Maribetta

Maribetta

It’s been about six months since I last hit the trekking trail and I thought it was high time I got started again. Bangalore Mountaineering Club (BMC) was organizing a trek to a little known hill called Maribetta near Kanakpura, and I thought I’d join in. So last minute plans were made, bags dusted, camera charged and off I went at the crack of dawn.
I met up with the rest of my little group at the usual spot at Domlur. For a change we made fairly good progress and actually reached the start of the trail a good hour before time. There we hired a few locals to guide us to the top, made pals with the mandatory dog and set off to climb Maribetta.
My first thought on seeing the hill was – That’s not all that tall, shouldn’t take too long to climb. Little did I know how wrong I’d be.
We soon hit the trail that went over a small hill. It was all good until we crossed it and it was only after that did we realize why the organizer’s had asked people to wear full sleeves shirts. The rest of the trail weaved through forest, with thorny bushes on either side!!
The trail that we took, went kind of round the main hill and up a smaller one. From there the idea was to take the connecting ridge all the way to the top.
In spite of the thorns, we made good progress and were almost all the way to the top pretty soon. But that was almost because we soon hit a pretty steep section of rock. From then on for the next hundred odd meters it was climbing up on all fours to reach the top of the section. After that bit the going was easy and we soon reached the top of the hill.

View from the top

View from the top

The view from the top of the hill was breathtaking, with clear views for miles around the hill.
We had a quick lunch and spent some time admiring the view from the top. While we had aimed at staying for a few hours at the summit, the sharp afternoon sun and lack of shelter forced us to begin the trip back much earlier than planned. Since we wanted to climb down the hill as soon as possible, our guides decided to take us down another route.
Initially the route seemed fine and went through some forest patches, but pretty soon it became quite steep. At one point we were actually climbing down a steep (60 degree ?) rock face, literally sliding down !!! The journey down took it’s toll on us – torn bags, scuffed/torn pants were the order of the day. Oh and somewhere along the way, we all ran out of water.
We eventually made it down and rushed to our transport and made a beeline for the nearest place where we could get some water. Our thirst satiated, we made our way back to Bangalore reaching back in the late evening. Overall, it was quite a decent trek and a great way to get back to trekking.

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I’ve been fascinated by the world of algorithmic trading, portfolio selection and the general use of computers and technology to make trading and investment decisions. Of late, I’ve also been dabbling with markets, and while my stock picking has been fairly decent – there have been some huge lemons picked up along the way as well. So I wondered if there was a way to systematically invest and diversify away the risk using historical data and trends.

Of course, investing in a  good mutual fund through a Systematic Investment Plan (SIP) is a no-brainer and I believe the corner stone of every portfolio (especially if you do not have the time to micro-manage your portfolio) should start there. However, I also believe it’s possible to augment returns from mutual funds through investing in stocks directly or through derivatives.

Which brings me back to the fundamental question – is there a fairly “sound” system for getting into the stock market and exiting profitably? From the little I know about the field, most academic research has been done in the “value investing” school of thought i.e. investing in stocks that are trading at less than their intrinsic values.

So I decided to investigate this further by building a “paper” portfolio of value stocks. I chose Benjamin Graham’s Net Current Asset Value (NCAV) per share as the criterion to filter stocks.  The NCAV per share is calculated as per the formula below:
NCAV formula
What the NCAV per share effectively indicates, is a “realistic” cash value that may be available to the shareholder once all liabilities have been met.  Graham recommends buying stock that trades at approximately 67% or less of the NCAV per share. A study by the State University of New York has shown that investors could have earned an average return of 29.4% over a 20 year period, by picking stocks by this method and holding them for a year.
Once the filter criterion was decided on, I needed a universe of stocks to choose from. For the universe of stocks to choose from, I restricted myself to the stocks that compose the BSE SMALL CAP index (which also served as my benchmark). I then ran a series of scripts that I wrote in Ruby to pull the data needed to calculate NCAV from Yahoo Finance. Once I had all the data in a spreadsheet, I calculated the NCAV for all the stocks.
While Graham recommends only picking up stocks that trade at values significantly below their NCAV, I chose to go with stocks that were trading at prices that were at the NCAV or below it. Using this filter, I got a portfolio of about 17 stocks. The next step in my opinion should have been either of the following:

  • Use the Markowitz optimum portfolio theory and allocate a fixed amount of capital among the stocks chosen so as to minimize portfolio risk OR
  • Do further fundamental analysis (which most investment “gurus” recommend) and pick only those that are “fundamentally” strong

However, since I was pressed for time – I took the easy way out.

