Oh just be quiet and listen to this. My garage door got broken into before my garage door service boca raton got around to fixing it. Its still better though, all they stole was my Zima collection.

Just get a life already Phil. My garage door broken boca raton looks great compared to yours. All you have a smoking hot wife.

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Geek Talk

So I was talking to the wife using Viber when Viber acted up and disconnected. This happened a couple of times. Then I moved to FaceTime, but that too had problems, and started acting up. Finally I got irritated and decided I wouldn’t mind spending some money for uninterrupted conversation, so picked up my phone and dialled ISD.

And I told the wife, “I was getting damn irritated with packet switching, so I moved to circuit switching”. And then we got talking on why Viber was so irritating, and we talked about Tanenbaum (both of us really loved that textbook of Networking) and acknowledgements and transmission of messages on unreliable channels – which can only happen by introducing redundancy – which becomes painful in a human-to-human direct conversation.

I have an engineering degree, and am fairly good at maths, and read a fair bit of economics and history, so keep popping up concepts from these in my regular conversation. Some people find it abhorrent, and wonder if I’ve landed from another planet, given that I talk this way. For example, I remember using  the word “incentivise” while answering a question at a quiz (which had nothing to do with economics). I often rationalise purchases saying they offer “option value” – real options are one thing that I think I understand. And so forth.

From this perspective I think it’s really wonderful that I’m married to someone who not only tolerates this geek talk but actively encourages and participates in it! Like the wife has now become a big proponent of the concept of option value (though admittedly she has just joined B-school so is yet to appreciate the finer points of the Black-Scholes-Merton model). I’m not sure if before she met me she would quote as regularly from Harry Potter as she does now (or maybe I’m taking too much credit). And she keeps peppering examples from physics and astronomy and electrical engineering in her normal day-to-day conversation.

And speaking of physics and option theory and sporting analogies, I get damn irritated when people describe curves as the one below as “hockey sticks”.

I’m Indian, and the only hockey I know is “field hockey”, whose stick looks like a J. So whenever someone mentions “hockey stick” I start imagining a J-shaped curve. As for the above curve, I sometimes (especially when I’m hanging out with banker types) describe it as “call option payoff”. When I’m hanging out with more scientific types, I describe it as “photoelectric effect”.

I wonder how our kids will turn out!

Deresiewicz, Pinker and the IIT JEE

A few months back, William Deresiewicz, formerly of Yale, wrote a long piece advising people why they should not send their kids to Ivy League schools. He talked about students in Ivy League schools becoming single dimensioned, hyper-competitive, and less appreciative of the finer things in life. He spoke of the Ivy League system being broken, and not close to what it used to be once upon a time.

Now, Steven Pinker (he of the Stuff of Thought and Language Instinct fame) of Harvard has responded, and he has the opposite problem with Ivy League students. Halfway though the semester, the class is half-empty, he cribs, with students more involved in extra curricular activities rather than attending class. This implies that all the effort the university puts in building world-class libraries and laboratories and other facilities go waste. Pinker’s diagnosis is different – he blames the “well roundedness” criteria that universities use for admissions (supposedly initially put in place to restrict the number of jewish students, and then kept in place to restrict the number of asians).

I’m about halfway through Pinker’s article, and I remember reading Deresiewicz’s article in full, and my reaction to both is the same – “IIT JEE rocks”. By having a standardised exam to admit students, the IITs actually take pressure off high school students rather than imposing more pressure – since the criteria for admission are clear – that one examination, a student of class 11 or 12 has her objectives clear in front of her in case she wants to go to IIT – single-minded mugging of Maths, Physics and Chemistry.

With a more “well-rounded” criterion – say one that includes social service and extra curricular activities and sport and all such, the objective function is not that clear, and the student needs to slog towards an uncertain objective function, which is significantly inferior to slogging towards a known objective function.

