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Just Shoot Me

Bala, 28, Gordon Gekko in the making, pseudo-intellectual, cynic, bibliophile, obsessive compulsive ranter...

Why Arbitrage is not cool?

March 31, 2007

Dear stock market investor,

Given the recent volatility in the indian markets, lot of people are now talking about Arbitrage and investing in arbitrage mutual funds. Arbitraging looks sexy on paper, but it takes enormous amounts of guts and self control to actually make decent money out of it. Let me list a few reasons why it is not sexy?

1) Arbitraging requires a great amount of leveraging. Your account has to be deep enough to bear heavy Mark to Market calls. A common mistake arbitragers make is over leveraging and getting your margin calls triggered. Even nobel economic price winners make this mistake.

2) Price convergence happens sooner or later or maybe never. Not everyone has deep enough pockets or conviction to sit through till it happens. In India, the usual derivative contract period is a month. Holding on to a position, switching to the next month series time and again requires great conviction, patience and perseverance and you are not as tough as you think you are.

3) Arbitraging opportunities are not common. (at least those which promise a good spread). Great volatility comes maybe once a year. For every good month there will be many bad and mediocre months

4)Indian Arbitrage Mutual Funds have expense ratios similar to Equity funds whereas their returns are comparable to Debt/liquid funds. Considering this, your money is better off in the bank. And read the fund fact sheet carefully - you will find whatever gains an indian arbitrage MF scheme shows, would have come mostly from their equity holdings

5)Arbitraging places a lot of faith in acts of god. And the guess what happens to people who believe in God?

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posted by Bala, 9:55 AM | link | 0 comments |

Why i am bear - Tim Knight

March 28, 2007

Tim Knight has a great article titled Why i am a bear?. For all you permabulls out there, check it out. It is a must read, if you are the sort who insists that Fin year 2015 earnings justify today's valuations.

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posted by Bala, 8:48 PM | link | 1 comments |

Religious propaganda!

Two sunni muslims i know keep on insisting that Husain Ibn Ali was killed by jews. No amount of explaining the facts of Battle of Karbala can change their mind. No matter what the religion, there are brain washed masses aplenty. Hmm maybe i should become a messiah and start a religion.

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posted by Bala, 8:26 PM | link | 0 comments |

The Poligar Wars - Round 1

March 25, 2007

In today's Sunday suppplement of The Hindu eminent historian S. Muthiah talks about pre-1857 rebellions against the britis rule in india. Since Poligar (paalayakarar) wars are a hobby of mine, i was interested to see the following references to it. I have added some extra information i know about the points raised.

...the scale of the revolts by local powers in the South, the first being as early as 1757. When Mohammed Ali, the Nawab of the Carnatic, supported by the Company, attempted to extend his control over the "Madura" and "Tinnevelly" districts, the poligars (palayakarar = local chieftains) rebelled. The eastern poligars of Telugu origin, led by Kattabomman Nayak of Panchalamkurichi, and the western poligars, led by Puli Thevar of Nelkattamsevval, forged local alliances and then a grand alliance as they revolted against Mohammed Ali. Of necessity he had to seek John Company assistance, and, though battles were won and lost, the revolt was finally put down in 1761 by Yusuf Khan, who had been nominated the Governor of "Madura" and "Tinnevelly" in 1758 by the British, despite Nawab Mohammed Ali's objections...

The kattabomman mentioned in the above paragraph is not the one made famous by the movie Veera pandia kattabomman. This is his grandfather "Polla pandia kattabomman". As Muthiah indicates, there were two confederacies of palayakarar's which resented the intrusion of mohammed ali into their dominions (they were more or less independent players since the end of nayak dynasty in 1736). The eastern confederacy (i use the word confederacy in a very liberal sense), was led by panchalankurichi and the western confederacy by nel kattum sevval. "nel kattum sevval" literally translates to "Rice tribute paying place", but after its' ruler puli Thevan's successful (initially) attempts at defying Mohammed ali, the name changed into nel kattan sevval ("place which doesnt pay rice tribute"). In effect by 1757, these paLayams had declared their independence.

