Monday, November 17, 2008

Does a CAT have 9 lives?

Apparently not as per a CAT expert excerpt in Economic times :
“Over the years, there have been candidates who make repeated attempts at CAT and even get right percentile for admission to one of the IIMs. However, such candidates lack the right attitude and IIMs in fact don’t like them. And this year’s pattern reflects this very well,” said a CAT expert.
I wrote CAT twice, the first time I was better prepared but I did not clear it, the second time I got a center at Jyoti nivas college and cracked CAT in a happy go lucky manner. The key thing is to be relaxed. Why did'nt I clear it the first time..Among the reasons which I thought:
1. I was not relaxed
2. I reached the center too early and lost my potential by whiling about in the garden
Blogging on CAT is an Annual ritual :D

Thursday, November 13, 2008

saw toothed stock market

The fluctuation of the NSE Nifty today reminded me of saw toothed waveforms which I would look to clip in my electrical engineering days at surathkal. IMO This volatility is a result of uncertain policy measures as US is changing course seeing China's fiscal stimulus move. Today in the hindu columnist patnaik essentially advocated fiscal stimulus versus just doing increasing the M3 money supply. Will the long term cash flows of cashcow companies get effected unless of course the cashcow is not the sacred cow we thought but just a ponzi scheme of routing money from financial services into aircraft turbine and power generation biz? Making the customer leveraged by having a financial arm might be a good idea in good times, but in bad times it can make you sink faster.

Tuesday, November 11, 2008

Saravanaa bhavan and free movement of people

I am almost scared of posting for fear of horsing around. I had a shock of my life seeing the owner of saravanaa bhavan in chains. Is it a plot by McDonalds to stump the future of fast food from Madras. Saravanaa bhavan is an Oasis in Chennai station with fresh cool and clean air to breathe. Its so miles apart from the smelly station air!!
Saravanaa Bhavan near Mount road is where I would go with my parents on saturday nights to down the delicious Dosas followed by coffee and walk down to our house in Lloyds road. Walking a bit further and turning to left comes the US consulate who filed a complaint for traficking on Saravana Bhavan. Corporate governance becomes important for even SME's! Software companies would be well advised to look at the repurcussions of Visa abuse. It goes against my sense of liberty that the movement of humans should be restricted so that there can be certain oasis which reminds me of Babylon AD. In the movie Babylon AD , the rest of world is shown to be in Chaos while North America enjoys unprecedented peace and prosperity. Shall I accept the view that Visa is not a right and rebel against Darwinism and survival of the fittest. Why should a person who is not a diligent worker be sheltered against a hardworking person from another part of the world?

Friday, October 31, 2008

case studies for business process fraud analysis

After doing a training on business processes for 4 days, I realized that the case study was most insightful. Factoring receivables opens up the same can of worms as CDO's. Lets look at the point of similarity, both of them essentially sell future cash flows at todays prices. Just as asset prices can be inflated or loans foreclosed, how can Accounts Receivable be manipulated?
1. Channel stuffing
2. Changing the credit terms
More ideas from readers?
The other important thing I gleaned from the training was keeping your vendor and customer files clean and excel pivot table definitely helps :>

Sunday, October 12, 2008

Economy on steroids(Tax payers money)

The infusion of liquidity by monetary policy is pushing up the price of gold and pulling down the price of oil.
Some interesting conjectures:
1. Gold is a not a luxury/vebelen good based on current trend where the demand has tapered off as price has increased.
2. Commodity prices are cooling off in effect equating liquidity pressures to cooling-off of demand side. By the same logic, easing liquidity should lead to easier lending thereby enabling capital expenditure.
I have been reading a lot on behavioural economics and Moral Hazard pops up everywhere, AIG management has gone on a vacation after bailout. Infusion of public equity(Tax payers money for bailout) into private sector will lead to inefficient allocation of capital. Regulation is a more efficient framework if Regulators listens to leading lights like Nassim Taleb who had criticised VAR methodology in the book fooled by Randomness . Can regulators listen to hedge fund managers like David Einhorn, however diligent they may be?
Risk taking =f(utility, weighing) , Tversky and Kahneman, 1992, suggest that individuals are risk seekers for small-probability gains and large-probability losses, and risk averse for large-probability gains and small-probability losses. The only issue here is whether the traders are cognizant of the large-probability losses!

