Managing your portfolio risk through speculation and hedging

Before we look into hedgers and speculators, let's read a little into what is risk and future contracts and why do we need future contracts in the first place. Starting from risk, investment risk is the chance that in future the profits or returns will be smaller (or no return at all) than expected. Investment risk arises from uncertainty, and because uncertainty is always there, risk cannot be separated from any form of investment.

Coming to the futures contracts, they are the agreements between two parties to buy or sell some commodity in the future at current rates (or the price decided at the time of contract). In this case the seller minimizes the risk of a cut down in prices by foregoing some potential gains, while buyer assumes the risk expecting larger yields.

Hedging:
In portfolio management hedging is regularly used to secure the investors from some negative events in the future. In a simple futures contract, where A agrees to deliver some commodity to B after eight months at current prices, A is making sure that if the price for that particular asset goes down, he/she will remain indifferent to that slump. Note that A is also missing out on some potential profits that he may get in case the prices rise instead of going down, but he/she has secured himself from a loss in case of a negative event (i.e. adverse inflation).

Hedging is used to reduce risk, but any reduction in risk means a reduction in expected profits and in the end it comes down to investor's intuition that whether they want to go for “more-profits” or “less-risk”? Normally the investors who are in doubt (scared of market fluctuations) will go for hedging, just to make sure in case of some unfavorable occurence; the loss will be minimum (or no loss in case of perfect hedging).

Speculation:
Where the hedgers are minimizing the risk, someone is needed to absorb that risk (obviously in expectations of large returns). In simple words speculators are investors, ready to assume high risk while expecting high returns. Though speculators are quite similar to normal investor, and speculation process is almost the same as investment, there are some minor differences. Speculation is short term, high-risk and high-return form of investment, where normal investments are mostly for longer periods of time. Speculators are quite vulnerable to the risk, that’s why speculative investment is not suitable for less experienced investors or the beginners.

Managing different types of external communication

These days, media is vibrant than ever, aspiring young journalists are in hunt of scandalous stories that are related to politicians, celebrities (including business tycoons) or large corporations. In addition to media, there are other external parties that you need to interact with … for example government, investors, or business associates. External communication is an effective tool to build on trust and develop clarity among these stakeholders. Some mediums used in external communications are

• Press Release
• Newsletters
• Media Interviews
• Websites & Corporate Blogs

Press Release:
Large companies have public relation departments to look into the task of issuing press release (news release) to news media when needed. Press release is also used for marketing purpose, but the prime objective is always to inform or communicate with public about some particular incident or development in the company. Press release must be made up of something that is newsworthy; headline should grab the attention of reader, while compiling press release, make sure the language used is not too extravagant (or it may sound like an advertisement).

Newsletter:
Newsletter is not for general public, it's normally intended for only subscribers. It can contain some news about the company or the industry itself (like arrival of a new technology or new service being introduced). When creating newsletter, don't confuse it with sales letter. Subscribers are expecting some news and information about the topic of their interest, a newsletter that only consist of some poorly written promotions will get nothing but loads of unsubscribing requests.

Websites & Corporate Blogs:
Websites and more importantly corporate blogs are the latest addition into the list of external communication tools, in fact corporate blogs can do better than most other mediums as they can help the brand in building a stronger relationship with customers, hence improving customer's loyalty. Plus, reader's comments make it easier to know more about your customers and their preferences. Blog writing is a specialized job because Blog is supposed to be informative and interesting at the same time.

Media Interviews:
As noted earlier, journalists are after exclusive news and stories coming out of showbiz or corporate world. When giving out some media interview, be well prepared. Make sure that you are using words that cannot be maneuvered into something disreputable for you or your company. Keep in mind your audience and the company's objectives all the time.

Public relation department or the company's spokesperson should be extra careful when dealing with some crisis situation. A crisis situation can arise when some bad news or rumor about the company becomes public; Company's credibility or reputation is at stake, mishandling such communications can prove to be the last nail in the coffin for your business.

Maintaining Office discipline at your workplace

"Discipline" … exactly what kind of feelings this word brings to you? For most of us it brings negative feelings (especially those who were punished in the name of discipline at the hands of their teachers or parents). Childhood memories of disciplinary actions and penalties can urge people to resist even the thoughts of getting disciplined. Such behaviors are unfortunate to say the least, for the individual, the society he/she lives in and for the workplace where he/she works, because discipline alone is the most important ingredient in the recipe of success. We are bestowed with everything we need to achieve our goals; all we need to add is a little discipline (self-control).

When you are at the helm of affairs in your company or workplace, your first task is to maintain discipline in your office. Workplace discipline means regulating the employees, making them abide by the rules and policies of the company and follow guidelines. Simple, as it may sounds but it's not that easy. Managers have got to be strict, but not to a threatening extent. Excess of check and balance will irritate workers and they'd be looking to dump the job somehow. At the same time, some managers tend to lose all control while trying to create a friendly atmosphere. What, a good manager should be able to do is to keep a balanced approach, not overly strict and not too lenient.

