Monthly Archives: January 2016

Naira is out of balance — Rewane


The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, has described the naira as being misaligned, saying Ghana and South Africa had already moved closer to equilibrium.

Rewane, who was quoted by Bloomberg as stating this, said, “The concerns are that the currency is under pressure, that the currency is misaligned.

“Ghana and South Africa have already moved closer to equilibrium. Nigeria has not really accepted that the currency price is in disequilibrium.”

The Bank of Ghana on Monday kept its benchmark interest rate unchanged at 26 per cent, in line with the forecasts of seven of the 10 economists surveyed by Bloomberg. Kenya’s central bank also opted last week to extend the pause in its interest-rate cycle by leaving the policy rate at 11.5 per cent.

In Nigeria, pressure is mounting on the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, to devalue the naira and ease foreign-currency controls that are said to be hurting businesses and worsening the outlook for growth in the country.


The CBN’s Monetary Policy Committee, which started its first meeting of the year on Monday, will announce the outcome of the meeting on Tuesday (today).

He surprised market analysts at the last MPC meeting in November by cutting the benchmark rate by two percentage points to 11 per cent and snubbing calls to weaken the currency.

All but one of the 22 economists surveyed by Bloomberg predicted that Emefiele will leave the key rate unchanged on Tuesday, with some predicting an adjustment to the naira rate.

While the CBN has virtually fixed the naira at 197-199 per dollar since March, South Africa’s rand has plunged about 29 per cent and Ghana’s cedi is down almost eight per cent in the same period. The National Bank of Angola, which is set to hold an MPC meeting on January 29, has gradually devalued the kwanza since last year as revenue plunged in sub-Saharan Africa’s biggest oil producer after Nigeria.

While a record-low rand may force South African policy makers to take more aggressive action, Nigeria is set to stick to its looser policy, according to analysts surveyed by Bloomberg.






CANSLIM is a philosophy of screening, purchasing and selling common stock. Developed by William O’Neil, the co-founder of Investor’s Business Daily, it is described in his highly recommended book “How to Make Money in Stocks”.

The name may suggest some boring government agency, but this acronym actually stands for a very successful investment strategy. What makes CAN SLIM different is its attention to tangibles such as earnings, as well as intangibles like a company’s overall strength and ideas. The best thing about this strategy is that there’s evidence that it works: there are countless examples of companies that, over the last half of the 20th century, met CAN SLIM criteria before increasing enormously in price. In this section we explore each of the seven components of the CAN SLIM system.

C = Current Earnings
O’Neil emphasizes the importance of choosing stocks whose earnings per share (EPS) in the most recent quarter have grown on a yearly basis. For example, a company’s EPS figures reported in this year’s April-June quarter should have grown relative to the EPS figures for that same three-month period one year ago. (If you’re unfamiliar with EPS, see Types of EPS.)

How Much Growth?
The percentage of growth a company’s EPS should show is somewhat debatable, but the CAN SLIM system suggests no less than 18-20%. O’Neil found that in the period from 1953 to 1993, three-quarters of the 500 top-performing equity securities in the U.S. showed quarterly earnings gains of at least 70% prior to a major price increase. The other one quarter of these securities showed price increases in two quarters after the earnings increases. This suggests that basically all of the high performance stocks showed outstanding quarter-on-quarter growth. Although 18-20% growth is a rule of thumb, the truly spectacular earners usually demonstrate growth of 50% or more.

Earnings Must Be Examined Carefully
The system strongly asserts that investors should know how to recognize low-quality earnings figures – that is, figures that are not accurate representations of company performance. Because companies may attempt to manipulate earnings, the CAN SLIM system maintains that investors must dig deep and look past the superficial numbers companies often put forth as earnings figures (see How to Evaluate the Quality of EPS).

O’Neil says that, once you confirm that a company’s earnings are of fairly good quality, it’s a good idea to check others in the same industry. Solid earnings growth in the industry confirms the industry is thriving and the company is ready to break out.
A = Annual Earnings
CAN SLIM also acknowledges the importance of annual earnings growth. The system indicates that a company should have shown good annual growth (annual EPS) in each of the last five years.

How Much Annual Earnings Growth?
It’s important that the CAN SLIM investor, like the value investor, adopt the mindset that investing is the act of buying a piece of a business, becoming an owner of it. This mindset is the logic behind choosing companies with annual earnings growth within the 25-50% range. As O’Neil puts it, “who wants to own part of an establishment showing no growth”?

