Measuring Business Impact of Learning by Michael E. Echols, Ph.D.

In its one-year-plus existence, the Bellevue University Human Capital Lab has funded research on how best-practice companies are using measurement of learning's business impact to support their talent management and strategic objectives. Here is what's happening at some of those companies.
Business Issue: Employees Quit Their Supervisors

At ACS, multivariate statistical methods were used to determine the impact of learning on call-center performance. The first phase of the research documented that training is a key factor impacting employee retention. The method used to derive this conclusion addresses a key measurement issue: how to be sure the improvement in business outcome - in this case, retention - was directly related to the training and not something else. Based on the initial business implications, ACS extended the analyses to additional dimensions of the business including recruiting.

Business Issue: Leadership Pipeline

The business challenge addressed here is one way a geographically dispersed global retail organization identifies highly engaged associates and delivers learning to this hourly and salaried workforce at thousands of locations. In this case, the focus is a customized retail-management program leading to a bachelor's degree. The program is co-designed by retail subject matter experts in conjunction with Home Depot executives to provide maximum impact on current associate performance and on future career capability.

This program integrates the corporation's tuition assistance benefits into its leadership career development strategy. The key element of this program is the opt-in nature of the highly engaged associates. The business-impact measurements at the company include the tracking of the percentage of future store management that emerges from the customized program vs. more traditional channels.

Business Issue: Tuition Assistance as a Strategy

One of the most advanced companies in the use of tuition assistance is Verizon Wireless. Under the leadership of Dorothy Martin, LearningLINK program manager for Verizon, the corporation already has monthly dashboards that document business impact. The four key business outcomes measured include recruiting, retention, job performance and job mobility.

These are key human capital factors for any company. All four parameters show favorable outcomes for employees utilizing tuition assistance relative to the general Verizon Wireless employee population. Especially dramatic is the fact that the strategy has produced as much as a 10 percent improvement in retention. This result is important because it is directly opposite to the "educate them and they will leave" opinion widely held among operating managers.

To extend the impact of tuition assistance, Verizon Wireless is collaborating in the development and deployment of a customized retail management program targeted at accelerating the development of future leaders in critical retail operations. Calibration of the impact of the custom program on the business outcomes listed above is part of the deployment.

Business Issue: Sales Training Redesign and Redeployment

Few industries face the challenges seen in the auto industry today. Innovation, a key concept in many markets, is more than a mere expression at Chrysler Academy. First presented to the public in detail at the Fall 2008 Chief Learning Officer Symposium, the corporation has deployed an innovative approach including:
a) Performance maps for high performers.
b) Gap analysis.
c) Sales training redesign and new deployment model.
d) Measured business impact.

Answering questions around learning's impact has motivated senior Chrysler management to extend the analysis to dealership management programs that reach far beyond sales training.

In summary, these best-practice companies are walking the talk when it comes to innovative learning strategies and the related business outcome measurements that show the value of the investments. Validated in the first phase, these measurement initiatives are being leveraged to impact even broader strategy issues - the true seat at the table.

[About the Author: Michael E. Echols, Ph.D., is vice president of strategic initiatives at Bellevue University and author of "ROI on Human Capital Investment."]

The Human Resources Department As a Profitability Factor by Kenneth Moore & Robert Furlong

What would you do if you had a Human Resources employee who could improve the company's profit margins, positively impact the cost of goods sold, lower the day's sales outstanding, and increase the price/earning ratio while liquidating overhead costs to the business - and still deliver flawless transactional and traditional HR services?

Most CEO's would react in two ways:
a) Why is this individual wasting his/her time in an HR department?
b) Why didn't I demand this level of HR department performance five years ago?

The concept of the Human Resources department as a profitability contributor is fast gaining currency in U.S. businesses and bears closer examination. Professor David Ulrich of the University of Michigan, a leading expert on HR competency models, sees the changing business world as a 20-20-60 proposition. Of executives surveyed, 20% currently use the HR department as active and innovative business solution partners. 20% believe that the HR department should remain as administrative overhead and only perform transactional work.

But, 60% of the executives are starting to expect the HR department to partner with others departments to improve the company's core competencies and competitive advantages. And, more HR people are stepping up to the plate and delivering the goods.

What's driving this thinking? The short answer is competitive pressure in a fast changing business world - pressures for sales, talent, and profits. Most CEO's (and their CFO's) are held accountable for three general but powerful results: Increasing revenue, generating cash, and reducing costs. In order to focus on these three accountabilities, executives are discarding paradigms that no longer work as companies seek to stay in and grow their business.

The HR department as a strictly administrative overhead and resource consumer is one of the paradigms under justifiable attack. Transactional HR departmental activities such as payroll, benefits administration and records keeping are easily outsourced or digitized (or should be) with significant cost savings.

We have worked with companies who have digitized their current and past employee data bases. In one company, they eliminated over 35 five-drawer file cabinets (and two rooms) and condensed them into CDs that fit into a shoebox. With advances in technology, even the shoebox is in jeopardy as a storage device.

To many CEOs and CFOs, the HR department as a revenue enhancer takes getting used to. That's not the way they were taught. They are more interested in the payoff and are asking appropriate questions: What's in it for the company? Where is the improvement in the revenue stream? How does this get us new customers and retain our current customers. Where is the proof of corporate performance enhancement metrics?

Once they get solid answers to these questions from competent HR leaders, the CEOs are quick to change their thinking. To answer the payoff questions, recognize that a continual company-wide value chain analysis is critical to the success of any organization. Over the past decade, CEOs began demanding that their Human Resources departments deliver flawless functional work and become a knowledgeable partner with all other disciplines to advance the business plan of the company.

Individual professional silos are breaking down. Disciplines such as finance, sales, marketing, operations, and HR no longer exist as stand alone entities. They are inter-dependent with one another. Weakness of any one of the links inhibits other links from maximizing their efficiency and productivity.

Expectations of the Human Resources Department Have Changed

These three emerging concepts in the practice of HR bear examination:

a) What value does the HR department bring to the organization. Many HR teams lack a vision that includes their value to the organization. Do the HR department's activities directly help the company achieve its broad business objectives? Are the HR team's arguments for or against a business strategy credible to the other department heads at the decision making table? How are the HR department strategies, that benefit the employees, the shareholders, the customers, and all other stakeholders in the organization, selected and implemented?

b) What value does the HR department generate for the customer - the end user of the company's product or service? Sales and quality are no longer restricted to the sales and quality assurance teams. Edwards Deming taught organizations that quality and value must be built into every step of the process. The HR department doesn't just hire a salesperson based upon a manager's request. The end result of HR's recruiting and hiring efforts is that the customer who interacts with the new sales person receives continuing world class service from the company. HR shares the quality of the new hire with the other departmental silos to insure that the company is, or becomes, the vendor of choice for that customer.

The final of the three emerging concepts for the Human Resources Department is:

c) What core business competencies must HR leaders possess in order to be credible strategic partners with the rest of the executive team? Each company and each industry can generate its own list of core business skills their teams must have that go beyond their individual specialties.

This issue has become so critical that in graduate and undergraduate level business programs, new editions of Organizational Development textbooks are including chapters on financial calculations and ratios, corporate social responsibility, globalization, and major workforce diversity challenges, among others.

The biggest barrier to profitability is ignorance - ignorance by many people about how the company makes money and how it achieves its objectives, and how all of the departmental silos are interdependent on each other. The myth that only finance people need to know about finance or that marketing people are the only people who need to know about marketing is fast disappearing. In today's business environment, profitable organizations require highly skilled employees who can solve complex problems using multi-disciplinary teams.

The Human Resources Department and Profitability

Can HR be linked to profitability metrics? Yes. Here are three examples.

a) A well known global company formed a group of HR professionals who developed processes and training programs in sales, customer service, workouts, project management, process improvement and leadership development that focused on critical performance issues for their internal and external customers. By partnering with operations, sales, and customer service they served as a catalyst to forge alliances, partnerships and agreements.

Many of their efforts resulted in improved relationships that translated into "Preferred Provider Status", which increased sales and lowered costs. All of their costs were liquidated by charging a fee for the service while creating net revenue. After two years, this HR group generated sales of $4 million and a profit margin in excess of 30% which was returned to the division budget at the end of each fiscal year.

b) Secondly, an HR team, partnering with the Audit staff, discovered that the accounts receivable turnover had moved from a preferred 30 days to 45 days during the past two years. They decided to let the chief credit officer go. The HR staff established criteria to identify candidates with the ability to reduce the ratio from 45 days back to 30 days. The HR staff recommended one candidate for hire. Within six months, the company's DSO (Days Sales Outstanding) ratio was reduced to 35 days.

c) In a third case, while designing and negotiating a new health care and 401(k) plan, the HR leadership partnered with the sales and marketing team to determine if the cost of the program would erode the company's market share and competitive pricing strategy. The resulting benefit program design achieved its cost/benefit objectives without jeopardizing the company's market share and pricing metrics.

