Empathy
The alcoholic sat on my front porch
I look down upon him from my high horse
Sober
Morally superior
I judge
But what if I didn't?
What if I could say...
My friend
You're going through a lot
I feel your pain
Hey, now I'm on Forbes too!
After my cash management strategy showed up on WSJ last year, this time it's my investment plan that showed up on Forbes magazine. [Link to Forbes article]
The gift of light
[Speech delivered at Candid Culture toastmasters club]
My dear friends,
I know this inspirational section of our meetings is usually reserved for prayer. I do not have an inspirational prayer for you this evening. Instead I'll tell you a story, which I hope will inspire you as it has inspired me.
Imagine an old widow in India in her late 80s. Her entire life was defined by the so-called traditional value system. Socio-religious rules, all of them leftovers from thousands of years of gender discrimination, confined her to the traditional gender role for women. She is the mother of four, extremely caring, and a phenomenal cook. She is very intelligent, but she never got a chance to persue an advanced education. She is very smart, but she never got a chance to persue a career. She is very strong, but she never got a chance to become a leader. Not outside her home anyway. She spent almost all her life within the confines of her walls, and her rules. Imagine her in her white saree, no colors - exactly what the society dictates a widow must wear. Imagine her eating her simple vegetarian meal - exactly what the society dictates a widow must eat. She is also very religious. Imagine her in her prayer room spending most of the time of her last days praying to her Hindu Gods, waiting to meet them in the heaven - exactly as her religion dictates she must think.
What do you imagine her end of life wishes would be? What would a woman like her, growing up in her times, in a society like hers, and living a life like she did... what would she want after her death? Perhaps a perfect ritualistic cremation according to her religion. Perhaps a perfect ritualistic mourning to follow, ensuring her soul reaches her heaven. Perhaps also a perfect ritualistic offering to her soul every year so that her soul finds peace in heaven.
Perhaps.
Actually, she wanted none of these. Surprisingly, or should I say unimaginably, she wanted to forgo all these religious rituals. Instead, she willed to donate all her organs for helping someone who would need them, and then donate the rest of her body to scientific research.
She, my friends, I am proud to say, was my grandmother. I called her my "Dimma", a childish variation of the Bengali word for grandmother. I was very close to her. After I lost both my parents, and having lost all my other grandparents before that, she was the only person in the world I was directly related to by blood. Although separated by nine thousand miles geographically during the last few years, I thought about her all the time. I hungered to be that little boy who dissolved into her lap. I hungered for her warm embrace that made all my worries fly away. I loved her very very much.
We lost her in the spring of 2008. She died of cancer, so her wish of donating most of her organs could not be carried out, but it was possible to donate her eyes.
Thank you.
My dear friends,
I know this inspirational section of our meetings is usually reserved for prayer. I do not have an inspirational prayer for you this evening. Instead I'll tell you a story, which I hope will inspire you as it has inspired me.
Imagine an old widow in India in her late 80s. Her entire life was defined by the so-called traditional value system. Socio-religious rules, all of them leftovers from thousands of years of gender discrimination, confined her to the traditional gender role for women. She is the mother of four, extremely caring, and a phenomenal cook. She is very intelligent, but she never got a chance to persue an advanced education. She is very smart, but she never got a chance to persue a career. She is very strong, but she never got a chance to become a leader. Not outside her home anyway. She spent almost all her life within the confines of her walls, and her rules. Imagine her in her white saree, no colors - exactly what the society dictates a widow must wear. Imagine her eating her simple vegetarian meal - exactly what the society dictates a widow must eat. She is also very religious. Imagine her in her prayer room spending most of the time of her last days praying to her Hindu Gods, waiting to meet them in the heaven - exactly as her religion dictates she must think.
What do you imagine her end of life wishes would be? What would a woman like her, growing up in her times, in a society like hers, and living a life like she did... what would she want after her death? Perhaps a perfect ritualistic cremation according to her religion. Perhaps a perfect ritualistic mourning to follow, ensuring her soul reaches her heaven. Perhaps also a perfect ritualistic offering to her soul every year so that her soul finds peace in heaven.
Perhaps.
