Tuesday, March 31, 2009

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kelly's criterion

Kelly criterion

There is high influence of mathematics in arbitrage, trading ,hedge fund in short the whole stock market. Today I am trying to explain formulae which are usually used by fund managers to find out how much they can get as average return on their investment; however these are mere on paper calculation sometimes overly optimistic assumptions which should be taken care very cautiously. [http://www.cisiova.com/betsizing.asp]



                                     Avg returns= (1 + W1*F)^(P1) * (1 + W2*F)^(P2)

Where Wi = increase in percentage value of stock you are expecting
Pi = chance of happening this rise based on the backtest
F = fraction u put in the wager

When you play with stocks there is however a funny but simplified formula given by epchan.blogspot.com it says that if you are expecting your stock to increase by 1% or decrease by 1% with 50-50 odds what would you do ?… many will jump on hold the stock as it is going to remain flat…. But formula says otherwise [reference]

                                                                    Y = m-s^2/2  

                                                        where S = standard deviation =1%                                                                                                                m = expected return value =1%                                                                F = 0.5% which means we are going to take loss

Kelly criterion is very and some times overly optimistic, I have shown 2 different flavors which are currently used in the market. For more info check out William Poundstone’s Fortune’s Formula (amazon)

How ever there is another complicated formula for this, we can find out how much fraction can we bet to optimize profit for our bank roll….[refence]

y = [(1+v*f)^p]*[(1-f)^(1-p)] = Avg return

f = Fraction optimized for gain
f = [p*(v+1)-1]/v (derivative of y wrt f)
p = Probability of gain
v = Odds of gain

so if odds of winning are v = 2:1 and backtest probability is 50-50 the f = ¼ optimized fraction pluggin into to equation y value would provide us 6.1% avg retrun on our bet.

My interest is purely in the fun of the mathematics and not the application so let me throw a disclaimer of using these formulae’s at your own risk.We have seen effects of these modeling in past when modelers failed to model the financial melt down but in their defense I should also say that a Quant is not astrologer he models based on back testing data given to him . So he cannot predict any event never ever happened before in the history of stock market.




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Sunday, March 29, 2009

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Mini update : EAWA 2009 USCIS

USCIS








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Movie Be Kind Rewind (2008)




Rating ***/5
A fantastic Jack black comedy, its happens in a little obscure setting, where a movie store employee accidently erases tapes yes VHS tapes, so he decides to plant the movie back in a very unusual fashion... by refilming it thinking people wouldnt notice it. Hardcore Jack Black fans will simply love it....



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Employ American Workers Act 2009

Employ American Workers act 2009 was passed by President Barack Obama, as a part of American Recovery Reinvestment Act 2009 on 17th of feb 2009. According to this bill any American company who received money through Trouble Asset relief program (TARP) or Federal Reserve Act cannot hire H1B.This act however is not for ever it expires on 17th feb 2011 exactly 2 years from its inception. Few days back Bank of America refused to honor hiring of foreign nationals. A rough estimate states that almost one third of M.B.A graduates hold foreign nationalities, and more than half of the graduate schools in US in Engineering , Science, Technology are filled with foreign nationals.

When Such acts are passed by US congress it is merely impossible for foreign nationals to come here to study and enrich the intellectual property of this great nation is.The EAWA 2009 act says the following from WWW.USCIS.GOV

It has taken good faith steps to recruit U.S. workers (defined as U.S. citizens or nationals, lawful permanent resident aliens, refugees, asylees, or other immigrants authorized to be employed in the United States (i.e., workers other than nonimmigrant aliens) using industry-wide standards and offering compensation that is at least as great as those offered to the H-1B nonimmigrant;
It has offered the job to any U.S. worker who applies and is equally or better qualified for the job that is intended for the H-1B non  immigrant;
It has not “displaced” any U.S. worker employed within the period beginning 90 days prior to the filing of the H-1B petition and ending 90 days after its filing. A U.S. worker is displaced if the worker is laid off from a job that is essentially the equivalent of the job for which an H-1B non immigrant is sought; and
It will not place an H-1B worker to work for another employer unless it has inquired whether the other employer has displaced or will displace a U.S. worker within 90 days before or after the placement of the H-1B worker.



however there is a catch EAWA only applies to U.S companies that received covered funding and want to hire NEW H1-B workers ....that means existing h1 b's will not face gruelling time, the sweet caveat is as follows 


New employment (i.e., hires) based on a petition approved before Feb. 17, 2009, if the H-1B employee had not actually commenced employment before that date.

