Left With No Option

 A quarter of a century ago, in April 1997, I read that the Nobel Prize for Economics had been awarded to two fellows, Merton and Scholes, who had created the Black-Scholes Option Pricing model (with another guy called Black, who, well, blacked out from the effort and went cuckoo).  My first reaction -actually, only reaction - was to check out legal ways by which the goofy imbeciles on the Nobel Committee could be hung upside down, a few inches above six salt water crocodiles that had only been fed cauliflower noodles and pappadums
 
While doing my MBA and attempting to change the course of human history by majoring in finance, I took a course in International Finance.  Of course, I had done many stupid things in life earlier (like cycling with a loose handlebar on MG Road to win a bet), but this was when I summited the peak and planted a flag.  For starters, I understood nothing in the course and, in the class, a thin film would cover my eyes, the chin would drop three inches, the brain could only think of all the Hollywood films I had seen on escape and I would fervently pray for deliverance (no, no, not the deliverance of the question paper.  Though, in retrospect, that may not have been a bad idea….). 
 
We had a prof called Apte, who had brains oozing out of his ears and dripping onto the Cadapa floor to form sedimentary rock.  He took a dim view of minions (well, guess you know whom I am referring to here, don’t stress the point, will you?).
 
To make matters God-awful, there were classmates who seemed to know what was going on….tll we came to this damn option pricing model and the three genocide-perpetrators who invented it.

Take a close look at the formula below and let me know if you understand it.  Here is a tip: if you have it figured out, then you have got it all wrong.  At that time, the only one on the planet - other than the three quantitative-perverts - who figured it out was Apte, and when he took the class on the B-S Option Pricing Model, his eyes lit up, words flowed like a passage from Auden and he filled the board with all kinds of funny looking squiggly stuff and squealed in delight – damn him - as he took us through this deranged formula for Armageddon.  I kept staring at the formula and seeing a whistle to the power of 2 (whistle squared. Hope that makes sense to you) and elsewhere I could swear there was a whistle square-root t as well.  I saw heaps of stars too, Orion being the main constellation.
 

In his final class on B-S OPM, he asked at the end, ‘Any questions?’ and the only one the class asked was, ‘Is this an Optional question?’, which, we all agreed, was the only humour in a five km radius, so we all laughed hysterically.   
 
In ’97, I cursed the Nobel committee, their parents and ancestors freely (big help, that was) and wished that Scholes and Merton would be served as that thing you get in Bangalore called shawarma. 
And it sort of happened.
This Scholes & Sadists gang had created a company called Long Term Capital Management to apply some of their formula stuff to the real world.  In ’98, it went so badly bust that, for once in their life, they had no option, let alone a bloody price for it. 
 
Moral of the story: only believe in formulas that involve potassium permanganate. 
 
ps (for those whose business it is to close all loops and know everything):  I passed IntFin, but in every nightmare in later years, I failed.  B-S figured prominently in those as a compulsory question of 55 marks.
 
 
 
 
 
    

Water From Stone

About 27 years ago, I worked in an investment team in ICICI Ventures that was led by one of those superior types, who walked around with with his nose at 45 degrees to mean sea level.

One day, a proposal for investing in a textile mill that had gone bust landed up. The company was up to its neck in debt, yet needed more money and the family that ran the business asked one of its own – a US-MBA type - to take over (the fact that he agreed was indicative of his IQ, but it did not occur to me then).

If you know anything about textile mills, you are probably in stitches by now and laughing yourself sick.  The general rule is, the more spindles you have, the higher your societal value in Coimbatore, and the more losses you make.  The only way to make money off a textile mill is to keep digging below the factory floor till you strike oil.  

Under every circumstance, we would have neatly stacked this proposal document in the weekly waste paper sale to the raddi-wala (which was at that time the only profitable activity we did), but that year we were hopelessly behind the annual investment target (those who set targets should be tried in a court reserved for War Crimes), so the team head – I shall call him Mr Vapour – decided that I should take a look.

…which in his language generally meant, We should take a Good Look and hit the Invest button.    

I was ok about it for two reasons:

- I had now some work to do to keep myself occupied

- I was heavily into reading Warren Buffett in those days and he too had begun with a bust textile mill (Warren, do note that’s where the similarity sort of ends).

(talk of vested interests)

Now, there were a 1000 reasons to be cautious as hell about this deal, but Vapour had made up his mind (or what was left of it).  So, I waded through mindless stuff on spindles, cotton and jargon, without understanding anything.  What I did understand – the balance sheet – reminded me of Jaws 3, because it was terrifying.  We then made a case for investment (which must be under the Fiction section somewhere in the archives of the company now), while I prayed for divine intervention (Indian Express headline, “Lightning strikes Coimbatore Mill, machinery to be exchanged for eighteen bags of peanuts”) and waited anxiously for the Big Day to present this basket case to our Board. 