O’Neil points to Wal-Mart as an example of a company whose strong annual growth preceded a large run-up in share price. Between 1977 and 1990, Wal-Mart displayed an average annual earnings growth of 43%. The graph below demonstrates how successful Wal-Mart was after its remarkable annual growth.
A Quick Re-Cap
The first two parts of the CAN SLIM system are fairly logical steps employing quantitative analysis. By identifying a company that has demonstrated strong earnings both quarterly and annually, you have a good basis for a solid stock-pick. However, the beauty of the system is that it applies five more criteria to stocks before they are selected.

N = New
O’Neil’s third criterion for a good company is that it has recently undergone a change, which is often necessary for a company to become successful. Whether it is a new management team, a new product, a new market, or a new high in stock price, O’Neil found that 95% of the companies he studied had experienced something new.

A perfect example of how newness spawns success can be seen in McDonald’s past. With the introduction of its new fast food franchises, it grew over 1100% in four years from 1967 to 1971! And this is just one of many compelling examples of companies that, through doing or acquiring something new, achieved great things and rewarded their shareholders along the way.

New Stock Price Highs
O’Neil discusses how it is human nature to steer away from stocks with new price highs – people often fear that a company at new highs will have to trade down from this level. But O’Neil uses compelling historical data to show that stocks that have just reached new highs often continue on an upward trend to even higher levels.
S = Supply and Demand
The S in CAN SLIM stands for supply and demand, which refers to the laws that govern all market activities. (For further reading on how supply and demand determine price, see our Economics Basics tutorial.)

The analysis of supply and demand in the CAN SLIM method maintains that, all other things being equal, it is easier for a smaller firm, with a smaller number of shares outstanding, to show outstanding gains. The reasoning behind this is that a large cap company requires much more demand than a smaller cap company to demonstrate the same gains.

O’Neil explores this further and explains how the lack of liquidity of large institutional investors restricts them to buying only large-cap, blue chip companies, leaving these large investors at a serious disadvantage that small individual investors can capitalize on. Because of supply and demand, the large transactions that institutional investors make can inadvertently affect share price, especially if the stock’s market capitalization is smaller. Because individual investors invest a relatively small amount, they can get in or out of a smaller company without pushing share price in an unfavorable direction.

In his study, O’Neil found that 95% of the companies displaying the largest gains in share price had fewer than 25 million shares outstanding when the gains were realized.

L = Leader or Laggard
In this part of CAN SLIM analysis, distinguishing between market leaders and market laggards is of key importance. In each industry, there are always those that lead, providing great gains to shareholders, and those that lag behind, providing returns that are mediocre at best. The idea is to separate the contenders from the pretenders.

Relative Price Strength
The relative price strength of a stock can range from 1 to 99, where a rank of 75 means the company, over a given period of time, has outperformed 75% of the stocks in its market group. CAN SLIM requires a stock to have a relative price strength of at least 70. However, O’Neil states that stocks with relative price strength in the 80–90 range are more likely to be the major gainers.

Sympathy and Laggards
Do not let your emotions pick stocks. A company may seem to have the same product and business model as others in its industry, but do not invest in that company simply because it appears cheap or evokes your sympathy. Cheap stocks are cheap for a reason, usually because they are market laggards. You may pay more now for a market leader, but it will be worth it in the end.

I = Institutional Sponsorship
CAN SLIM recognizes the importance of companies having some institutional sponsorship. Basically, this criterion is based on the idea that if a company has no institutional sponsorship, all of the thousands of institutional money managers have passed over the company. CAN SLIM suggests that a stock worth investing in has at least three to 10 institutional owners.

However, be wary if a very large portion of the company’s stock is owned by institutions. CAN SLIM acknowledges that a company can be institutionally over-owned and, when this happens, it is too late to buy into the company. If a stock has too much institutional ownership, any kind of bad news could spark a spiraling sell-off.

O’Neil also explores all the factors that should be considered when determining whether a company’s institutional ownership is of high quality. Even though institutions are labeled “smart money”, some are a lot smarter than others.

M = Market Direction
The final CAN SLIM criterion is market direction. When picking stocks, it is important to recognize what kind of a market you are in, whether it is a bear or a bull. Although O’Neil is not a market timer, he argues that if investors don’t understand market direction, they may end up investing against the trend and thus compromise gains or even lose significantly.