The normal exception to the H-1B dependent employer requirements that an H-1B nonimmigrant is exempt from the dependency calculation if the individual earns a salary of at least $60,000 or has a master’s degree or higher is not available to companies that have received covered funding.



Having read this comments I think H1B's should breathe easy as new laws are not as draconian as one might have thought. However they might be looked down upon by the future  F1 students and immigrants as a potential hazards towards migrating and obtaining green cards. There is a chance that the taxes and houses bought by these high skilled workers,and their contribution towards US economy, might start to fade a little for atleast next 5 years. 




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Saturday, March 28, 2009

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Bailout Southpark style ..........








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Cloud computing is shaping up !!!!

Cloud computing has recently got tons of attention companies like google, amazon and IBM are coming out with guns blazing to capture the computing market however one company NIVIO started by Sachin Duggal gained my attention. Sachin Duggal ,whose credentials include winning pioneer technology award at World Economy Forum in Davos (past winners 2002 is Google), he claims that services provided by web giants mentioned above are restricted to the net or the webusers, while his service would be catering anyone with P.C like interface ...kinda Youtube on demand or MS Excel on demand.This company is not threatened by Google competition since they want to work with them to service their WEB Applicaitons like google docs etc...

How ever there are many skeptics of this technology article in Business week

There are two kinds of risks in putting your data online. One is that you can never be quite sure who has access to your information once it has migrated beyond the hard drives and backup storage devices in your home. The other risk is that the information, and sometimes the applications you need to make use of it, may be available only when you are connected to the Internet and the service is up and running.


Like it or not evil or not cloud computing is here to stay reason is simple increase bottom lines by pay as you go service.

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Friday, March 27, 2009

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British P.M. taken to task by British MEP

Watch as this guy skewers with excellent oratory ...............

Debt per British child 20,000 pounds

Comparing England's deficit to Pak and Hungary priceless




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Fuzzy Dynamic Logic

I had a great honor of meeting Dr. Leonid Perlovsky (AFRL)during my tenure as a graduate student at Arizona state university. So much was I impressed with his brilliance that some part of my blog name contains the name of algorithm he proposed. He intrigued my mind with this algorithm so much that every time i try reading his book i discover new aspects of his approach. At first I hated the combination of Philosophy and AI math together however my friend made me realise that philosophy had been foundation of mathematics since the Roman empire philosophers like plato,socrates,archimedies have contributed towards formation of bedrock of this art.
When i was reading this book for the first time many emotions ran through my mind like frustration & anxiety towards the theory as to why does the author need to mix philosophy and mathematics into a brand new theory. Yet, if the author still wants to go ahead and apply why dosen't he clearly demarcate the boundary ..yes..its though to find clear transition from philosophy to mathematics during his proposal of Modeling Field Theory.During that time (2004 FALL) my advisor Dr Jennie Si whom i have had priviliedge of working with, helped me understand the mathematics of the proposed MFT through some of his published work, this reduced my anxiety and gained control over the understanding the working of it.

I want to throw a humble disclaimer that i was just a mediocre research aide, but the theory was in its virgin days of its publication, and since i had read and understood every possible theory for predictive modelling some were tool difficult to realize practically some were too unstable to implement.I perceived MFT to be somewhere in between the two states was not too difficult to realize and at same time it was too good to be working beyond theory.