Actually, she wanted none of these. Surprisingly, or should I say unimaginably, she wanted to forgo all these religious rituals. Instead, she willed to donate all her organs for helping someone who would need them, and then donate the rest of her body to scientific research.
She, my friends, I am proud to say, was my grandmother. I called her my "Dimma", a childish variation of the Bengali word for grandmother. I was very close to her. After I lost both my parents, and having lost all my other grandparents before that, she was the only person in the world I was directly related to by blood. Although separated by nine thousand miles geographically during the last few years, I thought about her all the time. I hungered to be that little boy who dissolved into her lap. I hungered for her warm embrace that made all my worries fly away. I loved her very very much.
We lost her in the spring of 2008. She died of cancer, so her wish of donating most of her organs could not be carried out, but it was possible to donate her eyes.
Now here is the best part of her story: a few months later, I received word from India that the eye bank has been able to use both her eyes successfully to bring back vision to the eyes of two blind men. Imagine that! She gave eyesight to two blind men! My dear Dimma has given the gift of light!
When I heard this, I felt such joy, warmth, and hope in my my heart like I've never experienced before. I do not know how it gets any more inspiring than this. This, my friends, is the human spirit at its very best. I'm confident that despite giving up all those religious end-of-life rituals, my Dimma met her Gods in her heaven, and her Gods were divinely pleased to meet her.
I hope my Dimma's story inspires each and every one of us to overcome our fears, our traditions, our boundaries, and do something beyond what is expected of us to make this world just a little bit better for someone else.
When I heard this, I felt such joy, warmth, and hope in my my heart like I've never experienced before. I do not know how it gets any more inspiring than this. This, my friends, is the human spirit at its very best. I'm confident that despite giving up all those religious end-of-life rituals, my Dimma met her Gods in her heaven, and her Gods were divinely pleased to meet her.
I hope my Dimma's story inspires each and every one of us to overcome our fears, our traditions, our boundaries, and do something beyond what is expected of us to make this world just a little bit better for someone else.
Thank you.
India for Dummies
1/4th the size of USA, 4x the population. Very crowded everywhere you go. You can ride a car for 12 hours straight and still see nothing but houses and people. One out of every six people in the world are from India.
Every state in India is different. Think about Europe as a country, and each European country as a state. Just like every single country in Europe, every single state in India has a completely different culture, language, tradition, religious practices, weddings, food, etc. For example, a Bengali wedding will be very different from a Tamil wedding which will be very different from a Rajasthani wedding. I know Indian couples here in the US who don't know each others' languages and speak English at home.
Cities and villages have a dramatic difference in lifestyle, food, education level, social conservatism vs liberalism, and wealth. My city, Calcutta, has produced Nobel laureates in peace, economics, literature, and physics; a lifetime achievement Oscar, and a Miss Universe. It also has rampant poverty such that children grow up in slums under railway stations and other horrible conditions as depicted superbly in the Oscar winning documentary "Born into Brothels". Poor people in India may have to skip meals and travel several miles to fetch drinking water, unlike in the US where poverty usually translates to owning a really bad car. Nobody in India feels sorry for a man who owns a car.
Things stand to change economically however, as Indian economy is expanding at a rate above 7% per annum. Put in simple words means that India will double its wealth every decade. That is almost unheard of anywhere or anytime in history outside China and now. Unlike the Chinese however Indian expansion does not depend on cheap unskilled labor, rather it depends on harder to find highly skilled labor, so it is more sustainable at least theoretically. Emphasis on higher education is a cultural trait among the middle class in India (for example: I didn't even know that not going to college was an option), and I think that it's finally paying off thanks to globalization.
Primarily Hindu population. Worlds largest Muslim population by numbers, but not by percentage. Other religions are Sikh (wear turbans and mostly have Singh as last name). Small Christian population mainly due to the work of Christian missionaries and converts from Hinduism due to the ridiculous caste system. Buddhism originated in India and is restricted mainly in the northern mountainous regions. India shelters the Dalai Lama from Chinese law since the Chinese occupied Tibet.
