Satisfaction is when...

After more than a week being stuck with a model, I finally solved the whole thing today. Not entirely by myself but with a few pointers here and there from some really smart people. The feeling upon solving the whole thing is indescribable. I guess this is just pure joy of having a burden lifted. Best part is getting congratulated by my supervisor at 12.20am after I sent him the solutions :)

I just want to remember this moment...

To catch a thief

Kitchen 117 had been invaded! At first, it was brushed off as a mistake by a member of their own. But now, via some sharing of info, they discovered the truth. There was a break-in. Among the things missing were a bar of kitkat, a bag of spinach and sausages from a pan of fried rice left on the counter.

SM: I think we should set up a bait.
PC: How to catch the person?
SM: Maybe we should put a "junk" wrapped in choc outfit and store inside the fridge.
PC: Right.
SM: I wonder why they stole LR's spinach but not my tomato...
PC: My bell peppers are still in the fridge too...
SM: So the question is what kind of person prefers spinach to tomato and bell pepper.
PC: The person also ate all the sausages from fah's fried rice which was lying on the counter.
SM: Right.
PC: And likes sweet things (kitkat bar)
SM: That's universal.
PC: Erm...ok
SM: The next question is if we do catch the thief, what do we do? Take photos?
PC: Hit him...real hard.
SM: You sure? Bout the hitting.
PC: I have an umbrella.
SM: Maybe we should yell loudly: thief! thief!
PC: I suppose...
SM: Or throw water?
PC: Good idea. I need a bucket.

At the same time...
FP: I think I am gonna leave some poison food outside.
JC: Good idea.
FP: I was really shocked. If they ate everything, it's alright. But they ate only the sausages!
JC: That is seriously shocking.
FP: I should have asked my friend to buy some laxatives pill from T***.
JC: Yeah, we can marinate your sausages in laxative pills.

PC: I am gonna keep my ears open from now on especially at night.
SM: Alright. I will keep an ear open as well. I don't mind since I sleep at 2am.
PC: I sleep at 1am. Maybe the thief comes at 3...
SM: ...

And so the member of kitchen 117 are on a mission now. To be continued...

First official personal meeting

Believe it or not, I went through most the papers I was supposed to go through for my first meeting with my supervisor only this morning. Around 5 hours before the appointed time. That's the level of my laziness now (I call it post-exam trauma). Luckily, I survived after following him round the dept in search of empty room for our next group meeting and having a cup of tea at his insistence in the staff lounge.

To get into business, I think I might finally have a dissertation title. Quite a departure from the original idea. Now he is looking for "intellectual sketch", whatever that means. So, my works for these next few days are to try to solve Shin's model of two assets (in which he said a copy will be given to Dr. Rocket-Science-with-monotonous-tone to have a look and I am to send him a copy of my answer, darn) and to come up with a plan for my proposal to be presented on Thursday. The main theme is to analyse the difference between two very different models between Shin's marking-to-market problem and Foster & Young's faking alpha model. My contribution could be to find the link or the evidence supportive of either one model to tip the balance.

So, let's start sketching intellectually!

Second meeting

Today is the second meeting of the consortium. 4 students presented their dissertation proposal. One of them came ready with presentation charts, complete with a model and results!!! At that moment, I feel that I should just sink into a hole and disappear. Too depressed with their apparent strong grasp of their subjects and their ability to modify models. Each of their stories seems to link together and weave into one final tale.

At the end of the presentations, me and 3 other students were asked to stay behind to have further discussion with our supervisor. He wanted us to come together to build a story of the credit crunch. He kept insisting on us working together. As a result of this, I am without a dissertation topic anymore. I wasn't sure how to move on with his continuous stream of new ideas. I need a certain topic by monday. Seriously...


Preliminary thoughts after listening to my prof and his argument with another student...

In Shin's model, moral hazard is not seen as a cause of the banking crisis, rather it's largely due to active balance sheet management. AH thinks that moral hazard is still part of the story because banks can gamble via SPV. What struck me is that we may be able to assume that banks were gambling without knowing it. There's a lot of talks bout the complexity of the structured financial assets that no one understands them. In the beginning, these sound like pretty good ideas for risk-sharing and most investors believed they had bought high quality assets given the perceived AAA ratings. So, it does sound as if no one was gambling if we agree to take this side of the argument. I am not sure how convincing the argument will be. Need to look into it further.

Punctuality

I used to think it's a Malaysian problem. Now I realise it's a global problem. Everybody comes late, regardless of the occasion; late for class, late for meeting, late for appointment, late for anything that you and I can name in this world.

Our final class was held yesterday. The business school organised a class photography session and stressed in the email, asking us to be punctual. Yet, after we had taken our photo, a small group of my coursemates started appearing and we were asked to stay on for a second round. I do not know what was the reason for their lateness. In KL, we can blame the traffic jam. In a campus university where most of us stay 10 minutes away from the piazza, what kind of creative excuses can anyone conjure up? I can probably think of a few:

1. I stepped on bird shit when I walked out and had to run back to my room to change to a new pair of shoes.

2. The wind was blowing too hard that it's stopping me from moving forward.

3. A group of ducks were crossing the road and I am afraid of them. Hence, I let them crossed first.

I am not saying I have never committed this offense before. I just wish to say that if ever you are late, you do not expect people to turn back time for you.