I think this extremely flexible and its implemetations will be world changing...... So guys those are curious heads and those in mathematics or engineering if u have a chance please read this excellent book I am placing a link to amazon

Neural Networks and Intellect: Using Model-Based Concepts (Hardcover)
by Leonid I. Perlovsky (Author)




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Thursday, March 26, 2009

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America and marijuana economy

There is heated debate going on through out American continent, lets legalize marijuana proponents of this claim put forward reasons such as

* Reduction in drug related violence
* Better medical heath care
* Tax stimulation to the county, state and country
* Job opportunities for impoverished families
* Reduction in Drug Cartel related violence and drug cartel income citing prohibition example
* Reduction in Non-violent drug offenders in jail saving huge tax dollars
Pro-pot blogs

Dan Sweeney
http://www.huffingtonpost.com/dan-sweeney/taking-the-pro-pot-positi_b_179653.html
Jim Gilliam
http://www.huffingtonpost.com/jim-gilliam/pot-saved-my-life-mr-pres_b_179585.html

Opponents argue
* Increase in violence just like drunk driving is side effect of lifting prohibition
* Increase in delinquencies in children when they buy marijuana from their fav coffee shop
* Increase in violent crimes related to marijuana
* Youth will be destroyed bad example
* Chaos in society etc...

Even if Jim Gilliam's life had been saved by marijuana based medicine it does not mean
That it is a healthy for rest of America. Even though Marinol saved his life that doesn’t mean that whole country should be freely using limited version of marijuana. Proponents argue that those who want marijuana they ultimately have it by hook or by crook then why not earn tax dollars on it. However in my counter argument those people who are unaware of this vice will at least be saved from Desire of “trying it out ". However Chris weigant (chrisweigant.com) argues on huffingtonpost that although marijuana based drugs are allowed in 25% of American states

From wikipedia: List of schedule I drugs

This is a list of Schedule I drugs under the Controlled Substances Act for the United States. Required findings for drugs to be placed in this schedule:

1. The drug or other substance has a high potential for abuse.
2. The drug or other substance has no currently accepted medical use in treatment in the United States.
3. There is a lack of accepted safety for use of the drug or other substance under medical supervision.


This is a list of Schedule II drugs under the Controlled Substances Act for the United States. Required findings for drugs to be placed in this schedule:

1. The drug or other substance has a high potential for abuse.
2. The drug or other substance has a currently accepted medical use in treatment in the United States or a currently accepted medical use with severe restrictions.
3. Abuse of the drug or other substances may lead to severe psychological or physical dependence.


Then why it is not schedule II drug and its still schedule I drug, he further argues that since Obama decided to place science in its rightful place then why doesn’t he allow marijuana to become schedule II drug. My argument is why do you need rescheduling your drug under different category what will it symbolize that marijuana is more family friendly. I think marijuana has long history of abuse and just
as meth and other medical drugs are abused by kids from their grandparent's medicine box i foresee a difficult task for the authorities to control already grey area for prescription abuse.....What people are proponent are is the free use of marijuana not the drug based marijuana. So if the US govt is already allowing free use of marijuana based drugs why are people pushing the envelope for legalizing sale of retail marijuana in coffee shop......there are much better to take economy on high then Marijuana







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Second round of outsourcing .... ?

Last time there was a bubble in United states economy it gave birth to a Flat World as Tom Friedman would like to call, so i want to ask a question will we see a second round of outsourcing after economy bottoms up. Recently an article in Time described it as Rebirth of Outsourcing. Whether it will happen or not depends on when and how the economy recoveres itself from the mess. However this time i think that there will be outsouricng in more than one sector like Pharma,Finance,Banking etc, which were considered primarily "cannot be outsourced" U.S. jobs.

China and India are watching these developments very closely, and ready to pounce on every opportunity donated by US. This will force Barack Obama to impose protectionist policies on economy under heavy public outburst,resulting in chaos, however in the President's defence there is no other way than the will of his constituents. So will United States act impulsively or patiently after the crisis is over is worth a bet, but the bet i am going to put money on is the shift of large ammount of jobs to Asia( India is also in Asia) because that is where the market is and that is where the human resource is . I hope the young Americans will realise the necessity of giving themselves extra training skills to procure back these jobs.

America is going through a road less travelled, high recession,high unemployment , large deficits , outsourcing,ponzi schemes,ineffecient people in power, threat from terrorism, and a directionless economy. Nouriel Roubini the great Dr. Doom predicts today in bloomberg.com that value of stocks are still going to fall which leads me to my previously asked question do the banking executives know really how much losses they have made in first place.