I just created a “paper” portfolio containing 100 shares of each stock. Slightly “unscientific” I know, but bear with me.
So with this small little NCAV portfolio – I began tracking the performance of the portfolio. And the results have been interesting, to say the least.

NCAV Portfolio Performance

NCAV Portfolio Performance

The portfolio has significantly outperformed the benchmark over the last month. The returns from the benchmark BSE SMALL CAP index have been about -2.14% while the portfolio has returned about +9.09%.
While I agree that the time period is probably a bit short for significant analysis, I think the results warrant further investigation. Over the next few months, I will actively monitor my little test portfolio and update this blog. Lets see how it goes.

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Google+ seems to have made a “splash” with the initial crazy insane response. However, thanks to Google’s measured response to sending out new invites, this seems to be slowing dying out. Both search and news volume trends for Google+ seem to be heading downwards. It seems to me that Google still hasn’t learned lessons from the Wave debacle – strike while the iron’s hot. Though whether this will sink the fledgling social network or not is something that time will tell…

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ebooknomicsI have been fascinated with Infographics of late, and decided to take a shot at creating my very own Infographic. The result is a short look at current e-book costs and revenue statistics for firms that sell e-books.

A few things about the data used in the Infographic:

  • The average cost of an e-book today, was determined using the average cost of the Kindle editions of the New York Times Hardcover Bestseller list.
  • The 10 year average e-book price was computed by looking at the price of e-books on the bestsellers list at ebooks.com over the last 10 years
  • The “payback” period was determined by using the New York Times Hardcover Bestseller list. The average price of a hardcover on that list was $27.68
  • The average price of both e-readers and tablets was based on the average cost of devices announced this year
  • The graph shows the average cost of e-ink based e-readers only and does not take into account other devices like tablets.

Here is a couple of things I discovered while researching data for this Infographic:

  • The average cost of e-books has been pretty much steady. As such $10.00 and below seems to be a sustainable market clearing price for e-books
  • Selling e-books and digital content is highly profitable for publishers. Their profit share is much higher for e-books. Some publishers such as Simon & Schuster have posted record earnings in 2011 on the back of blistering growth in the digital segment. They reported almost double the revenue over the previous quarter. Part of this growth was attributed to  “lower shipping, production and returns costs”. Print sales fell across the board. All this leads me to believe that:
    • the benefits publishers gain by not having to print physical books is far more than they would like us to believe
    • there is still enormous scope for further reduction in prices of e-books or even scope for a new business model
  • The sharp fall in e-reader prices over the last three odd years has resulted in sharp increases in overall sales. The data further lends credence to the theory that once e-reader price levels fall to below $100, the mass-adoption that will follow will give a huge boost to online e-book sales.
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Just saw this great video (courtesy of @naughty_hot) on GOOD called – Hey You ! What song are you listening to. Basically, one guy put together the video by asking random strangers on New York’s streets what they were listening to on their iPod’s, Walkman’s, MP3 players etc. Its great, because he also overlays the background track with the music that the person on screen on listening to. It makes for an interesting medley of tracks.

But here’s the really interesting thing – a significant amount of the people on screen have to actually look at the screen on their music devices to be able to tell what they are listening to !! Makes you wonder what direction humanity is taking, if we can’t even pay attention to what we are listening…

(On a side note, classical music seems to be dead and Frank Sinatra is still alive and kicking 🙂 )

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Recently, Google announced that it was depreciating some of it’s APIs (including the very popular Translate API). This announcement was met with a fair amount of flak from the developer community, with people going as far to say that they would never ever use a Google API ever again.
Here’s what I don’t get, people are complaining in spite of the fact that:

  1. The APIs are Google’s property. It can do as it wants with them.
  2. Most of the people who are crying out against this haven’t contributed in any form to either the API development or maintenance.
  3. Almost all the depreciated APIs have replacements.
  4. Quite a few of the APIs were still under API Labs – which means that they were experimental.
  5. The Termination clause in the Terms & Conditions (which I assume most people expecting to run a business / project based on a API would read) clearly states that Google may terminate the API if, I quote:

    the provision of the Services to you by Google is, in Google’s opinion, no longer commercially viable.

