Monday, May 24, 2010

Quotable: never too late

"Never too late, never too old, never too sick, to start over from scratch." -- Bikram Choudhury

Thursday, May 20, 2010

Comes back from cancer to help others

Faced with death, many people bargain with God.

Jonny Imerman did, too. But after his life was spared (cancer), he made good on his side. Now he puts together his "Angels" to support and help newly-struck cancer victims, one-on-one.

His story....

In the future, he plans to expand from cancer to all kinds of maladies. What a world this would be if everyone had his generous, giving spirit....

Wednesday, May 19, 2010

Book review: Can Wall Street "Quants" make a comeback? WSJ reporter/author Patterson tells how

The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It

by Wall Street Journal reporter Scott Patterson, is the inside baseball story of the quest for The Truth on Wall Street. That is, the fountain of money that never stops flowing.

-- As made manifest from the odds, the probabilities.

-- As interpreted by the "quants," traders who believe (or believed), above all else, in the numbers, data, statistics.

And why not? That's not immediately pejorative, though Wall Street has gotten a very, very bad reputation of late.

After all, odds, probabilities, are the stuff of everyday life.

We don't think about them consciously. But they're there.

You and I cross the street -- now -- because we see the odds of getting hit are nil. We didn't cross 10 seconds ago because we saw two semi's roaring towards us. We don't even think about these as "probabilities," per se. But they are.

And for those who do think about probabilities, and in connection with financial markets, from a vast resource of education (preferably Phd) and erudition and experience, the rewards can be staggering, as in a million per minute.

Quant trading started in -- wait for it -- Las Vegas, where odds-making (not image, sorry Andre, our favorite LV homeboy) is everything. This is where card counting got its start. Card counting is just probability analysis, on the fly. And card-counting, writ large, is quant trading.

Card counting pioneer, Ed Thorp, was the progenitor of quant trading. (He is the comeback story here, read on......)

Thorp begat Ken Griffin, Citadel. And on and on it went (and goes).

Some of the other featured players here include:

  • Cliff Asness, Goldman Sachs, Global Alpha, group leader, and founder AQR

  • Boaz Weinstein, Deutsch Bank

  • Peter Muller, Morgan Stanley

Author Patterson wields a deft pen, and never fails to grab the reader at the end of a section or chapter: you have to keep reading. Very entertaining.

To peel back the layers of secrecy and expose the histories, successes, failures, personal peccadilloes -- the whole story of 'the quants' -- is a very great journalistic accomplishment.

Just a very few interesting factoids the author presents:

  • p. 63 "In 1991, a company asked Thorp to look over its investment took Thorp about a day to realize the fund was a fraud." The fund manager? Bernard Madoff.
  • p. 68 Thorp's, and later Griffin's, specialty de la maison: buying underpriced warrants and hedging by shorting the stock. That was the start for the financial powerhouse Citadel.
  • p. 298 "When (PIMCO chief Bill Gross) was 53, he decided to run a series of marathons -- 5 in 5 days. On the 5th day, his kidney ruptured. He saw blood streaming down his leg. But Gross didn't stop. he finished the race, collapsing into a waiting ambulance past the finish line."

There are many, many more.

THE QUANTS is not an indictment, per se, of the entire enterprise of quantitative trading, but does indict extreme leverage and the perils it presents.

The industry can make a comeback from its meltdown -- if it forsakes excess leverage, according the author. Patterson follows the first quant profiled and author of "Beat the Dealer" and "Beat the Market", Ed Thorp, who turns away from over-leverage, and generates excellent returns without it. (p. 300 -- System X, no leverage, 18% return 2008, on $36 million. This, during a period when Citadel "coughed up half its money, a year in which AQR fell more than 40%, and Saba lost nearly $2 billion.")

So, as per usual with Wall Street, we come back to the question of greed. Greed is good? Maybe like alcohol or fire or nuclear energy? A little bit, the right place, the right time. Managed. To overdo here is to destroy, and the problem is, we're all on the hook for it. THE QUANTS is big, intriguing, messy, clear, ambiguous, and provocative -- just like the financial industry it covers. It is, quite simply, a must read.

PS: Talk about "destroying Wall Street", as we were reading this volume, the Dow experienced the infamous May 6, 2010, "Flash Crash," for which many explanations have been offered, but the truth? We are still waiting; Wall Street doesn't tell all its secrets, not even to Mr.Patterson. As author Patterson wraps it up: "here come the quants."


PPS We received from a Chicago quant this
. Another cautionary quant tale, a good one, told in
large part by a quant-turned-oysterman (he lives off his interest) and
we recommend it to you:


  • "Beauty is the right level of complexity."

  • "Condensing 300 pages of prose to one equation = beauty to a mathematician."

  • "A major rethink is required if the world is to avoid a major mathematician-led market meltdown."

Wednesday, May 5, 2010

EC AMAZON RANK TODAY Sales Rank: #76,352 in Books (See Bestsellers in Books)

Popular in this category: (What's this?)

#76 in Books > Health, Mind & Body > Psychology & Counseling > By Topic > Motivation

Tuesday, May 4, 2010

After he was kidnapped, he came back to become one of Brazil's most successful businessmen

The story of retailer Abilio Diniz in this Forbes, well worth your time and attention.

Monday, May 3, 2010

If you take up cross-country skiing...

...pick a small country to start.

Back to school and out for baseball -- at 58

Here's the whole amazing, and inspirational story.

One kind of "comeback" none of us want

If you're donating old technology, or just throwing it away, beware. Deleting sensitive data -- your credit card numbers, account numbers, passwords -- does not actually delete them from the drive.

The data is still onboard, and savvy banditos can access it if they get their hands on your drive.

How to handle?

Surf over to Kill Disk. They have a free product that will "kill" your disk, or remove all data. There are two levels: one pass "kill" (free download), and high level, military-style multi-pass, priced from $39.95 to $59.95.

The free version is a no-brainer, and if you're hesitating at the tariff on the high-level versions, we have two questions for you: 1) how much is your peace of mind worth? and 2) how much will it cost you in time and effort to reclaim your life if all your confidentials fall into the right hands?

Can't happen to you? Happens to the U.S. government even; students found sensitive U.S. defense contracts on hard drives -- in Ghana!

You don't want your data coming back to you in another's hands to haunt you. Be safe. Take the necessary steps to protect your identity and resources.