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Arms sale wrapped around in girls arms

Aero India 2009 had some serious guests from all over the world however one which caught my attention was Israeli Rafael which posted a Bollowood dance number to sell their missiles and weapon system to india. India's famously grumpy neighbour firstly hated our millitary ties with Israel, but embedding cultural zing would even throw them off their couch





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Wednesday, March 25, 2009

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Why are drug companies hyperventilating

Few weeks back if you noticed pharma companies were in merger takeover talks companies like wyeth & Pfizer , roche & genentech, people were exteremely excited to listen to these drug companies playing capitalism capitalism in times of utter chaos in financial sector. Few anchors of CNBC were pretty excited to see that American credentials of being free fair and capitalist nation exist, as if trying to defend the faltered economy. However there is a genuine reason behind these mergers and

and take overs for example pfizer accordint to a report in zack.com 40% of the pfizer 18 billion dollar revenue generating drugs are going to looose their patents in next 4 years these drugs include some of the famous ones like Caduet, Geodon, Viagra, and Xalatan between now and the end of 2012.Merck, will see 32% revenue of 2009 of its drug getting wiped of it balance sheet which includes medicines like Singular and Cozaar GSK has 4% revenue exposed, J&J has 6% exposed between 2011 and 2012.
Hence these companies are in takeover and merging mood, how can a company afford to tell its customers that sorry our 25% revenues are now 0% in 2012, so its a great time to short these companies, unless of course the merger proves inverse, but definately 2011 and 2012 will be the year pharma companies will have to forsee costcutting and increase in research spending, this would mean increase in outsourcing to 3rd world countries lab tests conducted on Indian subcontinent or Africa so lets gear up for watching collapse or say crack in wall of great pharma industries. But the Generic drug companies are here to make profit from these drugs especially drugs like viagra would definately have lot of takers on it so keep long options for some generic drug manufacturers, those in finance or credit business need to increase their credit riskiness of these companies and downgrade their credit rating unless they generate some break through durg like lipitor....


This is great time for a newbie generic drug manufacturer to approach pfizer merck or any other company to buyout their complete plants and place sales royalty turnkey business model.




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Kalman filter .... linear dynamic filtering

Kalman filter

what is kalman filter ?
Kalman is recursive Linear dynamic filter, based on markov chain perturbed or modelled based on Gaussian noise. The primary applications of kalman filter include Computer vision, Financial Engineering wherever there is involvement of predictive analysis. In practical applications Discerete Kalman filter is applied it works on the basic principle as shown in the figure below[1]

time update <-----------> Measurement update


Time update
i.e.Prediction

* to predict the next state
* to update the probability distribution based on current prediction


Measurement
i.e. correction
* determine vairance of measurement noise
* intialization of noise covariance

A detailed explaination is given in this kalman paper
 

 


for example...
Time update
Predict next possible location of target in a 2D environment, to implement this practical task we first intialize the current pixel location (say A(20,30)) of the target to generate a possible probability distribution, ( generate priori) measurement update Predict next possible position the kalman filter will randomly choose particles from the region surrounding say radius r (say r = 10pixels) which will be the new vairance and evaluate the covariance with respect to possible target feature( i.e. small cut out from the image of the target) can be used. and define the particle within the gaussian boundry which minimizes the error, ending up generating posteriori . go back to time update.

Applications
Predictions of relatively linear dynamic stock prices
Prediction of target in target in Automatic Target tracking video survelliance
Embedded system applications include Vehicle stability, vehicle control , camera stability and control
weather prediction
speech analysis
Radar tracking


References and cool Stuff
-----------------------------
Basic intro to kalman
[1]http://www.cs.unc.edu/~welch/media/pdf/kalman_intro.pdf
Excellent resource of kalaman research papers and implemenntation 
[2]http://www.cs.unc.edu/~welch/kalman/
MATLAB implementation book 
[3]http://www.wiley.com/WileyCDA/WileyTitle/productCd-0470173661.html  
MATLAB TOOLBOX
[4]http://www.cs.ubc.ca/~murphyk/Software/Kalman/kalman.html  
[5]http://www.mathworks.com/matlabcentral/fileexchange/5377  
2D Target Tracking using MATLAB
[6]http://www.mathworks.com/matlabcentral/fileexchange/14243  
[7]http://en.pudn.com/downloads50/sourcecode/math/detail173459_en.html  
Wikipedia page for reference
[8]http://en.wikipedia.org/wiki/Kalman_filter 