Despite being a Hindu majority country ("Hindusthan" is another name of India), India had a Sikh prime minister, Muslim president, and Christian leader of majority party at the same time up to as recent as last year when the Muslim president stepped down to make way for our first woman president. India already had a president from the lowest ranks of society (dalit, formerly "untouchables"), and a woman PM. (US needs to catch up here, big time). Noteworthy: Resume of PM of India… http://indianprimeminister.org/php/showNews.php?newsid=17&linkid=2
A lot of everyday words and expression used in America comes from India. For example: guru, pundit, holy cow, nirvana, yoga.
History suggests that India truly believes in peace. India has never attacked any country anytime in her 10,000 year history. The Indian "Defense" lives up to its name, literally. When Pakistan led by then General Musharaf attacked India during the Kargil incursion recently, the army fought them out from within the borders even if it was clearly tactically beneficial for
India to cross over to Pakistan and fight the war from a different front.
India is a densely populated, extremely diverse, culturally vibrant country.
"There's never a dull moment in India".
Every state in India is different. Think about Europe as a country, and each European country as a state. Just like every single country in Europe, every single state in India has a completely different culture, language, tradition, religious practices, weddings, food, etc. For example, a Bengali wedding will be very different from a Tamil wedding which will be very different from a Rajasthani wedding. I know Indian couples here in the US who don't know each others' languages and speak English at home.
Cities and villages have a dramatic difference in lifestyle, food, education level, social conservatism vs liberalism, and wealth. My city, Calcutta, has produced Nobel laureates in peace, economics, literature, and physics; a lifetime achievement Oscar, and a Miss Universe. It also has rampant poverty such that children grow up in slums under railway stations and other horrible conditions as depicted superbly in the Oscar winning documentary "Born into Brothels". Poor people in India may have to skip meals and travel several miles to fetch drinking water, unlike in the US where poverty usually translates to owning a really bad car. Nobody in India feels sorry for a man who owns a car.
Things stand to change economically however, as Indian economy is expanding at a rate above 7% per annum. Put in simple words means that India will double its wealth every decade. That is almost unheard of anywhere or anytime in history outside China and now. Unlike the Chinese however Indian expansion does not depend on cheap unskilled labor, rather it depends on harder to find highly skilled labor, so it is more sustainable at least theoretically. Emphasis on higher education is a cultural trait among the middle class in India (for example: I didn't even know that not going to college was an option), and I think that it's finally paying off thanks to globalization.
Primarily Hindu population. Worlds largest Muslim population by numbers, but not by percentage. Other religions are Sikh (wear turbans and mostly have Singh as last name). Small Christian population mainly due to the work of Christian missionaries and converts from Hinduism due to the ridiculous caste system. Buddhism originated in India and is restricted mainly in the northern mountainous regions. India shelters the Dalai Lama from Chinese law since the Chinese occupied Tibet.
Despite being a Hindu majority country ("Hindusthan" is another name of India), India had a Sikh prime minister, Muslim president, and Christian leader of majority party at the same time up to as recent as last year when the Muslim president stepped down to make way for our first woman president. India already had a president from the lowest ranks of society (dalit, formerly "untouchables"), and a woman PM. (US needs to catch up here, big time). Noteworthy: Resume of PM of India… http://indianprimeminister.org
A lot of everyday words and expression used in America comes from India. For example: guru, pundit, holy cow, nirvana, yoga.
History suggests that India truly believes in peace. India has never attacked any country anytime in her 10,000 year history. The Indian "Defense" lives up to its name, literally. When Pakistan led by then General Musharaf attacked India during the Kargil incursion recently, the army fought them out from within the borders even if it was clearly tactically beneficial for
India to cross over to Pakistan and fight the war from a different front.
India is a densely populated, extremely diverse, culturally vibrant country.
"There's never a dull moment in India".
Hey, I'm on the Wall Street Journal !
You know there is a crisis in the economy when a bum like me is featured in the Wall Street Journal.
Alternatives to Banks
Bhaskar Sarkar, a software engineer in Flower Mound, Texas, has stopped using banks altogether. Instead, he parks his cash in a brokerage account at Fidelity, where he is using a municipal money-market mutual fund as his core account. [Read on...]