Daily Prices and Volumes
CAN SLIM maintains that the best way to keep track of market conditions is to watch the daily volumes and movements of the markets. This component of CAN SLIM may require the use of some technical analysis tools, which are designed to help investors/traders discern trends.
Here’s a recap of the seven CAN SLIM criteria:

C = Current quarterly earnings per share – Earnings must be up at least 18-20%.
A = Annual earnings per share – These figures should show meaningful growth for the last five years.
N = New things – Buy companies with new products, new management, or significant new changes in industry conditions. Most importantly, buy stocks when they start to hit new price highs. Forget cheap stocks; they are that way for a reason.
S = Shares outstanding – This should be a small and reasonable number. CAN SLIM investors are not looking for older companies with a large capitalization.
L = Leaders – Buy market leaders, avoid laggards.
I = Institutional sponsorship – Buy stocks with at least a few institutional sponsors who have better-than-average recent performance records.
M = General market – The market will determine whether you win or lose, so learn how to discern the market’s overall current direction, and interpret the general market indexes (price and volume changes) and action of the individual market leaders.

CAN SLIM is great because it provides solid guidelines, keeping subjectivity to a minimum. Best of all, it incorporates tactics from virtually all major investment strategies. Think of it as a combination of value, growth, fundamental, and even a little technical analysis.

Remember, this is only a brief introduction to the CAN SLIM strategy; this overview covers only a fraction of the valuable information in O’Neil’s book, “How to Make Money in Stocks”. We recommend you read the book to fully understand the underlying concepts of CAN SLIM. Click on this link William J O’neil – How To Make Money In Stocks to download the book for free.