Transition the Human Resources Department to a Profitability Factor

How do HR leaders and CEOs make the transition? Here are suggestions based upon our belief that the more employees become knowledgeably involved in the business, the better they will be able to become a more productive asset.

a) Develop a leadership development program that includes hands on training in all of the functional disciplines. For example, in the production department, identify the barriers that prevent managers from achieving efficiencies and savings;

b) Insist that Human Resources staff receive financial training so they understand the impact of cash flow, receivables, billing cycles, and so forth. If you're a public company, teach them how to read and understand your company's annual report or 10-k. Reading the proxy statement is always informative - even if the information contained in it is reluctantly revealed, and occasionally masked with arcane accounting jargon;

c) Have HR staff participate in sales strategies, customer visits, and technology reviews. Encourage them to learn quality methods, process improvements techniques, terms and conditions, and contract negotiations with suppliers and customers. Engage them as process consultants (have them trained if necessary) so they can assist with growth initiatives;

d) Most importantly, hold all employees accountable for achieving the "critical numbers" established for your company. A superb HR department becomes irrelevant if the company is sliding into bankruptcy. The HR department's powerful value focuses on its contributions toward reversing the slide.

Include your HR employees as full business partners. They will rise to the occasion and surprise you by building your bottom line and becoming a profit center contributor as well as maintaining their traditional responsibilities - and they will be better at both. The intense and brutally competitive business environment of our global and digital world needs the help of everyone in the company. To which group of 20-20-60 does your company belong?

[About the Authors: Kenneth W. Moore is the President of Ken Moore Associates. He specializes in quantitative strategic business and organizational development leading to improved corporate performance. Robert (Bob) Furlong, principal of Sage Leadership Consulting, provides business-savvy Human Resource consulting that enables organizations to meet business objectives while fostering individual employee growth.]

Learning in a Tough Economy by Marc Sokol

Although there seems to be no shortage of bad news in the business world these days, there is a bright spot for learning leaders: Economic downturns often present opportunities to make learning more effective, thereby making organizations more competitive.

When the economy slows, corporations are forced to respond. It's a simple financial matter: Less money coming in means less money available to spend. Common fiscal belt-tightening techniques include budget cuts, spending and hiring freezes, and reducing the size of the employment base through buyouts, attrition or layoffs.

As organizational leaders weigh tough decisions on where to cut costs, they should ask themselves one simple question: "Do we still want to be in business after the downturn?" If the answer is "yes," one area in which spending should not be cut without some serious strategic thought is employee learning and development.

True, adjustments may be needed. The learning and development department probably should reduce spending just like everyone else. Instead of cutting all initiatives in equal fashion, smart organizations retain initiatives that are critical to business success and cut back on those that may simply be "nice to do." Think of it this way: It wouldn't be prudent for a restaurant kitchen to eliminate fire extinguishers to save costs in lean times, would it?

Canceling an arbitrary portion of training initiatives across the board creates the illusion of savings - some real via eliminated travel expenses and some potential under the assumption that freed-up staff time is put to good use. But without strategic thinking about where cuts should be made, such moves could end up damaging the differentiators responsible for competitive advantage.

Planning to Outlive a Recession

Development is a key factor in ensuring people stay engaged in the organization and continue to have an impact on the company's bottom line. Giving current and potential leaders the development they need helps a company weather the storm and continue to excel. So how can necessary cuts be made with minimal long-term damage? What can be cut, and what should remain?

To guide the decision-making process, company leaders should sit down with line managers and talent professionals to examine the key factors to business success and which training and development initiatives enhance these factors. Smart companies proceed strategically so that reduced learning and development spending won't blunt long-term corporate success.

Look at Talent Management as a Response to Economic Downturn
Don't spread reduced training dollars as if they were peanut butter and you were trying to make 10 sandwiches with only enough available for five. Such a nonstrategic approach simply reduces effectiveness across the board - including in the areas responsible for a firm's competitive advantages.

Instead, choose more carefully who you need to invest in and which types of behavior you need to impact. This means you have to determine which offerings have the most immediate and direct effect on the business and on customer experience. It also may mean you have to be more selective about who is invited to participate.

Take the example of Company X, which has a significant development initiative for high-potential leaders. This program has shown visible impact for participants and their managers. As the economy enters a soft period, Company X opts to cut spending for the coming year. How will this initiative be changed to compensate for this cut? Should the program be eliminated for a year or two? Should it be adjusted so it's less intensive? In the end, a decision is made to retain the initiative as its current level of intensity, but to offer it to fewer individuals.

Let's look at the impact of this decision:
a) The nomination criteria for the program are strengthened. This results in more in-depth discussions by senior leaders and managers about who should attend and increases the value of this initiative in the minds of these influential individuals.
b) Chosen participants benefit from the same high-quality program as participants from previous years, and any feelings of being cheated by having to settle for a second-rate version are avoided.
c) Management takes the opportunity to communicate to those who didn't make the cut. They're told of the reduction in slots this year and are reassured they will be reconsidered for participation the following year. They are disappointed they won't get to attend this year, but are glad that when their turn comes they will not get a second-rate version of a program that has become well-respected.
d) Those who did make the cut are told they were among a smaller group chosen, leading to a clear understanding of the company's desire to retain them over the long term and even more accountability to put what they learn into visible practice.

In this way, a spending cut ends up positioning the company to reinforce its commitment to a development program that really makes a difference. Most companies tell their employees that they are the firm's most important asset. Company X found a way to walk that talk.

Ensure All Training Efforts Are Critical to Continued Business Success

The key issue here is deciding what behaviors, industry gatherings and activities are truly critical to business success. When budgets are cut, learning and development managers need to ensure a clear line of sight exists between training efforts and the value they provide for the business and its customers. A good example comes from the manufacturing sector: A downturn is not the time to scale back training on quality or safety technique. Any refinery manager will tell you the same thing in a heartbeat.

On the other hand, an economic downturn probably is a good time for a company expanding in Latin America to limit Spanish-language instruction to only those being deployed there in the near future. Broader training across the talent pipeline in this area can be resumed once the economic storm has passed.

In truth, a time of universal economic contraction may even be a time when expanded training efforts become necessary. Key customer relationships may cool due to less frequent in-person visits and increased reliance on voicemail and e-mail. This may happen at precisely the moment when the customer is looking for its own ways to cut spending.

Companies in this situation would be wise to invest in new or enhanced targeted sales training to ensure confidence and credibility in dealing with nervous clients. It's human nature. We all want to affiliate ourselves with the strong, the confident and those who will survive. Customers of organizations are no different. They want to know that the entities they outsource to or buy products from will still be there after an economic downturn has run its course. Such a strategy not only serves an immediate business need but also positions the company well for when the economy regains its health.

Leverage Learning From Work Experience

An economic downturn is a great time for companies to think beyond the traditional workshop format. Much can be learned on the job and in collaborative groups. Simulation-based learning, increased coaching and mentoring, and looking to company leaders to teach others based on their own experiences all can have a deeply positive impact on the leadership pipeline.
Whether the format looks like a community of practice, an action learning team or simply a facilitated discussion group, learning and development leaders can help get people talking with each other about their own experiences and what they have learned.

Look to Technology

Technology-enabled learning can extend development investment when economic times are tight. Similar program content can be delivered without the associated travel costs, and if done well, an atmosphere of engaged group learning can be maintained.

Let's look at another example, this time from a firm we'll call Company Y. This organization has professionals based in locations around the globe. These individuals gather in person twice each year to review case studies, swap notes and discuss the latest trends. Company Y anticipates a slowing economy and makes a decision to eliminate these twice-yearly gatherings to save travel and accommodation costs.

But Company Y doesn't stop there. In fact, its corporate leaders have been researching lower-cost alternatives ever since the meetings' costs were tagged for discussion. After all, the value of these best-practice exchanges are tangible and are one reason why Company Y's people are so clued in to the needs of their clients. Although Company Y eliminates the twice-yearly in-person gatherings, a quarterly webinar is instituted in its place to cover the same topics. The employees experience continuity of best-practice information flow. True, employees miss the face time with colleagues, but at least they know their needs for connection and development still matter as Company Y realizes cost savings.

