Wednesday, March 09, 2011

Scary thought

I was chatting with a close buddy yesterday, and we came to the topic of how tough it is to buy a home these days. I then had a really scary thought.

Take a guy in 1970. Let's say this guy is very well educated, works in the best career of the times, is an ideal saver, is not extravagant and has a disciplined financial plan. Let's say this guy keeps a bulk of his money in safe fixed deposits or bonds. This guy, upon retirement circa 2000, would not have enough savings to last him even 10 years at today's expense levels. And as for ability to buy a home, the very notion is laughable! Inflation and the cost of living has exploded so much in the last decade that I fear for my future. What if this hypothetical guy of the 1970s is me, 40 years out? Will I live in penury in my sunset years?

What is the solution to this conundrum? I can think of 2 ways -
1) Hock yourself to the max in debt and buy a house as soon as you can. Keep slaving and paying back this debt over 20-30 years. If real estate today seems expensive, it will seem very cheap tomorrow.
2) Allocate substantially large amounts of savings to equity. This is risky in the short term, but very safe in the long term. In fact, this is the only protection against inflation - on 2 counts. One is that purchasing power is maintained and secondly, there is lower taxation on capital gains.

Net net, the solution is to harness the power of compounding, live frugally today and ever after! This, to me, is a depressing thought. Just when you think life will get easier, you realize that it is uphill for some more distance!

Thursday, March 03, 2011

Just a passing fad?

At one point in time 3-4 years ago, I counted more than 25 friends, colleagues and classmates who blogged frequently. It used to be fun reading varied expressions of humour, philosophy, cussedness or general points of view. Not anymore.

Perhaps I need to find newer blogs, but the regular contributors to blogs seem to have dropped dramatically. And the ones that still remain are much less prolific than before. While the easiest hypothesis (one endorsed robustly by the wife) explaining this phenomenon could be that blogging was a fad which is passing its baton to newer fads like twitter or facebook, there could be other reasons for this too. A few listed here:
  1. Perhaps blogging is an outlet for the inability to express your innermost thoughts to a very close friend. 3-4 years out of business school, disillusioned with corporate life, not yet married - a perfect time and age to blog. Now, the same cohort is mostly reconciled with their jobs, has a spouse to communicate with, or is generally plain busy with kids, career or grocery shopping. Therefore lesser blogging.
  2. Freshly minted bloggers harboured secret dreams of world conquest via the next masterpiece novel (I know I certainly did! Fame, riches, fawning women - I would be the toast of the town). However, after the first few pioneers in this field did just that to mediocre success at best (think Amit Varma's My Friend Sancho or Great Bong's random book or Meenakshi Madhavan's You Are Here; though perhaps Sidin Vadukut's Dork was the exception), the dream faded and consequently blogging became less attractive.
  3. Mind control through the popularization of blogging was a secret CIA plot for world domination which was foiled by an intrepid US President working under the alias of Dubyaman.
I must confess that the 3rd reason is just because a list of 2 seems too short! Anyhow, the fact remains that following blogs aint what it used to be.

Thursday, February 24, 2011

A perfect storm

The Jasmine revolution(s) underway in Egypt, Libya and other parts of the Arab world have affected crude oil prices tremendously. Brent crude is now within striking distance of its all-time high of $147 / barrel. India, which imports more than 70% of its crude oil requirements, is going to be a big victim of this spike.

The Indian nation finds itself in a familiar position - caught in a cleft stick with no hope of redemption. Oil prices cannot be raised under the current APM dispensation since inflation is currently very high (more on this later). However, burgeoning oil prices would mean higher subsidies and consequently higher fiscal deficit. This is bad for the entire country since a) government borrowings would crowd out private investment which we sorely need b) it would increase cost of debt as the country's ratings would suffer and c) it would place downward pressure on the currency, thus making oil imports even more expensive.

The reasons why we find ourselves in this hopeless situation are also familiar. When times were good, our government paid no heed to fiscal consolidation and kept the money spigots open. This money lined the pockets of esteemed gentlemen like Suresh Kalmadi / A Raja and got stashed in Swiss bank accounts. So now when times are bad, we find ourselves in the situation of the grasshopper who did not save anything for the winter.