60 Stock Tips For Investment Success: by Blain Reinkensmeyer

  1. As a new investor, be prepared to take some small losses. (see also 10 Great Ways to Learn Stock Trading)
  2. Always cut your losses at 8% below your purchase price. (read our stop loss orders guide)
  3. Persistence is key when learning to invest. Don’t get discouraged.
  4. Learning to invest doesn’t happen overnight. It takes time and effort to become successful at it.
  5. When getting started, it is important that you pick the right full service or discount brokerage. If you use a broker, make sure he or she has a good track record.
  6. As a beginner, set up a cash account, not a margin account.
  7. It only takes $500 to $1,000 to get started. Experience is a great teacher. (Read our Investment Guide to Proper Portfolio Allocation)
  8. Avoid more volatile types of investments, such as futures, options, and foreign stocks.
  9. Concentrate on a few, high-quality stocks. There’s no need to own twenty or more stocks.
  10. Don’t get emotionally involved with your stocks. Follow a set of buying and selling rules, and don’t let your emotions change your mind (see 50 Ways You Know You Are An Emotional Investor).
  11. Don’t buy a stock under $15 a share. The best companies that are leaders in their fields simply do not come at $5 or $10 per share.
  12. Learning from the best stock market winners can guide you to tomorrow’s leaders. (navigate our stock chart examples archives)
  13. Always do a post-analysis of your stock market trades so that you can learn from your successes and mistakes.
  14. A combination of fundamental and technical investment styles is essential to picking winning stocks.
  15. Fundamental analysis looks at a company’s earnings, earnings growth, sales, profit margins, and return on equity among other things. It helps narrow down your choices so that you are only dealing with quality stocks.
  16. Technical analysis involves learning to read a stock’s price and volume chart and timing your decisions properly.
  17. To make big money, you have got to buy the very best companies at the right time.
  18. Strong sales and earnings are amongst the most important characteristics of winning stocks.
  19. Buying a stock as it is coming out of a price consolidation area or base is crucial to making large gains.
  20. Always pick stocks from the leading industry groups or sectors. The majority of past market leaders were in the top industry groups and sectors.
  21. Many big winning stocks come from sectors such as drugs and medical, computers, communications technology, software, specialty retail, and leisure and entertainment.
  22. Volume is the actual number of shares traded by a stock (Find out how to read volume on stock charts).
  23. Stocks never go up by accident. There must be large buying, typically from big investors such as mutual funds and pension funds.
  24. In studying the greatest stock market winners over the past 45 years, bases formed just before the stock broke out into new high ground in price and then went on to make their biggest gains.
  25. The most common pattern is a “cup with handle” names so because it resembles a coffee cup when viewed from the side.
  26. The optimal buying point of any stock is the “pivot point”.
  27. On the day a stock breaks out, volume should increase by 50% or more above its average.
  28. A decrease in price on decreased volume indicates no significant selling.
  29. Replace the old adage, “buy low and sell high” with “buy high and sell a lot higher.”
  30. You want to buy a stock at its pivot point. Don’t chase a stock up more than 5% past its pivot.
  31. Chart price and volume action frequently can help you recognize when a stock has reached its top and should be sold.
  32. History always repeats itself in the stock market.
  33. Most big stock market leaders breaking out of a sound base will go up 20% in eight weeks or less from the pivot point. Never sell a stock that does this in four weeks or less, you may have a big winner.
  34. The general market is represented by leading market indices like the S&P500, Dow Jones Industrials, and the NASDAQ Composite. Tracking the general market is key because most stocks follow the trend of the general market.
  35. Ignore personal opinions about the market.
  36. A typical bear market will decline 20% to 25% from its peak price. A negative political or economic environment could cause a more severe decline.
  37. Knowing when to both buy a sell a stock is key for success.
  38. three out of four stocks , regardless of how “good’ will eventually follow the trend of the overall market.
  39. After four or five days of distribution within a two to three week period, the general market will normally trend downwards.
  40. Bear markets create fear and uncertainty. When stocks hit bottom and turn up to begin the next bull market loaded with opportunities, most people simply don’t believe it.
  41. At some point on the way down, the indices will attempt to rebound or rally. A rally is an attempt by a stock or the general market to turn up and advance in price after a period of decline.
  42. Most technical market indicators are of little value. Psychological indicators like the Put-Call ratio can help confirm changes in the market’s direction.
  43. Once you determine you are operating in an uptrending general market, you need to pick superior stocks.
  44. Potential winners will have strong earnings and sales growth, increasing profit margins and high return on equity (17% or more). They should also be in a leading industry group.
  45. Using a chart service can help you determine if the timing is right to buy a stock.
  46. There are two basic types of investors: growth stock investors and value investors.
  47. Growth investors seek companies with strong earnings and sals growth, superior profit margins, and a return on equity of over 17%.
  48. Value investors search for stocks that are undervalued and have low P/E ratios.
  49. When starting to invest, keep it simple. Only invest in domestic stocks or mutual funds. (Education on Fund Loads Scams and Mutual Fund Fees are necessary before investing. Consider ETF investing as an alternative)
  50. You get what you pay for in the market. Low-priced stocks are usually cheap for a good reason.
  51. Options are risky because investors do not only have to be right about the direction of the stock but also about the time frame in which they believe the price will go up or down.
  52. Futures, due to their highly speculative nature, should be attempted only be people with several years of successful investment experience.
  53. Wide diversification and asset allocation are not necessary. Concentrate your eggs in fewer basket, know them well and watch them carefully.
  54. If you have less than $5,000 to invest, only own one or two stocks. If you have $10,000-two or three stocks; $25,000-three or four stocks; $50,000-four or five stocks; and, $100,000 or more-own no more than six stocks.
  55. If you already own the maximum number of stocks buy want to add a new stock to your portfolio, force yourself to sell the least profitable stock to get money for the new name.
  56. When purchasing a stock, only buy half of your desired position at the initial buy point. Buy a small amount more if the price rises 2% or 3% above your first buy. Average up in price, never down.
  57. Don’t let yourself lose money after you already had a reasonable profit.
  58. 40% of stocks will pull back to their initial buy point-sometimes on big volume- for one or two days. Don’t let this shake you out of your stock.
  59. Sell a stock if its earnings per share shows a major deceleration in growth for two quarters in a row.
  60. Subscribe to Investors Business Daily (

Can You Really Make a Fortune in Penny Stocks? by Alexander Green, Chief Investment Strategist, The Oxford Club

Image result for PENNY STOCKS IMAGES

At first glance, penny stocks seem to make sense. After all, it’s easier for a 50-cent stock to go to a dollar than for a $50 stock to go to $100, right?

No. It’s not.

Over the years, dozens of studies have shown that lower-priced stocks don’t do better than higher-priced stocks. In fact, they do considerably worse. Ironically, it’s not easier for a 50-cent stock to go to a dollar. But it is a whole lot easier for it to go to zero.

