The modern world

The vague concept of "the modern world", which has for a long time coming been a convenient scapegoat for all the ills of our times, can actually help bail out those religious fellas who got onto the wrong side of law.

Q: WHY YOU STAY IN A PENTHOUSE IN ORCHARD ROAD INSTEAD OF TEMPLE?
A: Because I'm a modern monk. Can't you see? The world has changed...
I can be closer to my devotees if I stay in Orchard Road....

Q: WHY YOU WATCH PORN?
A: Because I'm a modern monk. Can't you see? The world has changed...
Who doesn't watch porn nowadays....?

Q: WHY YOU WEAR CALVIN KLEIN UNDERWEAR?
A: Because I'm a modern monk. Can't you see? The world has changed...
And it last longer... You should try....

Q: WHY YOU WEAR ROLEX WATCH?
A: Because I'm a modern monk. Can't you see? The world has changed...
And also it's a gift from my devotee.... Not I buy one...

On a different note, we tend to cast a disapproving look when we see monks mingling at high-end streets like Orchard and Sim Lim Square (of course!), and we react with glee upon seeing them stray onto the wrong side of law. We string them up, strip them of their dignity and robes, and scrutinize their private lives, right down to the underwears they own. And when we find that they lead lives not dissimilar to our very own, we start berating them for doing the very things we do, like giving in to materialistic excesses or lust or whatever that people in the "lousy modern world" do. Shouldn't we allow for some harmless failings on our fellow humans from time to time, especially if the crime committed is inconsequential? What is it with this selective inconsistency, or if you prefer, hypocrisy, that we have in abundance inside us? The christian bible may be another overrated relic, like justin timberlake or mutual funds, but it does say something wise from time to time: let he who is without sin, cast the first stone.

Into the Wild

"There was a boy, a very strange enchanted boy...", so began a song written in the wartorn 40s, which tells a fantasy of a boy who "wandered very far, over lands and seas" only to learn that "the greatest thing... was just to love and be loved in return". The song could very well have been about Christopher McCandless, whose story has haunted me ever since I caught the movie Into the Wild.

Uneven at times and beautiful in parts, it tells the tale of a boy who hails from middle-class America, but found himself in spiritual discord with the excesses of modern times. To him, a career is a 20th century invention--smart suits, sharp ties, empty souls--and he didn't want anything to do with them.

Paraphrasing Henry Thoreau, he said, "Rather than love, than money, than faith, than fame, than fairness, give me truth." After fulfilling the tedious and absurd duty of graduating from college, he set off on a journey to seek his truth. Starting from Atlanta, he crossed the great American plains, worked his way to Nevada, and into Mexico via the Gulf of Mexico, and crossed the desert back to the US. Having gained an intimacy with the North American continent, his wanderlust now took him to the ultimate wilderness frontier: Alaska. Trekking alone into the Great White North, the wilderness finally caught up with him and, remorselessly, claimed his life. He got himself killed all because he refused simple navigational tools like maps and compass. The tragedy was not that he seemed so lacking in basic sense that he somehow threw away a life like that. Thousands of nutcases get themselves bumped off the gene pool all the time. The tragedy was he was otherwise a very competent and intelligent guy, fleet of foot and quick of reflexes, and he should never have died under the circumstances.

The director was rather heavy-handed in trying to explain the inner soul of Christopher McCandless, alluding often to his overbearing father and the dysfunctional element which ran in his family. While no doubt he had to escape his life because his family embodies all that he hates about society, I think the director is missing the point. It is simply the call of the wild. The same siren song which led Columbus to the Americas, Marco Polo to the far east, and Dr Livingstone to the heart of Africa. The wild promises adventures that enrich your life, a spiritual reunion with the earth, and a peace that simply cannot be gotten from our modern-day jungle. It stirs you alive. All I know is when the siren song of the wild beckons, I have to go.

Barry Lopez, a landscape photographer who writes for National Geographic, and who too had found his calling in wilderness attributed it to a sense of loneliness. He writes, "The cure for loneliness, I have come to understand, is not more socialising. It's achieving and maintaining close friendships. The trust that characterises that kind of friendship allows one to be vulnerable, to discuss problems that resist a solution, for example, without having to risk being judged or dismissed. I bring this up because the desire I experience most keenly, when I travel in landscapes like the ones made so evocative here, is for intimacy. I have learned that I will not experience the exhilaration intimacy brings unless I become vulnerable to the place, unless I come to a landscape without judgements, unless I trust that the place is indifferent to me. The practice I strive for when I travel is to meet the land as if it were a person. To encounter it as if it were as deep in its meaning as human personality. I wait for it to speak. And wait. And wait."

It ain't over till it's over!

Towards the end of the match, I was asked to come up with a hypothetical headline to sort of capture the amazing spectacle that had earlier unfolded before our eyes. "Man U Thrashed at Theatre of Doom". Nah too long. "Red Devils slaughtered like lambs". No punch. "4 shoved up Man U's ass". Too vulgar. "Liverpool spanks Man U into meek submission". Too erotic. And my tongue started twisting as I was launching into the next one, which sounded like "Day of the Triffids at Old Trafford"... Writing headlines is not an easy job.

