Why I do not like the Kindle

I will not tolerate Borders walking into my house and removing a book from my bookshelf, unless they show a search warrant from a magistrate. Why should it be any different with any other bookstore?

Such an event was only bothering me as a theoretical possibility but now it appears that something like this actually transpired: Amazon deletes purchased copies of 1984 from Kindle users' devices - it would have been even more ironic if the book in question had been Fahrenheit 450.

From Citibank to the administration...

Read and weep:
Rubin's shameless interview justifying being paid $115 million for being a director without control over operations, policy or risk.

In other news, Rubin protégés to head top economic posts in the new administration.

With the foxes guarding the hen house, is the financial crisis about to get much bigger/worse?

What Part of Legal Immigration Don't You Understand?

Originally appeared at Reason.

Donating your time to charity

Donating your time to charity - it is just waste of your own time in the delusion that you are being helpful to society. It is no different from burning stacks of cash in front of the eyes of poor starving people. It might give you a lot of pleasure but it is of no use to them.

I would rather that you spent your time in what you are good at rather than delude yourself that you are helping a charitable cause by volunteering for menial $8/hour labour. If you want to spend a day in the soup kitchen say that you are doing it for your own selfish reason, rather than bragging about volunteerism. You are contributing exactly $64 to the charity by 8 hours of minimal wage labour dispensing soup. Meanwhile, I'll be donating a day's worth of my pay and making a far greater difference to the charity. My sense of accomplishment will be 100x that of yours.

Similarly, running a marathon for a cause - I refuse to subsidise someone who wants me to pay for him to waste his time running - instead he could easily have worked the extra 10 hours a week for 25 weeks and donated the 250 hours of pay to a charity. This would FAR exceed what he might raise in a lifetime of "running for a cause".

Of course I am talking of highly paid professionals here. For a burger flipper at MacDonalds, it is probably a better use of their time running to raise money for cancer than to flip more burgers.

MBAs

MBAs probably make good money for themselves. I don't think MBAs make money for the organization they are in. Any organization that has a large influx of MBA managers (replacing people actually competent and willing to do real work) begins to drown in procedural morass and a sea of paper shuffling. A fantastic example was Dell. It was completely taken over by the consultants from Bain, who ran the company into the ground. Google is the next example - it has been named as "most desired place to work" for MBAs, ahead of Mckinsey and Goldman Sachs. Luckily they had the common sense to insist that their CEO will be a person with scientific education, rather than merely bean counting, oops, MBA education.

---

The problem with a lot of MBAs - they are often competent enough to be useful members of society, but instead prefer to not do anything with their abilities. The confidence projected by a typical McKinsey consultant stems from their arrogance at being in McKinsey, not from their knowledge. One such person I met even went so far as to admit "I did a Phd in Philosophy and had no career option except to be a Management Consultant."

---

Jim Simons who is probably the most successful and richest hedge fund manager has started publishing papers in topology once again, at the age of 60. On his deathbed his main concern will not be that he did not do an MBA.

The casino on wall street

The whole thing came about because I was thinking how exactly are people making money. I don't mean salaries, I mean the firms paying the salaries and bonuses, where is all that coming from?

My model is to divide the world into two groups -

Group (1) includes banks and equity research groups who design the structured and complicated products, and then use that model to get some one to buy some thing and another person to whom they can sell something that is very similar, so they are then perfectly hedged and need accurate pricing, but they don't need price forecasting models because they don't care which way the market goes. Say you have an ideal IB, then this IB buys a bunch of mortgages from BofA, charges BofA a commission for that, then makes some complex model and sells packaged parts of it to, say pension funds, takes fees from all of those as well for providing them with investment vehicles, and all the while it is also enjoying the spread between how much it bought the mortgages from BofA for and how much it sold the components to the pension funds. So really what this IB is selling to its customers is the promise that "we are removing your risk" which is true - BofA got a lumpsum and removed the risk it had that mortgages would be worthless. Similarly the 3 funds that bought the 3 tranches got investments at their selected risk levels, so they are happy to pay fees also for "removing undesirable risk". So the IB only needs to make sure that what it takes on left side it can sell on right side for approx same amount. Today it might take a 500k mortgage and sell it in 3 tranches for 510k, tomorrow if that market crashes then it buys the 300k mortgage and sells it to someone at 305k. A glorified e-trade so to speak. IB doesn't care for the market direction just that there should be enough players in it, so the focus here is on designing more and more complex products to attract more and more players to try them out but not necessarily to accurately forecast anything because money making does not depend on forecast.

Group (2) are the poor fools who are actually trying to make real returns via trading/investing and have directional exposure. This includes all the 401k investors including you and me, as well as Warren Buffett as well a bunch of investment funds, mutual funds etc. These people might try to reduce their exposure to the direction of the market, but in the end they have to take a real position if they want to make real returns. Exposure to market risk is what creates returns in the long run. So here hedging is not enough, you need to model the whole universe and everything that goes on in it. The promise of the players here is "we will work hard for you to increase your money". The work hard part consists of econometric analysis, sifting through 10s of years of price data, volume and volatility data etc. to find "opportunities", as well as studying fundamentals to put into the models etc.