There are other reasons why making a fortune in penny stocks is easier said than done…

Three Reasons to Avoid Penny Stocks

For starters, the vast majority of tiny, unprofitable companies are such ridiculous long shots they don’t even merit your attention. Other than that:

  • Most companies offering penny stocks have little if anything in the way of profits, not to mention the first prerequisite: sales.
  • Secondly, you could drive a cement mixer through the bid/ask spread on many of these shares. If a stock is offered at 30 cents and bid at 24 cents, for instance, you’re down 20% as soon as you get your trade confirmation. (And that’s before commissions.)
  • Thirdly, penny stocks are thinly traded and easily manipulated.

You may buy a penny stock and see it zip higher, but then have trouble getting out.

It’s pretty disheartening to know you can drive down the price of a stock simply by selling your shares at market.

Beware of Penny Stock Scammers That Promise a Fortune

There are plenty of outright scammers in the marketplace.

Often referred to as a “pump and dump,” a penny stock scam is when the insiders talk the stock up on one hand while bailing out like there’s no tomorrow on the other. That’s usually because despite the great story – and make no mistake, the stories are fabulous – the company’s business prospects are usually nil.

But penny stock promoters want you to trust them, to believe in the hot tip and ensuring fortune to be made.

If you’re going to evaluate a penny stock, here’s how they’d like you to do it. By the multi-billion-dollar market they intend to operate in. By the enormous profits they’ll generate when their technology is finally commercialized. By the proven reserves of the mining company operating next door. By the results of their Phase I trials. By any criterion you can think of besides what the company is actually doing right now.

Because what the company is doing right now is… usually nothing.

If you insist on verifying this on your own, at least take a few basic precautions.

How to Size Up a Penny Stock

Start by reading the company’s most recent quarterly or annual report. Does it have sales or earnings? What kind of debt is it carrying? How long has the company been in business? Who are the people behind it?

In other words, if you’re going to roll the dice, make sure it’s a genuine speculation, not just a mindless crapshoot… or worse.

Also, take a look at what the insiders are doing. If the insiders – the ones who can hardly contain their enthusiasm for the company’s business prospects – are dumping the stock en masse, you know all you need to know. Run.

Some will say I’m unduly pessimistic. (Penny stock promoters, especially.) And, clearly, a few successful companies did start out as penny stocks.

But for every success story there are at least 100 penny stocks whose charts bear an uncanny resemblance to the last flight of the Hindenburg.

In short, there are plenty of smart ways to invest your money. Toying with penny stocks and expecting to bank a fortune, in my view, is one of the dumbest.


All wealthy people understand that the true secret to financial freedom is to be on the right side of the cashflow quadrant. In his book “Rich dad’s Cash flow Quadrant-A guide to financial freedom”, Robert Kiyosaki explains what it means to be on either side of the quadrant and the impact it would have on your financial future. This book is a must read for anyone who wants to rise up from the myth of financial security and step into the luxurious world of financial freedom. If you are interested, you can click on this link cashflow  to download the book for free. This book is sure to reshape your financial focus and give you the right mindset to take total control of your finances.



About Eloka Finance Consult


Eloka Finance Consult is a personal finance blog dedicated to providing you with real time stock market news, investment insights and expert analysis of current micro and macro economic trends that affect your investment decisions. A daily visit of this blog is recommended, as it will keep you informed and up to date on the recent developments in the fast paced world of finance, thereby giving you an edge and equipping you with invaluable tools to help you make the right decisions and gain the maximum value possible from your investments. Simplicity of expression is upheld while explaining complex financial issues. This blog can thus be regarded as “THE LAYMAN’S BLOG FOR FINANCE AND INVESTMENT”. The principal consultant and editor-in-chief of the blog; Olisaeloka Nnamdi; is a chartered accountant and an expert in corporate finance and investment banking.



TWITTER:  Olisa Nnamdi @NnamdiOlisa

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Africa Currency Crises Spark Diverging Central Bank Action


Nigeria to stick with looser policy, South Africa tightens
Inflation risks rising, while economic growth outlooks worsen

Africa’s biggest economies are taking opposite approaches on monetary policy as they struggle to cope with collapsing commodity prices and a slump in investor confidence.