Friday, October 03, 2008

wikinomics audiocast

Listening to the wikinomics audiocast has opened my eyes to a trend which I used to view as insignificant. Listening to the audiocast was mindblowing enabling me to see myraid opportunities in the web 2.0 space . I see it as an opportunity to build consulting eminence. The example is of a Gold prospecting company which uploaded its geological data to public competition into a 40MB file and thereby increased revenue from $30 million to $9 Billion. Respondents used non traditional techniques from mathematics and operations research to search for new drilling prospects. The prize money has had a reinforcing behaviour on respondents and enabled multi-discipliniary approach.
The advantage of investing time in web 2.0 is to study how collaborative system interacts with the traditional control assurance behaviour of enterprises to bring forth new blueprints of more efficient people and business processes.

Tuesday, August 19, 2008

Rainfall driving and keeping cool

Roads have been washed away by the rains in Hyderabad. I am faced with two options

1. Inch along for half an hour before reaching the tunnel where four lanes merge into one
Distance = 5 km, Time = 30 min - 2 Hrs Accident risk =Low
2. Drive through a different route where I tend to almost knock over motorcyclists who are overtaking on the left side.
Distance = 14 km, Time = 30-45 minutes Accident risk = Medium

Lets travel to uncle Sam's place. In Texas, I was amazed to learn about road rage. Who would imagine getting shot at by a shotgun for rowdy driving. It is so important to keep cool during driving and not deal with it like its CAT or JEE exam where you have to get ahead of the others. Parents have been drilling this message. Why am I so competitive that I try to stop others from overtaking me?
The solution has been :
1. Not have a target time to reach office
2. Drive in a straight line

Wednesday, March 26, 2008

convocation


















Finally a dream comes to an end. Convocation ran like a well oiled machine and my face was puffed up with pride. There was a lingering sadness in the back of my mind about leaving my K'omrades. It is still ennui before work resumes. When the mind remains idle it makes fantastic conjectures and this is leaning more towards synthesis rather than analysis. I am training my mind to place things in the concrete and abstract quadrants too. Few of my thoughts while lazing on a houseboat in the backwaters

1. Pension schemes should be taken on the wifes name as women live longer. This eliminates the need to take life insurance. The caveat is that this does not cover children.

2. There needs to be incentives for cleanliness in public places. The backwaters are so neat inspite of so many visitors. Kozhikode was not so neat a few years back. It took a sustained grass roots campaign by the district administration to make Kozhikode one of the neatest places. Its important not to throw around plastic. It will be such a lame post if I buy an SUV :(!

3. A short article on Warren Buffet @ Dalal street was enlightening. I liked the part about not spending on brands but on buying what one wants ( shades of no logo) and doing what one really wants to do. Remember its only one life and time in finite. I like watching national geographic and discovery channel if I am not able to travel :).
Why doesnt Dalal street provide FCFF and FCFE? The beta shown in also not complete as without mention of the period, the beta is useless. Dalal street online http://www.dalalstreetjournal.com/ONLINEPREVIEW/tabid/146/Default.aspx

Wednesday, February 20, 2008

Contagion




Stevia

The other thing I did today was to meet CEO of medicinal herbs company who connects the suppliers to the demand. I had queries on stevia and the response was that bid ask yield has reduced from 90/150 to 60/90 in 2 years. Currently there are no farmers who are cultivating stevia in wayanad. The climatic conditions are cold which cause flowering. Flowering a decreases the yield of stevia leaf. He was able to spare some time for me and showed me a sample of stevia powder of puritan brand imported from US. The label reads nutritional supplement. A very pertinent point as there are political implications to stevia from companies which have poured billion dollar investments into sugar substitutes. The other political problem is the sugarcane lobby.
The insight which he gave me was that the very Institutional voids which we criticize in India can help make stevia a success here. Now the challenge is generating demand. I thought the package might be a problem. If stevia is properly packaged in smaller packets, it can be a hit with juice wallahs. Coke uses Stevia in Japan, so another big market. The biggest market is households as stevia stays stable at high temperatures, even 400 degree centigrade.
To find farmers in wayanad who are cultivating stevia in wayanad, I got the suggestion to contact nurseries in and around kalpetta as growing stevia seedlings requires careful supervision. Good irrigation and hot sun are good enough for stevia to grow.

It has been quite a day for me. Recounting the details might take the juice out of readers who love one genre more than the others.
Among one of the ten magazines I picked up today two things struck me
1. US has a 14 trillion dollar economy , China has about 3.5 trillion dollar economy and India has a 1.1 Trillion dollar economy , looking at the magnitude of difference in size of economies, the decoupling theory does not hold.
2. An article on SIV Structured Investment vehicles , which are nothing but a synthetic of banks , borrow short and invest long. similarly Banks lend long. Now these long investments have to be liquid i.e. tradeable and offer an arbitrage opportunity. SIV are in a spot because liquidity has dried up as subprime CDO's are not generating cash flows.