Category Archives: Work and Life

My thoughts on corporate life, work-life balance or the lack thereof and so on.

Books, Corporate Life, Quantitative Finance

Agendas

In the dog-eat-dog corporate jungle, there always is a hidden agenda. Always. In writing this series of posts, I have a hidden agenda as well. It is to promote my book – Principles of Quantitative Development. Everything I say here is described in much more detail in the book. And, the book goes into topics that I do not plan to touch upon here – like a review of computing principles for quants, quant developers and people involved in trading and trade lifecycle management. Finally, the book comes with a mini trading platform illustrating many of the principles described.

Hidden Agendas

If these compelling reasons have failed to convince you to fork out fifty or so dollars to order the book from Amazon, consider your own hidden agenda. Why are you reading these posts? You are probably considering a lucrative career as a quantitative professional in a bank. Or, as a junior quant professional, you would like to know more about how the whole thing works. And Principles of Quantitative Development may help you in that quest.

To get back to my point, there always is a hidden agenda, and the associated petty politics. If you cannot play the political game, a bank is not the right place for you. That may sound like bad news to you. Let me give you the good news. Almost everybody is better at politics that they think they are, And almost everybody in the bank, regardless of how high they are, goes about feeling that they are not doing as well as they should, because they don’t play the political game . So don’t worry too much about it even if you fee that you are not good at it — you are probably better than you think you are.

My real point is just that you should be aware of hidden agendas — in day-to-day interactions, corporate memos and announcements etc. For instance, let’s suppose you get a congratulatory email from your big boss about a project you are working on, saying you did an excellent job, it’s going to save or make so many millions of dollars, and everybody is mighty pleased about it. You may also feel mighty pleased about the message, and start thinking of that big break, promotion, bonus, corner office, expense account etc. But it may turn out to be a precursor to letting you go — after all, you did such a wonderful job, and your work here is done!

Topics

Regarding the agenda of these posts, this series of posts will cover the items listed in the picture above. In the next post, we will go through what we call a Trading Platform because that is the arena of Quantitative Development. The next few posts will be on the structure of an investment bank, from the perspective of a quant and a quantitative developer. The structure, in some sense, is the static topology. How trades flow through it will be the subsequent few posts, which will be the dynamic evolution of a trade. As ia trade moves from one department to another in a bank, the players involved use their own work paradigms and perspectives to view and deal with it. It is important to understand these perspectives so that a quant developer can understand and appreciate the myriads of requirements thrown at him. After all, his product — the trading platform — mediates everything.

In order to give you more of a flavor for the workings of a bank, the whole series of posts will be peppered with some little tidbits of information that may read like newspaper columns — after all, I started my writing career as a columnist. In my book, these tidbits are called the BIG PICTURE.

Books, Corporate Life, Quantitative Finance

Off the Beaten Track

Recently, I gave an invited lecture to the Master of Financial Engineering students at the Nanyang Technological University in Singapore. I thought I would make a series of blog posts out of my talk with the belief that there is a wider audience out there who would like to know how an investment bank (or, more precisely, the structured and exotic products trading side of a bank) works.

Principles of Quantitative Development

First things first. I work for Standard Chartered Bank, Singapore. But the views expressed here in the talk and in this series of posts are my own. They are not influenced by my employer’s policies or client relationships. They are not meant to be any kind of investment or career advice. This disclaimer is a legal necessity before I can say anything related to banking and finance.

Off the Beaten Track

Since the talk was originally given to MFE students, who are expected to be pretty well-versed in the mathematics of quantitative finance, and possibly of computing as well, I tried to tell you something different. In any case, all the mathematics and computing stuff is something you can pick up from any number of standard text books. The stuff I’m about to share with you is something you will learn from only a few books, or by working in a bank for a while. That brings me to my hidden agenda. (Well, not so-hidden after this introduction.) And to the first moral of this lecture — there always is a hidden agenda in the corporate jungle. I will have more to say about it in the next post.

Since this series of posts is not quite on quantitative finance, nor on computing, it is a bit off the beaten track. Hope you enjoy it. In any case, you will develop and appreciation for the “Big Picture”. A few years ago, I published a well received article in the Wilmott Magazine on the same theme, and the positive feedback I received from it was the inspiration to write my book.

