Ridham and Blues

Ridham Desai, MD of Morgan Stanley India, has been appearing on the financial networks lately talking about the Sensex correcting by 50% form their peak levels of 21000.  If that is true we still have another 30% to go…ouch.  Over the past 4 months he is one of the few guys setting realistic expectations for the equity markets and his candor is surprising since he’s from a bulge bracket investment bank.

However in the past two weeks more and more people are saying the same thing – “sell into the rally.”  Not good to hear but the reality is the financial markets are going through a painful re-rating and re-pricing exercise.

The bright side is Indian stocks are still doing well when compared to the US which is experiencing multi year lows for many stocks: GE, Countrywide, Fannie Mae, GM, etc…or complete destruction like Bear Sterns.

Online Collaboration

It’s official we are heading back to the mainframe model, with a dumb terminal (now called a web browser) and the mainframe machine (now called cloud computing). It’s hard to believe the computer wonks at IBM had it right the first time around. It seems as my laptop gets more powerful, I’m pushing more of my applications to the cloud.  The biggest one so far has been Gmail, I was a die-hard fan of Outlook/Entourage but gave into the Googleplex.  

Recently, I was looking for an online content collaboration tool. I looked at a couple open source apps but stumbled upon a company offering an online tool that was surprisingly based out of Bombay. 

It’s similar to BaseCamp but way better, if you have remote teams working on different projects or need a way to track your work within the office this works way better then trying to share an Excel sheet. And of course since it’s online the data is always backed up.

I’m convinced in another year I won’t have any use for my laptop and will use my iPhone since everything will be in the cloud.

 

Another Indian Quant Fund

Reliance Mutual Fund (part of Anil Ambani’s empire) had recently converted a couple index funds (Sensex and Nifty trackers) into a single “quant fund.”  Since I’m a hugh believer in Index funds, it’s a disappoint to see Reliance shutdown that investment strategy…but its business.

The new strategy has been running since mid April and to make any judgements on it’s performance is a bit pre mature. Their basic model as taken from the offer document is: “will invest at least 90 per cent of the assets in an actively managed portfolio of 15 to 20 stocks from S&P CNX Nifty index on the basis of a mathematical model. The model will shortlist stocks on the basis of stock price movement and a variety of financial valuation aspects. The fund is managed by Krishna Daga who has been in the Indian equity markets for over 10 years with companies such as: HSBC, JP Morgan, Brics, B&K and Deutsche.

Since the product is a mutual fund the options it can deploy are limited to long only equities.  As the Agile Fund from Lotus it cannot go short, go to cash, hedge, leverage, etc…techniques that most international quant funds use.

New MacBook Pro

After using my 15″ PowerBook G4 for the past 3 years I decided it was time to upgrade. I looked at the MacBook Pro (MBP) and the MacBook Air (MBA) and after using both I decided I wanted the larger screen size of the MBP.  I got the 2.4GHz with the glossy screen and it’s awesome.  Running Windows or Ubuntu via VMware Fusion is the only way to go. Took me 10-15 minutes to install each OS and I can run them at anytime along side OS X.

A little known secret is that Apple Stores in the US offer free WiFi access. So, in my quest to buy the MBP I visited 7 Apple Stores while in the US, crazy I know: 

– Fifth Avenue, NYC
– SoHo, NYC
– W. 14th St., NYC
– Montgomery Mall in Bethesda, MD
– Manhattan Village in Manhattan Beach, Calif
– Century City in Los Angeles, Calif
– Oxmoor Mall in Louisville, KY 

I also picked up a great charger from Kensington, if you travel internationally this device is a must.

 

Indian Quant Fund

Back in December 2007, Lotus India Mutual Funds launched India’s first “quant fund” called the Agile Fund.  I use the term “quant fund” lightly when talking about Agile because it’s really an equity mutual fund dressed up.  Most people would agree that a typical “quant fund” selects securities based on quantitative analysis, in agile they do that.  However, their hands are tied because it’s a mutual fund, they can’t: go short, goto cash, derivatives or leverage.  In essence they are stuck only going long in equities, when the product was launched in Dec 2007 it seemed like a good idea.  

Their methodology is the model picks the top 11 stocks and investments are made in them on equal weighted basis. 9% of the total corpus is invested in each of these 11 stocks and the remaining 1% will be kept debt and money market instruments.  

Well 6 months later how is the strategy working?
Sensex (Jan 1, 2008 to June 30) is down -33.4%
Agile (Jan 1, 2008 to June 30) is down -42%  

I’m not saying all quant funds deliver performance but Agile is so limited in what it can do, it’s definitely not a “quant fund.” It’s just great marketing wrapped around a sub-par methodology.