The key question now is - what can be done. I have a somewhat radical and easy solution - reduce taxes (Excise / customs / sales) on petrol products to very minimal. Currently, 40% of end prices are made up of these taxes. Simultaneously, free ALL crude products to market prices. This will a) prevent many more deaths of conscientious officers trying to prevent petrol adulteration with kerosene b) improve the environment c) create a demand curve where high prices will translate to lower usage and vice versa. There will be no upward pressure on inflation since the money supply in the system will remain constant (inflation is and always is a monetary phenomenon). This has been categorically stated by many more learned gentlemen than me in the government's own committees. To help the really needy, provide coupons to them which they can redeem to buy LPG / kerosene at market prices.

However, I do not this this solution will be adopted. This is because a) we have a venal and inane opposition who only like to play one-upmanship, the country be damned and b) we have an equally venal and inane government which does not believe in decisiveness, the country be damned.

So, by popular vote, the country IS indeed going to be damned!

Wednesday, February 23, 2011

Mice in Men and Catcher in the Rye

Mice in Men:
I picked up this book of short stories, written by a doctor called Anirban Bose at the airport, hoping to fill up the 2 hours of my cramped flying time. Surprisingly, I found some of the stories quite good! Perhaps because I did not have too many expectations to begin with, but most of the stories held my interest, and most importantly, gave me a different perspective on things.

The fictional stories all have a doctor as the protagonist, and are slice-of-life / twist in the end type of stories. Good for a couple of hours of reading. Especially good are 3 stories - Stockholm Syndrome (written like a suspense thriller), The Best Way to Eat Mangoes (fantastic story, totally identifiable) and The Best Oishi (hauntingly true - brings a lump in the throat).

Catcher in the Rye:
What can I say about this evergreen classic that has not been said before? I read it for the third time recently, and loved it even more than before. Holden Caulfield, madman, genius, supreme humanist - the guy has characteristics that would make each reader identify with him. A loser in the conventional sense, the guy is one of the most memorable protagonists in popular literature.

Tuesday, February 22, 2011

Tedium

One big reason I'm not the least bit interested in the cricket World Cup currently underway is because I think the format is totally flawed. There are 14 teams playing, including such worthies as Canada, Ireland and the Netherlands. As a consequence, the 1st round matches are so one sided and boring that there really is no point watching them, or even following them in popular media.

I think ideally there should have been just 8 teams, divided into 2 groups. A total of 12 matches played before the top 2 from each group played the semi-finals and then the finals. A grand total of 15 matches for the entire shebang. Much more efficient than the current total of something like four times that number of matches and an equal number of days.

Would be interesting to see if any of the matches get any half-decent TV ratings. I would bet on very low ratings and advertisers losing their shirts!

Saturday, February 19, 2011

When will Microsoft ever get its act together?

In IIT, where I first came across computers and the Internet, I used mostly Linux and other Unix based operating systems. They were difficult to grasp the first time around, but once you got the basics figured out, they were quite easy to configure, customize and use. They were very very robust. At that time, I did not understand why most people were so anti Windows and MS Office. I used MS based systems mostly to watch movies since for some reason Linux did not have a good viewer (at least in the late 90s).

Today, after having used Microsoft based computers for no less than 9 years, I understand what I could not a decade ago. My computer is a state-of-the-art HP EliteBook. I have the most expensive hardware on this system. My operating system is the top-of-the-line Windows XP Professional. I don't understand why my computer operating system still keeps hanging ever so often. Every time this happens, the only thing I can do is to reboot. Each reboot takes around 10 - 15 minutes of my time. At 1am, when one is fighting a deadline, these 15 minutes are worth their weight in gold.

Another example - I used Lotus Notes for email during my time at McKinsey. Now, having used MS Outlook for the last 3.5 years, I must confess that it is the most heavy, most cumbersome and most buggy piece of software that I have encountered. It causes my computer to underperform so significantly, that I often shut it down when I'm working on critical stuff.