In this talk, and in my book, I lay out the foundations of Quantitative Development. Quantitative Developers (who tend to be computer science professionals) are different from Quants (who tend to be mathematicians). Quants tend to develop pricing models or other mathematical tools for the rest of the banks to use, and make them available in the form of prototype programs, or the so-called quant libraries. Quantitative developers make them available in existing, familiar systems (“productionize” them, to use the horrible jargon) so that the rainmakers of the bank can bring in profits. In that sense, their role in the bank is sandwiched between the model quants and the traders, from a functional perspective. If you don’t like that perspective, and would like to have a more abstract, mathematical sort of view, you can think of quantitative development as being in between pricing models and systems (which we will call Trading Platforms very soon). Or from a corporate hierarchy perspective, the job of quantitative developers falls in between the front office and the information technology division, so much so that they can actually be integrated with either one of them.

Life and Death, Philosophy, Work and Life

Home No More

I have been called a lot of unflattering things in my life. One of the earlier ones of that series was that I was hard-hearted, which I countered by pointing out that I was perhaps harder on myself than anybody else. Thankfully, my accuser concurred. One of the recent epithets in the same vein is that I’m cold and calculated, and I use my head to think rather than my heart;  I believe it is a fair assessment. Then again, using my head is the only way I know how to think (which, of course, is exactly the sort of cynical comments that earned me the said assessment.)

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Work and Life

Eye Catcher

Long time ago, my teenage gang saw a pretty girl whom we called the Eye Catcher. One of my friends in the gang insists that he came up with the name, although I distinctly remember that it was I who first used it. I remember because it was from the last page of India Today of the time, which had a column titled “Eye Catchers.” But my friend has always been more articulate than me, and it is quite possible that he coined the catchy name without any help from India Today.

Time has flown, and today has become yesterday. During the years spanning that age of innocence and now, whenever our gang met up (once a year or so in the beginning, once a decade of late), the Eye Catcher was a topic that always came up. And once, one of us wondered if we would talk about her if we met at the age of fifty, which was incomprehensibly far away then. (Again, I think I was the one who came up with it; may be I like to take credit for every witty thing that happened around me.)

Now with the distant fifty just around the corner, I wonder. Was it the prism of adolescence that amplified her beauty, or was she really that eye-catching? Now, of course, the ravages of time would have surely dulled any beauty she may have possessed, and made cynics of the beholders prompting them to consider prisms of adolescence and ravages of time. I think I prefer not to know the answer. Often the blurry pictures with fading colors are more beautiful than the garish reality in high definition.

It is similar to the scratchy Malayalam songs I listen to in my car. My English-speaking family laughs at me whenever I do. To them, the lyrics don’t make sense, the beat is silly, and the sweet melody of Yesudas is almost gross, like cold pancakes swimming in stale syrup. I don’t blame them. Even to me, it is not just the words and the sounds that bind my heart to the songs; it is the fading colors of the past. It is the faces and scenes that the songs bring to mind, like the smell of June rain, the orange hue of the muddy potholes, and the tall coconut trees against blue skies and white cumulus, gently swaying their heads in assent to whatever adventures the day had in store. And the faces of the simple souls who played out their part on that stage of life and bowed out. Memories of a paradise lost.

But those players played their part well enough to imprint themselves on the songs for good. And with the twilights peeping over the horizon now, I often wonder — what am I going to leave behind? What are you?

Science, Topical, Work and Life

Are You an Introvert?

Here is a simple 20-question quiz to see if you are an introvert or an extrovert. Introverts tend to agree with most of these statements. So if you get a score of close to 100%, you are a confirmed introvert, which is not a bad thing. You are likely to be a quiet, contemplative type with strong family ties and a generally balanced outlook in life. On the other hand, if you get close to 0%, congratulations, I see stock options in your future. And you are a party animal and believe that life is supposed to be wall-to-wall fun, which it will be for you. I’m not too sure of those in the middle though.

