Life and Death, Work and Life

Giving What We Can

I found this charity initiative that I believe will make a real difference. It is called “Giving What We Can.” In fact, it is not a charity website, but a portal with a few recommended organizations listed — those that are efficient and focus on the extremely poor. Sure, it tries to lay a guilt trip on you, but it really does give you hard-to-find information.

While going through it, I suddenly realized what was bothering me about the “normal” charity activities. Most of these activities operate locally, not globally, and therefore end up helping the slightly worse-off. In a world where the richest 20% command 80% of all the income, local charity only means the top 5% giving to the next 10% — the extremely wealthy helping out the very wealthy. This kind of charity never reaches the really poor, who desperately need help.

Living in this highly skewed world, it is hard to see how rich we really are, because we always benchmark ourselves against our friends and neighbors. For instance, as a “poor” graduate student in the early nineties, I used to make about $12,000 a year. It turns out that I was still better off than 90% of the world’s population. It is not surprising — my stipend was more than the official salary of the President of India (Rs.10,000 a month) at that time!

Coming from a rather poor place in India, I know what real poverty is. It has always been too close to home. I have seen a primary school classmate of mine drop out to become a child laborer carrying mud. And heard stories of starving cousins. To me, poverty is not a hypothetical condition allegedly taking place in some dim distant land, but a grim reality that I happened to escape thanks to a few lucky breaks.

So the local charity drives bother me a bit. When I see those school children with their tin cans and round stickers, I feel uncomfortable, not because I cannot spare a dollar or two, but because I know it doesn’t really help anything — except perhaps the teacher’s KPIs. And the twenty-year-olds with their laminated name badges and certificates of authenticity also make me uncomfortable because, certifiable bean-counter that I am, I wonder how much it costs to hire and outfit them. And who benefits?

Similar bean-counting questions haunted me the last time I sponsored a table at a local charity dinner at $200 a plate — $100 to the hotel, $50 to the entertainers, and so on. Who is the real beneficiary? Some of us turn to local churches and spiritual organizations to share and help others. But I cannot but suspect that it only helps the middlemen, not the extremely poor we mean to direct our aid to.

These nagging doubts made me limit my charity activities to my own meager personal drives — two dollars to the hawker center cleaning aunties and uncles, gas pump attendants, those old folks selling three tissue packs a dollar, and the Susannah singer. And handsome tips after the rare taxi rides. And generous donations to that old gentleman who prowls CBD and strikes up a conversation with, “Excuse me sir, but do you speak English?” You know, the next time he asks me that, I’m going to say, “No, I don’t. But here’s your five bucks anyway!”

But seriously. Take a look at this website. I think you will find it worth your time.

Corporate Life, Life and Death, Philosophy

Midlife Crisis

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In one of my recent posts, an astute friend of mine detected a tinge of midlife crisis. He was right, of course. At some point, typically around midlife, a lot of us find it boring. The whole thing. How could it not be boring? We repeat the same mundane things over and over at all levels. True, at times we manage to convince ourselves that the mundane things are not mundane, but important, and overlay a higher purpose over our existence. Faith helps. So do human bondages. But, no matter how we look at it, we are all pushing our own personal rocks to a mountaintop, only to to see it roll down at the end of the day — knowing that it invariably will. Our own individual Sisyphuses, cursed with the ultimate futility and absurdity of it all. And, as if to top it off, our knowledge of it!

Why did Camus say we went through the Sisyphus life? Ah, yes, because we got into the habit of living before acquiring the faculty of thinking. By midlife, perhaps, our thinking catches up with our innate existential urges, and manifests itself as a crisis. Most of us survive it, and as Camus himself pointed out, Sisyphus was probably a happy man, despite having to eternally push the rock up the slope. So let’s exercise our thinking faculty assuming it is not too dangerous.

Most of us have a daily life that is some variation of the terse French description — metro, boulot, dodo. We commute to work, make some money for ourselves (and more for somebody else), eat the same lunch, sit through the same meetings, rush back home, watch TV and hit the sack. Throw in a gym session and an overseas trip once in a while, and that’s about it. This is the boring not merely because it really is, but also because this is what everybody does!

Imagine that — countless millions of us, born somewhere at some point in time, working hard to acquire some money, or knowledge, or fame, or glory, or love — any one of the thousands of variations of Sisyphus’s rock — only to see it all tumble down to nothingness an another point in time. If this isn’t absurd, what is?