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Tuesday, March 24, 2009

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Credit Ratings and Probability of Default

As i was researching for this article, I came across a startling fact about serious involvement of rating agencies and the collapse of our financial system. IT is called as credit rating or credit worthiness of a company, for example moodys has a rating schema as follows Long-term Debt Ratings (maturities of one year or greater)

Investment Grade
Aaa – highest rating, representing minimum credit risk
Aa1, Aa2, Aa3 – high-grade
A1, A2, A3 – upper-medium grade
Baa1, Baa2, Baa3 – medium grade
Speculative Grade
Ba1, Ba2, Ba3 – speculative elements
B1, B2, B3 – subject to high credit risk
Caa1, Caa2, Caa3 – bonds of poor standing
Ca – highly speculative, or near default
C – lowest rating, bonds typically in default, little prospect for
recovery of principal or interest

The credit risk analyst at AIG and other insurance companies who insured these CDO's did it without capital backing and secondly it gave a clean chit to the banks that since the securities were insured "risk" was reduced on their balance sheet. A quant engineer or a Credit Risk Analyst predicts the rate of default or probability of default on the basis of the ratings given by the credit rating agencies like Moody. From 1995-2004 there has been 0% default rates for AAA rating companies or securities, however when AIG insured the bank CDO these mortgage back scurities immediately became AAA rating the rating given to AIG itself, and we know the rest of the story.

Although if based on priori information its difficult to convert the ratings to probabilities of default you can do it using modelling techniques so as to assign AAA rating some kind of default probability and not 0. There are some curve fitting techniques which can model it perfectly, but needs more perfection. I will try to investigate these modelling/curve fitting/regression etc to find out that will assign a decent PD to the rating.

UPDATE : Goldman Sachs is planning to return the govt money

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Monday, March 23, 2009

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Attention !!! Goldman Sachs is out of NEWS

Goldman Sachs (NYSE:GS)is one investment banking firm which is not making noise even as UBS , Bank of America, Merrill Lynch, and favourite whipping child AIG is getting broiled. It seems that these companies have not estimated how much actual damages are, for eg UBS came down last with 18billion dollar write downs..... how many is too much, and then
citigroup CEO Vikram Pandit shooting down an email to employees that gloomy days of loss making quarters are over, but sir, have u taken a breath and realised that although operating profits are higher than normal,you are discounting the fact that your company has a huge disadvantageous federal bailout loan on your head it is as if to say " Profits are kept privately but losses spread socially " . With due respects to the CEO and CFO i think all the American banking companies or Financial companies should go back to the drawing board and figure out once and for all how much losses they have made bring it down to table and take hit just for one time.
This is excellent tactic usually company does, let the bad news be let out when the market is bad, so when Dow is going down what the hell people care if u have consistently written down billions of dollars. That raises to the point where is "Quality Unparalleled knowledged Employee " which was long boasted by American Financial Institutions, which went there instead of becoming Doctors and Engineers. Where are brightest of all minds gone ???? eternal question i cannot understand..... where are the financial whiz kids now what are they doing now to solve the problem

Hence I feel something is cooking in the Goldman Sachs I think they are the ones who are assesing their losses and investigating their asset quality, which makes them one of the first ones to rebound in my opinion amongst the first ones to out shine and come out of the Great Recession of 21st century.

Like many I felt sense of exuberence when i see market rally as today's but this was immediately shot down by my friend who predicts that this is just a false start and calls it nothing more than " Emotional outburst" he says the worst is yet to come with dow shedding few thousand points down to 5000 -6000 range before it bottom's out

Even though we agree and disagree that greed, bonuses,falsification, ponzi scheme, idiotic quant modelling ....lead to the cataclysmic fall of this market i think these three factors will continue to thrive even in the worst of economies, and that is how Capitalism will be shaped.


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Statistics on Computer

Hello all i am compiling a list of statistical analytical software, each of these software have some core expertise of applied statistics, although majority are versatile,WEKA,R are free however Matlab SAS you can buy student versions have fun mining the data and let me know if new stat tools come in market.....Some of my favourites have been Matlab and WEKA excellent data mining and analytical tools...