Some of the cribs that Pinker puts in his post is true of IITs as well – I’ve had several professors lecture to me about the lack of seriousness on the part of IIT students, and how they would prefer students who might be less brilliant but more serious about their learning (an oft touted solution to this was to jack up the fees and make students dependent on education loans they had to repay. Not sure if the IITs have implemented this, but the IIMs have, for sure).

But then IIT Madras, where I studied for four years, and where everyone had come in after passing a rigorous standardised test, had no shortage of characters. While everyone who was in had necessarily shown single-minded devotion to mugging maths physics and chemistry in the preceding year or two, a large number of students there had interests that went much beyond those three scientific subjects. In that sense, if the Ivy League schools want to see a system where standardised admissions process actually lead to a fairly diverse class, they need not look beyond the IITs (a system they are no doubt familiar with since the IITs contribute generously to the grad student population of the Ivy League schools).

One of the frequent criticisms of the IIT JEE is that it can easily be gamed – rather than selecting the “brightest” students or those that have the best understanding of maths, physics and chemistry, the IITs end up selecting students who are best prepared for the standardised exam. An oft-touted solution to this is to make the entry process more “holistic” (in India that means including board exam marks (??!!) ), to make it less game-able. However, evidence from the Deresiewicz and Pinker pieces suggests that even the “holistic” admissions process that the Ivy League schools follow are easily gamed, and that the gaming of those systems is in fact biased towards kids with rich parents.

A while back I was looking at the admissions process of some Ivy League schools – both undergrad and MBA programs. Now, all these schools tout diversity as one of their drawing criteria. But if you look a little deeper, you will notice that this purported diversity is only skin-deep (literally!). While these schools might do a fantastic job of getting students from different nationalities, skin colour, undergraduate backgrounds and work experience, the way their essays are structured implies that the students they get are largely similar in thought – students should have done some social work, they should have exhibited a particular kind of leadership, they should be politically correct, and so forth.

The reason I mention this is that “holistic” admissions criteria need not actually produce a student body that is necessarily more diverse than that produced by a standardised test – it all depends upon the axis that you look along!

PS: I happened to have a good day on 7th May 2000, when I wrote the IIT JEE and did rather well, so this post might be biased by that. I don’t know if I would have taken such a charitable view towards standardised tests if I hadn’t done so well in them.

A misspent career in finance

I spent three years doing finance – not counting any internships or consulting assignments. Between 2008 and 2009 I worked for one of India’s first High Frequency Trading firms. I worked as a quant, designing intra-day trading strategies based primarily on statistical arbitrage.

Then in 2009, I got an opportunity to work for the big daddy of them all in finance – the Giant Squid. Again I worked as a quant, designing strategies for selling off large blocks of shares, among others. I learnt a lot in my first year there, and for the first time I worked with a bunch of super-smart people. Had a lot of fun, went to New York, played around with data, figured that being good at math wasn’t the same as being good at data – which led me to my current “venture”.

But looking back, I think I mis-spent my career in finance. While quant is kinda sexy, and lets you do lots of cool stuff, I wasn’t anywhere close to the coolest stuff that my employers were doing. Check out this, for example, written by Matt Levine in relation to some tapes regarding Goldman Sachs and the Fed that were published yesterday:

The thing is:

  • Before this deal, Santander had received cash (from Qatar), and agreed to sell common shares (to Qatar), but wasn’t getting capital credit from its regulators.
  • After this deal, Santander had received cash (from Qatar), and agreed to sell common shares (to Qatar), and was getting capital credit from its regulators, and Goldman was floating around vaguely getting $40 million.

This is such brilliantly devious stuff. Essentially, every bad piece of regulation leads to a genius trade. You had Basel 2 that had lesser capital requirements for holding AAA bonds rather than holding mortgages, so banks had mortgages converted into Mortgage Backed Securities, a lot of which was rated AAA. In the 1980s, there were limits on how much the World Bank could borrow in Switzerland and Germany, but none on how much it could borrow in the United States. So it borrowed in the United States (at an astronomical interest rate – it was the era of Paul Volcker, remember) and promptly swapped out the loan with IBM, creating the concept of the interest rate swap in that period.