If I were to leave this post at this point, I can see my readers looking for the “Unsubscribe” button en masse. To do anything useful with this depressing idea of futile rock-pushing rat-race, we need to see beyond it. Or have faith, if we can — that there is a purpose, and a justification for everything, and that we are not meant to know this elusive purpose.

Since you are reading this blog, you probably don’t subscribe to the faith school. Let’s then look for the answer elsewhere. With your permission I will start with something Japanese. Admittedly, my exposure to the Japanese culture comes from Samurai movies and a couple of short trips to Japan, but lack of expertise has never stopped me from expressing my views on a subject. Why do you think the Japanese take such elaborate care and pride in something as silly as pouring tea?

Well, I think they are saying something much deeper. It is not that pouring tea is important. The point is nothing is important. Everything is just another manifestation of the Sisyphus rock. When nothing is important, nothing is unimportant either. Now, that is something profound. Pouring tea is no less (or more) important than writing books on quantitative finance, or listening to that old man attempting the Susannah song on his mouth-organ on Market Street. When you know that all rocks will come tumbling down just as soon as you reach the pinnacle of your existence, it doesn’t matter what rock you carry with you to the top. As long as you carry it well. And happily.

So I try to write this blog post as well as I possibly can.

Philosophy, Physics

Ghost of Gravity

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It has been a while since my last post. I was reading Zen and the Art of Motorcycle Maintenance again just now, and came to the part where Pirsig compares scientific beliefs and superstitions. I thought I would paraphrase it and share it with my readers. But it is perhaps best to borrow his own words: “The laws of physics and of logic — the number system — the principle of algebraic substitution. These are ghosts. We just believe in them so thoroughly they seem real. For example, it seems completely natural to presume that gravitation and the law of gravitation existed before Isaac Newton. It would sound nutty to think that until the seventeenth century there was no gravity. So when did this law start? Has it always existed? What I’m driving at is the notion that before the beginning of the earth, before the sun and the stars were formed, before the primal generation of anything, the law of gravity existed. Sitting there, having no mass of its own, no energy of its own, not in anyone’s mind because there wasn’t anyone, not in space because there was no space either, not anywhere…this law of gravity still existed? If that law of gravity existed, I honestly don’t know what a thing has to do to be nonexistent. It seems to me that law of gravity has passed every test of nonexistence there is. You cannot think of a single attribute of nonexistence that that law of gravity didn’t have. Or a single scientific attribute of existence it did have. And yet it is still ‘common sense’ to believe that it existed.

“Well, I predict that if you think about it long enough you will find yourself going round and round and round and round until you finally reach only one possible, rational, intelligent conclusion. The law of gravity and gravity itself did not exist before Isaac Newton. No other conclusion makes sense. And what that means is that that law of gravity exists nowhere except in people’s heads! It’s a ghost! We are all of us very arrogant and conceited about running down other people’s ghosts but just as ignorant and barbaric and superstitious about our own.”

[This quote is from an online version of Zen and the Art of Motorcycle Maintenance.]

Philosophy, Physics, Science

Only a Matter of Time

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Although we speak of space and time in the same breath, they are quite different in many ways. Space is something we perceive all around us. We see it (rather, objects in it), we can move our hand through it, and we know that if our knee tries to occupy the same space as, say, the coffee table, it is going to hurt. In other words, we have sensory correlates to our notion of space, starting from our most precious sense of sight.

Time, on the other hand, has no direct sensory backing. And for this reason, it becomes quite difficult to get a grip over it. What is time? We sense it indirectly through change and motion. But it would be silly to define time using the concepts of change and motion, because they already include the notion of time. The definition would be cyclic.

Assuming, for now, that no definition is necessary, let’s try another perhaps more tractable issue. Where does this strong sense of time come from? I once postulated that it comes from our knowledge of our demise — that questionable gift that we all possess. All the time durations that we are aware of are measured against the yardstick of our lifespan, perhaps not always consciously. I now wonder if this postulate is firm enough, and further ruminations on this issue have convinced me that I am quite ignorant of these things and need more knowledge. Ah.. only if I had more time. 🙂

In any case, even this more restricted question of the origin of time doesn’t seem to be that tractable, after all. Physics has another deep problem with time. It has to do with the directionality. It cannot easily explain why time has a direction — an arrow, as it were. This arrow does not present itself in the fundamental laws governing physical interactions. All the laws in physics are time reversible. The laws of gravity, electromagnetism or quantum mechanics are all invariant with respect to a time reversal. That is to say, they look the same with time going forward or backward. So they give no clue as to why we experience the arrow of time.

