Links for 7th May, 2019

  1. “Cyclone Fani slammed into Odisha on Friday morning with the force of a major hurricane, packing 120 mile per hour winds. Trees were ripped from the ground and many coastal shacks smashed. It could have been catastrophic.

    But as of early Saturday, mass casualties seemed to have been averted. While the full extent of the destruction remained unclear, only a few deaths had been reported, in what appeared to be an early-warning success story.”
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    A short read from the NYT about how Odisha was rather more prepared this time around for Cyclone Fani. Makes for encouraging, happy reading!
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  2. “Perhaps the earth has life because it came from other solar systems, seeded by alien probes, and indeed that is what I would do if I were a very wealthy alien philanthropist. If you end up with 100 successfully seeded solar systems for each very advanced civilization, the resulting odds suggest that we are indeed the result of a seed.That’s partly why, to this observer, the most likely resolution of the Fermi paradox is this: The aliens have indeed arrived, through panspermia — and we are they.”
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    An equally short, equally interesting take on aliens and the Fermi paradox from Tyler Cowen.
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  3. “We Are Pro-Technology, but only as a means, not an end. Technology is only as good as our understanding of it, and an incremental approach will save more lives in the near and long term while mitigating the second order consequences of an all-or-nothing approach.”
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    I was sent this by Aadisht Khanna, and while I do not necessarily agree with all of it, it does raise some fairly interesting points – and the manifesto itself is certainly food for thought.
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  4. “This looks quite tough, and there’s a significant chance the company will be valued at less than the debt itself, even if there was a buyer. After all if a buyer is paying that much money, why doesn’t he just start a new airline (or acquire a significant stake in an existing airline) and take over whatever slots, planes and rights Jet had? That’s likely to be much cheaper.”
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    Deepak Shenoy ponders the question of Jet Airways unusually high share price, and is unable to resolve the paradox.
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  5. “Without going too far down this rabbit hole, the following is worth noting: What sport psychologists, coaches, parents and players are prescribing as a model of mental toughness is equally likely to be the success-producing traits of highly successful and highly functional psychopaths. I have worked with a few psychopaths. I’ve seen the so-called attributes of mental toughness in them, which help deliver results on the field. I have seen how fans, friends and the media adore these people. But I have also seen what it looks like when their mental toughness is unmasked as psychopathic behaviour. They come across as being narcissistic and entirely self-serving, compulsive (and clever) liars, manipulators without any remorse and an inability to take responsibility for their errors. These are not qualities we should encourage as general conditions for performance.”
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    A fascinating article in Cricinfo about mental toughness, and how it doesn’t really exist – at least, not the way you think it does.
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Links for 22nd April, 2019

  1. “It all comes down to money, and in this case, MCAS was the way for both Boeing and its customers to keep the money flowing in the right direction. The necessity to insist that the 737 Max was no different in flying characteristics, no different in systems, from any other 737 was the key to the 737 Max’s fleet fungibility. That’s probably also the reason why the documentation about the MCAS system was kept on the down-low.Put in a change with too much visibility, particularly a change to the aircraft’s operating handbook or to pilot training, and someone—probably a pilot—would have piped up and said, “Hey. This doesn’t look like a 737 anymore.” And then the money would flow the wrong way.”
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    The most readable account I have read about what went wrong with the 737 Max. I do not know if it is correct or not, in the sense that I do not have the ability to judge the technical “correctness” of the piece – but I did understand whatever was written. A sobering read about checks and balances gone wrong in many, many ways.
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  2. “Hardly sounds plausible. But there it is: Donald Fagen and Walter Becker—two super-fans of the genres they creatively appropriated—made some incredible, snarling, cynical, viciously groovy easy listening music, and it has more than held up over the decades since they released their debut album Can’t Buy a Thrill in 1972. Despite decades of critical praise and hit after hit, they also remain a profoundly misunderstood band.”
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    The article doesn’t actually deconstruct Steely Dan as much as they might have, but if you haven’t heard of the band, this is a good place to start to learn more about them, and then maybe listen to their music. But also a good way to learn about the benefits of non-conformity, and doing what you really like without worrying too much about the consequences – a powerful lesson!
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  3. “The iPad was not in the basket. Ollie, it turns out, had got hold of it and gone to town on the passcode, trying one idea after another, with the fury and focus of Alan Turing trying to beat the Nazis. It’s not clear how many codes Ollie tried, but, by the time he gave up, the screen said “iPad is disabled, try again in 25,536,442 minutes.” That works out to about forty-eight years. I took a picture of it with my phone, wrote a tweet asking if anyone knew how to fix it, and went downstairs to dinner.”
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    A short read from the New Yorker about, ostensibly, a toddler and an iPad, but also about empathy, technology, stuff going viral. Interesting because it is short, and we can all feel the pain.
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  4. “News floods the investment landscape about something strange in the land of debt funds. It turns out that:a) Kotak Mutual Fund has an FMP maturing April 8, and they won’t be able to pay the full maturity amount. They will pay some now, and the remaining “later”.

    b) HDFC Mutual Fund also has an FMP maturing soon. They will postpone the maturity of the fund if you so choose, by one year. But if you don’t vote to postpone, you will get the maturity value but a lesser amount than the NAV tells you.