[ezquiz]
I prefer one-on-one conversations to group activities.
I often prefer to express myself in writing.
I enjoy solitude.
I seem to care about wealth, fame, and status less than my peers.
I dislike small talk, but I enjoy talking in-depth about topics that matter to me.
People tell me that I’m a good listener.
I’m not a big risk-taker.
I enjoy work that allows me to “dive in” with few interruptions.
I like to celebrate birthdays on a small scale, with only one or two close friends or family members.
People describe me as “soft-spoken” or “mellow.”
I prefer not to show or discuss my work with others until it’s finished.
I dislike conflict.
I do my best work on my own.
I tend to think before I speak.
I feel drained after being out and about, even if I’ve enjoyed myself.
I often let calls go through to voice-mail.
If I had to choose, I’d prefer a weekend with absolutely nothing to do to one with too many things scheduled.
I don’t enjoy multi-tasking.
I can concentrate easily.
In classroom situations, I prefer lectures to seminars.
title: Are you an introvert?
[/ezquiz]

These questions are from Susan Cain’s best seller, Quiet: The Power of Introverts in a World That Can’t Stop Talking, and a prelude to my review of it. The questions are copyrighted to Cain, and are reproduced here with the understanding that it constitutes “fair use.” If you have any concerns about it, feel free to contact me.

Books, Corporate Life, Work and Life

Quiet Me

I’m an introvert. In today’s world where articulation is often mistaken for accomplishment, introversion is a bit of a baggage. But I have no complaints about my baggage, for I have been more successful than I expected or wanted to be. That’s one good thing about being an introvert — his ambition is aways superseded by the need for reflection and introspection. To an introvert, the definition of success doesn’t necessarily include popular adulation or financial rewards, but lies in the pleasure of finding things out and of dreaming up and carrying out whatever it is that he wants to do. Well, there may be a disingenuous hint of the proverbial sour grapes in that assertion, and I will get back to it later in this post.

The reason for writing up this post is that I’m about to read this book that a friend of mine recommended — “Quiet: The Power of Introverts in a World That Can’t Stop Talking” by Susan Cain. I wanted to pen down an idea I had in mind because I’m pretty sure that idea will change after I read the book. The idea calls for a slightly windy introduction, which is the only kind of introduction I like (when I make it, that is).

Like most things in life, extroversion, if we could quantify it, is likely to make a bell-curve distribution. So would IQ or other measures of academic intelligence. Or kinesthetic intelligence, for that matter. Those lucky enough to be near the top end of any of these distributions are likely to be successful, unless they mistake their favoured curve to be something else. I mean, just because you are pretty smart academically doesn’t mean that you can play a good game of tennis. Similarly, your position on the introvert bell curve has no bearing on your other abilities. Whether you are an introvert or an extrovert, you will be badly and equally beaten if you try to play Federer — a fact perhaps more obvious to introverts than extroverts. Therein lies the rub. Extroverts enjoy a level of social acceptance that makes them feel as though they can succeed in anything, just like a typical MBA feels that they can manage anything despite a total lack of domain knowledge. That misplaced confidence, when combined with a loud assertiveness hallmark of extroversion, may translate into a success and make for a self fulfilling prophesy.

That is the state of affairs. I don’t want to rant against it although I don’t like it. And I wouldn’t, because I estimate that I would fall about one sigma below the mean on the extroversion curve. I think of it this way: say you go and join a local tennis club. The players are all better than you; they all have better kinesthetic intelligence than you can muster. Do you sit around complaining that the game or the club is unfair? No. What you would have to do is to find another club or a bunch of friends more at your level, or find another game. The situation is similar in the case of extroversion. Extroverts are, by definition, social and gregarious people. They like society. Society is their club. And society likes them back because it is a collection of extroverts. So there is social acceptance for extroversion. This is a self-fueling positive feedback cycle.

So, if you are introvert, and you are seeking societal approval or other associated glories, you are playing a wrong game. I guess Susan Cain will make the rest of it pretty clear. And I will get back to this topic after I finish the book. I just wanted to pen down my thoughts on the obvious feature of the society that it is social in nature (duh!), and therefore extrovert-friendly. I think this obviousness is lost on some of us introverts who cry foul at the status quo.