Links: (1) WSJ article, (2) Taylor Larimore's post
How to become an investment legend
The dirty secrets of the mutual fund industry
Step 1: Incubator funds
Let's start a mutual fund company today with four new funds (assume $10m assets in each) wisely invested in four different sectors of the market. We do this because we know that market sectors are essentially on a random walk, and that there is no way to predict which market sector will do best in the next few years.
Wise as we are, we quietly keep doing our job for three or four years, after which, as we had expected, one of those four funds, out of sheer randomness, beat the market handsomely because the sector it was invested in just had a few good years. Another one of our funds, the one that most closely resembles the market, did just what the market did (of course); and the other two did miserably because their sectors didn't do well.
Step 2: Hide the losers
Now we "merge" the bad fund and the average fund into the best fund "keeping the best interests of our investors in mind", i.e. we take all the money left in the two worst performing funds and convert them into shares of our best performing fund. This way we simply kill off the bad performers and hide them forever so that nobody comes to know about it. This genius trick is called "survivorship bias", but shhh... don't tell anybody.
Step 3: Let the genius be known to the public
Now is the time to let the world know about the genius that we are. We aggressively advertise the performance of our best fund - full pages on financial magazines loudly display their market beating returns over the last few years. The internet financial websites and blogs start buzzing. We land an interview or two on CNBC where we claim that the stocks in which our best fund was invested over the last few years were "poised for growth", and we express our astonishment over how other investment professionals failed to see the obvious market signals that seemed like common sense to us. More and more investors come to know about our great new fund company, now being dubbed "wall street's best kept secret", which has only two funds - one of which "most definitely" demonstrates our supernatural powers of picking the winners in advance, and the other fund is there just for the wimps who don't like risky investing. At this point, as predicted, performance chasers take note and jump in. Money starts flowing in and assets in our "best fund" bloats to, say, $2 Billion, growing daily.
Step 4: Retain the advantage
We are now well on our way to become investment legends. We have correctly figured out that since our best fund has already beaten the benchmark (a market index like the S&P 500) in its first few years, all we have to do now is to track the index closely so that we forever retain that initial advantage versus the index. We become the so called "closet indexers", i.e. we buy stocks very closely resembling the makeup of the index (but of course we deny that in public).
And so the years pass. Our closet indexing strategy guarantees that, given our lead from the initial years, the annualized or cumulative returns of our "best fund" will always look better than the index for the last 1, 3, 5, 10, or "since inception" years (time-weighted returns).
Step 5: Keep quiet about the dirty secrets
The only investors to have benefited from our strategy are those lucky ones who had invested the first $10M in our best fund. All the subsequent dollars that came into the fund have tracked the index at best (because we were "closet indexing"), and almost certainly underperformed the index after expenses (net investors' return = gross index return - investment expenses). If you measure the returns that each dollar has earned since it was invested in our fund (dollar-weighted returns), since most of them came in after our period of out-performance, it is dramatically different and inferior from our much touted "annualized returns" and "cumulative returns". All this really means that our investors have done really poorly while we were busy becoming investment legends - but of course we are not telling that to anybody.
There's more... In order to pretend that we were doing something other than closet indexing, we have bought and sold a lot of stocks now and then, while cleverly keeping the overall composition close to the benchmark. Our investors have paid for this portfolio churning in the form of brokerage transaction fees, bid/ask spreads, and the biggest cost of them all - capital gains taxes!
But we're not telling that to anybody either.
Meanwhile we appear frequently on financial magazine covers, finance columnists on the web rave about us, books/articles are written about our winning stock picking strategies, and we are rich. Our investors think they have "seen the light", and some of them discuss our annualized/cumulative returns triumphantly every month on internet forums in order to demonstrate how smart they have been to have invested with us. Only one obscure cult-ish forum in one corner of the internet manages to figure out what really happened - but they were not the target audience of this drama anyway.
Step 6: Quit while you're ahead
But all those extra transaction fees, spreads, and higher taxes are gradually eating into the advantage we had in our best fund versus the benchmark index. If it gets too close, we'll lose our "legend" status. It's time to seal the deal now. Retire! Let the managers who replace us take the blame. We remain rich, famous, and basking in the glory of our "success" - forever and ever and ever.