In fact, apart form the ATM (which Volcker famously termed as the last financial innovation that was useful to mankind, or something), most financial innovations that you have seen in the last few decades would have come about as a result of some stupid regulation somewhere.

Reading articles such as this one (the one by Levine quoted above) wants me to get back to finance. To get back to finance and work for one of the big boys there. And to be able to design these brilliantly devious trades that smack stupid regulations in the arse! Or maybe I should find myself a job as some kind of a “codebreaker” in a regulatory organisation where I try and find opportunities for arbitrage in any potentially stupid rules that they design (disclosure: I just finished reading Cryptonomicon).

Looking back, while my three years in finance taught me much, and have put me on course for my current career, I think I didn’t do the kind of finance that would give me the most kick. Maybe I’m not too old and I should give it another shot? I won’t rule that one out!

PS: back when I worked for the Giant Squid, a bond trader from Bombay had come down to give a talk. I asked him a question about regulatory arbitrage. He didn’t seem to know what that meant. At that point in time I lost all respect for him.

Reading fiction

In the semester of January-May 2004, I took a course on Indian Fiction in English. This was in order to satisfy the quota for “humanities” credits at IIT Madras. The course was mostly good, and taught well, and we got a glimpse of how Indian writing in English developed, and the motifs that have been unique to such writing. There are a number of short stories we read as part of the course that I still remember vividly. But then there was the book.

For a one semester course, having lots of short stories makes sense, but no course is complete without analysing a novel, and so we were asked to read Jaishree Misra’s Ancient Promises, a truly depressing and mindfucking piece of literature. I don’t know if it was a consequence of that, or that I didn’t read much anyway, that the number of books of fiction I’ve read since then can be counted on the fingers of one hand.

Soon after graduating from IIT (after some wrangling – I had attendance issues in the said Indian Fiction in English course, thanks to all the IIM interviews and some casual bunking), I paid Rs. 95 for Chetan Bhagat’s Five Point Someone and devoured it. Fresh out of IIT (and having spent a summer at IIT Delhi, I could relate to the settings in the book), I must say I loved it. A few days later I borrowed To Kill A Mockingbird from God. Loved that, too. Then I borrowed (from God, again) Gabriel Garcia Marquez’s One Hundred Years of Solitude. Never got past the initial pages. I don’t think I even returned the book to God.

Then I bought Catch 22 and didn’t read it (the book was soon in tatters and I gave it away). Through IIM, I was too busy reading the Business Standard and blogging and indulging in unsavoury activities to have any time for reading. And after graduation I turned to non-fiction (I started with Duncan Watts’s Six Degrees, then James Suroweicki’s The Wisdom of Crowds, Freakonomics, Jared Diamond’s Guns, Germs and Steel, James Gleick’s Chaos, etc.) – mostly books on science and history and economics. I was hooked and for the last eight years this is what I’ve mostly read. The only book of fiction I remember reading in this intervening time period was Amit Varma’s My Friend Sancho. I had gone for the book’s launch in Delhi (more of an excuse to meet Amit and other friends who were going to turn up there), bought it out of sheer social pressure at the occasion and read it. I must say I quite liked it (though I like Amit’s recent writings on risk and ancient writings on freedom much better).

So scroll back (or forward – depending on which frame of reference you are in ) to about a month back, after I had left twitter and facebook when I decided I must use the now available time to read some fiction. I started off with Joseph Conrad’s Heart of Darkness (free Kindle edition), struggled though to about 50% and promptly gave up. I needed some fiction that would inspire me.

Some ten years back Madness had recommended that I read Neal Stephenson’s Cryptonomicon. I promptly ignored him. Eight years back he made the same recommendation. I ignored him again. In 2008 I decided to read the book, but couldn’t find a copy (pre-Kindle days, remember). Sometime in 2009 or 2010 I found a copy in Blossom, and bought it, and it was sitting in the back of my bookshelf till two weeks back. I didn’t start reading from that, though.