Yet, we know that time, as we experience it, is directional. We can remember the past, but not the future. What we do now can affect the future, but not the past. If we play a video tape backwards, the sequence of events (like broken pieces of glass coming together to for a vase) will look funny to us. However, if we taped the motion of the planets in a solar system, or the electron cloud in an atom, and played it backward to a physicist, he would not find anything funny in the sequences because the physical laws are reversible.

Physics considers the arrow of time an emergent property of statistical collections. To illustrate this thermodynamic explanation of time, let’s consider an empty container where we place some dry ice. After some time, we expect to see a uniform distribution of carbon dioxide gas in the container. Once spread out, we do not expect the gas in the container to coagulate into solid dry ice, no matter how long we wait. The video of CO2 spreading uniformly in the container is a natural one. Played backward, the sequence of the CO2 gas in the container congealing to solid dry ice in a corner would not look natural to us because it violates our sense of the arrow of time.

The apparent uniformity of CO2 in the container is due to the statistically significant quantity of dry ice we placed there. If we manage to put a small quantity, say five molecules of CO2, we can fully expect to see the congregation of the molecules in one location once in a while. Thus, the arrow of time manifests itself as a statistical or thermodynamic property. Although the directionality of time seems to emerge from reversible physical laws, its absence in the fundamental laws does look less than satisfactory philosophically.

Life and Death

Candle that Burns Bright

A classmate of mine from IIT passed away a few days ago. When I heard the shocking news, I wanted to write something about him. What came to mind were a couple of disjointed memories, and I thought I would share them here. For fear of causing more pain to those close to him, I will keep all the identifying references to a bare minimum.

We used to call him PJ — an acronym for a mildly insulting expression, which probably had its origin in our academic envy. PJ was academically brilliant, and graduated at the top of a class filled with almost pathologically competitive and bright IITians. This intensity that he brought to bear on the less superhuman is part of my first memory.

Troubled by this intensity, we once formed a delegation to appeal to PJ’s better nature. I don’t remember who initiated it, or even who was there in the delegation. But it certainly feels like something that Lux or Rat would do; or Kutty, perhaps, if we could get him to do anything at all. Anyway, we approached PJ and requested that he take it easy. “What is the big deal, man? Slow and steady wins the race, you know.” PJ’s response was an eye-opener. “Sure,” he said, “but fast and steady is better!”

I’m sure this fast and furious pace of PJ’s brilliance brought him many well-deserved accolades later in a lifetime perhaps best measured in terms of its quality rather than quantity, impact rather than longevity. But PJ was never an all-work-and-no-play fellow. I remember once when the MardiGras girls came to the Mandak dining hall (“mess”) to eat. Studying them with that hapless fervor that only a fellow IITian can fully appreciate, we discussed this development with PJ. He said, “Yes, we want to mess with them!”

IIT happened to us at an age when friendships came easy and the bonds forged stayed strong. With PJ gone and the connections a bit weaker, I feel a bit of unraveling. And the melancholy words that ring in my mind remind me — ask not for whom the bell tolls, it tolls for thee.

PJ was a brilliant man. I hope his brilliance would be source of strength and courage to those close to him. You know what they say, a candle that burns twice as bright burns half as long. With one of our brightest candles flaming out, what I feel is a sense of some darkness descending somewhere far.

Photo by armin_vogel cc

Philosophy, Physics, Science

Half a Bucket of Water

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We all see and feel space, but what is it really? Space is one of those fundamental things that a philosopher may consider an “intuition.” When philosophers look at anything, they get a bit technical. Is space relational, as in, defined in terms of relations between objects? A relational entity is like your family — you have your parents, siblings, spouse, kids etc. forming what you consider your family. But your family itself is not a physical entity, but only a collection of relationships. Is space also something like that? Or is it more like a physical container where objects reside and do their thing?