WEKA
http://www.cs.waikato.ac.nz/ml/weka/
R-Project
http://www.r-project.org/
SPLUS
http://www.insightful.com/products/splus/
SAS
www.SAS.com
MATLAB
www.mathworks.com


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Movie Blood Diamond

Rating ****/5

Amazing direction and cinematography of this movie, the story is about a diamond being found in African continent and amount of blood,money,weapons exchanged during its tumultous journey into our life is captured. This is aamazing cast i beleive leonardo di caprio has found amazing eye to read script, although its a old movie for a review if not watched worth the watch



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Sunday, March 15, 2009

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Roti Kapda Makan & Quant analysis


Roti (food an medicines) Kapda( clothing,toileteries ) and Makan (housing, construction )are three pillars of Indian industrial philosophy of survival and hence the industry around it can never affected even during the darkest of the hours, but in these uncertain days let me add the unpredictable variable to it. How can the  unpredictable variable


affect the growth of industry. The principle of non-linear dynamics in stochastic analysis of a stock market takes into account various factors of uncertainty, some of them failed recently due to lack of addition of failure variable to it or overlooking the failure rate as convservative it might sound its critical . Many Quant analyst forgot to add or forsee this hence i would like to propose a approach in which you can model uncertain eventualities happening at regular intervals or i.e non-linear dynamics taking place at linear time interval. This would add a tremendous boost to formulation of failure analysis of a prediction model. If you are student of stochastic mathematics then you know that prediction models are based on prior information ( probability distribution if u dont have u assume intial values)or 'priori', but what happens when hurricane,credit crisis or dot com bubble happens how can we predict and detect unnatural, hyper-active activity in stock market and develop our model, there are two theories i have had an eye on, first is the Fuzzy Dynamic Logic proposed by AFRL based scientist Dr. Daniel Perlovsky, his model is highly flexible and state of the art prediction models, and second one is the Rao-Blackwell theory.

In order to understand the first theory i would suggest use of the fuzzy dynamic logic text book by Dr. Perlovsky as it might be beyond scope of my blog to explain in one or two para. The second one is Rao-Blackwell filter, this theory proposes use of linear and non-linear dynamics parallel to various variables. For example probability of default can be added into the non-linear prediction analysis however growth of company can be a linear model. I don't know what variables financial engineers use but one thing i know that they use this science without understanding the philosophy of it . Using these techniques we can involve the uncertainty variable such as natural calamity, credit rating, leverage into a tighter leash of predictability, thus increasing "chances" of model to predict failure rate.

Before i finish my blog i reiterate that regression and curve fitting can be helpful if the ocurrance of the event is predictable 'priori' how ever events such as natural disasters and other failure scenarios have never before covered adding completely flexible dynamic to it and even if taken into account it is biased hence increasing the risk of failure.


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Friday, March 6, 2009

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Cricket Under The Clouds Of Terrorism

Few days back Srilankan cricket team visiting Pakistan's Lahore's Gaddaffi stadium came under heavy gunfire attack from 12 unidentified gunmen with Ak-47s , hand grenades and rocket launchers, say luck or god's grace  there was no fatality, although there were few injuries but were taken care off. This incident followed a huge tsunami of criticism against security provided by Pakistani security agencies. The English and Australian match offcials gave a startling  event description sending the Pakistan Cricket Board and its security agencies in to a tailspin. Many like me have a opinion that Srilanka in spite of warning going to prove a 'brave' point went to Pak was unnecessary in first place, and secondly the security was the culprit . Having said many of my friends disagree and consider a conflicting view point. Kartikeya Date in his blog writes :

I haven't read a single angry reaction by any Sri Lankan cricketer to what happened in Lahore. Chris Broad and Simon Taufel on the other hand, have gone to town about how they were "left alone", even though people died trying to protect them ..."

The comments on his posts are really interesting and contradictory, however i respect his  opinion but would politely like to differ. Let me remind all of you that Kartikeya is  one of the leading cricket blogger in world, his credentials include his own cricket rating which i think is very balanced, and his unparalleled commentary on cricketing events taking place daily. Please visit and read his blog and do provide your point of view on the Pakistan cricket issue. 








