I’m in the process of reading the Goldman Sachs report about what India should do to become a superpower by 2050. Have read some 4 pages of it so far.
Category: finance
Letting Bear fail
This is a tubelight post. Was supposed to have written this two months back.
I sometimes wonder if the US Fed did the right thing by encouraging JP Morgan to buy out Bear Stearns rather than to just let the latter fail. I know letting it fail would have had significant negative impact on the already struggling financial sector. But wouldn’t it have sent out a nice message for the longer term? That nobody was too big to fail? Wouldn’t this have significantly improved the quality of derivatives contracts in the long term?
Oily predictions
I propose a new business model. Make a seemingly outrageous long-range prediction. It could just be anything, but you might want to stick to the financial world. Once you have decided on the prediction to make, think up of about six possible reasons why this prediction could come true. Given that the prediction in itself is outrageous, it shouldn’t be hard for you to come up with six outrageous reasons to support the same.
Buying pickles in Sringeri
That’s what i did immediately before I proceeded to the VidyaShankara temple to look for porn. I spent half an hour at the Sri VidyaShankara Home Products store buying pickles and other assorted condiments. I ended up buying a bottle of Appe Midi Mango pickle (made out of whole uncut tiny mangoes). Then one bottle of Amla (nallikai) thokku – a kind of chutney made with full amlas. My mom later told me she was keen we bought this because I usually don’t eat the fruit in amla pickles, and that it’s good for health.
Tracking your portfolio
Another amazing insight from fooled by randomness. The essence of this is that if you are a passive investor, the more often you track your portfolio, the more your headache. Suppose you have invested in a portfolio where the expected annual return is R%, and the volatility is V%. The insight is that the more often you track your portfolio, the likelihood of the portfolio delivering a positive return between two observations falls extremely quickly.
Accountants and Engineers
I’m currently reading Nassim Nicholas Taleb’s Fooled by randomness. Have read some fifty pages so far. Like his later book The Black Swan, this too contains totally awesome fundaes. And contrary to reports that I’ve heard, it’s extremely easy reading. Either it’s because of my familiarity with derivatives or because I’m just coming off Chaos by James Gleick, which I found extremely difficult to read, and struggled to finish.
interest rates derivatives revisited…
so my favorite topic of interest rate swaps has made front page news today (in the Business Standard). apparently the food corporation of india (FCI) entered into a swap with Barclays in which FCI received fixed and paid an interest rate linked to the yield on Indian GSecs. now it so happens that reverse repo rates have gone up by much more than Barclays had projected (thus driving up yields on GSecs), and poor FCI is now getting mothered.