I have stopped using Internet Explorer altogether - Google Chrome is so much lighter, responsive and intuitive - it has become my default browser.

Microsoft has a monopoly position in these products - the least they can do is to make them REALLY REALLY good. However, they cannot seem to get it. They have had similar experiences with web-based email (Hotmail, which is so much inferior to GMail), smartphones (their OS is nowhere even close to Google's android or Apple's iOS) or even search (Bing could not dent Google's market share). These guys are in the best place to invest vast resources and cream the competition. But they don't seem to get it!

What is up with Microsoft???

Wednesday, February 16, 2011

On Facebook...

While googling for some Social Network dialogues, I came across this website. Funny!

The Social Network

I'd been trying to see the movie when it was playing at theaters in India, but could not see it because the wife and I could not take our little quiet-loving daughter to a movie hall. I thought I had missed the bus on this movie despite all the rave reviews etc. And then, I finally got to watch it in the strangest and most unexpected of places - on a domestic Jet Airways flight! (Interesting aside: I could watch the movie only because I was seated in the economy section. Apparently, the business section had some issue whereby the in-flight entertainment section starts late and ends early - I would not have been able to watch the entire film at one go)

I thought the film was absolutely fantastic - the sparkling dialogue, the brilliance of the lead actor and the chutzpah of the film make it a must watch. What I liked very much was the idea of Mark Zuckerberg (and I'm sure it is nowhere like this in real life) - a guy who is in-your-face, unapologetic about being smarter than you, and says it like it is. A guy who is excellent at what he does, has searing ambitions and the wherewithal to make things work! The best part about the movie was that it filled me with an infectious optimism and a sense of how small beginnings can lead to great things!

I don't understand what all the pre-release controversy was about, though. At no point did I feel that the movie set out to make a villain out of the guy - I thought he was fair and center the hero of the movie. He gets a very sympathetic treatment from the script and from the viewer too.

The best line in the movie: "It's as simple as this: if you had invented Facebook, you'd have invented Facebook"

Ambush by the big boy

For long, English business news in India was dominated by CNBC-TV18. NDTV Profit and Bloomberg TV were not even significant challengers. The Hindi segment was dominated by Zee Business. Into this cozy world, the Economic Times launched a new business channel called ET Now.

From all accounts, ET Now had a lot of teething troubles. This, despite luring away a significant chunk of CNBC's anchors and other employees at very lucrative rates. However, ET Now has now flexed its muscles even more by exclusively tying up market 'analysts' and 'experts' such as Ashwini Gujral and Sudarshan Sukhani. These dudes (bless their general ineptitude and lack of any accurate predictions about market moves) have not been appearing on CNBC's website (moneycontrol.com) for a couple of months now. I must confess that reading their views (if only to disparage them!) was the only reason I ever visited the website in any case. Lately, I find myself visiting the Economic Times' website much more than moneycontrol.

CNBC's cupboard looks a bit bare currently - they are now trying to cultivate a new crop of 'experts' but it looks like a very long shot to me. However, I think moneycontrol still has a much better product when it comes to reporting earnings (estimates as well as analyses). ET scores poorly on that front.

Additionally, to make a significant dent, I think ET Now needs to re-think its distribution strategy. For example, I don't think I can watch ET Now on Tata Sky (not on the basic 250 channel pack anyway). So a natural consumer of the channel's content is unable to watch it, which certainly does not augur well for subscription or advertising revenues.

Would be interesting to see if BCCL can replicate its dominance in print to TV. (Aside: I really don't understand why they are dominant in print - the ToI is just a gossip rag, with the HT a much much better product. As for ET, the less said the better. Business Standard is vastly superior and Mint is so far ahead of both that its not even worth mentioning in the same breath)

Tuesday, February 08, 2011

Peepli Live

I saw this movie today, a long time after having bought the DVD. At the end of the movie, I feel quite depressed - the story's treatment in the movie is quite light and deft, but the content itself is so cynical and bereft of any hope that it is difficult to not feel uncomfortable. The worst part about the whole shebang is that it rings so true!

