Thursday, March 13, 2008

It All Began with Einstein.....

In 1905 Albert Einstein published his three famous papers (actually there were four papers) one of which was on explanation of the statistical mechanics of Brownian motion which produced the now famous heat transfer equation. Black and Scholes used this heat transfer equation – a partial differential equation – to derive the famous option pricing formula.

It was the drift term in the Brownian motion framework that finally resolved the mystery of financial options.

In 1965 Paul A. Samuelson worked on the valuation of warrants that led to a formula of the same general form as that of Black and Scholes, except that Samuelson used for the drift term the expected return of the stock rather than the riskless return which was used later on by Black and Scholes.

The seminal work of Franco Modigliani and Merton Miller in the year 1958, that produced the famous MM hypothesis, and which demonstrated the invariance of a firm’s value to its capital structure and dividend policy inspired Black and Scholes to invoke the principles of no arbitrage to derive their celebrated option pricing formula.

It is anybody’s guess as to what would have happened if Merton Miller had not persuaded the Journal of Political Economy to publish the Black-Scholes manuscript.

It is also anybody’s guess as to what would have happened to our world of finance, and especially financial theory, if Robert C. Merton in the early seventies had not introduced continuous time mathematics to finance. Black-Scholes formula for option pricing is perhaps, the most famous example of continuous time finance. Robert Merton gave Black-Scholes the key insight that is a hedged position is maintained continuously, its return becomes certain.

And finally, Fischer Black and Myron Scholes, in 1973 published their famous paper in the Journal of Political Economy, that used the heat transfer equation of Brownian motion which Einstein had derived, Merton’s insight of a continuous maintained hedged position and MM’s insight of a no-arbitrage portfolio to set up a partial differential equation that is independent of investor’s risk preferences. The solution of this equation is the famous Black-Scholes formula for option pricing.

It is now 2005, a hundred years since it all began..............

pic lens - a review

I checked out the piclens, Firefox plug-in last week and WOW! It’s waaaaay cool! Basically it turns Google Images, Flickr, Photobucket or a few other photo sites into really cool, full-screen interactive galleries.
Good points:
  1. The resolution/quality is amazing. They must have some sort of filter that sharpens the images because even small images look quite crisp blown up.
  2. You can quickly scan through hundreds of photos just by dragging along the scroll bar
  3. Very cool eye candy
Bad points:
  1. It’s just eye candy. I was very surprised to find that once you are in PicLens, there is no way to link straight to a given photo on the site it appears on. Or at least if there is, I haven’t been able to find it in 1 week of using it quite frequently.
  2. firefox starts taking more memory(expected) over and above the known memory inefficiencies of firefox
  3. avaialable only for windows which sucks big time.

Monday, March 10, 2008

The Ayn Rand Effect

.. I have been saving this blog and did not publish it when I had written it, I had written it the night I had finished reading Atlas Shrugged some 4 months ago.....


......And is the line between selfness and selfishness really the one which we have made out to be . If it is then my claim is that it is a line we have drawn because we as a species have made a virtue out of making standards of morality not from our own conscious thoughts but from borrowed garbage that some so called intellectuals shoved down our throats. The rest of the mankind just gulped whatever was decreed to them because of a confirmed lack of self respect .

In the course of time that I have been sitting at home waiting to join work a couple of months from now, idle with my own thoughts I have come to see people not as individuals but as specks. I have become disconcerted often with my own low outlook on humanity but I am trying to figure out what on earth would make me respect men and women that I come across everyday as friends, wellwishers, guardians of society, the so called intellectuals that appear on TV shows and editorials gloating about morality and virtuosity. If for most of the time listening and talking to them would have made me any wiser, or had I heard something from them which came from their own independent thought would have rated them as puposeful human beings but sadly I have not met too many of that kind in life so far.

There are very common issues on which the devoidness of human mind is exposed. If one claims to like a movie actress because she is beautiful despite not being a good actor we frown on him, just as we do when someone expreses the desire to marry a beautiful woman. We call him hollow, incapable of being able to look for some mysterious "inner beauty" as if inner beauty was the domain of only ugly looking women. Well I think it is a good idea if we learned to accept that beauty is what appeals and moves the world. Whether that beauty lies in a woman or in the valleys and gardens of the world it is one and the same entity, human nature is given to crave for it. So for all those feminists and intellectuals who want everyone in the world to forget about the "superficial beauty" and dig deeper my question is where will that lead to ? I for my part will not want to waste time digging for roots of a tree and would rather smell the flower it bore. If I am being hollow so be it .