Companies should look to intranets, online chat rooms, SharePoint technology or other existing resources to enable collaboration and idea exchange between teams and colleagues geographically separated from one another.
Move From 'Training' to 'Development That Makes a Difference'
Learning professionals know that, as engaging as any training event can be, the lessons learned quickly can dissipate and fail to translate into meaningful changes on the job without an effort to make the learning "stick."

To reap full the benefit from resources spent on learning and development, companies need to effectively communicate expectations to the individuals who will be taking part, as well as to their managers. Success is more than just showing up at a training event. Insights must lead to action, and action must translate into practical improvements in performance.

Taking a realistic approach to learning and development means ensuring people know what needs to be improved, they are motivated to improve and they get useful knowledge and tools to address their targeted areas. They also need opportunities to apply what they have learned, and they need to be held accountable for improvement. These strategies can help drive effective integration of new skills. They're also another example of a reaction to an economic downturn that can have a lasting positive effect on the company long after the economy has improved. Learning professionals can seize the moment to drive best practices into place.

 

Foster Dialogue About How Competitive Advantage Can Be Maintained or Enhanced

An economic recession is like any other type of organizational change, only this one is imposed from the outside. Employees and management can't hide their heads in the sand waiting for the recession to pass or for the "other shoe to drop." The challenge needs to be faced head-on.

Learning and development leaders can help foster dialogue among employees about what the business needs to do to be more competitive than the next company. After all, the whole industry is in the same situation. Issues need to be addressed with emotional engagement, not just a set of dispassionate adjustments. This is the time to increase communication in all directions and encourage employees to respond thoughtfully. Ask them to help prioritize how development dollars get spent. Such discussions often yield surprising and valuable insights.
Set the Stage for Increased Competitive Advantage

Recently, Personal Decisions International conducted a survey of human resources professionals and other business leaders around the globe to uncover organizational approaches to retention of key employees in the slowed economy and what tactics they have found to be most successful. Among the 530 respondents, 93 percent said retaining key employees is even more important during an economic downturn.

Perhaps counterintuitively, the survey found "accelerating the development of key employees" to be a more effective tactic to retain these individuals than "competitive pay and benefits." These responses offer real-world evidence that employees want development opportunities and will stay with the company that offers them.

Skillful learning and development leaders can foster a common vision of what it looks like to be successful, even in a recession. Those who do so will mobilize and focus energy across their organizations, both for today and tomorrow, as they become catalysts for action and learning.

[About the Author: Marc Sokol is the senior vice president and global practice leader of development solutions at Personnel Decisions International.]

"How schools treat parents" series: School 2 - Venkat International Public School

Venkat International Public School is a CBSE school in Rajajinagar, Bangalore - about a kilometer away from National Public School. In the informal survey that my wife and I did, this school ranked somewhere in the middle of the shortlist (in terms of building, number of kids in a class, class room quality, etc.)

My wife and I had, sometime in Oct'08, registered our child's name for the first standard for Academic Year 2008-09.

This morning, my wife received a call from the school with the following instructions:
1. The child needs to be brought to the school on Saturday the 6th December (the day after tomorrow) at 10.00 AM for 'observation' (part of the admission process in most schools - the child is observed while playing and interacting with other kids.)
2. The parents must be ready to pay Rs. 40,000/- in cash immediately (on the same day) to the school. This is a non-refundable 'donation'.
3. The application form will also be issued on the same day, for Rs. 250/-.
4. They have not decided on the monthly fees yet, and will inform the parents of the monthly fees sometime after March'08.

I thought donation was legally prohibited by a supreme court judgement. Apparently the schools in Bangalore do not consider this a major impediment.

In any case, I am taking my daughter here just for the experience of an 'observation'.

Detailed procedure of Sandhyavandanam - 1 of 2

www.vishuji.com

SANDHYA VANDANAM


Sandhya Vandanam is a specially devised efficient spiritual ritual for the realization of the Divinity of the Self (Atman). It is a Nitya Karma or an obligatory daily ritual whose object is to bring about self-purification and attunement to Cosmic Reality. It is an all-round complete ritual which incorporates the principles of the Supreme Divinity (Brahman).

RITUALS OF THE SANDHYA

Each part of the ritual is meant to give expression externally to an internal mental attitude and spiritual feeling (Bhava). Some necessary changes are introduced in the Mantras and ritual according to the time of the Sandhya-- dawn, noon, or sunset, and according to the Veda (Rg, Yajur, or Sama) to which the votary is affiliated. However, the main purpose as well as most of the Mantras, the procedures, and rituals are all common.

The procedure involve :

1. Achamanam :

Sipping a little water, in the prescribed manner, for self-purification, remembering the Supreme All-pervading Reality.

2. Apo-Marjanam :

Invoking all the waters of the earth which form the cause of the emergence and sustenance of all life, by sprinkling water on oneself, to enable one to be attuned to the cosmic life and reality.

3. Pranayama :

Regulated breathings, as per prescription, for establishing psycho-somatic harmony, using the Gayatri-Mantra.

4. Punar-Achamanam :

Again sipping water with appropriate Mantras for the removal of all sins and obstacles, attuning oneself to the light-giving sun in the morning, to the life-giving waters at noon and to the heat-giving fire in the evening, which are the means of all our life and activity, and as such are termed as the sources of Immortality (Amrta-yoni).

5. Punar-Marjanam :

Again sprinkling water over oneself with the Gayatri and other Mantras praying for welfare here in the world and highest spiritual attainment hereafter.

6. Aghamarsanam :

Repeating the cosmic creation Mantras, feeling oneself as a part of it, to remove the limitations of personality.

7. Suryopasthanam :

Invoking the Sun-God who brings life and light to the world and attuning the mind to the Divine in the Sun and to all the cosmic surroundings.

8. Gayatri-Upasanam :

First the Divine Gayatri is invoked as the source of the Vedas and then the different Worlds and the Supreme Divinity are located in the various limbs of one's body by touching them while uttering the Gayatri-Mantra, along with the Vyahrti (Bhuh, Bhuvah, Svah). This process of locating is known as Anga-Nyasa.

This is followed by the Japa and meditaion of the Gayatri-Mantra for as long as one can do conveniently, fixing, however, a decent minimum number of times for the Japa. For meditation Gayatri is conceived in the form of a luminous Goddess illuminating the Heart and removing all darkness of Ignorance.

9. Visarjanam :

Valediction. Praying to the Goddess to retire, to return again when invoked. Salutations are offered with devotion.

10. Antya-prakaranani :

Ending. Now, concluding the Upasana, protection against all wrongs and evils is sought and salutations are offered to the Sun-God and other Cosmic divinities. Forgiveness is sought for any flaws or lacunae in the uttering of the Mantras and the performance of the rituals and the Supreme Being is remembered to make them complete. The Upasana is concluded with the offering of salutations.

Preparation for the Performance of Sandhya :

Before performing the Sandhya, one should be physically clean, mentally calm and restrained and have a prayerful attitude. One should sit in a clean quiet place on a mat or Deer-skin, in a straight position with legs tucked in (ordinary Padmasana).

DETAILS OF THE PRACTICE OF SANDHYA WORSHIP

1. Achamanam Sipping water sanctified by mantras

Sit in a squatting position, facing east or north. The hands should be between the knees. Bend all the fingers other than the thumb and the small finger slightly so that a hollow is produced in the palm. Take a very small quantity of water in the palm and sip, uttering the following three mantras (one sip for each mantra):-

Achyutaya namah
Anantaya namah
Govindaya namah

Then
Utter Kesava and Narayana touching the right cheek and the left cheek respectively with the thumb of the right hand.
Utter Madhava and Govinda, touching the right eye and the left eye respectively with the ring finger.
Utter Vishno and Madhusudana, touching the right nostril and the left nostril respectively with the index finger.
Utter Trivikrama and Vamana, touching the right ear and the left ear respectively with the small finger.
Utter Sridhara and Hrsikesa, touching the right shoulder and the left shoulder respectively with the middle finger.
Utter Padmanabha and Damodara touching the naval and the head respectively with all the fingers.

Meaning 1:

By these actions the various parts of the body are sanctified and the person is made fit to proceed with the worship.

2. Vighnesvara Dhyanam - Meditation on Lord Vighnesvara

While reciting the following mantra, gently tap the two sides of the forehead with the fists five times with the thought that thereby the nectar (amrta) in the head flows down through all the nerves and invigorates them.

Shuklambaradharam Vishnum

Sasivarnam Chaturbhujam,

Prasannavadanam dhyayeh,

Sarva-vighnopasantaye

Meaning 2

For the removal of all obstacles I meditate on Lord Vighnesvara who is clad in white, is all-pervading, is white like the moon, sports four arms and is always of serene aspect.