When I had my accident in Rajasthan back in 2012, I had injured the ligament in my left thumb, and the greater injury of my fourth right metacarpal had meant that I had ignored this ligament injury until it was too late. So I have a weak left thumb. And that means it is hard for me to hold open a paperback with my left hand – it has to be placed somewhere. This means most of my reading in the last two years has been on the Kindle.

And so I got a sample on my Kindle. The first scene involving movement of currency in Shanghai had me hooked. Soon I was through the sample. Before I hit that “buy” button on my Kindle, though, I checked the bookshelf to see if the physical copy still existed. It did, though it was yellow (perhaps it was already yellow by the time I bought it). So I picked up the physical copy. And over the last ten or twelve days I’ve read it. All 918 pages of it.

It’s been a fabulous book (if a work of fiction has to hold my attention for this long it ought to be fabulous – my ADHD makes me a very good judge of books and movies). Insane fundaes on cryptography, privacy, the second world war, American legal system and just about everything else. It’s been so insanely full of fundaes that I actually sat through 918 pages of it! Can’t recommend the book enough!

I wonder if I would have read it had I still been on Twitter and Facebook. I probably would have – despite being on these media I did read a sufficient quantity of non fiction in the last 2-3 years. But I had the kind of mental space I didn’t for a long time (possibly in part with living alone). And so I read. It’s been fabulous.

The next two books I plan to read are Kurt Vonnegut’s Slaughterhouse Five (I’d begun reading it two years back and liked it before I had a problem with that Kindle and had to exchange it) and Dr. Sid Lowe’s Fear and Loathing in La Liga (considering I’m traveling to Catalunya next month). I still don’t know which one I’ll pick up next (figuratively – both books are on my kindle).

Twitter, outrage and political correctness

So I continue to be off twitter. The only tweets you see from me are the automated tweets that go out (which i customise a bit) every time I write a blog post, which has been fairly often in the last one month or so.

I gave up on my efforts to curate a twitter feed and get the links to pocket. I simply use the Flipboard app on my iPad, which I log on to once a day to see if there are interesting links. For a few days it worked. I collected lots of nice links. I still collect some nice links.

But then the thing with flipboard is that along with the links you end up seeing the twitter commentary that accompanied the links. And I see a lot of outrage. People don’t seem to have patience for a civil discussion on twitter any more. Everyone takes sides, every little topic is dissected like crazy and it’s almost like people have this pathological need to outrage and twitter is their vehicle for that. If this means that this might decrease their outrage in the rest of the world it’s a good thing, but I’m not sure if that is actually happening – it might even be that the constant outrage on twitter is keeping people’s outrage knives sharp and they are outraging more outside too.

Sometimes I like to crack a joke. More often than not it is likely to be offensive and politically incorrect. There is a friend who says he uses twitter exclusively as an outlet for the jokes that build up within his head -to let off steam in some sort of way. But then the extreme outrage and political correctness that twitter imposes on you means that you can never crack a nice harmless politically incorrect joke – people will descend upon you like a pack of wolves, and you get called names and all such.

And so you hold back. And you become a little less of what you were. And you regress. And then you find that you simply can’t function the way you used to a long time back.

Last night I was going through some of my blog posts from 2008 – I go on these trips sometimes. There will be some trigger that will remind me of a particular blog post, and from there I’ll read 20 other adjacent ones. Looking back at the blog posts, they were profound. They were the products of a clean and unfettered mind, who liked to put things out and who didn’t really mind any adverse reactions.

But over the last six years that mind has been dulled, sullied, bullied, into writing possibly only politically correct stuff, which might be flat and hardly profound. So the last month and a half when I’ve been out of twitter has also been an exercise to reclaim myself from @karthiks. And become back closer to skthewimp.livejournal.com – for that is the mode in which I think I function best!

Anyway.. My current thinking is that my facebook and twitter sabbatical will last until the end of October. Going by my brief intrusions into twitter via flipboard, though, it seems like I might stay away for much longer. But you know where to find me!