Indulgence is another issue. Pleasure is derided upon. There are certain absolutes which are a no-no even if there is nothing irreversibly wrong with it. Drinking is bad because Mahatma Gandhi also said the same , because one's parents taught the same.Taking a lighted cigarette occasionally between one's lips is the same as being a smoker risking cancer and therefore touching a cigarette itself is bad . The moral standards dont allow it . What if a drink now and then does not make you vulnerable to disease , what if you hold your own when a little high on smoke and alcohol, it is bad. And who ever stops to think why ! Some argue it leads to addiction-- it is their own lack of trust upon themselves in being more disciplined and not be addicted that makes them mistrust someone else too . The weaker person with lesser self control feels completely justified in setting standards of good and bad. Way to go!

The most hilarious is the way people go about religion. I started reading Geeta a few days ago not because I identify myself as some Hindu but because I wanted to read the thought behind the book. The one thing I definitely understood was that if 80 odd percentage of our nation calls itself Hindu, then it is the biggest fraud ever unleashed upon ourselves. Because as far I have heard being Hindu means following the Geeta first and foremost and its some wonderful insights into the "way of life" and not, mind you, standards of morality. And most of us Hindus are so far away from practising the philosophised way of life in the book that the moment some intellectual on a TV show starts opining about the need to be sensitive to religious sentiments and such innuendo I feel the need to put him in a spot and ask them what religion they are trying to be protective about-that which no one even practices but has been given to feel that he practices it because of the hysteria of the mindless masses chanting hyms in temples , sitting and listening to yogis , making an issue out of whether leather belts are offensive to gods in temples, and whether God would be offended if they were to pray to him on a full stomach(or even worse a stomach full of flesh food) -this hysteria so conveniently accepted as a standard good and passed on through generations without question drives us . Where is religion? And if someone puts a goddess in his painting as nude our religion is offended.So what if it is offended ? Why should it be protected when the religion we practice is in most part a socially approved melodrama and not even close to what it was meant to be!

Here's another one. And this one I guess is one of the most unchallenged of all times. Prostitutes and their job is perhaps the most looked down in any corner of the wise world. Why? because sex is is a sin. It is another matter that our species exists because of it but it is a sacrilege and a tabboo ...and these women who make a living out of sex are certainly the most corrupt human beings because they are so neck deep in it. If they are looking for respect from their fellow humans they might as well take a trip to another planet.How could they perform an act as ugly as sex , make money out of it and be shamless about it! Do they not realise how vulnerable they make strong willed men to fall prey to temptation? And as human beings is it not completely out of bounds for us to fall prey to temptations to flesh...what if those temptations were ingrained in us by nature itself..so indelibly that even a five year old boy would be moved by representations of the same . We are not here to think , we are here to judge . We shall not be convinced that sex is not a sin but a beautiful revelry of human existence ..we will shy away from talking about it or joking about it because again our parents have told us to. Between a woman who experiments wearing a bikini and a woman who would rather always wear a salwar our respect shall be awarded to the latter of course because she is the one who stayed away from the sin of being sensuous. So to accord the same respect to a prostitute as this latter woman who perhaps was shy of even seeing herself naked is totally unconcievable -right?
Virginity in a woman is a cherished virtue. Marriage is the defining point where loss of virginity is no longer sinful . A priest would read some lines in a ceremony and the gullible lot standing witness to the occasion says "mating between these two can now be officially done" and the whole thing is now morally right! There is nothing such as love before marriage which can justify with this brainless mob a woman's (and for that matter a man's) indulgence with lust because this mob does not function on reason..it functions on a common ground of frenzy and ideological weariness that cannot be expected to be done away with. So even if a man and a woman have been together and committed for ten years they don't have the right to practice the most fundamental and pleasurable instincts of life. The interesting part is some of these very people announce so proudly to the world that they "didn't do it", implying of course that they followed what was commonly held as the right thing to do- their sense of right and wrong emanated more from what the myth of generation had held than their own mutual love ...for them abstinence made their love pure and immediately after marriage they would consider giving up that purity. They would not even stop to ponder that sex was the driving force behind a man and woman getting together in the first place..if it was not for it men and women could have lived happily alone and the burden of bearing new life could have been carried with an equally leashed but less controversial mode of conception-that marriage is a concept that came at least billions of years after the concept of sex and that putting the former as a benchmark for justfying love making means labelling all those who lived before the age of matrimony as sinners!?! What could we do but smile in contempt at such notions and hope that our own sense of reason does not get carried away to discriminate between a "whore" and a "lady" when we meet one or the other in the future.