South Africa, Nigeria, Angola and Ghana are set to announce their first interest-rate decisions of the year this week in an environment complicated by plummeting currencies, rising inflation risks and deteriorating growth. While a record-low rand may force South African policy makers to take more aggressive action, Nigeria is set to stick to its looser policy, according to analysts surveyed by Bloomberg.

The contrasting approaches underscore the difficult policy choices African central banks are being forced to take as their currencies suffer the worst of the rout in global financial markets. In Nigeria, the continent’s biggest economy, growth concerns and naira stability have trumped inflation risks, while fiscal pressures in Ghana and an oil-triggered crisis in Angola have fueled weaker currencies and prompted higher interest rates.

“A further decline in commodity prices, tightening of monetary policy by the U.S. Federal Reserve, and unfavorable weather conditions mean that the short-term outlook for African currencies is weak,” Jacques Verreynne, an economist at NKC African Economics, based in Paarl, near Cape Town, said in an e-mailed response to questions.

“Although the outlook for economic growth is fairly weak in many parts of the continent, there is pressure on central banks to raise interest rates in order to anchor inflation expectations,” he said.
Naira Risks

The Bank of Ghana kicked off the week’s policy decisions by keeping its benchmark interest rate unchanged at 26 percent on Monday, in line with the forecasts of seven of the 10 economists surveyed by Bloomberg. Kenya’s central bank also opted last week to extend the pause in its interest-rate cycle by leaving the policy rate at 11.5 percent.

In Nigeria, pressure is mounting on Governor Godwin Emefiele to devalue the naira and ease foreign-currency controls that are hurting businesses and worsening the outlook for growth in Africa’s biggest oil producer.

He surprised market analysts at the last Monetary Policy Committee meeting in November by cutting the benchmark rate by 2 percentage points to 11 percent and snubbing calls to weaken the currency.

All but one of the 22 economists surveyed by Bloomberg predict Emefiele will leave the key rate unchanged on Tuesday, with some predicting an adjustment to the naira rate.
Inflation Pressure

“The concerns are that the currency is under pressure, that the currency is misaligned,” Bismarck Rewane, chief executive officer at Financial Derivatives Co. Ltd., said by phone from Lagos, Nigeria’s commercial capital. “Ghana and South Africa have already moved closer to an equilibrium. Nigeria has not really accepted that the currency price is in disequilibrium.”

While the Central Bank of Nigeria has virtually fixed the naira at 197-199 per dollar since March, South Africa’s rand has plunged about 29 percent and Ghana’s cedi is down almost 8 percent in the same period. The National Bank of Angola, which is set to hold an MPC meeting on Jan. 29, has gradually devalued the kwanza since last year as revenue plunged in sub-Saharan Africa’s biggest oil producer after Nigeria.

The rand’s slide to a record-low of 17.9169 per dollar on Jan. 11 is adding to pressure on inflation in South Africa at the same time that the worst drought in more than a century boosts food costs. Inflation accelerated to 5.2 percent in December and is set to exceed the central bank’s 3 percent to 6 percent target band this year. The rand fell 0.1 percent to 16.4859 by 5:23 p.m. in Johannesburg.

Speculation is growing the Reserve Bank will raise the magnitude of its rate increases from 25 basis points. While most of the 23 economists surveyed by Bloomberg predict higher rates this week, 16 forecast the repurchase rate of 6.25 percent will be lifted by at least 50 basis points.
Economic Stability

The MPC decision is the first since the U.S. Federal Reserve raised interest rates in December and President Jacob Zuma shocked financial markets by changing his finance minister three times in the space of five days, triggering a weaker rand.

Governor Lesetja Kganyago said in an interview on Jan. 20 that it’s impossible to avoid the trade-off between growth and inflation and the central bank will “act with resolve” if price pressures stemming from a weaker rand spread more broadly in the economy.

“There’s still room for African central banks to tighten monetary policy,” Courage Kingsley Martey, an economist at Databank Group Ltd., said by phone from the Ghanaian capital, Accra. “It is possible to sacrifice growth for some time and then allow macroeconomic stability to return, else inflation will return to haunt growth.”





At a Microsoft executive retreat during his first month as chief executive officer, Satya Nadella saw a research project that captured his attention. The demonstration in February 2014 used speech recognition and artificial intelligence to translate a live conversation into another language. Nadella told the team he wanted the tool combined with Skype and ready in time to show off at his first public speech three months later.