There are many things wrong with our country. The debilitating poverty, the sensationalist media, the venal politicians, the useless bureaucrats - all these come alive in the story of Peepli Live. The only bright hope - a young journalist with his heart in the right place - succumbs in the end to no avail. The world goes on, and many Hori Mahatos continue to die.

I think the reason why the world that this movie portrays exists is because the victims let it exist. Perhaps due to the caste system ingrained in our genes, we as a nation are so used to accepting someone else's superiority that we bend over backwards and take it. We like not only turning over the other cheek, but we offer to self flagellate for good measure. We continue to be chained by the accidents of our birth - if one is lucky enough to be born in the right family, one gets the most exciting opportunities. But one born to - for example, my maid - stands no chance to change the trajectory of his life. And this is the worst tragedy of our times.

Monday, January 31, 2011

Blessings

There are a lot of things we take for granted. Usually, the things that are going well never attract any attention from us. It is the trivial niggle that occupies 90% of our thinking time, and causes much stress. Like much in life, what is is just the opposite of what should be.

I tried today to count my blessings - and boy! are they bountiful? I have the most wonderful wife in the world - she is the reason for my happiness, the one that I would trust my life with. My daughter's toothless smile can melt away the most cynical thought in my mind and make me light hearted in an instant. My parents' love gives me the courage to follow my convictions. I live in a country that throws up immense opportunities for new ventures. My true friends don't really care about the size of my car or the favours I can bestow. My education allows me to read and understand books that broaden my horizons.

I read today about a billionaire who has sold off his mansion and his limousines, and now lives in hotels and gives away his wealth in charity. The guy has no family to leave his money to. Thinking about this gentleman, I felt as if I was so much better off than he.

In the end, the core of my happiness consists of very few material pleasures and a lot of non-material pleasures. By worrying about the former, I run the risk of missing out on the latter, and turning into an ungrateful being. I hope I can re-capture the emotion of this post whenever I fret and fume about trivialities!

Saturday, January 29, 2011

Return of the King

Alert: This may be very boring for all those who are not die-hard fans of Lord of the Rings

Thanks to the imdb link here, I came upon a treasure trove of dialogues from LOTR: ROTK. Some memorable ones:

Witch King: [taking Eowyn by the throat] You fool. No man can kill me. Die now.
[Merry stabs the Witch King from behind; the Witch King shrieks and falls to his knees. Eowyn rises and pulls off her helm, her hair falls down over her shoulder]
Eowyn: I am no man.
[she thrusts her sword into the Witch King's helm and twists; he shrieks and implodes]

Theoden: Eomer. Take your Èored down the left flank. Gamling, follow the King's banner down the center. Grimbold, take your company right, after you pass the wall. Forth, and fear no darkness! Arise! Arise, Riders of Theoden! Spears shall be shaken, shields shall be splintered! A sword day... a red day... ere the sun rises!
Eowyn: [to Merry] What ever happens, stay with me. I'll look after you.
[the King rides past his men, hitting their spears with his sword as he goes]
Theoden: Ride now!... Ride now!... Ride! Ride to ruin and the world's ending!
[He stops and faces Sauron's army]
Theoden: Death!
Rohirrim: [echoing] Death!
Theoden: Death!
Rohirrim: [echoing] Death!
Theoden: DEATH!
Eowyn, Merry: Death!
Theoden: Forth, Eorlingas!

Gimli: Never thought I'd die fighting side by side with an Elf.
Legolas: What about side by side with a friend?
Gimli: Aye. I could do that.

Pippin: I didn't think it would end this way.
Gandalf: End? No, the journey doesn't end here. Death is just another path... One that we all must take. The grey rain-curtain of this world rolls back, and all turns to silver glass... And then you see it.
Pippin: What? Gandalf?... See what?
Gandalf: White shores... and beyond, a far green country under a swift sunrise.
Pippin: [smiling] Well, that isn't so bad.
Gandalf: [softly] No... No it isn't.

[Frodo drinks the last drops of water from Sam's waterskin]
Frodo: There'll be none left for the return journey.
Sam: I don't think there will be a return journey, Mr. Frodo.