If you have ever doubted the existence of The Higher Power, please note: He’s There.

A day before the Big Day, the company’s MD – influenced no doubt by a kamikaze pilot – called me and set out a list of conditions if we were to invest. Hang on: we should have been setting the conditions! 

So, not knowing what Vapour would do, I went to his boss, i.e., my super boss – that’s nowadays called ‘doing a skip level’.  He let out a sardonic, low-decibel sort of laugh-cum-growl, used Shakespearean English, which is now banned on Facebook, and asked me to tell the MD to fly a kite, which message I passed on at once, asking him to choose from either flying kites or digging for oil.  

ps: I did not actually do the last part, but it makes the ending sort of cool.  

ps2: Vapour may have forgiven me, I suppose, but he does not show it.   

…and, finally, 

ps3: and, here is what the Oracle from Omaha has to say in general:

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

WhatsApp in Moradabad

Not sure if you have been reading the right stuff in the newspapers these days, but the only news I paid attention to was one that rated the noisiest cities in the world and had Moradabad as the second loudest.  This kind of measurement is, of course, absolute tripe and rubbish, complete nonsense, and is done by people who were born just after the Industrial Revolution had reached Haiti (where they probably still live in a building called Out-Of-Touch).  Nonsense, because this measurement does not consider Whatsapp Groups to be a city. 

 
Now to brass tacks (which, if you know Moradabad, is a most disreputable pun.  Shocking, the levels I stoop to on Sundays).
 
I have – under duress, pinky promise – been made a member of our neighbourhood Whatsapp Group under the utterly delusional impression that the objective of this Group was to discuss the neighbourhood.
Generally, daily conversations on this group begin this way:
“Good morning”
“Good morning”
“Yes, good morning”
“Thank you.  Good morning”
….which continues till it is afternoon.  Since nobody finds anything good about afternoon, there are no postings.
But the real action – the stuff of Kamikaze legend – begins around 5 pm.
 
“OMG! THERE IS A MOSQUITO IN MY KITCHEN”
“OMG”
“OMG”
…which continues till someone – generally a chap called Kosandri Ranganatha Somanna Srinivas – asks how OMG should be pronounced.
Everyone, of course, ignores him.  Another deeply sympathetic soul with blood and the future of civilisation at perilious stake will then say,
“THIS IS TERRIBLE.  A MOSQUITO, IMAGINE! THIS IS DENGUE SEASON.”
 
I must take a commercial break here to point out that everyone uses capitals, even Kosandri Ranganatha Somanna Srinivas does while writing his name, because it is like a cricket stadium – when everyone stands up to see a dog running onto the pitch, no one who sits down has a hope in hell (of seeing the dog do to a stump what it generally does, that is).  

ps: the aspirations people have are distressing.  But back to breaking news.
 
The conversation immediately shifts to dengue’s body count last season and what needs to be done.
….which is the perfect moment for IMHO.  This stands for “In My Honest Opinion”.  What it actually stands for is “I Am Completely Jobless At This Moment, Have Never Thought About This Issue But This Is A Democracy”.  

So, everyone criticises the Municipal Corporation and provides entirely unworkable solutions ("MONTREAL USED 83 DRONES TO SHOOT DOWN 7 MOSQUIS LAST WEEK") that will not be implemented till 2145 AD, each such solution prefaced with IMHO and followed by YAR (You Are Right).  About 62.4 percent of this group is so lazy that they just do a ‘+1’ – this stands for ‘We All Knew You Were A Total Idiot And Now You Have Company In Me’.
 
When these solutions are being discussed animatedly and excitement is at its peak, a chap called Ramakrishna Shastry – who I hope fries one day in boiling castor oil and is then garnished with Kandhari chilli – forwards a post which says
 
“PAKISTAN HAS DESIGNS ON INDIA”, which normally runs into about a thousand words.
 
There is an immediate howl of protest by society, with people castigating him.  “Not Relevant”, “Can we stay focused on this pointless discussion, instead?” “IMHO’s and ‘+1’ s, after which he goes off deeply satisfied, no doubt, to have his evening toddy-on-the-rocks.
 
There is never any conclusion, of course, so everyone wishes each other GOOD NIGHT and TG (“That’s Great”, without specifying what is).  I believe Moradabad is fighting hard to become the noisiest city in the World but it has about as much chance as Kosandri Ranganatha Somanna Srinivas has of knowing how to pronounce OMG.

final ps: I now hope you are, like me, a member of the secret cult called “Anything But Whatsapp Groups” where people wear black hoods and roam the streets searching for victims-posting-OMGs-and-IMHO-stuff.