(1) is a glorified casino selling newer and fancier kinds of chips, (2) are the bettors. (1) will always make money because the rules are in its favor, (ie fees, spreads will always earn it money) whereas (2) will have a few people that are very good/lucky/both who make all the money and most will go bust.

All said and done, it is better to be a casino operator than a bettor; it may be boring but you make guaranteed return as long as you have visitors.

Block popups, underlining, banner ads on yahoo websites

Run mozilla and just add this to your adblock Advertisement filter:
"fe.shortcuts.search.yahoo.com/script?fr=csc_fin_pf"
That is it - no more underlining, no more stupid popups on double clicking a word etc. on yahoo websites.

Remove banners on Yahoo Finance by adding this to the Element Hiding Rules:
"finance.yahoo.com#DIV(style=height: 90px; width: 728px;)"

Be careful who you learn from...

from Comics.com.

Barrack Obama vs. Hillary Clinton

On the major issues, there is no real gulf separating this two.

The difference according to Larry Lessig:

(1) Character - Bill and Hillary Clinton have shown in the past that principles are expendable. One minor example - she refused to endorse the call to make presidential debates free from copyright, fearing that it might hurt her fundraising efforts from big business.

(2) Integrity - Hillary Clinton blatantly lies about Barrack Obama.

(3) Ideals - Hillary is "good enough" to continue the current divisive politics that everyone hates, Obama inspires change and peace.

Remove those annoying ads from Yahoo Messenger.

http://googlesystem.blogspot.com/2006/05/no-more-ads-in-yahoo-messenger.html

http://www.helpbytes.co.uk/noads.php

Recommended Mozilla Extensions and Add-ons

Ad Block Plus -- EasyList, EasyElement, and ABP Tracking Filter
Ad Block Plus Element Hiding Helper
Ad Block Filterset.G Updater
Clone Window
del.icio.us
Download Statusbar
Flashblock
Gmail Manager
Google Browser Sync
IE View
Tiny Menu
Yahoo! Mail Notifier ---> avoid crashes -- remove npYState.dll found in C:/Program Files/Yahoo!/Shared/
=============
NoScript
BugMeNot
IE Tab
Google Gears
Customize Google, add http://meta.wikimedia.org/wiki/Mirror_filter and also -inurl:(kelkoo|bizrate|pixmania|dealtime|pricerunner|dooyoo|pricegrabber|pricewatch|resellerratings|ebay|shopbot|comparestoreprices|ciao|unbeatable|shopping|epinions|nextag|buy|bestwebbuys)

How to Block dictionary definition popup windows on nytimes.com

The New York times Website has an annoying feature - whenever one highlights a word, the site popups a window with the dictionary definition of that word. This makes it extremely annoying to read as you ahve to be very careful where on NYT you click the mouse.

Here is how to block this stupid ad:
Run Adblock in mozilla.
Add this to adblock filters: *.nytimes.com/js/common/screen/altClickToSearch.js

Insurance

Interesting analogy: selling insurance is like selling puts on the stock index, except insurance companies get bailed out by the government!

Generating samples from a normal distribution

Stumbled upon an elegant result today:
If F is the cumulative distribution function of X, then F(X) is the Uniform Distribution on [0,1].

How to use this in practice? Well, NORMSINV(RAND()) can be used in Excel to pick a random value from a standard normal (Gaussian) distribution. Though accurate, this is very slow as it involves the inverse of an integral.

Career politicians

I am suspicious about the intentions of anyone who says he is a "career" politician. Such people typically are scoundrels.

Anyone with integrity seeks to provide value in the world. Administration, governance and bureaucracy is parasitic on others' production, at best it is neutral and at worst detrimental to usage of scarce resources.

The concentration of power in centralized administration has only "produced" genocide of more than 50 million people (WW1, WW2, Korea, Stalinist Russia, Mao China, Vietnam, Sudan ...) in the 20th century.

Your dream fulfilled - in Redwood City, CA.

Amazing real estate in the incomparable Bay Area:

Americans have always dreamed about being cowboys - a distinctly American profession. Well, if you own this house, you can practice corralling small children or pets! Maybe you could have a rodeo and lasso your cat! Try riding your dog! Or other American Dream fun fill activities.

On jobs, retirement and slavery

Something I found in my archives, dated Nov 28, 2002.

About the notion of "job".

The ancient Babylonians had a type of slavery in which the slaves worked for their masters and were paid a bit for that. If they so wished, they could sell crafts for themselves to make extra money in their spare time. They also had an option of buying their freedom.

(Slavery conjures images of flogging and hard physical labour, but the above form almost sounds like the life of an employee - you spend 8 hours a day working for your employer.. are free to do what you want in your spare time, even make money for yourself and can retire if you think you have enough money...)


The modern notion of a job was created by the industrial revolution.

In Victorian England, it was scandalous to do a "job". Any self-respecting individual "worked for himself". Obviously the very idea of a job seemed akin to slavery to the people then.

The subsequent boom in "Manufacturing and Services" made the concept of earning a living by working for another socially acceptable.