You may consider the distinction between the two just another one of those philosophical hairsplittings, but it really is not. What space is, and even what kind of entity space is, has enormous implications in physics. For instance, if it is relational in nature, then in the absence of matter, there is no space. Much like in the absence of any family members, you have no family. On the other hand, if it is a container-like entity, the space exists even if you take away all matter, waiting for some matter to appear.

So what, you ask? Well, let’s take half a bucket of water and spin it around. Once the water within catches on, its surface will form a parabolic shape — you know, centrifugal force, gravity, surface tension and all that. Now, stop the bucket, and spin the whole universe around it instead. I know, it is more difficult. But imagine you are doing it. Will the water surface be parabolic? I think it will be, because there is not much difference between the bucket turning or the whole universe spinning around it.

Now, let’s imagine that we empty the universe. There is nothing but this half-full bucket. Now it spins around. What happens to the water surface? If space is relational, in the absence of the universe, there is no space outside the bucket and there is no way to know that it is spinning. Water surface should be flat. (In fact, it should be spherical, but ignore that for a second.) And if space is container-like, the spinning bucket should result in a parabolic surface.

Of course, we have no way of knowing which way it is going to be because we have no way of emptying the universe and spinning a bucket. But that doesn’t prevent us from guessing the nature of space and building theories based on it. Newton’s space is container-like, while at their heart, Einstein’s theories have a relational notion of space.

So, you see, philosophy does matter.

Humor, Philosophy

If Time Died Now, I Would Be Happy

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I dream strange dreams. Thankfully, I don’t usually remember them. But at times, I do remember some, and they provide a lot of entertainment. One recent dream was of a TV interview, going on in a mall. The person being interviewed was a stranger, as the protagonists of my dreams tend to be. This guy was middle-eastern, either Iraqi or Iranian, and was talking about a kid who he was about to adopt. The kid turned out to be a child prodigy, and was flying away somewhere for specialized training. The interviewee, though a bit sad, was philosophical about it. At that moment, there was a background song in the mall that went like, “If time died now, I would be happy.” And the man says, “Yes, that is the way I feel!”

I remember feeling, in my dream, “Yeah, right! The right song just happened to be playing!” Way too skeptical even in my dreams. Not to mention that there is not such song (as far as I know). If you think this dream is weird, I once dreamed up an unknown (and non-existent) word while reading a book. I even tried looking up the word when I woke up, but in vain, of course.

One of my top dreams was when I was invited to the White House by President Bush (junior) right after his inauguration. As I stepped into what appeared to be a decent sized living room, the President was walking down a flight of stairs. And he asked me, “So. Do you still think I’m dumb?” Now, how did he know how I felt?

Coming back to my time-dying dream, there is something else that is a bit weird. I mean, one would normally say, “If I died now, I would die a happy man” or something to that effect. Why would “time” die? Is it my secret conviction that when one dies, one’s “time” also dies? That there is no common, universal time, but only our own, individual, personal times? Perhaps. I’m not talking about Newton’s universal times vs. Einstein’s relative time. There is something philosophical here that is just beyond my grasp. Like a name at the tip of your tongue. These are deep waters, and I really need to learn more. Back to school, some day…

The fanciest of my dreams? I was James Bond once. Complete with a bicycle that turned into a wooden canoe when I hit the local beach.

Books, Philosophy, Physics, Science

On Rationality and Delusions

This post started as a reply to M Cuffe’s comment on my post on The God Delusion. M Cuffe suggested that I’m merely asserting an individual’s right to be irrational, or ignorant. Yes, I am indeed saying that one has the right to be irrational. But that statement stems from something that I believe is deeper. It stems from what we mean by rationality, and why we think it is a good thing to be rational. I know it sounds “irrational,” but I’m talking about rationality as Persig talked about it in Zen and the Art of Motorcycle Maintenance.

Stepping back a bit, rationality is quintessentially a worldview. By rational, we mean things that seem normal to our commonsense. So the notion of a nuclear bomb moving or obliterating a mountain is rational, although we have never seen it. You believe it because it is consistent with your worldview. I believe it too, trust me. I was a nuclear physicist not too long ago. 🙂

And a god (or faith) moving mountains is clearly ludicrous to our rationality. I’m not asking people to give equal rational weight to faith and bomb moving mountains. I’m merely encouraging them to examine why they believe in one and not the other. Calling one more rational is just another way of saying that you choose to believe one more than the other. Why?