As a manager or supervisor, the simplest and the most effective way to uphold discipline is to act exactly in the way you want your subordinates to precede. You want them to be punctual, impress them by arriving at time day after day, you want them to stop wasting time, show them how dedicated you are about the work yourself. Similarly, refrain from using profane language if you expect them to act levelheaded during working hours. Manager should always be an exemplary figure, by setting an example you don't leave any room for unruly behavior for your employees.

Every now and then, you have to deal with employees who are not ready to listen, no warnings, no disciplinary hearings seem to do anything. In order to protect other employees, company's interest and the office environment, you are left with no choice but to sack them. In developed countries (where you have laws and legislations protecting labor's interests), firing someone on disciplinary grounds can cause problems for managers. If the worker feels he didn't deserve to be dismissed like that, he/she may look to take some legal action against the authorities. That's why you should be having a record or documented proof of all the warnings that were issued before the employee was forced to leave.

Improving your personal productivity in this fast paced world

Just ask anyone around you, and you will find most of the people complaining about their low personal productivity. How they were not able to give their hundred percent and how much more they could have achieved only if they were able to utilize their full potential. How, for some reason they keep falling for the less important, insignificant activities every now and then? Isn’t it strange that the man has been inventing so many machines and devices to keep up with the time and complete lengthy, irksome tasks in shorter period; still the time manages to run faster?

In our effort to catch up with this fast paced world, and to meet all the expectations of the people around us, we pointlessly drift through the days and nights of our lives, years and years seem to pass in a twinkling of an eye and every time we look back, we are struck by a sense of guilt, realizing that we have spent most of our time in activities that were of no use to anybody. Even those who are relatively more successful than a common man will agree that they were capable of doing much more than what they have achieved so far. So what’s there to be done? Luckily, it’s never too late to start improving.

Time Management:
Good personal productivity is closely linked to better time management but good time management is something easier said than done. Who can deny the importance and scarcity of time, yet we continue to waste time, sometimes watching TV, going out and staying up late with friends, checking emails a thousand times on daily basis or just thinking how unfortunate we are for not having enough resources to fulfill our dreams (always forgetting that if we keep sitting idle like this, our dreams will just slip further away). To manage time effectively, you should carefully observe your daily routine. Sometimes we go through these time-wasting activities just out of habit. These habits are often not hard to break, and sometimes just knowing that you have already wasted so much time at something without getting anything out of it can make you quit that routine.

Don't Panic:
No matter how much work is left, as the deadline keep nearing, do not panic. Panic or stress will do nothing except eating out your energy and the time that can be used for more preparation and work. That doesn’t mean you should stop worrying about the cut-off dates or targets at all, just don’t let the fear of not being fully prepared or not meeting the deadline overcome. In panic, you may push yourself a little too hard and as a result you will end up feeling depleted.

Be focused and keep challenging yourself:
Again, simple rule but really hard to abide by. Never loose your focus, even before doing something constructive; ask yourself if it is going to help your goals in any way or not? Keep challenging yourself on constant basis, never shy away from challenges because often a challenge is all you need to get yourself back on track.

How to manage negotiations and conflicts at workplace

It’s good to have diversity in your workforce where different types of people can bring different advantages to your company. But this diversity often results into difference of opinions between two employees or two different departments. Conflicts are a part of working environment and as a manager you don’t need to panic in such situations. You cannot eliminate the disagreements altogether; all you can do is to manage them in a way that it won’t affect your productivity levels. The sooner you deal with them, the better it is for your business; otherwise the conflicts will give way to negative behavior and lack of team efforts, and as a result low productivity.

Possible Causes:
Whenever you get to the bottom of any conflict, you will find the same old cause lying in the roots, and that’s poor (or the lack of) communication. Different types of personality clashes and characteristics are another common problem. Unfair handlings, unmerited promotions, lack of opportunities or any other thing that results into insecurity among employees can also lead to the conflicts. If the work expectations or production targets are too hard to achieve, the workers will get frustrated, outcome might be bullying or regular exchange of harsh words between workers.

What to do:
As a manager who is looking to resolve conflict, you should start with communicating with all parties involved. Be calm, and listen to the whole thing patiently. Encourage everyone to speak their heart out, especially those who are less conversational. When thinking of a solution, try to focus on the problem and not personalities. Keep your personal prejudice away from the decision-making. Be sincere to both parties when taking corrective measures. One thing you should do even before some conflict arise is to eliminate favoritism of any type.

Precautions:
Employees and workers should be well aware of their job descriptions and what the management expects out of them. The rewarding system should be clear and well communicated. Joint decision making at all levels will reduce negative feelings to a great extent. Keep an eye at bullying types, and never let anyone get away with any kind of harassment or discrimination. Try to avoid personality clashes as much as possible, when making teams. If you have this feeling that two persons can’t work together, change the individuals if possible. Interact with all employees every now and then and never rely completely on your sources for the input.