  6. The Warranty clause in the Terms & Conditions further states that:

    IN PARTICULAR, GOOGLE, ITS SUBSIDIARIES AND AFFILIATES, AND ITS LICENSORS DO NOT REPRESENT OR WARRANT TO YOU THAT:

    1. YOUR USE OF THE SERVICES WILL MEET YOUR REQUIREMENTS,
    2. YOUR USE OF THE SERVICES WILL BE UNINTERRUPTED, TIMELY, SECURE OR FREE FROM ERROR,
    3. ANY INFORMATION OBTAINED BY YOU AS A RESULT OF YOUR USE OF THE SERVICES WILL BE ACCURATE OR RELIABLE, AND
    4. THAT DEFECTS IN THE OPERATION OR FUNCTIONALITY OF ANY SOFTWARE PROVIDED TO YOU AS PART OF THE SERVICES WILL BE CORRECTED.

(Note the emphasis on the ALL CAPS text)
So, given all this, did all those complainers really expect to keep making money off Google’s efforts and data in perpetuity? And is basing a business model on a API, that clearly states that it might vanish overnight, really such a smart idea?

Google also drew a lot of flak for pulling the plug on Translate citing API abuse as the reason. A lot of people felt that, given how “smart” Google was, they should have found some other way round the abuse problem. My take on this is that, people give Google some credit. Given how “smart” they are I’m sure they must have explored all avenues before coming to that drastic conclusion.

I think in the end, its the developer community that needs to shape up and stop having unrealistic expectations of experimental APIs and be ready to change legacy code when API’s depreciate or stop using them. And Businesses need to realize that depending on other companies for core functionality is never a smart move. I’ve already been involved this year with cases that show how both depending on API’s and building missing functionality using API’s can seriously boomerang.

Thats my 10 cents on this issue. What’s your take on it?

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The firm I work for has business interests in Africa, Europe and the Asia-Pacific region. As a result of this, we often have people traveling to countries in these regions for sales and pre-sales pitches, implementations etc. Thanks to my work, I got an opportunity to travel to – wait for it – Dhaka, the capital of our “beloved” little neighbor, Bangladesh.
The trip was for a Product demo to the senior managers of a prominent bank there. The weeks leading up to the trip were spent in getting the product demo ready for the trip. I was so engrossed with the lead up to the trip, that it didn’t feel like I’d be going on a short trip across the border. Eventually D-Day arrived and I caught an early morning flight to Dhaka via Delhi. Thanks to the wonderfully close Bengaluru International Airport, it meant catching a cab at the surreal witching hour of 3:00 AM. (On a side note, why is it an International Airport? Find very few International Direct flights from there anyway…) Continue reading ‘Dhaka Diaries’ »

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Here is what the next Bond Villain should have:

  • A Bond Villain Worthy name and style
  • Must be Universally reviled and feared by world governments all over
  • Must Have a secret army of minions that can take down his opponents
  • Must Have a “secret base” in Iceland
  • If arrested, must be confined to a stately English Manor, rather than a prison

Oh, wait a second, I just described Julian Assange – our dear beloved “Techno-Terrorist” !! Bond movie deal for Mr. Assange anyone?

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In 2007, I began my first long time association with Linux when I installed openSuse 10.2 on my Laptop. Since, then Linux has come a long way. Sadly, I didn’t keep my system updated, and soon found myself back into the familiar jungles of Microsoft Vista. Of late, though hard disk space crunches on my Windows Partition forced me to think about going back to Linux. This time round I decided to go with Ubuntu.

The last time I had tried Ubuntu, it was a rather bitter experience. My graphics card wasn’t fully supported and Ubuntu refused to show anything but a blank screen!! This time round though it was delightful experience.

Continue reading ‘Running with the Maverick Meerkat’ »

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I’ve been meaning to update the theme of this blog for quite some time now and I finally got some time to work on it this October. So after much waiting, here is version 3 of the blog.
Some of the things that are new:

  • Sleeker, cleaner design that will hopefully reduce the clutter. The design is also “fluid”, so you should be able to read the blog easily on most resolutions
  • New Social Sharing features that will let you “like” and “tweet” the blog posts you like
  • A new “reading” section that will track what I am reading. It has been updated with everything I have read since Jan 2010, so go ahead and discover some new titles
  • A mobile version of the Blog. Thanks to WP Touch, the blog now has a sleek new mobile skin to make it easier to browse on the phone
  • You can now subscribe to an email newsletter that will send you my latest posts

Hope you like the new design 🙂

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