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Thursday, March 5, 2009

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Citbank to its lowest point

As I write, Huffingtonpost is already displaying list of things which are cheaper then a Citibank share, this news is very very depressing to all of us as the pioneers of capitalism have come to such a cataclysmic grinding halt. Who would have imagined pillars of capitalism Bear Stearn's Lehman Bros. Merill Lynch would be victim of sheer greed. I am pretty sure that Vikram Pandit and his gang is up late nights trying to save citi from its complete annihilation,

Having said that all is not well in the heartland of economy,  people are depressed due to lack of jobs, executives forced to janitorial jobs and food banks flooded with people driving in their SUV's shows clearly how bad times are. There is a increasing number of parents who are bringing their kids back to live in  their basement, savings have increased to average rate of 5% highest since 1995 bankruptcy filing up 31%. However there is a silver lining....with news coming in today that huge reduction in the applicants for jobless benefits by up to 30,000 less, Walmart having surge in sale of 5.1 % regulators reducing tough regulations to help money flow in the inter banking loan...these indicators make may people on CNBC predict that there might be 100% jump in the share value of some financial institutions well as much as skeptical I am, sincerely wish it becomes true.

With such pessimistic numbers coming out in just one day .... I leave you with a dose of comedy by Jon Stewart who sums up his frustration on Rick Santelli and CNBC in one word F**K you..here is the video.

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Wednesday, March 4, 2009

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Halt in Global Trade and Unemployment

I was reading an article on H1-B visa oversight by United State government, this triggered an instant thought in my mind what would US be like...... crippled or strengthened by stopping the the whole H1-B visa regime, what would happen if US Senators  become successful in passing resolution to reduce or completely remove the H1B regime , luckily I have had a chance to not only observe the outsourcee side point of view but also studied the outsourcer's arguments too. 

Companies like Infosys TCS WIPRO are one of the most visible landmarks of the great Indian outsourcing saga, their business model is simple to deliver an end-to-end product to a global or local customer at a competitive market rate, this end-to-end product involves various steps,

1)project bidding based on  man hour rate calculations 
2)taking the project offshore and implementation 
3)second round of project analysis and
4) final deployment. 

I have may have missed a few but overall this is the basic skeleton of the business model .Now comes the question of H1-B ...where does it fit ?, not many people understand the importance of deployment  process which happens on site i.e. United States of America , this involves several engineers coming from India to United States on H1B visa simply because it happens that there is no other visa available for such a process, of course some may argue that there is a business B1/B2 visa but majority of these projects extend more than 3 months of deployment which is usual durations of such visas. So the outsourcer's argument holds. This is what few Senators in US should be educated on. No Sir.... Indians are not putting your people out of jobs rather making   " your " companies profitable

Today the notion of a truly American company has cease to exist, the rate at which the U.S. financial market exposed it tentacles to the global markets like Eastern Europe, Middle East and Asia, that it virtually bankrupted countries like Iceland completely where debts are $330,000  per  each man,woman and child. Companies like Boeing,CAT,Pepsi co,Coca Cola,Adidas Nike , McDonald's today are beefing their balance sheets merely by the increased profits in China,India and rest of East Asia.....question is .... are they really American companies any more ?, Chrysler and Ford, GM may close or fire people in Detroit but ask  about their sales in Asia and you'll have a rosy faces,   just ask Pepsi's CEO Indra Nooyi  who constantly visits the region to nurse the growing market. I am pretty sure Indian and Chinese are very net savvy activists who will argue that if H1-B's are cutoff due to the protectionist policies then so should Pepsi and Coke should be made to pay more taxes, resulting in a global trade tossed in air ,a complete confusion in global trade causing severe losses on both sides of the oceans, the U.S. 401 k's will shrink due to lesser bottom lines of their companies  and Ind/Chin will lose on standard and quality of living, there will be a transfer of huge trade from United States to Europe. This based on the fact that several European leaders rationally and rightfully disagree on Iron curtain protectionism last week. So everyone will go back to the 1980's, especially  in United States in terms where the stock values would fall, resulting in utter chaos and anarchy..... in Global Trade...

My suggestion is have PATIENCE till markets recover, as i write Dow Jones have risen today, by how much doesn't matter in this economy, but it has .............. 

Comments suggestions and corrections typo and colliding point of view are welcome..... 








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