The Cycle of Market Emotions

Lessons the Market Taught Us in 2008

I came across an excellent article from Larry Swedroe on lessons taught by financial markets in 2008

Here is an excerpt

The key to successful investing is to get the plan right in the first place, and then stick to it. That means acting like the lowly postage stamp that does one thing, but does it well—sticking to its letter until it reaches its destination. Your job is to stick to your well-developed plan until you reach your financial goal. And, if you don’t have a plan, write one immediately. And make sure the plan includes the aforementioned Plan B—the actions you are prepared to take if the “unexpected” does happen.

In short, this article says that

• Trust no one but yourself when it comes to money
  
• Active money managment is loosers game
  
• Don't invest in what you don't understand
  
• Nobody can predict future
  
• Invest for the long term
  

Joke of The Day !

Somali Pirates in Discussions to Acquire Citigroup

2008-11-20 14:23:00.260 GMT

November 20 (API) -- The Somali pirates, renegade Somalis known for hijacking ships for ransom in the Gulf of Aden, are negotiating a purchase of Citigroup.

The pirates would buy Citigroup with new debt and their existing cash stockpiles, earned most recently from hijacking numerous ships, including most recently a $200 million Saudi Arabian oil tanker. The Somali pirates are offering up to $0.10 per share for Citigroup, pirate spokesman Sugule Ali said earlier today. The negotiations have entered the final stage, Ali said. ``You may not like our price, but we are not in the business of paying for things. Be happy we are in the mood to offer the shareholders anything," said Ali.

The pirates will finance part of the purchase by selling new Pirate Ransom Backed Securities. The PRBS's are backed by the cash flows from future ransom payments from hijackings in the Gulf of Aden. Moody's and S&P have already issued their top investment grade ratings for the PRBS's.

Head pirate, Ubu Kalid Shandu, said "we need a bank so that we have a place to keep all of our ransom money. Thankfully, the dislocation in the capital markets has allowed us to purchase Citigroup at an attractive valuation and to take advantage of TARP capital to grow the business even faster." Shandu added, "We don't call ourselves pirates. We are coastguards and this will just allow us to guard our coasts better."

HAPPY FRIDAY ! :-)

Linux Sound System Mess

ALSA, OSS, Xine, Phonon, Gstreamer, PulseAudio...

All these jargons of Linux sound architecture are really confusing. Not long ago, I was running KDE applications using aRts layered on ALSA.

These days, we have PulseAudio, Phonon & Gstreamer for most of the distributions. All the three systems are horribly broken IMHO. I had to kill Pulse Audio on Ubuntu to make applications use ALSA API directly. I am using Mandriva these days and thank God it has a switch to disable PulseAudio.

Here is a pictorial proof of the mess 

This picture is taken from this presentation (OpenOffice.org Impress file format). I hope things improve in future :-(

Burton Malkiel's advice on current market turmoil

In all this market madness, here are some calming words from Burton Malkiel, author of A Random Walk Down The Wall Street

"A century of investing experience, as well as insights from the field of behavioral finance, suggest that investors who bail out of equities during times like these are almost always making the wrong decision."


"It is very tempting to try to time the market. We all have 20/20 hindsight. It is clear that selling stocks a year ago would have been an excellent strategy. But neither individuals nor investment professionals can consistently time the market."


"My own calculations show that in the aggregate, investors who moved money in and out of equity mutual-funds underperformed the buy-and-hold investors by almost three percentage points per year during the 1995-2007 period."


"So what should investors do? By all means, young 401(k) investors, and those in their prime earnings years, who are stashing away funds from every monthly paycheck, should stay the course."


"Well diversified investors should, at the end of each year, consider rebalancing to ensure that your portfolio composition remains consistent with the risk level appropriate for your financial circumstances and tolerance for risk."


"Don't forget that the U.S. economy is still the most flexible in the world and our "innovation machine" is alive and well."

For full article visit WSJ here

Stanford offers introductory CS courses FREE online

Following footsteps of its silicon valley peer UC Berkeley, Stanford University has also started offerening its introductory computer science courses online for FREE. A computer & internet connection is all that is required to access these lectures.

I found that video lectures can also be downloaded using iTunes. Also note that torrents don't seem to be working right now.

This is a positive step towards open learning. UC Berkeley (link to lectures) & Indian Institute of Technology (link to lectures) also offer many of their courses online. Also, don't forget to visit my del.icio.us bookmarks which has list of free CS video courses offered by many different universities around the world.

Gone Home

I am going home for a vacation from 24th August 2008 to 15th September 2008. A much needed break....