Wednesday, February 27, 2008

Fooled by Randomness

I am reading a book by Nicolas Taleb called 'Fooled by Randomness'. An interesting book which seems to imply the success we may have is NOT due to our skills but actually due to our luck. Everything is random and the media only highlights the success stories rather than the more numerous failures. So applying to my condition would seem to indicate that I am actually overestimating my skills and abilities. I guess this should all the more drive you to improve or increase your skills. To sharpen the saw or to increase one's capacity so to speak. An interesting book that keeps you thinking.

One of the main theme of the book is to place value on introspection. This allows you to shift the noise from the really valuable message or signal. The author is a trader so he knows what he speaks and he generally give some interesting stories on the stock market. A good book to read and companion to George Soros books. Both authors are highly educated and inclined towards philosophy. Both writers I think wanted to be a philosopher but ended up being successful traders.
Applying to my situation, it would seem that my sometime misfortunes at work with the boss man is not really due to my inadequate abilities. But more on my luck. So I have just reached a bad phase in my life which was due to come anyway due perhaps to 'law of averages'. Nevertheless, these outcomes help us become more humble and show us our shortcomings or our fallibility. So one should just move forward and not think about one's failures as it is not really a failure but of poor luck as specific circumstances arose (whether political in nature) which resulted in the unfortunate outcome for me.
This maybe more a problem of cognition where we make errors of thinking. Perhaps in induction as described in the book. The present day with the explosion in information, noise prevents us from learning the true lesson. Perhaps tools like visual thinking helps us shift through the noise. I attach a map on investing which summarizes my (meager) understanding so far on the market.

Tuesday, February 26, 2008

Stock and Options Investing

I have been exploring other alternatives of earning money. After reading books that advise on earning separate streams of income, I have chosen on investing in the market as another way to earn money. With the recent re-structuring at the office, I think this is a good move. I guess this is the predicament faced by everyone all over the world with the trend on outsourcing and globalization. So I have invested in the local stock market: modestly buying unit trusts, REITs (or Real Estate Investment Trusts), ETFs (or Exchange Traded Funds) and directly buying specific stocks following fundamental and technical analysis but following the principles of value investing. I followed the view expressed by people like Benjamin Graham and Warren Buffet. I have also practiced diversification and possess a modest portfolio with investments in country funds (Malaysia, Japan, Singapore and Philippines) as well as stocks in China (corn) and shipping companies, as well as infrastructure investment trusts and food companies.

The recent volatility in the stock market have affected me but overall I am not in bad shape. I think the key is to have a long term view. Recently, I have begun to explore and study other instruments of investments such as currency and options although I have not taken the plunge. I hope to increase my financial literacy by exploring other alternatives although I have to be careful having lost some money many years back in currency trading. So I have begun to read books by people like George Soros and Nicolas Taleb who are both engaged in financial trading and investments. I also read books about well-known traders (as against investors) who have made money speculating in the stock market. The better books are of course by Soros and Taleb who provide a philosophical framework with regards to investing to prevent risky decisions. A good start before undertaking riskier ventures which may cause you to lose money.

So I am now studying other profitable but riskier ventures after attending an introductory seminar on options last Saturday. The speaker was very good with a PhD in Finance and writes good articles. He runs a well-regarded seminar locally and seems to know his stuff. He paints a picture that investing in options is not difficult and people can earn money very easily. I resisted to attend his rather expensive course and prefer to educate myself on my free time by reading books, researching the Internet and practicing in websites that offer free tools to invest. So I would rather embark on a self learning phase to be a knowledgeable investor and read books by Soros, Taleb and others are a welcome companion in this journey.

Life in the office has proceeded but with a sword over our head as we await the Best and Final Offer (BAFO) from the outsource. The recent rumor is that we will be paid our package, plus a job offer from the outsource agent to work with them with a joining bonus. This sound too good to be true. After serving more than decade with the company, this is a good offer for me. Although I also like the prospect of being transferred to another country hopefully, China but the recent news is that the option to transfer no longer exists and only alternative left is to work for the outsource or get the money and look for another job in another company. So the coming change is imminent and one should be prepared for it. So I am widening my knowledge base by increasing my financial literacy in case a job opens in the financial sector - actually one of the growth areas around here.

Preparing for change is really something difficult but I have accepted the challenge by enrolling myself in all sorts of lessons. I have joined a gym club last month and have been exercising to keep my self strong and fit for the coming changes. I have joined a yoga class yesterday and engaged a personal trainer for 10 lessons. Working out in the hi-tech and popular gym is a new experience for me. Likewise I have also started guitar lessons every Sunday morning and a good way to keep me mentally fit. So at 44 year of age, I am re-inventing myself to adjust to the changes brought about by so-called forces unleashed by globalization, outsourcing and what have you..

Tuesday, February 12, 2008

Co-Sourcing Endgame

The Indian company that was chosen to be our co-sourcing partner will give their best and final offer (BAFO) soon. A lot of the people in the department are mulling the various options that may be available to them. Yesterday at lunch, our supervisor said that an option maybe to be paid a retrenchment package plus a job offer from the Indian company. This looks like a win-win option becuase we get paid plus have a new job. We just don't know how long we will last in the Indian company if we choose to work for them.

I guess this is the reality that we should be looking at: where information technology is no longer a core business function of manufacturers. An activity best outsourced possibly to an Indian company. I have been reading about this situation in books like 'Wikinomics' or 'The World is Flat' but it is really a different situation when faced in real life. I guess everything is random following the ideas explained in the 'The Black Swan'. But at the end of the day, not really random as this is a business reality that has already been ocurring in the recent years all over the world.

For my case, there are some 'rumors' that I may be moved to another country. Not a good option as I may leave my family to work abroad as my kids are taking their pre-college courses. But it is a good option in terms of career prospect. This is an option that I am seriously looking at if it is offered. Nevertheless, my horoscope for the 'Year of the Rat' portends of change in career or location this year and generally good for me. So even the stars have aligned to depict my fate in 2008. Whatever the outcome, change is afoot. I have joined a health club near the office and exercising nearly everyday. Not only does it keep me physically fit but prepares me mentally for the coming challenges.

Since the start of January I have been attending guitar lessons. I want to keep my mind in tip top shape by learning new things. I have read somewhere that musician's brains have strong physical connections between the left and right hemispheres as compared to other professions. So I hope to improve my brain 'biologically' (?) by learning music skills. Anyway, all these activities like working out in a gym and guitar lessons help to keep my spirits up instead of descending into despair, worry and anxiety due to the circumstances in the office .