King of the Dead: The dead do not suffer the living to pass.
Aragorn: You will suffer me.

Arwen: From the ashes, a fire shall be woken. A light from the shadow shall spring. Renewed shall be blade that was broken. The crownless again shall be king.

Gollum: They cursed us. Murderer they called us. They cursed us, and drove us away. And we wept, Precious, we wept to be so alone. And we only wish to catch fish so juicy sweet. And we forgot the taste of bread... the sound of trees... the softness of the wind. We even forgot our own name. My Precious.

Elrond: You're outnumbered, Aragorn. You need more men.
Aragorn: There are none.
Elrond: There are those who dwell in the mountain.
Aragorn: Murderers. Traitors. You would call upon them to fight? They believe in nothing. They answer to no one.
Elrond: They will answer to the king of Gondor.
[pulls out Anduril]
Elrond: Anduril, Flame of the West, forged from the shards of Narsil.
Aragorn: Sauron will not have forgotten the sword of Elendil. The blade that was broken shall return to Minas Tirith.
Elrond: The man who can wield the power of this sword can summon to him an army more deadly than any that walks this earth. Put aside the ranger. Become who you were born to be. Take the Dimholt Road.
Elrond: [pause]
[in Elvish]
Elrond: I give hope to men.
Aragorn: [in Elvish] I keep none for myself.

And the best:
Gimli: Certainty of death. Small chance of success. What are we waiting for?

Wednesday, January 26, 2011

Trending or cyclical

Not having posted anything for the last 4 weeks, I feel a little weird! There is a good reason for this, however, that is fodder for another post.

As often happens whenever I'm struggling with my thoughts for an extended period of time, I tend to get philosophical. One random thought that I'm currently grappling with is this: is the trajectory of life always trending, or is it cyclical? Does the good keep getting better, or are there violent swings? Looking around at my immediate circle of acquaintances, I tend to think that there is a definite pattern to individuals' trajectories in career, family life, luck etc. However, the observation period is too short (perhaps 5-6 years) to truly suggest acyclic behaviour.

When I read biographical accounts of peoples' lives, which of course is spread over at least 30-40 years, there seems to be an element of cyclical patterns. Good times are followed by bad, and vice versa. However, I'm not sure about this sample set as well, since the ones who have biographies published after them are more likely than not great successes in some aspect of their lives, and tend to dramatize the swings in their past lives.

So at the end of this little thoroughly unscientific thought experiment, we are left with no conclusions. Perhaps it boils down to belief - context and situation make any given statement true, as well as untrue. However, there is a certain harmony in believing that things go in cycles - great scientists have postulated (and proved) that all matter is made up of waves. A wave, by definition, is cyclical - it ebbs and flows. Why should life be any different?

On a totally different note, and for no particular reason, I am reminded of Aragorn in Tolkien's Lord of the Rings "A day may come when the courage of men fails, when we forsake our friends and break all bonds of fellowship. But it is not this day. An hour of wolves and shattered shields when the age of Men comes crashing down! But it is not this day! This day we fight!"

Saturday, December 25, 2010

Out with the old, in with the new

This year seems to be ending with quite a whimper - no mega song and dance, and no grand celebrations, no mega resolutions for the future. While such a sweeping generalization is probably incorrect by definition, it does seem that this is true for me, most of my buddies, the stock market, the political system, the country and the world in general! Considering that its not just the year which is ending, but also the decade, this seems doubly surprising.

The reasons for this are probably many - personal realizations, political instability, economic consolidation and mostly uncertainty about the future. In my opinion, such times are perfect for new beginnings. When one is not drowned in the hubris of a great yesterday nor drunk with the possibilities of tomorrow. Grand plans, sweeping changes, hairy goals - this is the season for renewal.

As a wise man once said: Arise, awake and stop not till the goal is reached!

So here's to all of us becoming better, wiser, happier, healthier in the New Year. Wish everyone a fantastic 2011! and a marvellous decade ahead!!

Monday, December 20, 2010

Getting better...