This is the last diatribe of this post and it relates to my opening narrative.I t is about the way we lose our sanity over patriotism. When that man in the gym asked me whether I intended to return home and serve my country I wanted to ask him a few questions but refrained because I could sense that any endeavour to drive home a point in this mind of stone would be farcical. Those questions I am putting here. Why should I label myself as an Indian first, then an invidual and then a world citizen? This random assigning of levels of priority one should place when deciding his loyalties baffles me. Why should I be made to accept that because I was born at a particular location in this wide world,I should consider myself an entity that owed more to a haphazard zig zagging geographical boundary that was drawn by self serving interests of kings and rulers through generations and had no other relation to the soil I took my first steps on? Why should I choose to be biased towards those who speak the same language as I do , dress in the same manner as mine, relish the same food and live in houses of familiar architecture to those who are different only by an accident of nature? And if I chose to be so unpatriotic to think that all the earth under the sky and entire universe was my domain as much as this political prison reverently termed a nation am I needlessly being a rebel ? My place as I feel it to be is the city I grew in and whose streets I remember trodding, or the city where I took my little brother around on my motorbike as he clung to me from behind, or the city where I went to spend my vacations during my childhood. And now it shall be the city which will give me livelihood and the means to attain the other material pleasures of the earth. That is it . Apologies for not being sentimental about the whole of India from north to south and east to west.

In the end all I am asking for from my fellow human beings is to be a little less uptight about ideas and notions that are not their own but of someone else in some other era gone by. At least if we have the weakness to be not able to practice this philosophy in entirety let us be more forgiving to those who have stronger will and vision than us to not judge them. That alone will make us more respectable not to anyone else but to ourselves.

Saturday, March 1, 2008

The Munnar trip - Chennnai to Trichy

"The first rule of driving in cities, never change lanes suddenly" cried Cobra in his instinctive all knowing tone. "I know, I know, that was just a mistake", explained Sriram. "I know that you know and this type of attitude is what causes accidents, I am just reminding you anyway." and then he went onto saying those lines of his which he repeated almost a zillion times during the trip, "You have accidents only when you hesitate, you either just overtake or just duck, you don't do both and if you do thts the end." So started our trip with exchange of ideas and knowledge and experience. We(read me, bomma, and julie) the ordianry mortals who were just there supposedly enjoying the trip were in fact literally putting our lives in their hands.
Within the first 10 minutes, we all knew that its not munnar that was going to be interesting but the journey itself. Although we were behind schdule by about 4 hrs (btw, whose schedule was it), the plan was clear. Start asap, go to pondi asap, fill whatever is to be filled asap, and reach trichy asap. The rest of the plan would be decided the next day. Though sriram started the trip, he being on the recieving end decided to be the one who would shout, and gave the steering to Cobra. And so started one of the riskiest drives I was ever in, more so because he insisted he knew what he was doing.
The drive upto pondi was pleasant with all the characteristic initial enthu, with all the PJs going on behind. We even tried to play cards inside the car with julie bending back from the first seat and me sitting in a position so as to maintain the deck of cards in a state of equilibrium, though unstable. I forgot to mention that I was nominated the financier for the trip to maintian all the spendings and the cash. Bomma was as alway doing nothing but to instigate comments from Sriram who was enjoying all this with his shady doped laugh. Cobra was enjoying the drive trying to maintian the much needed emotional balance and composure to take us safely to pondi. He was really grt without getting distracted by all the noise and nonsense we had created in the back, which he later made us realise that it was not the real him that we were seeing.
Thank god, and we reached pondi just behind schedule and filled the tank with as much petrol as we could. Then we went on to fill the other stuff and spend a lot of time deciding what to fill it with and trying to know the legal issues involved in transporting the fluid from one state to the other. We bought the fluids stored them much appropriately and started off for trichy.
The drive upto trichy was much calmer a the intial enthu had evaporated and was replaced with a sense of nausea. The unavailability of music in our car made us to try hard to invent nonsense in order to keep conversations alive, and keeping a conversation alive is essential to prevent the driver from dozing off. The nonsense ranged from disucussions about movies to politics to apps to jobs to life in general. Wet with all this nonsense we reached Trichy and took up the first rooms that were available to rest for the night.