Looking for a voicemail product

I’ll be traveling abroad for 2-3 weeks next month, during which I will not have access to my phone (don’t plan to take international roaming). In this context, what I need is some kind of a voicemail product – where any call made to my airtel number (which will be “switched off”) will get redirected to voicemail, which informs the caller that I’m traveling and they should leave a message. And I should be able to log on periodically to some website where I can listen to my collected voicemail, and possibly call back some of them.

Does such a product exist? If not, does there exist a market for this, or does everyone who wants to use a product like this can afford international roaming?

And while we are at it, are there any good voicemail apps that I can use on my Android phone (when my phone is in the sim and connected to the network)?

Thanks much!

Planning and drawing

Fifteen years ago I had a chemistry teacher called Jayanthi Swaminathan. By all accounts, she was an excellent teachers, and easily one of the best teachers in the school where she taught me. Unfortunately I don’t remember much of what she taught me, the only thing I remember being her constant refrain to “plan and draw” while drawing orbital diagrams (I’ve forgotten what orbital diagrams look like).

Now, I remember wondering why it was that big a deal that she kept mentioning “plan and draw” while drawing or asking us to draw such diagrams. This question answered itself a few days later at my JEE factory, where the chemistry teacher started drawing an orbital diagram which soon threatened to go outside the blackboard. A friend who was sitting next to me, who was also from my school, quipped “this guy clearly didn’t plan and draw”.

The reason I’m mentioning this anecdote here is to talk about how, when faced with a deadline, we start running without realising what we are doing. I can think of a large number of disastrous projects from my academic and professional life (till a couple of years back my academic and professional life was rather disastrous), and looking back, the problem with each of them was that we didn’t “plan and draw”.

I especially remember this rather notorious “application exercise” as part of my marketing course at IIMB (btw, since the wife is doing her MBA now I keep getting reminded of IIMB quite frequently). We had a problem statement. We had a deadline. And we knew that the professor demanded lots of work. And off we went. There was absolutely no coherence to our process. There was a lot of work, a lot of research, but in hindsight, we didn’t know what we were doing! Marketing was my first C at IIMB (and the only C in a “non-fraud” course, the other being in a rather random course called Tracking Creative Boundaries).

Then I remember this project in my second job. “Forecast”, I was told, and asked to code in java, and forecasting I started, in java, without even looking at the data or trying to understand how my forecasts would solve any problem. Six months down, and forecasting going nowhere, I started coding on Excel, looked at the data for the first time, and then realised how hard the forecasting was, and how pointless (in context of the larger problem we were trying to solve).

There are several other instances – see problem, see target, start running – like the proverbial headless chicken (as made famous by former Indian ambassador to the US Ronen Sen). And then realise you are going nowhere, and it is too late to do a fresh start so you put together some shit.

That piece of advice I received in chemistry class 15 years back still resonates today – plan and draw (pun intended if you are in a duel). Its is okay to take a little time up front, knowing that you will progress well-at-a-faster-rate once you get started off. You need to understand that most projects follow the sigmoid curve. That progress in the initial days is slow, and that you should exploit that slowness to plan properly.

Sigmoid Curve

I will end this post with this beautiful video. Ilya Smyrin versus Vishwanathan Anand. Semi-finals of the PCA candidates tournament in 1994 – the tournament that Anand won to face off with Garry Kasparov at the WTC. Anand, playing black, gets only five minutes to play the whole game. Watch how he spends almost a minute on one move early on, but has planned enough to beat Smyrin (Anand only required a draw to progress, given the rules).

Raghuram Rajan replies to my Pragati article

At least I like to believe that! A couple of weeks back I’d published this article in Pragati (published by the Takshashila Institution, where I work part time as Resident Quant) slamming recent decisions by the Reserve Bank of India to make two factor authentication compulsory and to limit the number of free ATM withdrawals from non-home banks.