...with time! Our portfolio is getting to better its outperformance of the Nifty index with time (as it should!!)

Will post the next update 6 months later.

Wednesday, December 15, 2010

Mighty impressed with the Ombudsman

I have generally been happy with my banking relationship with ICICI Bank. They have a good internet banking system, and for years I have not had to go to the branch (and thank God! for that - the only time I went to the branch, it was chaotic, with hordes of people being served indifferently by rude bankers).

However, recently I came upon a mysterious debit in my bank account. The amount involved was not very large, around INR 6K, yet it merited some attention since it was totally unexplained. I therefore called up the call center, and found out that this was collection for a credit card. When I asked whose card it was, I was told that it was MY card!! I of course, know that I dont have any such card, so I probed deeper. I was told the card was issued in 2001!!! and that the last transaction had also been in that year!!

This was galling because of 2 things: 1) how can anyone debit my savings bank account without my authorization? forget the merits or demerits of this particular card, my bank account cannot be debited without my permission. 2) this credit card was issued 10 years ago - how was i to know if there was some 'insurance charge' or annual charge put on it at that time, and at the 36% rates that credit cards charge, had now become 6k. Theoretically, they could let it run for 100 years and present my grandkids with a bill for billions of rupees!!

I protested to the bank via various fora - the complaint mechanism, writing to the branch manager, calling up the call center etc etc. I got no satisfactory response. I then complained to the RBI Ombudsman online (it is a very simple process) and forgot all about the issue (of course I cut off all ties with ICICI Bank also).

Today, about 2 months later, I got a sudden call from ICICI Bank, saying that this was in regards to my complaint to the Ombudsman - they would reverse the debit, and clear all the outstanding on the card. So I am mighty pleased :-) and impressed!!

This is how IT and process streamlining is making life better for Indian citizens! Long live the IT revolution! Long live consumer protection!! Down with ICICI Bank - they probably do this to many people, and refund the few that bother to complain - I myself just happened to complain in a fit of pique - I would have not bothered a couple of hours later.

Thursday, December 09, 2010

Look Ma, it works!

For those who like to track this sort of thing, time to look at the portfolio we had created way back in August. We have had a roaring bull market in October and a vicious bear in November. Today was particularly a carnage that happened ostensibly without reason. In short, the markets have been true to form - unpredictable in the short term.

No mean achievement, therefore, that the portfolio is now outperforming the index :-) With annualized returns of 23%, we are beating the Nifty by about 1.5%. We are not calling it a victory just yet though - we shall continue to measure and report!


Too Big to Fail

I think I'm done with reading books about the financial crises of 2008. Too Big To Fail, by New York Times reporter Andrew Ross Sorkin, is a mega journalistic narrative that captures, blow by blow, the conversations, thoughts and actions that happened in the US Government, Federal Reserve, markets and Wall Street investment banks in the three months that financial armageddon hit the world. I finished the book late last night, and came away reasonably impressed.

On the whole, it is an interesting and very commendable piece of work, but not in the same class as, for example, Barbarians at the Gate. The insights that the book offers are many - the Goldman Sachs nexus within the US Government, the filial loyalties that Wall Streeters have to their firms, and the heroic efforts of Henry Paulson, Tim Geithner and Ben Bernanke to do something, anything to stave off the crisis.

Turns out that most of the measures taken by these gents only exacerbated the sorry state of affairs in the markets. But one cannot really fault these gents, who were really solving very very messy crises each single day.

At the end, one cannot help but feel a bit sorry for Lehman Brothers, Dick Fuld and its team of executives, who did nothing that everyone else did not do, but were singled out for punishment. Many say that this was because personal animosity between Fuld and Goldman Sachs, and circumstantial evidence certainly points in that direction.

What I liked about the book was the little back stories of the key players - Dick 'Gorilla' Fuld, Jamie Dimon, the real hero of the crisis, Gary Fleming et. cetera. The key lesson for me was that tough times dont last, tough guys do!!