Why not just "Liverpool beat Man U 4-1", asked my incredulous friend. No! We Liverpool fans had been waiting for a day like this for a long time coming. It would have been a journalstic travesty to let Man U off with just any other headline. For almost 2 decades(can anyone even fathom the length of 20 years?), Liverpool had been living in the shadows of a dominant Manchester United team. If there was any team who had gotten on the wrong end of a stuffing, Liverpool would be it. Painful memories of a Jamie Carragher double--own goal doubles-- way back in 1999 came flooding back to my mind. A last min O'Shea goal at Anfield a few years back nearly set off an internal haemorrhage. At last, I managed to make peace with the devil and actually admired how Manchester United make the art of playing effective soccer seem so easy. Why? All you need to do is to send your defenders up at the last minute and pop your head at goal. Liverpool had become so pathetic that a draw at Anfield was considered a gift from the gods.

In many ways, we found our lives running in parallel with the fortunes of the football club we support. Somehow cheering for a chronic loser seem to condition one to be a loser in life. We learn to accept our lot, and learn to accept that the others will always have it better, and easier. Liverpool fans tend to hang their heads a tad lower, and smoke, and read Camus.

Until today, that is. We simply could not believe our eyes as the goals went in one after another. Manchester United given a hiding at Old Trafford? The expensively-assembled team of arrogant entertainers taught a footballing lesson from the gentlemen of Merseyside? It was like George Bush pleading for forgiveness for his Iraq fiasco. But happened it did. The last time Man U was thrashed at home by any team was in 1992, and by Liverpool, 1936. 1936! John Lennon and the state of Israel weren't even born yet. Perhaps it was the genius that was Torres. Perhaps it was the inspiration that was Gerrard. Or perhaps the industrious Kuyt, or the exuquisiteky-skilled Aurelio. (I always tend to notice the underdogs, even in a team of underdogs.) It didn't matter why. When Andrea Dossena signed off the match with a lob that floated into goal with such careless mockery, we were already delirious with joy and pride. With new-found self-confidence, and boasting pools of testesterones we never knew we had, we roared ourselves silly with delight. And with each roar, the years of frustration just melted away. And they always say, "Even the dogs have their day". But I say, this is a new world order. If it's always about fighting anyway, let's just fight to the end.

As for the headline, how about this: Liverpool strips Man U off their cloak of invinsibility. Summer is coming, but Man U may yet catch a chill they're never forget.

Someday i'll be saturday night

Don't Panic

Oh, we're sinking like stones,
All that we fought for,
All those places we've gone,
All of us are done for.

We live in a beautiful world,
Yeah we do, yeah we do,

Oh, we're sinking like stones,
All that we fought for,
All those places we've gone,
All of us are done for.

We live in a beautiful world,
Yeah we do, yeah we do,

Oh, all that I know,
There's nothing here to run from,

And there, everybody here's got somebody to lean on.


It seems to be creeping out from everywhere nowadays. This is a song of the times.

This is criminal

After agonising over the almost haphazard notations on the lecture notes provided by my course on Black-Derman-Toy interest rate model, and getting absolutely nothing out of it after almost 2 hours of my life, I decided to appeal to Emmanuel Derman himself.

http://www.ederman.com/new/docs/faj-one_factor_model.pdf

And soon the whole gist of the story became clear to me. It was not particularly because the original paper was well written--and it was sparkling in its clarity, as befits a typical Fischer Black paper--but because the idea was essentially very simple. Add-and-subtract simple. Heartbreakingly simple.

And I looked back to my lecture notes. I was not alone in getting all muddled up reading them, judging from the collective confusion in the class after the lecture. And I had to wonder, and perhaps never getting a satisfactory answer--how could anyone make something simple appear so incomprensible.

Richard Feynman once said, "If you can't explain anything simply, you don't know what you're talking about." Does the guy really understand what he is teaching? This is a complete and systemic breakdown of communication. And we, as the students, are made to pay, with our time, with our money, with our pride. Sometimes, I find no difference between institutional education and institutional abomination.

Post-remark (26/02/09):
Now I realised I had missed the point completely when my rudimentary understanding of the Black-Derman-Toy was cruelly exposed in an exam. In order to back out a r(2,-2) short rate, I had to perform tons of frustrating calculations, which I had later realised was completely unnecessary had I actually understood the powerful concept of state pricing. With state pricing, I could back out short rates, yield curve, and even forward yield curves. And that was what our lecture notes had been driving at all along. I learn, I learn...But the notations are still terrible!

Awakenings from a false dawn

At the start of the year, investors, fresh from the festivities, continued where they left off in the so-called year-end rally, and started bidding stocks higher. That helped the stock market rebound more than 25% from its November 21 2008 low. With more money in debt and money markets than equity markets for the first time since World War II, a rally could be spectacularly explosive. Looking at all the positive market indicators--rising oil prices, higher volume, rising indexes--there was a real sense of anxiety that the worst may be over. It may not sound right, that you actually wish for the worst to befall others. But it's just greed. It's just business.