3. Pranayamah

Regulation of breath

Bend the index finger and the middle finger and press the right nostril with the thumb and left nostril with the ring finger and the small finger. First draw in the breath through the left nostril while mentally chanting the following mantra. Then hold the breath within, mentally chanting the same mantra again. Thereafter, let the breath out through the right nostril, again mentally chanting the same mantra. These three actions of inhaling, holding the breath and exhaling, during which the mantra is chanted three times, together make up one Pranayamah.

Om Bhuh, Om Bhuvah, Om Suvah, Om Mahah

Om Janah, Om Tapah, Om Satyam

Om Tat Saviturvarenyam

Bhargo devasya dhimahi,

Dhiyo yo nah prachodayat

Om apo jyoti raso amritam Brahma

Bhur Bhuvas suvar om

Meaning 3

Om is all the lokas - bhuh, bhuvah, suvah, mahah, janah, tapah, satyam. We meditate on the adorable effulgence of the Lord who creates everything, so that it may energize our consciousness.

Om is water, light, the earth that yields tasty food, the air that sustains life, the all-pervading either and the mind, intellect and the 'I' sense marked by the terms bhuh, bhuvah and suvah.

4. Sankalpah

Resolution

Place the left palm, turned upward, on the right thigh and place the right palm, turned downward on the left palm. Recite the following mantra :

Mamopatta samasta durita ksaya dvara sri paramesvara prityartham -

- In the morning Pratah sandhyam upasisye

- At noon Madhyahnikam karisye

- In the evening Sayam sandhyam upasisye

Meaning 4

I begin to worship the goddess of sandhya in the morning (at noon/in the evening) in order to merit God's grace which destroys all the sins acquired by me.

5. Marjanam
Purification of the body and mind

Uttering Om keshavaya namah, write Om on water with the finger and touch the spot between the two eyebrows with that finger.

Then, while reciting the first seven of the following nine mantras, sprinkle water on the head with the ring finger. While reciting the eighth mantra, sprinkle water on the feet. Again sprinkle water on the head while reciting the ninth mantra.

Aapo hi stha mayo bhuvah
Ta na urje dadhaatana
Mahe ranaya chaksase
Yo vah sivatamo rasah
Tasya bhajaya teha naha
Usatiriva matarah
Tasma aram gamama vah
Yasya ksayaya jinvatha
Aapo janayatha cha naha

Now take a little water in the palm and rotate the palm around the head with the following mantra:

Om Bhur bhuvah suvah

Meaning 5

It is well-known that you, the deities of water, are the cause of great happiness. Please nourish us with the divine vision which brings glory and loveliness. Please make us worthy of imbibing the auspicious bliss even as a mother feeds her children. We approach you with eagerness for that bliss to distribute which you have taken a form and are shining. Bestow on us the boon of a next life sanctified by knowledge.

6. Prasanam

Sipping water with mantra

Take a little water in the palm and sip, after reciting the following mantra :

(Pratah) Suryascha ma manyuscha manyupatayascha, manyukritebhyah.
Papebhyo raksantam. Yadratrya papamakarsam. Manasa vacha hastabhyam.
Padbhyam udarena sisna. Ratris-tadavalumpatu.
Yatkincha duritam mayi. Idam aham mamamarita yonau.
Surye jyotisi juhomi svaha

Meaning 6

(In the morning) May the sun who stimulates everything, anger which enslaves all and the gods who preside over anger, protect me from the sins committed through anger. May the deity of the night absolve me of the sins committed by me at night with the mind, lips, hands, legs, stomach as also of whatever other sins may linger in me. This "me" devoid of all sins, I offer as sacrifice in the effulgence of the sun who is the source of immortality. May this sacrifice be well done.

(Madhyahne) Apah punantu prithivim prithvi puta panatu mam.
Punantu brahmanas patirbrahma-puta punatu mam.
Yaducchistam abhojyam yadva duscaritam mama.
Sarvam punantu mamapo asatam ca pratigraham svaha

Meaning 6

(At noon) May the deity of water sanctify the earth which is its base. May the sanctified earth purify me. May it sanctify the teacher who is the channel for the Veda. May the ever pure Veda purify me. May the deity of water absolve me from sins incurred through consuming food left by others or food unfit to be eaten, through bad contact and through receiving gifts from the wicked. Thus purified I offer myself as sacrifice in the Supreme effulgence.

(Sayankale) Agnischa ma manyuscha manyupatayascha manyukritebhyah.
Papebhyo raksantam. Yadahna papamakarsam. Manasa vacha hastabhyam.
Padbhyam udarena sisna.
Ahastadavalumpatu. Yatkincha duritam mayi.
Idam Aham mamamrita yonau. Satye jyotisi juhomi svaha

Meaning 6

(In the evening) May the Fire who stimulates everything, anger which enslaves all and the gods who preside over anger, protect me from the sins committed through anger. May the deity of the day absolve me of the sins committed by me at day-time with the mind, lips, hands, legs, stomach as also of whatever sins lingering in me. This "me" devoid of sins, I offer as sacrifice in the effulgence of Truth who is the source of immortality. May this sacrifice be well done.

7. Punarmarjanam

Sprinkling water again

Sprinkle water on the head with the following mantra:

Dadhikravnno akarisam. Jisnorasvasya vajinah.
Surabhi no mukhakarat. Prana ayumsi tarisat.
Aapo hista mayo bhuvah……

End with Om Bhurbhuvah suvah

Meaning 7

I make obeisance to the Supreme Person who supports, rules and sustains all the worlds, who is ever victorious and who has taken the form of Hayagriva the repository of all knowledge. May He make our faces and other organs fragrant. May He protect our lives continuously. It is well-known.…knowledge (as in No.5 above)

8. Arghya-pradanam

Offering water

Morning :
Stand facing east. Take plenty of water in both palms and raising the heels a little, pour the water down through the tips of the fingers other than the thumb uttering the following mantra. This is to be done three times.

Om bhurbhuvas suvah. Tat saviturvarenyam
Bhargo devasya dhimahi. Dhiyo yo nah prachodayat.

[Meaning - see no. 3 We meditate .. .. .. .. .. .. .. .. .. consciousness]

Noon :
Stand facing north and do the same twice

Evening :
Squat facing west and do the same three times

9. Prayaschittarghyam
Offering of water in atonement for failure to perform the worship at the proper time

Do Pranayamah once, as in No.3. Thereafter offer arghya once, as in No.8. Then uttering Om Bhurbhuvas suvah turn round once and sprinkle a little water around you.

10. Aikyanusandhanam
Meditation on the identity of the individual self and the Supreme Self

Sit down, close the eyes and mentally chant

Asavadityo brahma. Brahmai vaham asmi

Meaning 10
This sun is Brahman. I too am Brahman.
Do achamanam once, as in No.1.

11. Deva-Tarpanam
Offering of water to the devas

Morning: Squat, facing east.
Noon: Squat, facing north.
Evening: Squat, facing north

Pour water through the finger tips of both hands reciting the following mantras :

Adityam tarpayami
Somam tarpayami
Angarakam tarpayami
Budham tarpayami
Brhaspatim tarpayami
Sukram tarpayami
Sanaischaram tarpayami
Rahum tarpayami
Ketum tarpayami
Keshavam tarpayami
Narayanam tarpayami
Madhavam tarpayami
Govindam tarpayami
Vishnum tarpayami
Madhusudanam tarpayami
Trivikramam tarpayami
Vamanam tarpayami
Sridharam tarpayami
Hrsikesam tarpayami
Padmanabham tarpayami
Damodaram tarpayami

Meaning 11
I make my offering to the presiding deities of the nine planets - Aditya, Soma, Angaraka, Budha, Brhaspati, Sukra, Sani (who moves slowly), Rahu, and Ketu; and Narayana with twelve names - Kesava, Narayana, Madhava, Govinda, Vishnu, Madhusudana, Trivikrama, Vamana, Sridhara, Hrsikesa, Padmanabha, Damodara.
Do achamanam once, as in No.1.

An article I came across on Yajurveda Sandhyavandanam

SandhyaVandanam :: Forums @ KanchiForum.org

PostPosted: Tue Aug 23, 2005 3:40 pm Post subject: Reply with quote
For those interested, sharing what i recd, with u all. Didnt know how to attach so please forgive me for the cut and paste thus making the text long

[color=darkblue]Nithya andNimithya Karmas
Dear All,

By His Grace and as guided by my Guru Brahmasri Ramji
Sathrigal, a note on the importance of Nithyakarmas is
attached.
You are humbly requested to download,store it in your
hard disc,read with utmost care and follow. This note
may please be passed on to relatives and friends to
enable them to reap the benefits.
The C.D. may be collected FREE of cost in case of
requirement.
Sri Gurubhyo Namaha

ManuDharma

Rishis after undergoing penance for years have brought into this world for the benefit of human beings Vedas that prescribe ways to lead a purposeful life. Epics show that those who have taken such a path have been successful and have had peace of mind. To lead a life as suggested for each person in accordance with one’s Varna and to follow the set examples is itself Dharma.