Wednesday, November 24, 2010

White Nights

I have not seen Sanjay Leela Bhansali's Saawariya, and nor do I intend to see it. However, a couple of reviews of his most recent movie, Guzaarish, mentioned the earlier movie, so I thought of checking out the plot. This led me to Dostoveysky's 'White Nights', and I realized with great joy that I had earlier read this story, loved it, and had forgotten both the name of the story as well as the author (for some reason I thought the author had been Kafka!). Anyhow, glad to get back in touch with this fantastic story.

Plot below (thanks to Wikipedia):

Like many of Dostoevsky's stories, "White Nights" is told in first person by a nameless narrator who lives alone in a city and suffers from loneliness and the inability to stop thinking. The character is an archetype of a perpetual dreamer. He lives his life in his own mind, imagining that an old man he always passes but never talks to or houses are his friends. The short story is divided into six sections:

First Night

The story opens with a quotation by Ivan Turgenev

"And was it his destined part
Only one moment in his life
To be close to your heart?
Or was he fated from the start
to live for just one fleeting instant,
within the purlieus of your heart."

The narrator describes his experience walking in the streets of St. Petersburg. He loves the city at night time during which he feels comfortable in the city. He no longer feels comfortable during the day because all the people he was used to seeing were not there. He drew his emotions from there. If they were happy, he was happy. If they were despondent, he was despondent. He felt alone when seeing new faces. The main character also knew the houses. As he strolled down the streets they would talk to him and tell him how they were being renovated or painted a new color or being torn down. The main character lives alone in a small apartment in Saint Petersburg with only his older, non-social maid Matrona to keep him company.

He tells the story of his relationship with a young girl called Nastenka (a diminutive of the name Anastasia). He first sees her standing against a railing while crying. He becomes concerned and considers asking what's wrong but eventually steels himself to continue walking. There is something special about her and he is very curious. When he hears her scream, he intervenes and saves her from a man who is harassing her.

The main character feels timid and begins shaking while she holds his arm. He explains that he is alone, that he has never known a woman, so he is timid. Nastenka reassures him that ladies like timidity and she likes it, too. He tells her how he spends every minute of every day dreaming about a girl that would just say two words to him, who will not repulse him or ridicule him as he approached. He explains how he thinks of talking to a random girl timidly, respectfully, passionately; telling her that he is dying in solitude and how he has no chance of making a mark on any girl. He tells her that it is a girl's duty not to rudely reject or mock one as timid and luckless as he is.

As they reach Nastenka's door, the main character asks if he will ever see her again. Before she can answer, he adds that he will be at the spot they met tomorrow anyway just so he can relive this one happy moment in his lonely life. She agrees, stating she can't forbid him not to come and she has to be there anyway. The girl would tell him her story and be with him, provided that it does not lead into romance. She too is as lonely as the narrator.

Second Night

On their second meeting, Nastenka introduces herself to him and the two become friends by relating to each other. She exclaims that she has been thinking and knows nothing of him. He responds that he has no history because he has spent his life utterly alone. When she presses him to continue on the matter, the term "dreamer" pops up as the main character explains that he is of that archetype. The main character defines " 'The dreamer' - if you want an exact definition - is not a human being, but a creature of an intermediate sort."

In a precursor to a similar speech in Notes from Underground, the narrator gives a verbose speech about his longing for companionship leading Nastenka to comment, "...you talk as if you were reading from a book".

He begins to tell his story in third person as he call himself "the hero." This "hero" is happy the hour when all work ends and people walk about. He references Vasily Zhukovsky as he mentions "The Goddess of Fancy". He dreams of everything in this time; from befriending poets to having a place in the winter with a girl by his side. He states that the dreariness of everyday life kills people while he can make his life as he wishes it to be at any time in his dreams.

At the end of his moving speech, Nastenka sympathetically assures him that she would be his friend.

Nastenka's Story

The third part is Nastenka relating her life story to the narrator. She lived with her strict grandmother who gave her a largely sheltered upbringing. Her grandmother's pension being too small, they rent out their house to gain income. When their early lodger dies, he's replaced by a younger man closer to Nastenka's age much to her grandmother's distaste. The young man begins a silent courtship with Nastenka giving her a book often so that she may develop a reading habit. She takes a liking to the novels of Sir Walter Scott and Aleksandr Pushkinas a result. One day, the young man invites her and her grandmother to the theater running The Barber of Seville.