This is not how Microsoft typically works. As Nadella, a 24-year veteran of the company, would have known, the process of turning a Microsoft Research project into a product would often happen slowly, if at all. That’s partly by design. The company’s research group was set up in isolation from the product teams to allow researchers to envision the future without worrying about how their inventions will make money or fit into the company’s mission.

Satya Nadella
Satya Nadella.
Photographer: Matthew Busch/Bloomberg

But Nadella’s tight deadline left executives with no time to debate the separation of church and state. “We did not have a formal team working on this when he made that statement,” said Lilian Rincon, the Skype group program manager. So they assembled one and immediately went to work on what would eventually become Skype Translator.

Without Nadella’s direct intercession, the translation work might have amounted to little more than a talking point among academics. While Skype Translator would set an important precedent for the company, relying on the CEO to personally vet every lab project isn’t a sustainable business plan. That’s why Microsoft is overhauling its research arm and the way it works with the rest of the company. The goal is to quickly identify technology with the most potential and get it into customers’ hands before a competitor replicates it.

To break down the walls between its research group and the rest of the company, Microsoft reassigned about half of its more than 1,000 research staff in September 2014 to a new group called MSR NExT. Its focus is on projects with greater impact to the company rather than pure research. Meanwhile, the other half of Microsoft Research is getting pushed to find more significant ways it can contribute to the company’s products.

Besides Skype, other services that have benefited from the recent transformation include cloud productivity tools in Office, faster and more power-efficient servers running Bing, and the augmented-reality headset HoloLens. The latest to come out of this initiative is a new feature for Cortana. Microsoft plans to release an update to the digital assistant on Monday that relies on work from the corporate research group. It will give Cortana the ability to scan e-mails for tasks the user has agreed to accomplish and automatically set reminders to do them.

“Microsoft totally separated its research arm from the rest of the company and almost made it optional to contribute to the rest of the company.”

Microsoft is in a race with Google and Facebook to establish the strongest hold over people’s digital lives. The changes at Microsoft Research resemble how its younger Silicon Valley rivals have operated for years. “Microsoft totally separated its research arm from the rest of the company and almost made it optional to contribute to the rest of the company,” said Ahmad Abdulkader, an engineer on the applied machine learning team at Facebook who previously worked at Microsoft and Google. “Google took the exact opposite approach.”

Google researchers work very closely with product groups, and almost everything they produce is visible to the rest of the company, said Jeff Dean, a senior fellow at Google. “We don’t have this really isolated group that is doing stuff without any regard to what might be useful in products,” he said. “We have this very porous connection between research and products.”

Researchers and developers on the search engine or Gmail teams share many of the same tools, including the company’s open-source AI framework TensorFlow, Dean said. That kind of close collaboration has helped produce impressive features, including Smart Reply, which suggests e-mail responses based on the content of a message. The feature, released in November 2015, was based on about a year of AI research at Google. Once the company decided to deploy the tech in Google’s Inbox app, it took around four months to produce a prototype, said Jason Freidenfelds, a Google spokesman.

A similarly ambitious effort at Facebook, aimed at developing a conversational AI assistant called M, was born from research that began in 2014. The company published a paper on its work in October 2014, and by summer 2015 the tech was ready to be tested in Facebook Messenger. Alex Lebrun, who leads development of Facebook M, meets weekly with the company’s top AI researchers to explore which lab developments are ready for the world. Facebook employees can track research-in-progress using a tool named FBLearner Flow. It lets them access, copy, and adapt the source code, and then deploy their own versions of the software, said Abdulkader, the Facebook machine learning engineer. “This is how experiments are exposed and shared.”

Facebook Chief Technology Officer Mike Schroepfer said the cooperation between its research labs and those working on the social network is an effective recruiting tool. “The promise I made to all the artificial intelligence folks that joined us is we’re going to be the best place to get your work to a billion people as fast as possible,” Schroepfer said during an event last year at the company’s headquarters in Menlo Park, Calif.

A screenshot of two people talking to each other in different languages through Skype Translator
Skype Translator.
Source: Microsoft

One potential drawback of this approach is it could encourage scientists to ignore projects that don’t have obvious financial potential. Each company is trying to strike a balance to avoid this breed of short-term thinking. For instance, Facebook assigns some staff to focus on long-term research, and Google’s DeepMind group in London conducts pure AI research without immediate commercial considerations.