A person is born with three liabilities to Dhevas, Rishis and Pithrus and these are known as Runas. Performing Nithya Karmas and Pithrukarmas shall discharge one of these liabilities.

The root of Nithya Karmas i.e. acts to be performed daily is Sandhya Vandhanam with which only the other pujas, homas and Karmas get sanctified. In other words there shall be no effect to other Karmas without the basic that is Sandhyavandhanam.

Besides Sandhyavandhanam, Brahmayaganam i.e. Deva, Rishi Pithru Tharpanam is also to be performed once during daytime, which relieves one of the liabilities mentioned.

Aspects of Sandhya Vandhanam

Three important parts are a) Arghya Pradhanam b) Prnayamam c) Gayathri Japam.
Starting with prayer to Ganapathi, one purifies for acts if any done in the night, forenoon, and the after noon. Argyam is given with Gayathri Manthra and thereafter to Navagrahas and twelve aspects of Vishnu who represents AthiDhevatha of the twelve months. Prnava Japa and Pranayamas, Gayathri Avahanam, Nyasam, Japam and Gayathri Upasthanam follow this. It concludes with Prayers to Surya, Sandhya, Dhigdhevathas, Yama, Hara, Hari besides Sarpa Raksha manthram.

Importance of Sandhyavandhanam

1. Covers prayer to all manifestations of the Brahmam, in the form of Ganessh, Sakthi, Vishnu, Siva and Adhithya.
2. Prayers to Sun God with whose Grace only there is life in the universe.
3. In Vedas it is mentioned that there is perpetual war between Devas and Asuras . The Sun God, Devatha for Gayathri, with Argyapradhanam gets stronger to fight the evil and in turn shower His Grace on the performer. This is a cyclic occurrence as described in the verses beginning with ‘ Sahavai’ that is uttered before Brahmana Bhojanam in a Shradhdha.
4. Remembrance to Rishis who gave us this invaluable treasure.
5. Only those who have been initiated through Brahmopadhesam by a Guru could do Gayathri Japa, the essence of Vedas.
6. Gayathri Japa protects both self and the world.
7. While doing the Japa one needs to meditate. This meditation besides purifying ones soul gives the power of concentration.
8. Pranayams done in the proper way with the prescribed Manthras give the desired effects such as longevity, purification of lungs and heals any breathing problems.
9. Different postures followed during Sandhya Vandhanam such as sitting upright, bending, namaskarams, viewing the Sun are different physical exercises one does even without knowing.

Rules to be followed

1. Sandhya Vandhanam is done thrice a day in the morning, noon and the evening.
2. In the morning and noon one should do this standing while the evening one sitting.
3. Japa and Vandhana are done facing East in the morning and Noon while in the evening it is west you face.
4. Arghyam is given in the evening facing north.
5. Achamaniyam should not be done while standing or facing west or south.
6. It is important to have proper count of japams irrespective of the numbers.
7. This is to be done on all days even on days when one may have Aachoucham (Vridhdhi ot Theettu as known in Tamil). During this time one needs to do Argyam, 3 Pranayamas and 12 Gayathri and end with Gayathri upasthanam.
8. It is important that the rules and Prayoga (procedures) are followed with manthras properly uttered.

Our forefathers were performing till recently Nithya Karmanushtanas that started in Vedic period. It will not be difficult to set aside a few minutes daily amongst busy schedule to perform at least Sandhyavandanam and once it is part of daily routine it becomes much easier.

By such performance one should become an example to the next generation. There may be some that due to circumstances would have forgotten manthras or the rules or Prayoga and may be doing this karma occasionally but incorrectly.

To facilitate such people and also to guide fresh Brahmacharis a C.D. has been brought out by Brahmasri. Ramji Sasthrigal, of Aathma Vidhya Samajam, Nungambakkam son of Mannargudi Raju Sasthrigal.

The MP3 C.D. contains the following also.

Upakarma, Sravanam, AvaniAvittam:

This is being observed on Sravan Purnima (normally coincides with star Avittam) by Yajurvedhis, while Star Sravan at dawn is important for Rigvdhis. Samavedhis observe upakarma on the day when star Hastha is at dawn in Badhrapada sukla paksha.

On this day RECOUPMENT or REFRESHER COURSE OF VEDAS is undertaken.
One has to do Vedha Adhyana (learning) from Sravana Purnima in the year post upanayanam. From this day to Pushya Purnima one does Veda Adyayana and for the rest of the period till Sravan Purnima learns other aspects of Veda such as Vyakarna.

Veda adhyana that has been thus temporarily suspended (known as Uthsarjana) for six months, get restarted on the day of Upakarma.
It may therefore be noted Vedaramba or restart of Veda learning is the most important aspect of Upakarma.

Aspects of Upakarma.

1. Samithadhanam by Brahmacharis.
2. Kamokarshith Japa. This is done as prayaschitha for not performing Uthsarjana.
3. Brahmayagnam after Madhyaniham.
4. Mahasangalpam for getting rid sins performed during the year knowingly and unknowingly followed by Snanam / Prokshna Snanam for cleansing the body.
5. Yagnopavitha Dharanam – Changing the sacred thread.
6. Kandarishi Tharpanam- to thank all those Rishis and Devas who have given us Manthras for our welfare.
7. Puja for Vedavysa, Varuna and Homa for the Rishis and Devas.( This is normally done at the congregation by the Prohoit or priest.
8. Vedharambam or restart of Vedaadhyayana.
9. Gayathri Japam on the following day of Sravan Purnima. Followers of different Vedas perform this on this day.

Important rules to be followed.

1. Yagnopavitham is a sacred thread and due relevance should be given.
2. This should remain on the body always and preserved properly and kept clean.
3. It shall be changed as and when necessary say when gets broken or after an aachoucham, or before start of any important Karmas.
4. The Brahmamudichu or the knot should be resting on the top of the shoulder.
5. Since it is Sacred no external objects should be tied to this.
6. Yagnopavitham protects a person who respects its sanctity and observes nithya karmanushnaas i.e. daily rituals.


Sidhdhi Vinayaka Puja:
Alsoknown as Vinayaka Chathurthi is observed on Sukla Chathurthi in the month of Badhrapadha (August / September) as per English Calender.

Normally idol made of clay is worshiped and visarjan takes place on Anantha Chadhurdasi after 10 days. This custom is followed in Maharashtra while in south it is on the following day after Punar Puja.

Varalakshmi Vratham:

Families for the welfare of the husbands on the Friday preceeding Sravan Purnima observe this traditionally. Elders or Guru initiates the lady to the vratha in the year of marriage. If for any reason this is missed initiation takes place in the year when it falls in the Tamil month Avani.

Saraswathi (Dhurga, Lakshmi, Saraswathi) Puja:

This is observed to invoke the Goddess for proper education for the children and Gyna for elders. This falls on the Mahanavami day of Shardha Navarathri Festival.
In east Dhurga Puja is observed during Sharadha Navrathri, Lakshmi Puja on the Purnima following Vijaya Dhasami and Saraswathi Puja on Vasanth Panchami day.

Mahasankaranthi:

More popularly known as Pongal in Tamilnad falls on the day when the Sun changes its path towards North or known as Uththarayana. Sun which gives life to all living creatures in the universe is worshipped at the auspicious time of the change as per the calendar.

Sathyanarayana Puja:

This is being observed in many households on Purnima evenings. It is more popular in Andhra and Karnanatka who conduct the Puja as a part of any important ceremony such as marriage.

Besides Sathyanarayana or Sathyavrathar prayers are offered at the start to Ganapathy, Brahma,Vishnu, Rudhran and Gowri (Pancha Lokapalas), Navagrahas, Ashtadikpalas
(Indhra, Agni,Yama, Nirurithi, Varuna,Vayu, Kubera or Soma and Easanan).

Recital of five stories after the main Puja is another feature and concludes with Palashruthi. It is compulsory for the visitors to accept the offerings.