To get back to the suspicion of sour-grapishness, I know that I also would like to have some level of social approbation. Otherwise I wouldn’t want to write up these thoughts and publish it, hoping that my friends would hit the “Like” button, would I? This is perhaps understandable — I’m not at the rock bottom of the extroversion distribution, and I do have some extrovert urges. I’m only about a sigma or so below the mean, (and, as a compensation, perhaps a couple of sigmas above the mean in the academic scale.)

Bernard ShawMy wife, on the other hand, is a couple of sigmas above the mean on the extroversion department, and, not surprisingly, a very successful business woman. I always felt that it would be swell if our kids inherited my position on the academic curve, and her position in the people-skills curve. But it could have backfired, as the exchange between George Bernard Shaw and a beautiful actress illustrates. As the story goes, Mrs Campbell (for whom Shaw wrote the part of Eliza Dolittle in Pygmalion) suggested to him that they should have a child so that it would inherit his brains and her beauty to which Shaw replied: “My dear lady, have you considered that it might inherit my beauty and your brains?”

Corporate Life, Philosophy, Work and Life

Was Yours, Now Mine

I feel I have lived through an era of great changes. The pace of change can seem accelerated if you travel or emigrate because various geographical regions act as different slices in time. I have had the benefit (or the misfortune) of multiple emigrations. With that, coupled with my advancing years, I feel as though I have seen a lot. Most of what I have seen fills me with a foreboding of gloom and doom. Perhaps it is merely the pessimism characteristic of an unduly cynical mind, or perhaps it is the true decay of our global ethical standards.

On the positive side, the pace of change is indeed fast and furious. This is the kind of change you like — you know, vinyl to spool tape to cassette to MP3 to iPod kind. Or the land-line to satellite to cell to Skype to Twitter kind. However, along with this positive and obvious track of changes, there is an insidiously slow and troubling track creeping up on us. It is n this context that I want to reuse the over-used allegory of the frog-in-a-pot.

If you put a frog in hot water, it will jump out of the pot and save its skin. But if you place the frog in cold water, and slowly heat up the pot, it won’t feel the change and boil to death. The slowness of change is deadly. So let me be the frog with delusions of grandeur; allow me to highlight the unhealthy changes accumulating around us. You see, along with the technological miracle that we are living through, there is an economic or financial nightmare that is spreading its tentacles over all aspects of our social and political existence, transfixing everything in place in its vice-like grip. Slowly. Very slowly. Because of this invisible hold on us, with every iPod we buy, we (the middle-class) take a couple of dollars from the very poor and give it to the very rich. We don’t see it that way because some of us make a few cents in the process. The Apple store franchisee makes a few cents, the employee-of-the-month gets a token raise, an apple developer may enjoy a nice vacation, or a senior executive might get a new jet, the economy of the country goes up a notch, NASDAQ (and so everybody’s pension) goes up a tiny fraction — all are happy, right?

Well, there is this little question of the packaging material that may have killed part of a tree somewhere, in Brazil, perhaps, where people don’t know that the trees belong to them. May be a little bit of pollution escaped into the air or a river in China where the locals haven’t realized that these resources are their heirlooms. May be some moderately toxic junk ended up in a landfill in Africa somewhere where they haven’t quite grasped the concept of land ownership. It may have cost a developer in Bangalore or a call-center girl in Manilla an hour or two more than it should because they don’t know that their time is a resource bought low and sold high in markets they don’t see or know of. It is from these distant places and phantom people that we pick up a couple of dollars and pass on to the equally distant corporate coffers and stock markets. We take what is not ours from the unknown owners to feed the avarice of unseen players. And, like Milo Minderbinder would say, everybody has a share. This is the modern capitalism of the corporate era, where we have all become tiny cogs in a giant wheel inexorably rolling on to nowhere in particular, but obliterating much in the process.

The problem with capitalism as an economic ideology is that it is pretty much unopposed now. Only through a conflict of ideology can a balance of some sort emerge. Every conflict, by definition, requires adversaries, at least two of them. And so does an ideological struggle. The struggle is between capitalism and communism (or socialism, I’m not sure of the difference). The former says we should lay off the markets and let greed and selfishness run its course. Well, if you don’t like the sound of “greed and selfishness,” try “ambition and drive.” Associate it with words like freedom and democracy, and this “Laissez-Faire” ideology a la Adam Smith is a winning formula.