Thinking along those lines, I come to the conclusion that it is only a question of worldviews or belief systems. I personally subscribe to your worldview based on rationality as well, which is why I consider myself also an atheist (although one of my readers thought I was merely confused :-))

A god as an old man hiding behind the clouds is not consistent with our worldview. But it may have been a metaphor for something else. Let me explain. We have these abstract concepts of happiness, perfection, grief etc. Are these things real? Should we believe they exist? Such questions don’t make too much sense because these concepts are all in our minds. But then, what isn’t?

Let’s take perfection, for instance. Let’s say we assign some human form to it, so that we could explain it to a child or something. We then call it, say, the goddess of perfection or whatever. Over generations, for whatever reason, the notion of perfection disappears from our awareness, but the metaphor of the goddess remains. Now, to somebody who believes in the reality perfection, and therefore the existence of the goddess, it is not a delusion. In that belief system, in that context and worldview, it makes perfect sense. But in the absence of the abstract concept of perfection, the goddess becomes a delusion.

I believe that a large part of our collective wisdom is handed down in the form of such metaphors. Instead of dismissing them as delusions because their context is gone, we should perhaps try harder to rediscover the lost concepts. I also believe such metaphors exist in other fields that seem to work well. Take, for instance, the Qi concept in traditional Chinese medicine, the five elements (or three body types) in Ayurveda and so on. To the extent that traditional Chinese medicine and Ayurveda work, there has to be some knowledge buried in those practices. If we write off their basis merely because their metaphors are not consistent with our rationality, we may be writing off some potential sources of new or forgotten knowledge.

In addition, I believe that some of our smarter geniuses indeed see delusional metaphors in what we take to be supremely real.

Books, Quantitative Finance

Principles of Quantitative Development

[This post is a review of my forthcoming book, “Principles of Quantitative Development,” to be published by John Wiley & Sons in Feb 2010. This review is written by Shayne Fletcher, Executive Director, Nomura, and author of “Financial Modelling in Python,” and is posted here with the reviewer’s permission.]

In “Principles of Quantitative Development”, Thulasidas has offered a contribution that is somewhat unique in the literature associated with the field of Quantitative Development. In that specialised, narrow domain, technical books abound. Most such titles are concerned with the intricacies of the application of specific programming language to the problems of financial engineering or, expositions of advanced mathematics as used in the pricing models of exotic financial derivative products. Thulasidas however has taken a very different tact. Focusing instead on what he terms “the big picture”, Thulasidas offers us his insights into the role of Quantitative Development in the broader context of a bank’s “trading platform”. Armed with such insights, he shows us how an understanding of the varied usages of the trading platform can and should be used to influence and shape its design.

In the opening chapters, the book is concerned with defining what is meant by the term “trading platform”. In doing so, Thulasidas necessarily reviews the “architecture” of a bank from the point of view of a Quantitative Developer. That is, he discusses the nature and interactions of the front, middle and back offices of a bank, the different roles that professionals in each of those areas satisfy and how each of their respective needs induce a different set of requirements on the trading platform. Moving on, he reviews the nature of trades, the so-called trade “life cycle” and how different views of a trade are required as a function of the life cycle and the business role of the user.

Having established a broad understanding of the requirements for a trading platform, Thulasidas turns his attention to translating those requirements into design decisions for trading platforms. Along the way he considers such aspects of design as choice of programming languages, issues relating to scalability and extensibility, security and auditing, representations for market and trade data and a trading platform’s macro architecture whilst all the way remaining focussed on ensuring that all business needs identified in the earlier chapters are given consideration and catered for.

Going from the general to the specific, Thulasidas in later chapters introduces a flexible derivatives pricing tool (the source code for which accompanies the book). This program in itself will no doubt serve as an excellent starting point for Quantitative Development teams charged with the production of an in-house trading platform. Perhaps of even greater benefit though is Thulasidas’s critique of the pricing tool, that is, in his explanation of how the supplied program fails to meet the requirements of a complete trading platform and how the program needs to be extended in order to be considered one. In this way, the line of thought of earlier chapters is reinforced and brought sharply into focus.