The thing is, if we are on the road to recovery, in the sense that the worst quarter for the world economy was the 4Q 2008, which isn't saying much actually because it was extremely bad (or so we are led to believe), then we should see a bottoming out of stock prices anytime now, because conventional wisdom has the stock market as a 6 month leading indicator of economic health.

Indicators are misleading. They pretend to tell you a lot, but actually they don't. (Which is good actually, because you don't want the stock market to flash green lights for all to see so everyone can see its time to buy. Then you'll always be too late.) Oil prices have since rebounded from the rock bottom of $35, briefly touching $50 due to the Gaza wars, and the Baltic indexes have corrected by quite a bit too.

But any talks of a sustained rally is, at best, premature. The anticipated rally from the Obama presidential inauguration on Jan 20 2009 is not materialising. Instead investors are bracing themselves for what could be a worse-than-expected 4Q corporate earnings. In the space of 1 trading session (Jan 12 2009), financials are surrendering their gains since their November 21 low, and are threatening to breach that low all over again. Like a patient in ICU, a "stable but critical condition" has now suddenly--as usual--"taken a turn for the worse."

The depressed market trading conditions is suggesting that the year-end rally is beginning to take shape as just another bear rally in the grand scheme of a severe downturn. The dead cat has bounced? As an aside, the phrase comes from traders, whose morbid imaginations conjure up images of cats which had fallen from considerable heights and died under the circumstances, would nonetheless still bounce upon impact. That's what gloomy stock markets make you think about. You think about death.

Russell Napier, in trying to answer the million-dollar question, turned to history and examined 4 periods of extreme market undervaluations in 1921, 1932, 1949 and 1982, and found common themes, summarised here by FT's Tony Jackson, "Typically, the bottom was immediately preceded by a turn in commodities (copper especially), auto sales, corporate inventories and corporate bonds. Good news was, meanwhile, ignored by investors."

If we work through the list item by item, it seems that most of the conditions for a market bottom has been satisfied, especially with regards to commodity prices like copper which gained back some 20% since December, and oil, which rebounded from its low of $33.87 (Brent North Sea crude) in December 21 2008, to around $50 a barrel. US auto car sales may seem to be headed down, but once adjusted on an "annualised basis", they are actually not doing too bad. There is a palpable thaw in the credit market frozen over in the mayhem after the Lehman collapse. Bond yields have fallen and companies are issuing rights again.

But the conditions are scarcely enough. Dangling off the last of the list is an ominous remark about how "good news was ignored". It reflected the sentiments of those historic bears when markets were so bad that investors, apathetic to all sorts of news, have all but given up on the stock market.

It is clearly not the case now. Any reports of earnings that were less severe than expected would have the shares spiking straight up. Debenhams reported less severe than expected 4Q results and prompted a 20% rise in its stocks. When the BoE announced interest rate cuts to 1.5%, pushing the pound up(I am not sure why at this moment), the shares of British banks like Lloyds, Barclays and RBS rebounded very strongly in the space of a few sessions. Anticipating a massive auto bailout, investors bidded up the price of Ford from $1.50 to $3.50. Not good.

The thing is, if we are in the midst of a horrible bear market destined for an entry in the history books, and not just one of those barely mentionable cyclical downturns --technically the 2001 recession could be seen as one of "barely mentionables"-- then the bear market has further to go.

It sounds counter-intuitive, but analyst Jim Sibbet, paraphrasing Dow theorist Robert Rhea, explains that bear rallies and false dawns are mainly the effects of pockets of misplaced optimism investors still harbour about the economy, and when the true extent of the economic devastation is slowly revealed to us, piece by piece, the optimism will slowly be weeded out. That is when the market slides to its uncomfortable destiny with a truly unimaginable rock bottom, that is when the market has lost all hopes of recovery, that is when lights have been switched off at the end of tunnel, that is when everybody's mind is made up, and there is no way to go but up. And that is also that elusive bottom, the financial El-Dorado that everyone's been dreaming about. To go to heaven, you must first go through hell.

More ominously, there are some economists who think that we are actually having a continuation of a major bear market that began at the start of 2000. The underlying economic structures did not have a chance to fully recover before cheap credit papered over the cracks and ushered in a short-lived era of housing booms and false prosperity. If the fundamentals are severely damaged, it may take much longer for recovery to happen. I don't know why some like to quote from their CFA textbooks that a recession last for at most 1 year. The people who lived through the Great Depression never saw prosperity in their lifetime. Closer to our times, the Japanese endured a decade of zero economic growth. And we--the people of my generation--may become what others speak of in hushed tones, the lost generation.

In the midst of rising unemployment rates...

...it's high time politicians, so often convenient targets of the common people's wrath, consider fire-proof vests for personal safety. Because what happens when the economy turns bad? You can get fired.

MP hospitalised after man pours flammable liquid on him, sets him on fire