Standing in the other corner is the opposing ideology, which says we should control the flow of money and resources, and spread happiness. Unfortunately this ideology got associated with nasty words like totalitarianism, bureaucracy, mass murder, killing fields of Cambodia etc. Little wonder that it lost, save for this economic powerhouse called China. But the victory of China is no consolation for the socialist camp because China did it by redefining socialism or communism to essentially mean capitalism. So the victory of capitalism is, to all intents and purposes, a slam dunk. To the victors belong to spoils of history. And so, the socio-politico-economic ideology of capitalism enjoys the mellifluous association of nice words like liberty, equal opportunity, democracy etc., while communism is a failed experiment relegated to the “also-ran” category of ideologies such as fascism, Nazism and other evil stuff. So the battle between capitalism and the occupy-wall-street movements is pathetically asymmetric.

A battle between two well-matched opponents is nice to watch; say, a match between Djokovic and Federer. On the other hand, a “match” between Federer and me would be exciting only to me — if that. If you are into violent entertainment, a boxing match between two heavy weights would be something interesting to watch. but a brawny boxer beating the living daylights out of a two-year-old would only fill you with revolt and disgust (which is similar to the feeling I had during the ’91 Gulf War).

Don’t worry, I’m not about to defend or try to revive socialism on this blog, because I don’t think a centrally controlled economy works either. What worries me is the fact that capitalism does not have a worthy adversary now. Shouldn’t it worry you as well? Corporate capitalism is beating the living daylights out of everything that one might call decent and human. Should we ignore and learn to love our disgust just because we got a share?

Photo by Byzantine_K cc

Corporate Life, Environment, Work and Life

Troubled Conscience

At times I suffer from a troubled conscience. I get this sinking feeling that I am part of a large problem rather than a solution to it. Working for a modern corporate empire, a bank to boot, it is hard to avoid this feeling — if you feel anything at all.

Then I found a straw to grasp at. It was an observation made by Mohamed El-Erian, CEO of Pimco, on Hardtalk with Stephen Sackur. In response to a direct question, he said that the “Occupy Wall Street” guys had a point. Old Stevie was not going to miss a trick like that. He pounced, “Are you, you the head of a hedge fund managing over a trillion dollars, the epitome of modern capitalism, admitting that the system is flawed? Are you going to stop what you are doing?” (Of course, I’m paraphrasing. He probably asked it better.)

I loved the intelligent response that Mr. El-Erian gave. You see, you don’t get to the top of a corporate empire with sub-par intelligence, much as we techies would like to believe otherwise. He said (paraphrasing again), “You asked me about what should happen, the system as it should be. We work with what is likely to happen. In an ideal world, the two should converge. Our job is to make use of what is likely to happen and make profit for our clients. It is the job of policy makers to ensure that what is likely to happen is close to what should happen.” This line of thought was the straw that I was looking for, something that I felt would assuage my troubled conscience.

Right now, there is a large gulf between what should happen and what is likely to happen. What should happen is prosperity for all and peace and happiness on earth. What is likely to happen is obscene prosperity for a select few and misery for the rest. Yet, by our skewed economic indicators (like stock indices and GDPs), we are still doing well. The party is still on, they seem to indicate. Now is not the time to worry about the mess we are creating, and about the underpaid migrant workers who will have to clean it up. Now is the time to eat, drink and be merry, for tomorrow is not ours. It’s theirs, hopefully.