Into this situation came yusuf khan aka marudhanayagam (the same marudhanayagam who was the subject of kamal hassan's aborted movie) sent by the British to bring the poligars under control and make them pay kisthi. Earlier campaigns in 1755 by Mahfuz khan (mohammaed ali's brother;yusuf khan was a subordinate) were unsuccessful in subduing the poligars' partly because of their sticking to each other and partly because british troops had to be withdrawn to raise the french siege of Madras (by Lally). Yusuf Khan quickly intimidated the eastern poligars (no major details of the capitulation of panchalamkurichi is known) and moved against Pooli thevan. A series of sieges of Pooli Thevan's forts followed and eventually Nerkattansevval fort was reduced by British artillery. Pooli thevan was captured and escaped/encountered on the way to incarceration.

The failureu first poligar attempt at rebellion (the second attempt would come forty years later when the british had their hands full with tipu sultan) failed was a direct result of non-cooperation and caste rivalry between the poligars. The Eastern Telugu speaking "nayakkars" and the western tamil speaking maravars/thevars had enough mutual mistrust to prevent a united campaign from being launched. (Azhagu muthu kone, another palayakarar hanged by yusuf khan was a konar/yadav). This incident effectively illustrates how jathi has been the spoil sport in southern tamil nadu even 200 years ago. Though during the second poligar attempt, forty years later, the same two caste divisions (oomaithurai and marudhu brothers) came together to create major disruption of british control of southern tamil nadu. That i would write about in another post.

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posted by Bala, 9:51 AM | link | 3 comments |

The objective is to make money

March 20, 2007

Dear s/w-engineer-turned-part-time-traders,

It might be true that you are a brilliant, Einstein-level-IQ stud who can solve non-linear dynamic equations in your head. It might also be true that you have "cracked" the secret of the stock market. But remember - the reason you are in the equity business is to make money. This is not a chess match (or a boxing match) where you are out to beat an opponent. You are here to make the dabbu. At the end of the year, if you dont have the numbers in the black, your genius level IQ or jerk level attitude doesnt matter. Got it?. And don't bug me with shit about how hedge funds do fabulous machine trading. It didn't work for these guys. And they were Nobel Economic prize winners. And you are just a code jock sitting in a cubicle in bangalore writing mildly interesting code. If you leave me alone now,i promise to lend my shoulder later to you to cry upon when you lose your shirt in the market.

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posted by Bala, 6:48 PM | link | 0 comments |

TCS Lawsuit Update

March 18, 2007

(Thanks to the anonymous commenter in the last post)

I had written about the TCS Class action Lawsuit last year. There is news from the case.

TCS ' motion to have the case arbitrated in India by a arbiter of their choosing has been thrown out by a Federal court judge

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posted by Bala, 12:28 PM | link | 5 comments |

funny business

March 15, 2007

1) Right now the Dow jones industrial avg is behaving like the Nifty (was down 50 pts in the pretrade, opened 30 points up, went down 140 pts and now is trading 20 points plus... and there is still an hour of trade is left)

2) Gave the link of this blog to my sister. She might me reading this drivel in the future and i would have to watch my mouth

3)I have been invited to deliver a "guest lecture" in an engineering college this saturday. The problem of having only torn jeans to wear to such events is becoming irritating - i ought to break the vow and buy new clothes pronto.

4)the stock market is populated with idiots, like this blogger

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posted by Bala, 12:31 AM | link | 2 comments |

About NCFM

March 09, 2007

Dear uninformed stock market investor,

There are lot of idiots in the stockmarket-o-sphere who think that having a NCFM certfication is a big deal. Some even try posing as experts on the basis of the certification. Dont get fooled into believing that NCFM is a big deal. It isnt. All it takes to get a NCFM certification is mugging up a 200 odd page book and answering 60 odd multiple choice questions in two hours (with negative marking though). NCFM is meant to ensure the guy who enters the orders in the trading terminal knows the basics of stock markets and doesnt screw up. He is not a rocket scientist - just the guy who tightens the nuts in the rocket. So next time someone tries to tell you that he is NSE certified and thus a market expert, take it with a pinch of salt.