The C.D. containing the above Nithya and Naimithya Karmas has been made for everyone to reap the benefits by performing regularly and correctly and can be had from:

Sri.Ramji Sasthrigal, New No.18 (old No 37), New Tank Street, Nungambakkam (Tel.28253664)

K.Balasubramanian, 6, (Old No 8/1), Avenue Road, Nungambakkam (Tel. 52137939)

Sri. K.Ramji, PACRIM Software Systems, 7 (Old No.16), Avenue Road, Nungambakkam (Tel. 28211181/ 28223147)

Jai Sriram[/color]

_________________
Har Har Mahadev

Should I Invest in Index Funds or Managed Mutual Funds?

This is a great article written by G.E.Miller on how Index Funds are better for the average investor. I'm reproducing this article completely with all links and credits, to ensure credit is given where it belongs. The purpose of having this article on this website is only to 'spread the light' - share my learning with everyone.

- Kaustav

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Should I Invest in Index Funds or Managed Mutual Funds? | 20Somethingfinance.com - Personal Finance Blog for Twenty Somethings and Beyond

Should I Invest in Index Funds or Managed Mutual Funds?
By G.E. Miller • Mar 21st, 2008 • Category: Index Funds, Mutual Funds, Workplace Finance

Let’s take a look at index funds and compare them to actively managed mutual funds. It’s important to understand the distinction between the two, because you may have the option of both within your employer sponsored retirement plan. In order to truly understand index funds, you need to first take a step backwards and discuss what they are ‘cloning’ - stock market indices.

What is a stock market index?

Stock market indices measure the composite value of a group of stocks. Indices can be chosen through a set of rules or hand selected by committees. One of the more popular indixes is the S&P 500, which is a committee selected group of 500 large cap (market value) stocks, mostly domestic, that are meant to resemble the market as a whole. Another example of a market index is the Russell 2000, which includes 2000 small cap stocks. You’ll also find indexes that measure different sectors of stocks such as international, health care, real estate, REIT’s, and just about any other way you can group stocks.

What is an Index Fund?

Index funds are a type of mutual fund that attempts to mimic the performance of a stock market index. Like a mutual fund, index fund share values are based on the net asset value of all of the stocks they have invested in. Rather than its holdings being regularly bought and sold through managed trades, index funds periodically change investments based on a set of rules or infrequent committee selected changes. A lot of them take the human decision element out completely.

The first index fund was created in 1975 by Vanguard founder John Bogle. Some believe that Bogle’s philosophy was based on the book A Random Walk Down Wall Street by Burton Malkiel, which argued that one cannot consistently outperform the market averages. To this date, Bogle (now retired from Vanguard) and Vanguard remain strong advocates for investing in index funds, and Vanguard is now the second largest mutual fund company in the world.

Why Index Funds?

Proponents of index funds point towards data that shows that they consistently outperform their actively managed mutual fund peers due to the following reasons:

• Usually they have lower management fees (because they aren’t actively managed).
• They trade much less, so turnover ratio is lower. As a result capital gains taxes can be lower.

Comparing index funds to mutual funds often times will make them look favorable. There are mutual fund managers out there whose goal is to meet the market indexes, not consistently outperform them. Because they’re actively managed, their fees are higher and their turnover ratios are higher. Also, in general, there are some horrible mutual fund managers out there. It makes sense to check their histories before you purchase any of their shares.

A Real Life Comparison

My opinion is that you should take advantage of what is offered to you. Vanguard is my employer’s 401K plan administrator and within my plan I have the option of both index and mutual funds. Let’s take a real life look at an index fund versus a comparable mutual fund within my 401K plan.

Index fund - Vanguard Total International Stock Index (VGTSX): expense ratio = 0.27%, no manager, has outperformed the MSCI EAFE international stock index in four out of the last five years.

Actively managed mutual fund - Artisan International (ARTIX): expense ratio = 1.21%, manager is Mark Yockey who started with the fund in 1995 (good longevity). ARTIX has only outperformed the MSCI EAFE international stock index in two out of the last five years.

The Results: Over the last five years, VGTSX has outperformed ARTIX with a total return of 146% to 100% (with almost 1% lower management fees). This is a significant difference. In this case, being presented with these two funds for international exposure, I would opt for the index fund (VGTSX) every time. However, if I was doing the same comparison within a personal IRA and had other actively managed options to choose from, I would do my research and look to see if I could find an alternate actively managed fund with a lower expense ratio, low turnover, a seasoned manager, and better returns than ARTIX and VGTSX. One needs to look no further than DODFX, which returned 189% over the same period of time, with a team of 9 managers and only a 0.66% expense ratio.

You’ll find a number of investors who invest solely in index funds because they buy into the Bogle rhetoric that index funds are superior in every way in the long run. In many cases, they are. However, there are always exceptions and you should do your homework.

If you have the option of choosing between the two, take a look at the results of the mutual fund managers available to you. This post takes a look at some of the things you should look for in a mutual fund. When presented with limited options, I have opted for index funds. When presented with unlimited options, I never have.

----------------------------------------------------------------------------------------------------

This is a great article written by G.E.Miller on
how Index Funds are better for the average investor. I'm reproducing
this article completely with all links and credits, to ensure credit is
given where it belongs. The purpose of having this article on this
website is only to 'spread the light' - share my learning with everyone.

- Kaustav

Should you invest in Index Funds?

This is a great article from Investopedia.com on
how Index Funds are better for the average investor. I'm reproducing
this article completely with all links and credits, to ensure credit is
given where it belongs. The purpose of having this article on this
website is only to 'spread the light' - share my learning with everyone.

- Kaustav

--------------------------------------------------------------------------------------------------------------------

The Lowdown On Index Funds
by Investopedia Staff, (Investopedia.com)

Index funds have provided investors with a return that is directly linked to individual markets while charging minimal amounts for expenses. Despite their benefits, not everyone seems to know exactly what index funds are and how they compare to the many other funds offered by different companies.

Active and Passive Management

Before we get into the details of index funds, it's important to understand the two different styles of mutual-fund management: passive and active.

Most mutual funds fit under the active-management category. Active management involves the art of stock picking and market timing. This means the fund manager will put his/her skills to the test trying to pick securities that will perform better than the market. Because actively managed funds require more hands-on research and because they experience higher volumes of trading, their expenses are higher.

Passively managed funds, on the other hand, do not attempt to beat the market. A passive strategy instead seeks to match the risk and return of the stock market or segment of it. You can think of passive management as the buy-and-hold approach to money management.

What Is an Index Fund?

An index fund is passive management in action: it is a mutual fund that attempts to mimic the performance of a particular index. For instance, a fund that tracks the S&P 500 index would own the same stocks as those within the S&P 500. It's as simple as that! These funds believe that tracking the market's performance will produce a better result compared to the other funds.

Remember, when people talk of "the market" they are most often referring to either the Dow Jones Industrial Average or the S&P 500. There are, however, numerous other indexes that track the market such as the Nasdaq Composite, Wilshire Total Market Index, Russell 2000 and more. (For more on this subject, see this Index Tutorial.)

What Benefits Are They Providing?

There are two main reasons why somebody chooses to invest in an index fund.

The first reason is related to an investing theory known as the efficient market hypothesis. This theory states that all markets are efficient, and that it is impossible for investors to gain above normal returns because all relevant information that may affect a stock's price is already incorporated within its price. Thus, index fund managers and their investors believe that if you can't beat the market, you might as well join it.

The second reason to choose an index fund is the low expense ratios. Typically, the range for these funds is around 0.2-0.5%, which is much lower than the 1.3-2.5% often seen for actively managed funds. But the cost savings don't stop there. Index funds don't have the sales charges known as loads, which many mutual funds have.

In bull markets when returns are high these ratios are not as noticeable for investors; however, when bear markets come around, the higher expense ratios become more conspicuous as they are directly deducted from meager returns. For example, if the return on a mutual fund is 10% and the expense ratio is 3%, then the real return to the investor is only 7%.

What Are You Missing Out On?

One of the major arguments of active managers is that, by investing in an index fund, investors are giving up before they have even started. These managers believe that the market has already defeated investors who are buying into these types of funds. As index fund will always earn a return identical to that of the market it's tracking, index investors will not be able to participate if any anomalies occur. For instance, during the tech boom of the late '90s, when new technologies companies reached record highs, index funds were unable to match the record amounts of some actively-managed funds.

What Are the Results?

Generally, when you look at mutual fund performance over the long run, you can see a trend of actively-managed funds underperforming the S&P 500 index. A common statistic is that the S&P 500 outperforms 80% of mutual funds. While this stat is true in some years, it's not always the case.

A better comparison is provided by Burton Malkiel, the man who popularized efficient market theory in his book "A Random Walk Down Wall Street". The 1999 edition of his book begins by comparing $10,000 investment in the S&P 500 index fund to the same amount in the average actively-managed mutual fund. From the start of 1969 through to June 30, 1998, the index investor was ahead by almost $140,000: her original $10,000 increased 31-times to $311,000, while the active-fund investor ended up with only $171,950.