The bigger problem at Microsoft was that often the most promising research never made its way into the company’s products until a rival built something similar. Jim Gray, the late Microsoft Research scientist and A.M. Turing Award winner, designed one of the first modern digital mapping programs in the late 1990s. Microsoft co-founder Bill Gates showed off Gray’s TerraServer to applause at a conference in 1998 but didn’t do much with it after that. When Google Maps debuted in 2005, Gates ordered the company to build its own version in 100 days.

“We need to be open to new ideas, and Microsoft Research is where they will come from.”

Gates and former CTO Nathan Myhrvold started Microsoft Research in 1991 amid the decline of onetime tech powerhouses Bell Labs and Xerox PARC. They hired Rick Rashid from Carnegie Mellon University to create a lab in the school’s image, hiring bright minds and letting them do their thing. “The bad news was they have an internal technology transfer problem,” said Ed Lazowska, a computer science professor at the University of Washington who has been on the lab’s advisory board since its founding.

Today’s geniuses often prefer impact over independence, which is partly why Microsoft is rethinking its approach. “The product groups are now eager because whatever they’ve been doing hasn’t been working,” Lazowska said. “Part of Satya’s mantra is, ‘We need to be open to new ideas, and Microsoft Research is where they will come from.'”

Microsoft Research's Jeannette Wing
Microsoft Research’s Jeannette Wing.
Source: Microsoft

Jeannette Wing, a Microsoft Research vice president, pitched Lazowska’s students in a speech last month on how the company’s changes make it an attractive place to work. “We have enjoyed a stellar reputation in academia because of our scientific impact,” she said. “Now there’s an emphasis to have as much company impact as we’ve had scientific impact.”

The new reminders feature in Cortana was the product of a series of regular meetings between top researchers and product heads. Marcus Ash, a group program manager for Cortana in Windows, said his team is working with researchers on expanding the feature to track when someone else asks the user to take on a job. “There’s been a more deliberate focus on leveraging some of the best ideas from Microsoft Research to enhance Microsoft services and products,” said Eric Horvitz, managing director of Microsoft’s research group who worked with Ash on Cortana.

These changes won’t happen immediately, but Oren Etzioni, CEO of the Allen Institute for Artificial Intelligence in Seattle who sold a company to Microsoft in 2008, said the company is well-positioned to make the transition. “You just can’t turn it on a dime. It’s a process,” he said.

A command from the CEO certainly helps. The team behind Skype Translator managed to prepare a prototype in time for Nadella’s onstage demonstration at a Re/code tech conference in May 2014.  “I would have never believed we could move that fast,” said Vikram Dendi, who helped bring the product to life. Today, Skype Translator is available in seven languages, and Dendi is the strategy director for Microsoft Research. It’s his job to keep track of MSR NExT projects and identify ones that are ready for prime time. The Skype and research teams now talk every day.

Nigeria Cocoa Midcrop Harvest Seen Down 60% on Harsh Weather


  • Heatwave in cocoa-growing south scorching buds, flowers
  • There have been no rainfall in cocoa areas for two months

Public finances of 11 EU countries are at high risk in medium-term: EU

European Union (EU) flags fly in front of the European Central Bank (ECB) headquarters in Frankfurt, Germany, December 3, 2015. REUTERS/Ralph Orlowski

Eleven European Union countries including France, Italy and Britain face high risks to the sustainability of their public finances because even 10 years from now their public debt will still be high, the European Commission said on Monday.

In a fiscal sustainability report, the European Union’s executive arm said Belgium, Ireland, Spain, France, Croatia, Italy, Portugal, Romania, Slovenia, Finland and United Kingdom were all at high risk.

The estimates are based on the Commission’s macroeconomic forecasts for all 28 EU countries from last November that projected key economic indicators two years ahead.

The report did not contain any recommendations, but the commission is due to issue country-specific recommendations at a later date.

The sustainability analysis assumes no policy changes after the two years included in the forecast. It does not include Greece or Cyprus, which are still under bailout programs.

The Commission said there were no short-term fiscal sustainability risks to any EU countries. But it said that for instance in the case of Italy some factors such as gross and net debt, gross financing needs and the amount of non-performing loans, pointed to short-term “challenges”.

It made similar comments about challenges from non-performing loans and other issues facing 15 other countries.

The best performers in terms of fiscal sustainability, with low risks in the short-, medium- and even long-term, were Denmark, Germany, Estonia, Latvia.