Monday, October 17, 2005

P-notes: a simple derivative instrument to play in Indian markets

|| Businessworld - Play the game ||

Just read about these instruments which allow foreign investors to take part in the booming Indian stock market (and which allow for anonymity as well). SEBI seems to be a bit worried about these instruments, but heck, the market is booming, so who cares, right? Of course, Indian markets have always had distrust of financial engineering innovations, but this seems like a positive development.

Securities and Exchange Board of India (Sebi) has decided to allow hedge funds to operate in the Indian stock markets through the participatory notes if they conform to the guidelines being finalised by it.

Fooled by Randomness

Nassim Nicholas Taleb's Home & Professional Page

Up on my list of reading. I casually glanced through the book at a local Borders the other day (my casual glance means that I must have read 5% of the book while sipping my latte). What gave me a few chuckles is that Taleb seems to make fun of the MBAs a lot (He himself holds an MBA from Wharton; however he did top it off with a PhD later). He seems to imply that MBAs just dont seem to grasp the finer details of finance - they want a cookie-cutter solution to everything.

This is interesting because another instructor of a class that I am taking (who is also an MBA) has repeatedly pointed out that major publishing houses for MBA books on finance DEMAND from the authors (sometimes at the cost of accuracy) that the books should be devoid of any mathematical proofs or in-depth formulae.

I have no idea what goes on in MBA finance classes (except a bunch of case studies), but is this really true?

Counter argument (on Amazon by a reviewer called Carouser):
Taleb lumps MBA and businessmen types into the "fool" category. This misses the point. 99% of business is not about risk-assessment, dazzling insight, or grand strategic thought, but about successful *execution* of obvious ideas, and hard work. How many eggheads have had great ideas, but never done anything to put them into action? There is no point knowing that a beach bar in the Bahamas might be destroyed every 10 years by a hurricane, if you aren't even capable of raising capital, employing people, or working 16 hour days getting it off the ground. Good MBAs and CEOs will in any case employ people like Taleb to assess risk for them.

Friday, October 14, 2005

Corporate finance midterm

Well, Yesterday was the midterm for a UC extension class on "Basic Corporate Finance" that I am taking. The exam was pretty straightforward except for some True or False questions regarding transaction costs as they relate to market efficiency and CAPM assumptions.

I have been enjoying this basic class - it dwells on basic issues of investments as well as corporate finance. Looks like MFE program would also offer an introductory class on Corporate finance (in January alongwith Math and Programming class), so I will have to weigh whether I need that extra class or not!!

In other news, all this news of global inflation and rising interest rates (with a possibility of recession, coupled with real-estate bubbles crashing due to changes in tax laws) is not bringing me much joy, especially since I want the market to be upbeat when I graduate and am looking for jobs. Comments?

Wednesday, October 12, 2005

Pensions: The Unsolved Mysteries

Pensions: The Unsolved Mysteries

Interesting article on Pension funds coming out of their traditional low-risk profiles and adopting riskier alternative investments. Will University endowments go the same route?

Friday, October 07, 2005

Home no longer on Site...

This line is from a fax sent to me to describe the damage by one my collegaues in field in the hurricane affected areas. This one line brought chills down my spine. In an instant, one can lose a lifetime of memories, possessions, collections, everything which makes a house a "home".

I pray for everyone who has been through this horrible tragedy. However, one thing to learn from this is to have backup (electronic if possible) of everything that is important. I think I better invest in a scanner...

And I was freaking out when I almost lost my CD collection!!!!

Thursday, October 06, 2005

More Blogs...

Some more finengineer students blogs. I guess this calls for an east coast-west coast rivalry :)-

A shout out to my man Aloke
boing-wiki: MathFin

and to the rising hip-hop star
Peek into my life