Wednesday, December 31, 2008

The rationality myth

I have been studying Economics lately and every lesson in free markets, finance, and economics starts with an assumption that human beings are rational decision makers. We weigh all our options and always choose what is best for us so it says (and yes, we think at the margin :) !). But the current global crisis, the associated economy slowdown and the market panic seems to indicate otherwise! Reminds me of a funny rendition of the 10 Principles of economics by Yoram Bauman...

So finally, after reading months of print media, this is my understanding of the markets:

Most of the times we are just crazy speculators, who like to follow the herd or the so called "analysts" who can never even predict what's gonna  happen an hour from the time that they write the article! We are overly optimistic with our investments, and always feel that the future is somehow brighter for our doomed investments. To substantiate this argument let me quote Bruce Schneier - "People tend to be risk averse when it comes to gains, and risk seeking when it comes to losses". To read interesting evidence about this argument read this and this article!

Most of us (read menial small time investors) have no clue of what actually is going on inside the organizations that we invest in! And most of us enter the stock market as short term investors with limited budget to make money. In no time our investments lose value, so we invest more and become long term investors :) !!

These are the things that I had learnt as "facts of life" which were proved wrong in 2008:

  • Real Estate can never lose value, the world population is continuously growing, we will always need more land, so go ahead and invest all your money in a house!
  • Oil is a scarce resource, in no time we will see $200 a barrel!
  • Indian rupee will be so strong that the USD will soon lose value!

As 2008 comes to an end, I figured that I did some major changes in my life this year. Invested a bit in stock market and "safe" mutual funds (yeah, lost almost all that I invested!). Stayed in 3 different countries, quit my first job, took up education, made quite a few new friends, crossed the magical figure of 100 blog posts :) !! And yes, got older, fatter and more cynical. Thank you all for being with me for one more year :)! Catch you all in 2009....

Tuesday, December 30, 2008

Piece of art

My rendezvous with art and art forms started and ended in school somewhere around the time I learnt to draw stick figures. After that anything that I tried to draw from object drawing to beautiful scenery all resembled my definition of modern art (read incomprehensible!). Though I loved drawing, I figured that I spent more time explaining "what I have drawn" than actually drawing it. Yeah, I did a little bit of drawing in my first year of engineering, but it was much more pleasant as it involved drafters, rulers, compasses and dividers and did not require anything that remotely resembled art.

So I was pleasantly surprised when I got an opportunity to make "posters" for a business plan that we had to make in our Innovation class. Its funny that in this world of computer presentations and animation we do not ever think of portraying our ideas in any other form! I was blessed with team mates who along with me agreed that we do not use any print outs on our posters and make them all "by hand". They also made me in charge of the "art department" (or the lack of it!).

Now having unlimited flip charts and dozens of sketch pens in my hand reminded me of my "stick figure" days again and in no time I came up with some sketches of our business plan. (Did I tell you that before the age of 3 all my sketches used to be on the walls of our family home? And well, most of them would be in the living room, so that everyone who came home could see? Show-off ain't I? :) !)

Funnily enough, we were the only team who thought of being "imperfect" by drawing all graphs by hand, and not using any computer magic whatsoever. This kinda made our poster to stand out as the only one without any finesse! Huh, so that's the story of my tryst with art lately. And here is me presenting in front of our final poster and also a part of the poster that shows what I actually drew :) !!

Business Plan presentation   The Idea!

And talking of Business plans reminds me that I have made 3 (totally unrelated!) business plans in the last 5 months. Ha ha, I figured that bull$..t comes to me naturally :) !!

Friday, December 12, 2008

Formal Scare!

I hate attending meetings that require me to dress up in formal attire. Not that I hate the suits and the ties, but considering my body type (read the capacity to sweat), this kind of attire for me is very uncomfortable especially in a warm and humid climate like Singapore!

Today I spent almost an entire day dressed in formal attire and now that I am outta it, I feel at peace with myself! All because of following the westerners and their attire and being dumb enough to forget that they come from countries where it actually snows 6 months of the year!

I seriously believe that the warm humid countries should come up with their own definition of a formal attire which involves wearing a light cotton shirt and a pair of shorts with flip-flops. After all, if you are not comfortable wearing something at a formal occasion, what's the point in being there? (I spent half of my time fiddling with the tie and the collar as that was the only place from where I could release the steam building inside me). I could have easily cooked an entire meal for a family of 4 (boiled eggs, mashed potatoes and beans) by just keeping them in my shirt pocket for the entire day!

That was the grumpy sweaty me protesting :)

Monday, December 8, 2008

Tropical Paradise

5 months in my university and I have started liking the climate out here. Though insanely humid at times, it rains almost every alternate day. And once it rains, this place is lush green everywhere. The rain soaked trees make a beautiful sight, so much so that I sometimes feel I am in a tropical hotel rather than a university. I have to take extra efforts to get me outta this vacation mood and study :) !!

Halls of Residence Soaked road

View from my hostel room Lawned building

Its been raining like crazy since morning and I haven't felt like opening my books yet. Thought I post this and make myself feel guilty so that I start studying :) !!!