Monday, May 31, 2010

The Quants - Scott Patterson

I had been reading black swan few months ago and admittedly from a very different angle. While there were numerous references to the stock market crash, hardly did I realise that the dig is at the stock market wiz kids and their quantitative analytics and prediction. This book, written by Wall Street journalist Scott Patterson, indeed gave me the clue on what Taleb was hinting at. He was questioning the ability of these people to predict the stock market future, comparing them with the intelligence of taxi driver.

Scott Pattesons book , The Quants, looks at this phenomenon that controlled the stock market during the last few decades. The influx of mathematical and physics wizards entering the arena of trading using complicated algorithm written on super powered computers , making huge profits out of the system, which traditionally relied on the intuition ( to an extend) and limited knowledge of the traders. Scott looks at the tribe in general starting from few trend setters in early days and four wiz-kids in particular ( Morgan Stanley’s Peter Muller, Citadel hedge fund’s Ken Griffin, Cliff Asness of AQR hedge fund, and Boaz Weinstein of Deutsche Bank ).

Their traits are common. High education with PhDs in mathematics or Physics, Excellent computer skills , the ability to use data and analytics to predict the movement of stocks, derivatives or bonds, a quick eye to spot anomalies in the trading system , and to sum it all the thill of beating the system. Most of them started their early days with some thing in common. Curiosity over gambling..the ability to predict Russian Roulettes ( buying a second hand machine to do their research), the black jack table or winning the poker table ( Interestingly Poker become one of their favourite pass time , often spending the entire night among themselves trying to out win the rest. All of them belong to the top 50-100 poker professionals in the world). Some of these had the reputation of being in the watch list of Casinos around the world, for their ability to beat the system regularly. Their hypothesis is interesting and are extremely complex to the common brain. The explosion of internet and the computers and IT had definitely helped them to rule the market for a long time.

It was sort of natural progression that these ended up at the largest gambling arena of the world, the financial market. It took no time, for them to figure out the ways and means of beating the system ( most of them were inspired by the book 'Beat the market" by one of the earlier quants Ed Thorpe). Scott also examines various techniques and principles that become popular over the years for the bankers and those dealing with hedge funds. The Quants weren't welcomed by the traditional traders enthusiastically. those experience of a life time is being questioned by few twenty something, who has no prior knowledge of the system. "You don't know a shit about trading, boy" were the typical reaction. But it took very less time for things to change. These 'inexperienced lads in jeans and T-shirts' started popping large amount of profits for their employers. They were the pets of the bankers often raising billions of money through their hedge funds, constantly beating the market both in good as well as bad times.

While this continued for a long time, there was always a doubt on its capability to extend this to eternity.
"Despite Success, it always seemed ephemeral, as if one day the magic would go away, vanish like a genie into its bottle. As if one day the Truth wouldn't be the Truth anymore."
The traditional big-wigs, like Warren Buffet and others stayed out of this , relying on the traditional means. There are others like Nassim Nicolass Taleb , who himself was a quant ( so to say) , was critical to their approach and was questioning them , often into heated arguments with them.
"Taleb had gained the reputation as a gadfly of the quants, constantly questioning their ability to beat the market. Taleb did not believe in the Truth. He certainly didn't believe it could be quantified."
The later events shows that Taleb had the last laugh. The unprecedented growth had to come down and the final fall of the quantdom was the sub-prime crisis, collapsing the financial systems of the world during Aug 2007.

Scott Patterson writes this book like a thriller. There is no dull moment in reading. While I am not an expert in the subject of the book, as an outsider, I understand a bit better of the important part these mathematical and analytical tools played in the financial market and I believe that it is likely to stay that way ( may be with great sophistication). The book had its own flows, there are undue glorification, the fiction-style of writing of a more journalistic nature of subject and some of the facts which I find difficult to appreciate.

The Quants

Scott Patterson

Crown Business

337 Pages

Wall Street Journal

Friday, May 28, 2010

Singing from the Well - Reinaldo Arenas

"There went my mother, she just went running out the door. She was screaming like a crazy woman that she was going to jump down the well. I see my mother at the bottom of the well. I see her floating in the greenish water choked with leaves. So I run for the yard, out to where the well is, that's fenced around with a wellhead of naked-boy saplings so rickety it's almost falling in."

thus starts this wonderful novel by Reinaldo Arenas. Arenas has been in the news for some time after his five day long voyage escapade from Cuba after being prisoned, tortured and abused by the regime. Arenas committed suicide , unable to fight AIDS leaving behind one of the best 'suicide notes' I have ever read. True to the image which I had about this author, this novel, the first of the Pentagonia series ( 'secret history of Cuba', according to the author) depicts a boys life during the pre-revolution days.

Plot consists of the boy and his family ( mother, grand mother , grand father and an aunt) living in poverty under anarchy, isolated from the society. They continuously fought, abused and cursed at each other, often getting into murderous thoughts. The boy constantly live with a hope of murdering his grand father who beat him up regularly and 'split his skull by half' using the hatchet. Grand mother is no different showering him with abuse and anger. Mother, a silent sufferer, blames the boy for his indifference to her struggle and for her misfortune. We understand from the boy that his father had returned to his in-laws one day leaving his mother to their custody, never to return ( he did not look back, even once ). To this scene comes Celestino, a cousin, after his mother ( the boys aunt) committed suicide by hanging, and burning herself. Celestino's arrival only worsened the situation. The already fragile relationship had become worse, but the young boys soon become friends. Young Celestino, scribbled poems on the tree trunks, only to be cut down by the grand father. He then turned to the pineapple leaves, scribbling away, only to face the same fate. The novel concludes with a Christmas Party when the extended family of aunts, cousins ( interestingly no men apart from the grandfather), the dead cousins, the witches and aunts all adding up to the chaos and destruction.