What is interesting and really smart about Mr. El-Erian’s observation is how neatly he cleaved the responsibility into two parts — his job which is to make use of the status quo, and somebody else’s job, which is to improve it. Thinking a bit more about it, and recalling the opening  scene of every one of those Mahabharata episodes where Krishna says, “In a battle between the good and the evil, those who stand on the side lines are just as guilty as the evil,” I wonder whether this observation on the ‘way things are,’ for which I shouldn’t count myself responsible, is good enough a cure for my troubled conscience. By the way, President Bush totally and permanently ruined this Krishna statement for me, when he said, “You are either with us or against us.” On the plus side, thinking about Bush does soothe this guilt-laden conscience of mine to some degree. After all, I could have been worse. A lot worse…

Humor, Life and Death, Work and Life

Ridiculous, Annoying and Embarrassing

Now it is official — we become embarrassing, ridiculous and annoying when our first-born turns thirteen. The best we can hope to do, evidently, is to negotiate a better deal. If we can get our thirteen year old to drop one of the three unflattering epithets, we should count ourselves lucky. We can try, “I may embarrass you a bit, but I do not annoy you and I am certainly not ridiculous!” This apparently was the deal this friend of mine made with his daughter. Now he has to drop her a block away from her school (so that her friends don’t have to see him, duh!), but he smiles the smile of a man who knows he is neither annoying nor ridiculous.

I did a bit worse, I think. “You are not that annoying; you are not always ridiculous and you are not totally embarrassing. Well, not always,” was the best I could get my daughter to concede, giving me a 50% pass grade. My wife fared even worse though. “Oh, she is SOOO ridiculous and always annoys me. Drives me nuts!” making it a miserable 33% fail grade for her. To be fair though, I have to admit that she wasn’t around when I administered the test; her presence may have improved her performance quite a bit.

But seriously, why do our children lose their unquestioning faith in our infallibility the moment they are old enough to think for themselves? I don’t remember such a drastic change in my attitude toward my parents when I turned thirteen. It is not as though I am more fallible than my parents. Well, may be I am, but I don’t think the teenager’s reevaluation of her stance is a commentary on my parenting skills. May be in the current social system of nuclear families, we pay too much attention to our little ones. We see little images of ourselves in them and try to make them as perfect as we possibly can. Perhaps all this well-meaning attention sometimes smothers them so much that they have to rebel at some stage, and point out how ridiculously annoying and embarrassing  our efforts are.

May be my theory doesn’t hold much water — after all, this teenage phase change vis-a-vis parents is a universal phenomenon. And I am sure the degree of nuclear isolation of families and the level of freedom accorded to the kids are not universal. Perhaps all we can do is to tune our own attitude toward the teenagers’ attitude change. Hey, I can laugh with my kids at my ridiculous embarrassments. But I do wish I had been a bit less annoying though…

Corporate Life, French, Humor

Speak Your Language

The French are famous for their fierce attachment to their language. I got a taste of this attachment long time ago when I was in France. I had been there for a couple of years, and my French skills were passable. I was working as a research engineer for CNRS, a coveted “fonctionnaire” position, and was assigned to this lab called CPPM next to the insanely beautiful callanques on the Mediterranean. Then this new colleague of ours joined CPPM, from Imperial College. He was Greek, and, being new to France, had very little French in him. I took this as a god-given opportunity to show off my French connection and decided to take him under my wing.

One of the first things he wanted to do was to buy a car. I suggested a used Peugeot 307, which I thought was a swanky car. But this guy, being a EU scholar, was a lot richer than I had imagined. He decided to buy a brand-new Renault Megane. So I took him to one of the dealers in Marseille (on Blvd Michelet, if memory serves). The salesman, a natty little French dude with ingratiating manners, welcomed us eagerly. The Greek friend of mine spoke to me in English, and I did my best to convey the gist to the French dude. The whole transaction probably took about 15 minutes or so, and the Greek friend decided buy the car. After the deal was all done, and as we were about to leave, the Frenchman says, “So, where are you guys from, and how come you speak in English?” in flawless English. Well, if not flawless, much more serviceable than my French was at that point. We chatted for a few minutes in English, and I asked him why he didn’t let it on that he spoke English. It could’ve save me a world of bother. He said it was best to do business in French. For him, certainly, I thought to myself.

Thinking about it a bit more, I realized that it is always best to do business in whatever language that you are most comfortable in, especially if the nature of the transaction is confrontational. Otherwise, you are yielding an undue advantage to your adversary. So, next time you are in Paris, and that cabbie wants 45 euros for a trip when the meter reads 25, switch to English and berrate him before settling the issue. It softens the target, at the very least.