Scientia Salon: a manifesto for 21st century intellectualism

Scientia Salon

Arcimboldo's Librarian by Massimo Pigliucci

During the Enlightenment, the Marquis de Condorcet defined a public intellectual as someone devoted to “the tracking down of prejudices in the hiding places where priests, the schools, the government, and all long-established institutions had gathered and protected them.” A number of years later, on 13 January 1898 to be precise, the writer Emile Zola showed the world — and in particular the French government — what public intellectualism could do. He penned his famous “J’accuse” letter to the President of France, concerning the abysmal behavior of the French authorities in the infamous Dreyfus affair.

Intellectualism, of course, has its detractors, particularly in the United States. Richard Hofstadter’s classic “Anti-Intellectualism in American Life” [1] traces several strands of the phenomenon all throughout American history, and we can very much see it today in the form of religious-based opposition to the teaching of evolution in public schools, or…

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INTRODUCTION TO INVESTING

If you are totally new to investing and you are getting lost in the jargons. This section contain enough material so that after reading that you can learn the basics.

COMMON STOCK: It represents a part (share) ownership stake in a business. So common stocks are generally called shares. Shareholders of a company are like co-owners of the company. They needn’t participate in the functioning of the company but they need to select Independent Board of Directors who will look after their interest and can cast their vote regarding important decisions of company. If a company has 1,00,000 common stocks then 1 stock represents 1/1,00,000 part of the company. So the price of a common stock is directly related to company’s prospects. But Common stockholders are not entitled to any guaranteed return on their investments. They entitled to the profit which is left after paying interests on debt, dividends on preferred stock etc. Even though some companies distribute part of their earnings as dividends to shareholders the decision of paying or not paying it depends on management of the company. Even in an liquidation process when the company sells of its assets common stockholders receive what is left after paying to debt and preferred-stock holders. Generally common stocks contain chances of higher profits(in terms of price appreciation) but also high risk. These common stocks are traded in stock exchanges(like NSE and BSE) to purchase them you should have an Demat account.

Generally all common stocks are equal but  some companies have different types of common stocks for example:

Voting and Non-voting shares : Some companies have two types of shares voting and Non-voting. G Difference between them is that voting stockholders have voting rights which Non-voting stockholders don’t have. Example- Google.

Class A and Class B shares: They are almost identical but differ in their market price and in some cases in voting rights. Example: Berkshire Hathway has Class A and Class B shares. Class B is economically worth 1/30 of class A share and has 1/200 the voting right of class A share.

           HYBRID SECURITIES

PREFERRED STOCK: It is a kind of  hybrid between bonds and common stocks. Preferred stockholders are entitled to fixed dividend but they have no share in profits of company. But the dividends are compulsory only if company distributes dividends to common stockholders. If the company doesn’t pay dividends to common stockholders it as no obligation for paying dividends to preferred stocks.

CONVERTIBLE ISSUES: These are special type of preferred stocks which have all the characteristics of a preferred stock but have one significant difference. They can be converted into fixed number of common stocks within a given time. The exact number of common stock to which a preffered stock can be converted is decided at the time of issue of preferred stock.

For example: If a company XYZ issue convertibles of price 10,000 with 12% p.a dividend payment which can be coverted into 250 stocks of the company within 5 years. The holder of the convertible has the right to receive dividends and can convert is preferred stocks into common stocks at any time in the 5 years.

STOCK-OPTION WARRANTS: These are long term rights to buy common stocks at predetermined  prices.It is  a security that entitles the holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiry date.

Warrants and options(options is explained in post on derivatives) are similar in that the two contractual financial instruments allow the holder special rights to buy securities. Both are discretionary and have expiration dates. The word warrant simply means to “endow with the right”, which is only slightly different than the meaning of option.

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TOP 5 REASONS FOR INVESTING IN STOCKS

I am sure that at one point of time every person  gets curious about stocks, it can be a child/teenager who is puzzled by the price chart of a stock or a  grown-up  who is amazed by seeing his neighbor making a fortune by investing in stocks.

One thing that follows the curiosity is that  what makes this stocks go up(or fall down)?  is there any method to predict it? or more specifically put it “How to make money by investing in stocks? can i do it? I also got this questions & to my pleasant surprise it turned out to be YES! (BUT WITH APPROPRIATE EFFORTS  PUT IN)

Ya I know that this is not the general notion? people always say that stocks are risky don’t invest in them etc( especially  in India ) when  children gets interest in stocks most parents acts as if there children are going to ruin there life. But i feel they should be happy that there children are saving.

Of-course many people have lost money  in stock market but  studies shows that in the long run stocks have outperformed other type of investments like bonds commodities etc.  TOP 5 REASONS FOR  investing in stocks are:

1.Buy owning stocks you get a ownership stake in an existing business so as the business prosperous your stock price will go up; i mean your money works for you unlike the other way around. Fantastic isn’t it!

2. So buying a stock is a ultra low-risk high return method for making MONEY

3.The transaction cost are very less(<1%) and with a PC/laptop in your room you can do it seconds.

4. you have plethora of choices of well around 10,000 companies! & with few brokerage accounts you can buy shares of any publicly traded company situated around the world  while sitting in front of your pc! WHAT A LUXURY!

5. On the top of that you dont need much money $1 is enough. So it is a great advantage for students.

Hold on don’t go and dump all your money in stocks that’s how many people loss  money ,for making money in the market one needs to know a little about world of investing.Don’t panic as WARREN BUFFETT said to be an intelligent investor one need not have a high IQ what one needs is” SOUND INTELLECTUAL FRAMEWORK &EMOTIONAL ABILITY TO PROTECT IT FROM  CORRODING”.

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