My criticism for both these decisions was that they were designed to take money out of the banking system, which would result in a reduction of money supply, and subsequent increase in borrowing costs, thus slowing down India’s economic recovery. I had some other criticisms, too, such as it being none of the RBI’s business to mandate what was essentially a pricing decision between the RBI and the customer, and the perverse incentives the rule created for banks seeking to set up new ATMs.

Could it be that the above regulations are a move by the RBI to curtail money supply without necessarily doing the politically tricky task of raising interest rates?

If it is (and it is a very remote possibility), we should commend the RBI for what will then amount to be a sneaky decision. If not, it must be mentioned that though noble in thought, the two decisions are completely bereft of economic and financial reasoning.

I had written.

So an article published an hour back in Mint quotes Rajan on these two policies, where he defends them. On the two factor authentication issue, he is surprisingly defensive, offering nothing more than a statement that banks and companies need to follow the rules and not try to circumvent them in the name of innovation. Rajan then added that he is looking into permitting transactions up to  a certain limit that don’t need two factor authentication – something I had pointed out in my Pragati piece.

On the ATM issue, I (and other news organisations who I got my news from) seem to have got my information wrong. Apparently currently regulation exists that five ATM transactions per month from non-home banks are supposed to be free, and that is being cut down to three. Rajan clarifies (as reported in Mint today) that the new regulation only allows banks to charge customers beyond the first three transactions in a month, and they are not obliged to do so. He talked about the perverse incentives that the earlier regime (where banks were obliged to permit a number of free ATM transactions from non home banks) created.

My apologies for not reading the regulations correctly (of course a part of the blame has to go to the newspapers that reported it thus! :) ). I admit I should have checked from multiple sources on that one.

Coming to the point of the post, why do I think that Rajan is responding to my Pragati piece? You might argue that it might simply be a case of correlation-causation – that it might be coincidental that Rajan has spoken about two issues that I had highlighted in that post. However, there are two reasons as to why I believe that Rajan was responding to my post.

The first has to do with the combination of subjects. While the two regulations (ATM withdrawals and two factor authentication ) were widely reported in the media, I haven’t seen any piece apart from mine which addresses these two issues together (I must admit my perusal of Indian media has dropped nowadays given my Twitter and Facebook sabbatical). Given that Rajan has chosen to address these two issues today, it is likely that he is responding to my piece.

The second reason has to do with the timing. The Takshashila Institution sends out a weekly “dispatch” which is a summary of commentary written by its fellows and employees and associates. This is an emailer which contains links to these articles along with short snippets, and a number of fairly influential people (within the government and outside) are on the list of recipients. The latest edition of the Takshashila dispatch went out this morning, and it has a link to my Pragati piece. Now, while Rajan is not on the mailing list (to the best of my knowledge), it is likely that an influencer on the list with access to him brought it up today (it could even be the Mint journalist who has reported the story – that would still count as Rajan, albeit indirectly, responding to my piece). This reaffirms my belief that he was responding to my piece in his comments today!

You might think I’m deluded. So be it!

Carrots have become expensive

image

Carrots have become expensive in Bangalore, relative to cucumbers at least.

I’m at mainland China in Jayanagar to have their excellent pepper lemon chicken soup – which is brilliant when you’re nursing a cold – like I am  now.

Like any good Chinese restaurant they’ve given kimchi as complimentary starter and I’ve been eating that as I wait for me soup.

As you can see in the far right corner of the photo though the kimchi (not sure if the pickled carrot and cucumber they give as complimentary starter can be classified this or if the term is reserved for the pickled cabbage – anyhow) only has cucumber.

It’s my mistake that I took this photo now and not even it just arrived but what was supposed to be a bowl of carrot and cucumber was actually a bowl on picked cucumber only with one token piece of pickled carrot!

Clear indicator that carrots are expensive now – relative to cucumbers at least!!

PS: I shopped for vegetables on Wednesday. Bought carrots for sixty rupees a kilo while cucumbers cost twenty a kilo. So no ticket science to this post. Just a pertinent observation