Throughout the book, Thulasidas manages to convey his ideas with remarkable eloquence and lucidity. Understanding is enhanced by numerous rich graphics outlining processes and their design (both in the software and work-flow sense). The reader’s attention and interest is never lost and a great deal of entertainment is to be found in the numerous side-bars, the “Big Pictures” (in effect an enjoyable mini-series of magazine style articles in their own right).

As Thulasidas himself notes, the subject matter of his book is broad. Accordingly, the potential readership of this title is equally broad. Notably, Quantitative Developers at the beginning of their careers stand most to gain from this book. The fact is though that even the most seasoned of banking professionals would profit from its reading. Quantitative Developers, Quantitative Analysts, Traders, Risk Managers, IT professionals and their Project Managers, individuals considering switching from academia or other industries to a career in banking… Readers from each and all of these groups will find Thulasidas’s work informative and thought provoking.

Quantitative Finance, Work and Life

How to Make Money

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After my musings on God and atheism, which some may have found useless, let’s look at a supremely practical problem — how to make money. Loads of it. Apparently, it is one of the most frequently searched phrases in Google, and the results usually attempt to separate you from your cash rather than help you make more of it.

To be fair, this post won’t give you any get-rich-quick, sure-fire schemes or strategies. What it will tell you is why and how some people make money, and hopefully uncover some new insights. You may be able to put some of these insights to work and make yourself rich — if that’s where you think your happiness lies.

By now, it is clear to most people that they cannot become filthy rich by working for somebody else. In fact, that statement is not quite true. CEOs and top executives all work for the shareholders of the companies that employ them, but are filthy rich. At least, some of them are. But, in general, it is true that you cannot make serious money working in a company, statistically speaking.

Working for yourself — if you are very lucky and extremely talented — you may make a bundle. When we hear the word “rich,” the people that come to mind tend to be (a) entrepreneurs/industrialists/software moguls — like Bill Gates, Richard Branson etc., (b) celebrities — actors, writers etc., (c) investment professionals — Warren Buffet, for instance, and (d) fraudsters of the Madoff school.

There is a common thread that runs across all these categories of rich people, and the endeavors that make them their money. It is the notion of scalability. To understand it well, let’s look at why there is a limit to how much money you can make as a professional. Let’s say you are a very successful, highly-skilled professional — say a brain surgeon. You charge $10k a surgery, and perform one a day. So you make about $2.5 million a year. Serious money, no doubt. How do you scale it up though? By working twice as long and charging more, may be you can make $5 million or $10 million. But there is a limit you won’t be able to go beyond.

The limit comes about because the fundamental economic transaction involves selling your time. Although your time may be highly-skilled and expensive, you have only 24 hours in a day to sell. That is your limit.

Now take the example of, say, John Grisham. He spends his time researching and writing his best-selling books. In that sense, he sells his time as well. But the big difference is that he sells it to many people.

We can see a similar pattern in software products like Windows XP, performances by artists, sports events, movies and so on. One performance or accomplishment is sold countless times. With a slight stretch of imagination, we can say that entrepreneurs are also selling their time (that they spend setting up their businesses) multiple times (to customers, clients, passengers etc.) This is the only way to address the scalability issue that comes about due to the paucity of time.

Investment professionals (bankers) do it too. They develop new products and ideas that they can sell to the masses. In addition, they make use of a different angle that we discussed in the Philosophy of Money. They focus on the investment value of money to make oodles of it. It not so much that they take your money as deposits, lend it out as loans, and earn the spread. Those simple times are gone for good. The banks make use of the fact that investors demand the highest possible return for the lowest possible risk. Any opportunity to push this risk-reward envelope is a profit potential. When they make money for you , they demand their compensation and you are happy to pay it.

Put it that way, investment sounds like a positive concept, which it is, in our current mode of thinking. We can easily make it a negative thing by portraying the demand for the investment value of money as greed. It then follows that all of us are greedy, and that it is our greed that fuels the insane compensation packages of top-level executives. Greed also fuels fraud – ponzi and pyramid schemes.

There is a thin blurry line between the schemes that thrive on other people’s greed and confidence jobs. If you can come up with a scheme that makes money for others, and stay legal (if not moral), then you will make money. You can see that even education, traditionally considered a higher pursuit, is indeed an investment against future earnings. Viewed in that light, you will understand the correlation between the tuition fees at various schools and the salaries their graduates command.