Upon the night that the young lodger is about to leave Petersburg for Moscow, Nastenka escapes her grandmother and urges him to marry her. He refuses immediate marriage, stating that he does not have money to support them but he assures her that he would return for her exactly a year later. Nastenka finishes her story at the end of this, noting that a year has gone and he hasn't sent her a single letter.

Third Night

The narrator gradually realizes that despite his assurance that their friendship would remain platonic, he has inevitably fallen in love with her. But he nevertheless helps her by writing and posting a letter to her lover and hides away his feelings for her. They await his reply for the letter or his appearance; but, gradually, Nastenka grows restless at his absence. She takes comfort in the narrator's friendship. Unaware of the depth of his feelings for her, she states that "I love you so, because you haven't fallen in love with me." The narrator, despairing due to the unrequited nature of his love for her, notes that he has now begun to feel alienated from her as well.

Fourth Night

Nastenka despairs at the absence of her lover and his reply even though she knows that he's in St. Petersburg. The narrator continues to comfort her to which she's extremely grateful, leading the narrator to break his resolve and confess his love for her. Nastenka is disoriented at first, and the narrator, realizing that they can no longer continue to be friends in the manner that they did before, insists on never seeing her again; however, she urges him to stay. They take a walk where Nastenka states that maybe their relationship might become romantic some day, but she obviously wants his friendship in her life. The narrator becomes hopeful at this prospect when during their walk, they pass by a young man who stops and calls after them. He turns out to be Nastenka's lover into whose arms she jumps. She returns briefly to kiss the narrator but journeys into the night with her love leaving him alone and broken hearted.

Morning

"My nights came to an end with a morning. The weather was dreadful. It was pouring, and the rain kept beating dismally against my windowpanes".

The final section is a brief afterword that relates a letter which Nastenka sends him apologizing for hurting him and insisting that she would always be thankful for his companionship. She also mentions that she would be married within a week and hoped that he would come. The narrator breaks into tears upon reading the letter. Matryona, his maid, interrupts his thoughts by telling him she's finished cleaning the cobwebs. The narrator notes that though he'd never considered Matryona to be an old woman, she looked far older to him then than she ever did before, and briefly wonders if his own future is to be without companionship and love. He however refuses to despair.

"But that I should feel any resentment against you, Nastenka! That I should cast a dark shadow over your bright, serene happiness! ...That I should crush a single one of those delicate blooms which you will wear in your dark hair when you walk up the aisle to the altar with him! Oh no — never, never! May your sky be always clear, may your dear smile be always bright and happy, and may you be for ever blessed for that moment of bliss and happiness which you gave to another lonely and grateful heart ... Good Lord, only a moment of bliss? Isn't such a moment sufficient for the whole of a man's life?"

Tuesday, November 23, 2010

Let's measure!

On Aug 27, I had posted this, with ideas for 5 potential trades. I thought it would be good to take stock of how these trades would have done given that it has been a quarter since the ideas. Here is a table outlining the performance of these hypothetical trades.



Approximately 21% annualized returns. Not a spectacular performance, but then not bad either! Just buying the index would have given approximately a 9% return over the same period, but this portfolio is designed to be perform even when the index does not. So in theory, it should outperform over a longer time frame. I will keep tracking it and reporting results to see how the damn thing goes.

Analyzing each of the 5 trades, I think the only place I went significantly wrong was in the oil marketing companies. However, current under performance is primarily due to rising crude prices, which in turn is due to a weak USD. I remain confident that the pack should recover with continuing weakness in the global economy.

The (very reasonable) assumption here is that one would have put an equal amount of money to work on each leg of a trade (e.g. if one has Rs 100 in total for this portfolio, then I would buy / short a stock worth Rs 20. For a paired trade, I would buy for Rs 10 and short for Rs 10). CMP as on date includes dividends paid between 27 Aug and today.