    Whoa, you think. How can I be paid lesser than NAV? Isn’t that the very concept of an NAV? Isn’t it supposed to reflect what I’m supposed to be paid when I exit?

    Of course it is. And that’s why the mutual funds have had to take it on the chin for pretending it is not. Or rather, for ensuring it is not. But before that, let’s understand what the drama is all about.”
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    Deepak Shenoy warns us at the very outset that this is a long post, and he isn’t kidding. But that being said, it is a wonderful way of helping us understand what exactly went wrong with the FMP saga.
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  5. “Anticipating this discomfiting development long ago, Parliament passed an amendment during the Emergency years in 1976, freezing all delimitation as per the 1971 census, up to the census of 2001. Also, even after the redrawing of constituency boundaries, the total number of MPs per state was kept frozen. In 2000, another amendment postponed the day of reckoning to 2026. Thus, only after 2026 will we consider changing the number of seats in Parliament. Till then, everything is frozen as per the 1971 census. Remember, in 1971, India’s population was 548 million, and by 2031, the first census after 2026, it may well be close to 1.4 billion. The great apprehension is that redrawing boundaries and distributing the existing 550 MPs might mean that the south will lose a lot of seats to the north. Even if more members are added to the Lok Sabha, that incremental gain will mostly go to the northern states.”
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    This was written a year ago, but this is a problem that we should think more and more about in the years to come. Changing the shape of our Lok Sabha needs to happen by 2026. How is an extremely interesting question.

Links for 10th April, 2019

  1. “In an ideal world, you shouldn’t have to amortize. The prices will all be reflective of reality, there will always be a rational buyer at a rational price if you want to sell. In an ideal world corporates will not rollover their liquid fund investments every day either – they will know how much money they need, and they will only withdraw that much, leaving enough back in the liquid fund.”
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    The always excellent Deepak Shenoy explains the how, and some of the why when it comes to amortization in debt funds. If you are interested in corporate finance, finance in general, or policy-making when it comes to finance, this is well worth your time.
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  2. “Within the overall context of having asset allocation in an individual’s portfolio, passive investments will play an important role. It will increase overtime as a complementary strategy. It will not be just be plain vanilla passive but smart beta products. Look at these three benefits. Better returns profile, lower risk profile and wider diversification as compared to normal other products. So, it is a clear cut thing from the growth perspective.”..
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    An interview on Bloomberg Quint about smart beta products. As with the first link, a must read if you are a student of finance, especially from India.
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  3. ““If you wanted a snapshot of all your financial assets in one place on your mobile or to share information securely with a lender, it was previously not possible,” says Atluri Krishna Prasad, chief executive of Onemoney, one of the five entities that have secured in-principle approval from the Reserve Bank of India to operate as an account aggregator. “Now, if you give Onemoney your consent, we will fetch all your financial information from different sources, aggregate it and give you a single window with the consolidated information.””
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    If you were worried about data privacy in India, we’re only just getting started. A nice article in FactorDaily that explains how more data sharing between financial organizations will soon be on it’s way.
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  4. “Here, as in so many cases, the analysts haven’t got beyond an intuition that Johan Cruyff, the Dutch father of Barcelona’s football, had nearly 50 years ago. Cruyff played for Barça in the 1970s, coached the team from 1988 to 1996 and largely invented the passing game that the club still play. He could rhapsodise for hours about players who were “turned” the right way. He cared much less about a player’s size and speed.”
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    Just one of many excerpt-able snippets from a fascinating article about how a sporting club is using every last little bit of information about, well, everything to make Barca (for that is the football club in question) even better.
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  5. “He’s agreed to forfeit about $50m. It’s not clear what’s happened to the other $73m, but Rimasauskas was a prolific and baroque money-launderer who squirreled cash away in Cyprus, Lithuania, Hungary, Slovakia, and Latvia. Google has said that “We detected this fraud and promptly alerted the authorities. We recouped the funds and we’re pleased this matter is resolved.”Rimasauskas will be sentenced on July 29. He faces up to 30 years.”
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    One of those articles that truly help you understand Coase/Demsetz and industrial organization overall. But if I am to be honest, a great read in its own right.