Step 1: Incubator funds
Let's start a mutual fund company today with four new funds (assume $10m assets in each) wisely invested in four different sectors of the market. We do this because we know that market sectors are essentially on a random walk, and that there is no way to predict which market sector will do best in the next few years.
Wise as we are, we quietly keep doing our job for three or four years, after which, as we had expected, one of those four funds, out of sheer randomness, beat the market handsomely because the sector it was invested in just had a few good years. Another one of our funds, the one that most closely resembles the market, did just what the market did (of course); and the other two did miserably because their sectors didn't do well.
Step 2: Hide the losers
Now we "merge" the bad fund and the average fund into the best fund "keeping the best interests of our investors in mind", i.e. we take all the money left in the two worst performing funds and convert them into shares of our best performing fund. This way we simply kill off the bad performers and hide them forever so that nobody comes to know about it. This genius trick is called "survivorship bias", but shhh... don't tell anybody.
Step 3: Let the genius be known to the public
Now is the time to let the world know about the genius that we are. We aggressively advertise the performance of our best fund - full pages on financial magazines loudly display their market beating returns over the last few years. The internet financial websites and blogs start buzzing. We land an interview or two on CNBC where we claim that the stocks in which our best fund was invested over the last few years were "poised for growth", and we express our astonishment over how other investment professionals failed to see the obvious market signals that seemed like common sense to us. More and more investors come to know about our great new fund company, now being dubbed "wall street's best kept secret", which has only two funds - one of which "most definitely" demonstrates our supernatural powers of picking the winners in advance, and the other fund is there just for the wimps who don't like risky investing. At this point, as predicted, performance chasers take note and jump in. Money starts flowing in and assets in our "best fund" bloats to, say, $2 Billion, growing daily.
Step 4: Retain the advantage
We are now well on our way to become investment legends. We have correctly figured out that since our best fund has already beaten the benchmark (a market index like the S&P 500) in its first few years, all we have to do now is to track the index closely so that we forever retain that initial advantage versus the index. We become the so called "closet indexers", i.e. we buy stocks very closely resembling the makeup of the index (but of course we deny that in public).
And so the years pass. Our closet indexing strategy guarantees that, given our lead from the initial years, the annualized or cumulative returns of our "best fund" will always look better than the index for the last 1, 3, 5, 10, or "since inception" years (time-weighted returns).
Step 5: Keep quiet about the dirty secrets
The only investors to have benefited from our strategy are those lucky ones who had invested the first $10M in our best fund. All the subsequent dollars that came into the fund have tracked the index at best (because we were "closet indexing"), and almost certainly underperformed the index after expenses (net investors' return = gross index return - investment expenses). If you measure the returns that each dollar has earned since it was invested in our fund (dollar-weighted returns), since most of them came in after our period of out-performance, it is dramatically different and inferior from our much touted "annualized returns" and "cumulative returns". All this really means that our investors have done really poorly while we were busy becoming investment legends - but of course we are not telling that to anybody.
There's more... In order to pretend that we were doing something other than closet indexing, we have bought and sold a lot of stocks now and then, while cleverly keeping the overall composition close to the benchmark. Our investors have paid for this portfolio churning in the form of brokerage transaction fees, bid/ask spreads, and the biggest cost of them all - capital gains taxes!
But we're not telling that to anybody either.
Meanwhile we appear frequently on financial magazine covers, finance columnists on the web rave about us, books/articles are written about our winning stock picking strategies, and we are rich. Our investors think they have "seen the light", and some of them discuss our annualized/cumulative returns triumphantly every month on internet forums in order to demonstrate how smart they have been to have invested with us. Only one obscure cult-ish forum in one corner of the internet manages to figure out what really happened - but they were not the target audience of this drama anyway.
Step 6: Quit while you're ahead
But all those extra transaction fees, spreads, and higher taxes are gradually eating into the advantage we had in our best fund versus the benchmark index. If it gets too close, we'll lose our "legend" status. It's time to seal the deal now. Retire! Let the managers who replace us take the blame. We remain rich, famous, and basking in the glory of our "success" - forever and ever and ever.
Fall colors, West Virginia
Fisherboy
Taj Mahal
Singapore market
Reflections
Grand Teton lake
Where The Road Ends
Lake Erie Sunset
Butterfly
Desert Sunset