That brings us to retirement. This is an interesting creation of 20th century America !

In the 20's and 30's, America went into a deep depression. There just weren't enough jobs for people then.

In those days it was customary for people to work as long as they wanted to. It became imperative for the stability of the economy that older workers be replaced by younger ones.

But people just would not stop working voluntarily due to the difficult economic times. Also the elderly who did quit had no hope of gettign a job again because of all the young people in the job market.

So Social Security Act was passed (Roosevelt's New Deal) which made retirement a glorious event - work until age X (59, 60, 55 whatever) and you life after that will be automatically taken care of!

Cessation of work no longer meant abject poverty and penury, instead now there was a pot of gold at the end of the rainbow.

Democratizing anxiety rather than opportunity

Excerpts from a review for The Chosen that is worth reading in its entirety.

Proof of extracurricular activities, leadership qualities, letters of recommendation -- we take all these as natural, necessary and even enlightened elements of the college application process, though they cause us endless anxiety. Actually, they don't resemble in the least the way people in Europe or Japan get into college. They're a result of a particular American challenge at the turn of the 20th century, which President A. Lawrence Lowell of Harvard then characterized as follows: how to "prevent a dangerous increase in the proportion of Jews."

By the end of the 19th century, Harvard, Yale and Princeton were committed not primarily to refining the intellect but to welcoming the well-bred, athletic, public-spirited and sociable scions of the privileged -- young men who may not have performed well academically but were destined to be the leaders of the next generation. The result of such measures, at Harvard and elsewhere, was a horrific surprise: too many Jews! Though most of these students were more than academically competent, they didn't fit the usual definition of "gentlemen." The key code word here was 'character', a quality thought to be frequently lacking among Jews but present almost congenitally among high-status Protestants.

Newly established admissions departments gathered increasingly large amounts of "background" data on each applicant. Race? Color? Religious preference? Birthplace of father? Previous surnames used by the family? Mother's maiden name? The need for letters of recommendation was born; so was the interest in extracurricular involvement. Photographs were required, and personal interviews were encouraged, particularly with local alumni who would be most eager to perpetuate the muscular and sociable undergraduate image dear to them. The mechanism was similar to that of self-perpetuating private social and country clubs where new candidates were admitted only if members vouched for them.

Since the number of admission slots was being limited while more and more applicants were meeting the Big Three's academic criteria, the various nonacademic criteria and "intangible qualities" became decisive. One logical alternative -- raising academic standards even higher to get a more brilliant, intellectual class -- was hardly a consideration. By contrast, it was the well-bred students of average intelligence who university elders insisted were more likely to end up as leaders in business and politics -- and to become loyal, generous alumni. Most university leaders made no bones about limiting the "super-bright" to only 10 percent of each class.

Astonishingly, this subjective college admissions system -- designed in the 1920s to discreetly exclude as many "social undesirables" as possible -- is the system we continue to use today. And the central irony of The Chosen is that the very flexibility that was designed to exclude nontraditional students and placate the alumni up to the middle of the 20th century was subsequently available to administrators to accomplish essentially opposite goals.

As the century unfolds, ... [these] three schools had to process these demands [for diversity in admissions] in terms of its own internal constituencies: faculty pressuring for "more brains," students and the press demanding diversity, and alumni in open revolt against any such changes.

Having decided to change the make-up of their student body in this new direction, each school was successful in doing so because from the 1920s on, admissions officers had at their disposal a variety of nonacademic criteria by which to evaluate applicants. And as Karabel notes, moves to include previously excluded groups were not terribly radical since the Big Three, in fact, "had never been pure academic meritocracies."

Dramatic as these developments appear, they hardly constitute a sea change in how universities make such decisions. University administrations still view a move to completely meritocratic selection as neither in their self-interest nor realistic. Instead, Karabel convincingly shows this new institutional behavior to be the result of constant administrative shifts in order to maintain an uneasy balance among competing demands.

Much has changed in who now constitutes "the chosen" -- the elite prep schools, for example, can no longer count on a high proportion of their graduates getting into the Big Three. "As a consequence, deep apprehension about college admissions now extends to the highest reaches of the upper class," Karabel writes. But much remains the same. "At the same time, the children of the working class and the poor are about as unlikely to attend the Big Three today as they were in 1954. It is no exaggeration to say that the current regime in elite college admissions has been far more successful in democratizing anxiety than opportunity."

Market Sentiment

Comedy video explains how the market converts the tens of thousands lent to an unemployed black man in a string vest in Alabama to the more respectable Bear Sterns high grade structured credit enhanced leverage fund.

Principle of Least Surprise

Andrew Koenig has a post on surprises in designs:

[In APL,] a surprising result comes from three applications of the principle of least surprise:

1) It should be possible to have an array with no dimensions, and a zero-dimensional array should be the same thing as a scalar.

2) The size of an array should be a vector with one element for each dimension of the array.

3) When you do arithmetic on a scalar and a vector, the result has the same size as the vector.

Choosing the least surprising behavior in these three contexts causes the surprising behavior that the average of a scalar sum(v)/size(v) is an empty vector.