Thursday, February 21, 2008

A dialogue with the devil

"So what's the problem?", asked the devil, after all I didn't raise this question until now. So "Why now?", insisted the devil. I had no answer, may be because I was witnessing the fruition of others' dreams and dreamed about myself in that position. I asked,"Am I not wasting my gifts?", "Am I not supposed to be doing that? Am I not supposed to create value? Am I not being locally greedy to sacrifice the global fruit?". "But you always knew it, you were the one who justified the decision, you clearly knew that summer what you were doing, you clearly knew you had no chance of returning back, you also clearly knew how false their world is. You clearly illustrated the flaws in their arguments and assumptions.", it replied. I still used "it" as the proper pronoun to refer to it, as in spite of all the logic and reason and rationality, I sensed something wrong and lowly with it. "Yes I did, but the popular opinion supports their views and assumptions, and isn't it the popular opinion that counts in deciding between whats good and whats evil? Isn't it the only way to differentiate and classify things. Man being a social animal has learnt this lesson now and again, that no matter what reason dictates, its always the majority whose view is taken as the final view. Its always been an illogical democracy in nature, at least in the world controlled by man. All other attempts have had a very short life." The devil smiled and shrugged, " I am aware of the recent changes that have happened to you, you have been listening to people's views a lot, been following them a bit, trying to do whats necessary and acceptable, but can't you see how much you don't belong there? how much it irritates you to find so much chaos, so much non-reason, so much dependence on instincts without any sense of reasonability. You have in a sense forgotten your own ideas, you always knew that its the non-reason thats hailed and glorified here, and you had the answer too. You knew that you just had to disguise the reason and cover it up with a cloak of non-reason and present it to them, so what's wrong now. Thats the way you sell it to them. But for yourself, you always knew that it just had to be logical, because whatever happens its always reason that triumphs because of its inherent superiority, because of the inherent inferiority of non-reason which tends to ignore whats absolute and whats truth. So whats wrong now? Just remind yourself of the reasons behind your decisions ? Everything will be all right now". Slowly I could sense it take over me, and I could sense its mask melting and Him coming out. This was all I needed, I just needed to see it as Him. This was the truth, this was the moment you expected before starting this dialogue. Now I can sleep peacefully.

Wednesday, February 20, 2008

Zero and my teacher

Why do I feel it again? May be its because he was the only one who could constantly raise fears in me about my intellect. Or may be its the way he handled things, his accented English combined with the so called "mass" telugu, the way he used to start his class, the way he used to show his frustration. All these things and many more...
I clearly remember the day when he asked me to get out, and while I was leaving, the slap he gave me just rhymes in my head. I wasn't upset more any other day, but I would be lying if I don't express the happiness that I felt then. The happiness was because of his rage on my failure to perform, an indication of how much he expected of me, an indication of possibly my talents.
I loved him, yet never found courage to go meet him, may be because I dreaded him for expecting something out of me. Or may be I feared talking nonsense to him, which again would make me appear lowly to him. The humor on students' thinking which was very frequent in his classes only showed how frank and objective. And the way he used to tear apart te Sultan Chand book only added to his charm. All these things, made me love him but made me dread him more, as I personally believe in the inevitability of such nonsense. After all, why should Sultan Chand spend anytime on its books when the majority of the students it serves are first rate fools. I would fell, a good student (like me) would see the mistakes himself and hence would not need Sultan Chand's help.
Anyway, coming back to the topic, what is zero doing here. Well, this is where I console myself. Zero just reminds us of the existence of something called zero. So even if everything is destroyed, you have zero left. You can find solace in the fact that, come what may, zero always remains. zero is beautiful in this way. A nice name given to nothingness, in order to deal with it. How else would anyone have described nothingness? How else would anyone console himself if he didn't believe in something that never changes. People call it with different names, god is something that never changes, doesn't nothingness belong to the same category. god is believed to be omni-everything, isn't nothingness too?? So if nothingness is god, zero is the golden idol of that god.