Are Index Funds Better?

It's true that over the short term some mutual funds will outperform the market by significant amounts. But picking the good funds out of the thousands (literally) that exist is almost as difficult as picking stocks yourself! Whether or not you believe in efficient markets, the costs in most mutual funds make it very difficult to outperform an index fund over the long term.

by Investopedia Staff
Investopedia.com believes that individuals can excel at managing their financial affairs. As such, they strive to provide free educational content and tools to empower individual investors, including more than 1,200 original and objective articles and tutorials on a wide variety of financial topics.

--------------------------------------------------------------------------------------------------------------------

This is a great article from Investopedia.com on
how Index Funds are better for the average investor. I'm reproducing
this article completely with all links and credits, to ensure credit is
given where it belongs. The purpose of having this article on this
website is only to 'spread the light' - share my learning with everyone.

- Kaustav

4 reasons why you should buy while FIIs sell, if you are in India

This is a great article from Sandeep Shanbhag on
the investment approach to adopt in India in the current market scenario. I'm reproducing
this article completely with all links and credits, to ensure credit is
given where it belongs. The purpose of reproducing this article on this
blog is only to 'spread the light' and share my learning with everyone.

- Kaustav

--------------------------------------------------------------------------------------------------------------------

4 reasons why you should buy while FIIs sell
Sandeep Shanbhag

Wednesday, October 29, 2008


LET’S assume that you have invested in both, the US and the Indian stock markets. Now, it turns out, while your Indian investments are doing exceedingly well, the US portfolio suffers acute losses.

What is the most obvious thing you would do?

You would book profits in India, in order to make up for the US loss. Right?

This, in a nutshell, is the current scene today. The only difference is that the investors are foreign institutional investors (FIIs). These are institutions that operate mutual funds, hedge fund and portfolio management services abroad and invest the fund money in other countries. FIIs by definition, have world wide investments. So, not only India but other Asian markets are also facing a sell off.

What happens when FIIs sell?

FIIs have a huge exposure to the Indian market. Due to this, their buy and sell actions have a considerable impact on the market.

Recently, FIIs have been on a selling spree. This is one of the reasons for the markets to register steep falls. If FIIs are selling, should you buy?

The US is in turmoil but there is nothing wrong with us. The following factors just reaffirm this:

1. Toxic securities (such as MBS and CDOs) are conspicuously absent in our market, thereby preventing us from catching the infection.

Mortgage Backed Security (MBS) and Collateralized Debt Obligations (CDOs) are securities which are backed by a pool of mortgages that are paid by home loan takers in the US. So, if a home owner defaults on his repayment, the MBS holder suffers. Read all about these instruments and how they caused the big collapse.

2. As far as domestic operations of banks are concerned, RBI has been extremely strict by continually increasing the risk weights to real estate and housing loans, thereby discouraging banks to get ahead of themselves, in a bid to increase business.

3. Unlike the West which has a negative savings rate, our domestic savings rate is more than 35 per cent, that means, on an average, Indians save 35 per cent of their income. So, even if there is a protracted slowdown, we would still have considerable demand for products and services, which in turn will help the economy to achieve good growth.

4. Amongst all emerging economies, our export to GDP ratio is the lowest. This means that even if our exports went down, our growth won't be significantly impacted. Therefore, even a full blown US recession will shave only around 40 to 60 basis points off our GDP growth rate. So, we will still have the capacity to chug along at an 8 per cent plus rate.

India - a safe haven

The fundamentals of our economy make our market nothing short of a safe haven during such turmoil. So, I don’t care if the market falls to 9,000 or even lower. Once this storm blows over, things will be back to normal.

In the meanwhile, your fortune as an investor would depend on how you react, or rather, don’t react, to the situation.

The great fall of the market isn’t going to suddenly reverse the quality of the companies listed. If anything, I am looking forward to picking up some cheap but quality stuff.

Photograph: Spencer Platt/Getty Images
Disclaimer: The contents of the article or are for information purpose only and are in no way meant to be advisory in nature. The author does not claim responsibility for actions taken by readers on the basis of the Article. Please consult your financial advisor for your personal money management.

Source: http://wealth.moneycontrol.com/showstory.php?id=11311

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This is a great article from Sandeep Shanbhag on
the investment approach to adopt in India in the current market scenario. I'm reproducing
this article completely with all links and credits, to ensure credit is
given where it belongs. The purpose of reproducing this article on this
blog is only to 'spread the light' and share my learning with everyone.

- Kaustav

Why America needs an economic strategy- Features-The Economic Times

This is a great article from Michael Porter on
America's urgent need for a cohesive national economic strategy. I'm reproducing
this article completely with all links and credits, to ensure credit is
given where it belongs. The purpose of reproducing this article on this
blog is only to 'spread the light' and share my learning with everyone.

- Kaustav

--------------------------------------------------------------------------------------------------------------------

Why America needs an economic strategy

By: Michael E. Porter

31 Oct, 2008, 1900 hrs IST, BusinessWeek

With the US election just days away, it has never been more important to consider what the next President must do to keep America competitive. In this time of crisis, Washington has focused on the immediate and the short term. Lost are the more basic questions we really need to worry about: What is the fundamental competitive position of the U.S. in the global economy? And what must we do to remain strong when other nations are making rapid progress?

The stark truth is that the U.S. has no long-term economic strategy—no coherent set of policies to ensure competitiveness over the long haul. Strategy embodies clear priorities, based on understanding the strengths we need to preserve and the weaknesses that threaten our prosperity the most. Strategy addresses what to do, but also what not to do. In dealing with a crisis, experience teaches us that steps to address the immediate problem must support a long-term strategy. Yet it is far from clear that we are taking the steps most important to America's long-term economic prosperity.

America's political system, especially as it has evolved in recent times, almost guarantees an absence of strategic thinking at the federal level. Government leaders react to current events piecemeal, rather than developing a strategy that unfolds over years. Congress and the Executive Branch are organized around discrete policy areas, not around the overall goal of improving competitiveness. Neither candidate has put forward anything close to a strategy; rather, each has presented a set of disconnected policy proposals with political appeal. Both parties contribute to the problem by approaching the economy with long-held ideologies and policy positions, many of which no longer fit with today's reality.

Now is the moment when the U.S. needs to break this cycle. The American economy has performed remarkably well, but our continued competitiveness has become fragile. Over the last two decades the U.S. has accounted for an incredible one-third of world economic growth. As the financial crisis hit, the rest of the American economy remained quite competitive, with many companies performing strongly in international markets. U.S. productivity growth has continued to be faster than in most other advanced economies, and exports have been the growth driver in the overall economy.

THE AGE OF ANXIETY

Yet our success has come with deep insecurities for many Americans, even before the crisis. The emergence of China and India as global players has sparked deep fears for U.S. jobs and wages, despite unemployment rates that have been low by historical standards. While the U.S. economy has been a stronger net job creator than most advanced countries, the high level of job churn (restructuring destroys about 30 million jobs per year) makes many Americans fear for their future, their pensions, and their health care. While the standard of living has risen over the last several decades for all income groups, especially when properly adjusted for family size, and while the U.S. remains the land where lower-income citizens have the best chance of moving up the economic ladder, inequality has risen. This has caused many Americans to question globalization.

To reconcile these conflicting perspectives, it's necessary to assess where America really stands. The U.S. has prospered because it has enjoyed a set of unique competitive strengths. First, the U.S. has an unparalleled environment for entrepreneurship and starting new companies.

Second, U.S. entrepreneurship has been fed by a science, technology, and innovation machine that remains by far the best in the world. While other countries increase their spending on research and development, the U.S. remains uniquely good at coaxing innovation out of its research and translating those innovations into commercial products. In 2007, American inventors registered about 80,000 patents in the U.S. patent system, where virtually all important technologies developed in any nation are patented. That's more than the rest of the world combined.

Third, the U.S. has the world's best institutions for higher learning, and they are getting stronger. They equip students with highly advanced skills and act as magnets for global talent, while playing a critical role in innovation and spinning off new businesses.

Fourth, America has been the country with the strongest commitment to competition and free markets. This belief has driven the remarkable level of restructuring, renewal, and productivity growth in the U.S.

Fifth, the task of forming economic policy and putting it into practice is highly decentralized across states and regions. There really is not a single U.S. economy, but a collection of specialized regional economies—think of the entertainment complex in Hollywood or life sciences in Boston. Each region has its own industry clusters, with specialized skills and assets. Each state and region takes responsibility for competitiveness and addresses its own problems rather than waiting for the central government. This decentralization is arguably America's greatest hidden competitive strength.

