka and the rest of the Rovio team have got their minds on bigger and better things. One of the partners at Accel Partners happens to sit on the boards of Facebook and Wal-Mart Stores, both of which could play vital roles in the future of the company. Rovio plans to bring a new, cooperative version of its game to the Facebook platform this spring. Soon enough, millions of people will be mounting assaults against pig fortresses with their friends from all around the world. And as their virtual reach extends, so too does the companies physical presence as they consider branching out from Helsinki, Finland to cities within China, the United States, and South Korea.

All that’s left to do now is wait for the Broadway musical about the plight…of the Angry Birds!


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Mirror, Mirror on the Wall…

Unlike a mirror, which reminds us of who we really are and may have a negative effect on self-esteem if that image does match with our ideal, Facebook can show a positive version of ourselves,” said associate professor Jeffrey Hancock. “We’re not saying that it’s a deceptive version of self, but it’s a positive one” (CNN Tech).

There has been a growing concern that our generation’s dependence on Facebook and other similar social media networks to determine our self-worth has reached unacceptable levels. How can we define ourselves as unique, interesting, artistic, clever, cool, etc. while differentiating ourselves from everyone else who might hope to get the same image across?

Facebook is formatted such that you can learn almost everything and anything you want about your connections. Naturally, the idea of such openness is intimidating to many, and privacy groups, like the Electronic Privacy Information Center, have come together and garnered some influence within the government (All Things Digital). What these groups might want to consider, however, is that companies like Facebook, YouTube, and Twitter are ultimately around to maximize their net income despite the efforts these organizations go through to convince you otherwise.

Ultimately, Facebook is not an inherent right but a privilege.

I admit that all of this sounds ominous, but we must not forget that there’s a bright side to it all. With a few exceptions, you, and no one else, have almost complete control, as a Facebook user, to control the content of your profile. It is up to you to determine which celebrity/athlete/artist pages to like, whether or not you want to share your education and employment specifics, whether or not you will keep other peoples’ posts on your wall and comments on your pictures, and even whether or not others will be able to access your pictures from your page. Finally, it is up to you to decide what picture will summarize your online presence. I’m referring, of course, to your profile picture, often the first thing you notice when you click through to your friends’ pages.

I took the above quote from Jeffrey Hancock from an article on CNN Tech. The story covers Hancock’s report regarding the correlation between Facebook and self-esteem in a study of 63 students (click here to be linked to the report itself). It turns out that subjects who spent time on Facebook returned more positive feedback about themselves than those who were either staring at a mirror or a blank computer screen during the allotted time (CNN Tech).

“For many people, there’s an automatic assumption that the internet is bad,” Hancock said. “This is one of the first studies to show that there’s a psychological benefit of Facebook” (CNN Tech).

Does the research speak for itself?

Either way, perhaps some of us should consider lightening up.

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Posted by on March 6, 2011 in Business/Technology


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