--
PS : the blogger has cleared four modules of NCFM - capital markets, derivatives market, commodities market and AMFI just on the basis of browsing through the curriculum on the train journeys to chennai on the nights before the tests.

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posted by Bala, 7:52 PM | link | 1 comments |

first love

March 08, 2007

I am rewatching old episodes of Space: Above and Beyond. I first watched it ten years back in Star Plus (before it became the abode of Ekta Kapoor's K monstrosities) and the show is every bit good as i remember it. This was the show that set me on the road toward science fiction (Space city sigma was the first inspiration and S:AAB sealed the deal) and it is always good to revisit first loves :-)

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posted by Bala, 6:24 PM | link | 0 comments |

Anniyan inspiration

March 06, 2007

I think i have found where Shankar's last movie Anniyan was "inspired" from : Mathew Pearl's 2003 novel The Dante Club

It is not a total ripoff - just the basic premise has been ripped. Earlier i used to think, the idea of giving punishments from a book was taken from Se7en, but The Dante Club is more specific. Shankar has just replaced Dante's inferno with GarudapuraNam

==
For the benefit of Tamil search engine phrases:
இயக்குனர் ஷங்கரின் அன்னியன் படத்தின் மைய ஐடியா சுடப்பட்டது / காப்பியடிக்கப்படடது / உருவப்பட்டது மாத்தீயூ பியர்ல் எழுதிய The Dante Club என்ற நாவலில் இருந்து. Dante's Inferno வுக்கு பதில் கருடபுராணம் என்று மாற்றி விட்டார் ஷங்கர்.
posted by Bala, 6:53 PM | link | 0 comments |

Three Market Idiots - Dr. Brett Steenbarger

March 05, 2007

posted by Bala, 10:22 PM | link | 0 comments |

AXN's back

March 02, 2007

I thought the ban on AXN was till March 15. Anyway AXN is back on Indian TV. Poor guys they get banned for showing "world's s*e*x*iest commericals". Priya Ranjan Das Munshi apparently didn't know about the late night content in AXN.(or doesn't want to show that he does). Anyways there are late night shows in AXN that are far more "indecent" (their words not mine) than the this one. Now that AXN is back - i wonder will it keep up the late night content for India.

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posted by Bala, 9:09 AM | link | 0 comments |

22 thousand in 28 days

March 01, 2007

IndiaPlaza (formerly Fabmall and even before that Fabmart) announced a price challenge. They claim they have the lowest prices on books and mobiles and offer a challenge - find the same product priced lower elsewhere and they will give you a gift coupon for double the difference. Now this is something i have been doing for the past six years. Back during my college days when my book buying allowance was meager (in my view)i used to compare prices routinely between different bookshops (odyssey, landmark, fabmall etc etc) and this habit has continued till now. Six hours of browsing and several missed crappy TV shows later, i had a list of 120 odd books with a cumulative difference of 11,100 Rs. That works out to be a whopping 22000 Rs worth of gift coupons. I submitted the list to Indiaplaza and forgot about it (crappy TV shows beckoned). Now Indiaplaza has indeed honored its challenge and has offered me gift coupons for Rs 22000. But the catch is they have given me 100 odd small denomination coupons (20 fifty rupee coupons, 30 hundred rs, 30 two fifty rs, 30 three hundred etc) and the coupons cant be combined! - they have to be used stand alone. Add to that they expire on March 28th.

So here i am with 22000 Rs in gift coupons to be spent within 28 days. And i am determined to use all of it. (Personal motto : oc la kidacha phenoyila kooda kudikkanum ). Now all i have to do is find 120 odd paper backs to fit into the gift coupons....

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posted by Bala, 10:04 PM | link | 8 comments |