Sixth, the U.S. has benefited historically from the deepest and most efficient capital markets of any nation, especially for risk capital. Only in America can young people raise millions, lose it all, and return to start another company.

Finally, the U.S. continues to enjoy remarkable dynamism and resilience. Our willingness to restructure, take our losses, and move on will allow the U.S. to weather the current crisis better than most countries.

Yet what has driven America's success is starting to erode. A series of policy failures has offset and even nullified its strengths just as other nations are becoming more competitive. The problem is not so much that other nations are threatening the U.S. but that the U.S. lacks a coherent strategy for addressing its own challenges.

An inadequate rate of reinvestment in science and technology is hampering America's feeder system for entrepreneurship. Research and development as a share of GDP has actually declined, while it has risen in many other countries. Federal policymakers recognize this problem but have failed to act.

America's belief in competition is waning. A creeping relaxation of antitrust enforcement has allowed mergers to dominate markets. Ironically, these mergers are often justified by "free market" rhetoric. The U.S. is seeing more intervention in competition, with protectionism and favoritism on the rise. Few Americans know that the U.S. ranks only 20th among countries in openness to capital flows, 21st on low trade barriers, and 35th on absence of distortions from taxes and subsidies, according to the 2008 Global Competitiveness Report. We are fast becoming the kind of distorted economy we have long criticized.

Lack of regulatory oversight and capital requirements, in the name of liberalization and well-meaning efforts to extend credit to lower-income citizens, has undermined our financial markets. America underregulates in some areas while it overregulates in others.

U.S. colleges and universities are precious assets, but we have no serious plan to improve access to them by our citizens. America now ranks 12th in tertiary (college or higher) educational attainment for 25- to 34-year-olds. We have made no progress in this vital area over the past 30 years, unlike almost every other country. This is an ominous trend in an economy that must have the skills to justify its high wages. Instead of mounting a serious program to provide access to higher education, like the G.I. Bill and National Science Foundation programs of earlier years, Congress grandstands over the rate of endowment spending in our best universities.

The federal government has also failed to recognize and support the decentralization and regional specialization that drive our economy. Washington still acts as if the federal level is where the action is. Beltway bureaucrats spend many billions of dollars on top-down, highly fragmented federal economic development programs. Yet these programs are not designed to support regional clusters, nor do they send money where it will have the greatest impact in each region. For example, distressed urban communities, where poverty in America is concentrated, are starved of the infrastructure spending needed for job development. Again, no strategic thinking.

At a time when insecurity and job turnover are higher than ever, the U.S. also has abdicated its responsibility to provide a credible transitional safety net for Americans. It is no wonder Americans are becoming more populist, more protectionist, and more tolerant of harmful intervention in the economy. The job training system is ineffective and receives less and less funding each year. Pension security is eroding, and the most obvious step required to strengthen Social Security—slowly adjusting upward the retirement age—has not been taken. Improving access to affordable health insurance is a major worry for all Americans. Washington could take basic steps such as equalizing the tax deductibility of individually purchased insurance to assist those not covered by their employers. Yet the government has failed to do so.

HIGH COSTS, BIG HASSLES

Federal polices have hobbled America's entrepreneurial strength by needlessly driving up the cost and complexity of doing business, especially for smaller companies. Cumbersome regulation of employment, the environment, and product liability needs to give way to better approaches involving less cost and litigation, yet special interests block reform. The U.S. has become a high-tax country not only in terms of rates but also administrative hassle. Infrastructure bottlenecks, due to neglect and poorly directed spending, are driving up costs in an economy increasingly dependent on logistics. The U.S. is energy-inefficient, but public policies fail to promote energy conservation. Health-care costs are too high, but there is no serious effort to provide more integrated and efficient care.

Collectively, these unnecessary costs of doing business, coupled with skill gaps, are becoming significant enough to drive investments out of the country, including investments by American companies. Instead of addressing the real reasons for offshore investment, the parties spar over closing tax "loopholes," even though U.S. corporate rates are among the highest in the world. Where is the strategic thinking?

Trade and foreign investment are fundamental to the success of the U.S. economy, but America has lost its focus and credibility in shaping the international trading system. Our economy today depends on advanced services and selling intellectual property—our ideas, our software, our media. Yet rampant intellectual property theft and high barriers to competition in services tilt the world trading system against a knowledge-based economy.

With no strategy, the U.S. has failed to work effectively with other advanced countries to address these issues and has failed to assist poorer countries so they feel more confident about opening markets and internal reform. The U.S. has abdicated its strategic role in developing Latin America, our most natural trading partner. We have failed to engage meaningfully in Africa, the Middle East, and Asia to help countries improve the lot of their citizens. Our foreign aid is still tied to the purchase of U.S. goods and services, rather than the actual needs of countries. Congress fails to pass trade agreements with countries highly committed to our economic principles, such as Colombia.

A final strategic failure is in many ways the most disconcerting. All Americans know that the public education system is a serious weakness. Fewer may realize that citizens retiring today are better educated than the young people entering the workforce. In the global economy, just being an American is no longer enough to guarantee a good job at a good wage. Without world-class education and skills, Americans must compete with workers in other countries for jobs that could be moved anywhere. Unless we significantly improve the performance of our public schools, there is no scenario in which many Americans will escape continued pressure on their standard of living. And legal and illegal immigration of low-skilled workers cannot help but make the problem worse for less-skilled Americans.

The problem is not money—America spends a great deal on public education, just as we do on health care. The real problem is the structure of our education system. The states, for example, need to consolidate some of the 14,000 local school districts whose existence almost guarantees inefficiency and inequality of education across communities. Instead, government leaders haggle over incremental changes.

SAME OLD ARGUMENTS

We need a strategy supported by the majority to secure America's economic future. Yet Americans hear the same old divisive arguments. Republicans keep repeating simplistic free-market thinking, even though the absence of all regulation makes no sense. Self-reliance is preached as if no transitional safety net is needed. Some Republicans even argue passionately that the country should have no strategy because that would be "industrial policy." Yet the real issue is not picking industry winners and losers but improving the business environment for all American companies, something we cannot do without identifying our top priorities. Overall, Republicans seem to think business can thrive without healthy social conditions.

Democrats, meanwhile, keep talking as if they want to penalize investment and economic success. They defend unions obstructing change in areas like education, cling to cumbersome regulatory approaches, and resist ways to get litigation costs for business in line with other countries. Democrats equivocate on trade in an irreversibly global economy. They seem to think social progress can be achieved only at the expense of business.

To make America competitive, we have to get beyond this thinking. Political leaders, business leaders, and civil society must begin a respectful, fact-based dialogue about our challenges. We need to focus on competitive reality, not defending past policies.

A strategy would address each of the areas I have discussed. If we are honest with ourselves, we would admit the U.S. is not making real progress on any of them today. Efforts under way by both parties are largely canceling each other out. A strategy would direct our spending to priority investments that also put money into the economy, such as educational assistance and logistical infrastructure, rather than tax rebates. With a strategy, we would stop counterproductive and expensive practices such as farm subsidies and spending earmarks.

Is such strategic thinking possible, given America's political system? It happens in other countries—Denmark and South Korea are just two where I have participated in serious efforts by national leaders, both public and private, to come together and chart a long-term plan. This almost never occurs in the U.S., except around single issues.

We will need some new structures to govern strategically. I served on the last public-private President's Commission on Industrial Competitiveness—in 1983! This time we need one that is less politically motivated. Congress would benefit from a bipartisan joint planning group to coordinate an overall set of priorities. More up or down votes on comprehensive legislative programs are needed to allow a shift to a coherent set of policies and away from lots of separate bills.

The new Administration will have an historic opportunity to adopt a strategic approach to the U.S.'s economic future, something that would bring the parties together. America is at its best when it recognizes problems and accepts collective responsibility for dealing with them. All Americans should hope that the next President and Congress rise to the challenge.

Porter, the Bishop William Lawrence University Professor at Harvard Business School, is a leading authority on competitive strategy and the competitiveness of nations and regions. Professor Porter's work is recognized in governments, corporations, nonprofits, and academic circles around the world.

Copyright 2000-2008 by The McGraw-Hill Companies Inc. All rights reserved.

Provided by BusinessWeek

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This is a great article from Michael Porter on
America's urgent need for a cohesive national economic strategy. I'm reproducing
this article completely with all links and credits, to ensure credit is
given where it belongs. The purpose of reproducing this article on this
blog is only to 'spread the light' and share my learning with everyone.

- Kaustav