Such an idiot

I can't believe I missed the last class of my course!!! I did not overslept. I merely thought the class was being held at the same hour when it was actually moved to the morning. My friends did wonder where I went when I did not turn up. Largely because, they knew I never miss a class no matter how boring it will be.

This does not mean I am free. I still have two more projects to hand in by end of the month and I have yet to decide which topics to do. I am definitely going along with CAPM (since I have wasted my printing quota on the papers). I was planning on doing ARCH effect in stock prices till I missed the class (that's the final class) for this chapter. I am doomed. But having said that, I am qualified for my MSc already even if I failed this paper. Rules said we are allowed to fail one paper. Of course if I can help it, I will try not fail any.

Reverse of the law of large numbers

I found this fascinating piece of news on FT today. Summarising the idea:

In general, the law of large numbers states that large sample size leads to convergence towards expected value. Reverse LLN, on the other hand, describes the reverse effect of LLN. In a market where there are many participants, herding behaviour reverses the LLN effect, moving the probability distribution away from normal towards the extreme tail end. Therefore, market views become unbalanced, tipping on either end of the extreme. This has implication on market prices, enabling prices to move away from equilibrium and hence, driving bubbles formation in the markets.

http://www.ft.com/cms/s/0/2005e96a-33f1-11dd-869b-0000779fd2ac,s01=1.html?nclick_check=1

Mwy nag a welwch...

Ringggg....my alarm went off. A thought crossed my mind. What if I text my friends now to tell them I have decided to skip the trip to Llandudno because I am too lazy to wake up? Didn't take me long to conclude that I do not want to waste the GBP12 I paid for the trip. The next thing I know, I was already on the way to Llandudno, the name of a place in Wales which I can't quite pronounce.

Wales greeted us with its stunning view of houses perched on top of mountains, a mine and a castle hidden among the trees. LLandudno offered us a nice, pure traditional town by the rocky seaside, the very epitome of timeless beauty. According to the owner of a souvenir shop (where I bought a cute little fishing boat magnet), the town has not changed since she was a little girl. That is really a long long time ago.

We began our journey by looking for a place to lunch and found a simple-looking restaurant offering fish and chips. Actually most of the shops there (except KFC) sell fish and chips. Next, we headed to the beautiful seaside to stroll along the rocky beach on the North Shore. Sea larks were everywhere. It was a joy to hear them calling out every now and then. Part of our mission of the day was to capture a proper photo of the sea lark. I have to confess that it's my first encounter with them.

After making a stop at the pier, we went up to Happy Valley to catch the cable car to the Great Orme (679 feet). The Llandudno cable car is the longest passenger cable car system in Britain, which is about 2 miles. The ride costs GBP6.50 for return and GBP6 for a single journey. The ride was nothing like the ride up Genting Highlands i.e. not scary. As our cable car glided up smoothly to the summit, we had the most amazing view of Llandudno, covering both the North and West Shore. Our photos will never be able to do justice to the view we saw nor explain my feeling at that point in time.

We continued to be amazed by the breath-taking view of this little resort town upon reaching the summit of the Great Orme. Had we had the time, we could have spent the day, lying on the big field, enjoying nature or take a hike down the mountain. But time was a luxury. By 3.40pm, we had to leave the summit. On our way down, we spotted some of the feral Kashmir goats, enjoying themselves under the bright, sunny day, chewing grasses. They were such pretty creatures.

The last few hours were spent on looking for souvenir shops and walking by the seaside once more. By then, the sun was glaring at us, making it difficult to take photos properly. We were glad we spent the best part of the day on the Great Orme and not in the castle. One regret was missing out the chance to see the West Shore where Alice Liddell's family own a house in the 1860's. There's still so much we wanted to do that we began looking at the prices of hotel. Thus far, we found mainly GBP30 per night per person for B&B.

If there's one place I am willing to depart with a coin to ensure my return, Llandudno will be it.

More than meets the eye...

First meeting

As soon as my lecture ended, I ran or rather walked hastily to the social science building. My first meeting with my supervisor was starting at 4pm and according to the email from him, he can't postpone the session any longer as he had already did it once to accommodate the business school students. Upon arrival, he had just started handing out some forms for the students to fill in. There are more than 10 students in the room. I looked for a seat. He saw me and gestured me to the front row. Great.

He began the session by explaining to us the 3 big grouping of all our dissertation topics. Each of us was assigned to one of the supervisors who formed the consortium of three. "We want your help", he said. The meetings were designed to help one another, between students and supervisors and among students. We were encouraged to hold our own group discussion. I like that idea.

So, yesterday, he just went round the table asking each student to brief the group on his/her ideas. The ideas range from global macro to credit crunch to the oil market. When it came to my turn, I couldn't believe my own nervousness as if I wasn't prepared even though I had mindmaps and slides ready to be distributed. In the end, I did not distribute any as I was caught by surprise. Initially he said only students who had discussed with him will be speaking. Hence, I thought I won't need to say anything this round. I was wrong. Nevertheless, it was helpful to let him know my plan, allowing him to suggest papers to check out and to speak to another student working on similar topic.

For the next meeting, 3 students will be allocated 20 - 25 minutes each to present their ideas to the whole class. I am not one of the first three yet. Phew.