Poignant, lyrical and moving, frustrating at the same time, the prose of Arenas is outstandingly refreshing and clear. While the subject is of pre-revolutionary Cuba and most of the characters are allegory of the republic itself, his writing has maintained an high energy and is brave.
Structurily, he experiments with various forms.. Reality and fantasy are intermixed and at times it is very demanding on the reader. Towards the end, the story is through dialogues ( as in plays). There are pages at odd places with verses taken from different sources ( presumably, scribbled by Celestino on tree trunks). Half way through the book comes to "THE END" , but continuing further gets you the "THE SECOND END" , until the "LAST END". I am not sure, why this ploy as there is no real end or change of course anywhere. Arguably, Celestino himself could be an alter ego of the boy. Celestino never speaks to anyone but to the Boy, never reacts to the beatings or torments, and is referred as dead many a times in the narrative.

Overall a fantastic reading experience.

Singing From the Well ( 1965)

Reinaldo Arenas ( translated from Spanish by Andrew Hurley )

Penguin Books

206 Pages
Obituary, Article on Arenas at Moorewatch

Tuesday, May 25, 2010

Dreams of my Russian Summers - Andrei Makine

"it was not just a radio station that was disappearing but our era itself. All that we had said, written, thought, fought against, defended, all that we had loved, detested, feared - all those things belonged to that era."

Images from your visits to your grand parents and their stories remain with you forever. Some of them will remain as clear as viewing a movie, however insignificant it is. Andrei Makine, one of my relatively late discovery takes us through another fantastic journey of reminiscence of his childhood. This book, received tremendous acclaim and was a huge success, winning two prestigious awards in French upon its publication.
The narrator, recounts his summer holidays, in the house of his grand mother, in the distant town of Sarenza, in the vast Siberian steppe, along with his sister. His grand mother, Charlotte, a French descendant, lived through the eventful history of Russia, takes the children through her stories and the French classics. Supported with the 'old paper cuts' and greying photos from her ' Siberian suitcase', the young boy and his sister pester her to narrate the stories over and over again.

Charlotte is born in 1903 and have witnessed two great wars, the revolution, the rise and fall of Stalin. She was trapped in Russia, during one of her visit to their earlier residence in Siberia and was living in Russia ever since physically, managing to retain her french-ness. We get the story of her life as a young nurse post the revolution, and her marriage to a soldier ( who according to the authorities was killed in the war -twice the letter reached her announcing his death - only to return after the war. The day she was assaulted and raped by a group of turban heads in the deserts, the way she and the kids escaped the frontiers while the Germans advanced, and their miraculous escape, her job as a nurse during the WW2 tending the physically and mentally battered soldiers coming in large numbers by bogies. The images of St.Petersburg where the 'samovars', survived soldiers post the war who have lost their limbs, now begging in the streets... continue to fill in the minds of growing up young kids..

The book is of contrasts, French and Russian ( the boy starts identifying himself as Russian as he grows, against the dreamland France), Old and the new Russia ( his exile to Paris, naturally and his effort to reconcile with his past ), the young and old , the monstrous city and the vast silent steppes.

Images of Tsar and the queen on the Paris Streets, the death of French President in the arms of his mistress, Marcel Proust and other literary figures , the chief if secret police Beria, a serial rapist.. there are many images that remain in the mind of the boy and the reader. For him, escaping the rigid apartment complexes of the Russian life to the 'mysterious french experience' , to the stories of his family on either side of parents, those tales of survival ( against wars, against revolution and new regime, the unbearable Siberian winter, the famine) and hope and some sort of rebellion and reconciliation.

As I have seen in his other books, the imagery, the lyrical language, the eye catching descriptions of ever lasting memories are in abundance. The writing vivid without being flamboyant. This is not a typical coming of age story. The initial awe for every thing French to the later solid thought of Russian-ness and the much later realisation of what the elders have gone through , gives us a growing up of a matured , intelligent man.

Another fantastic book, an autobiographical coming of age tale of a young boy, living in revere of those great summers spent in the company of his grand mother and those memorable stories.

Dreams of My Russian Summers ( 1995)

Andrei Makine ( translated from French by Geoffrey Strachan )

Arcade Publishing

242 Pages

Other reviews : January Magazine, Wiki

Wednesday, May 19, 2010

The Miniaturist - Kunal Basu

The court of Akbar, the third Mughal emperor, supposed to be the best time for arts and culture filled with the best in the field of music, art and painting. It is considered as one of the golden era of medieval India. Set in his period ( 16th Century AD), Kunal Basu's second novel takes us on a journey with Bihzad a painter in the Akbar's court.

Born to the 'khwaja' ( the chief) of Akbars 'kitabkhana' ( the artists workshop), Bihzad was already a child prodigy in line with his fathers tradition. Persian descendent, who moved into India with the Mughals have already made India their home. His father had put him under the tutelage of an elderly painter, to bring some discipline in his drawing, only to be abandoned by the boy stating " I have nothing else to learn from him". Illiterate, he had to listen to the stories being narrated ( for which he uses his step mothers help) to reproduce them with all magnanimity, not to be rivalled. It was only natural, to have his name and fame to reach the royal ears. Soon, he was admitted to the 'kitabkhana' to be the rightful heir to his fathers post, when the father was elated to the post of a courtier. Akbar has moved his capital out of Agra to Sikri and moved his court and the ;kitabkhana' to the new city ,moving his wives and harem to the new place. His step-mother, with whom he now has developed a relation beyond the maternal limitations, has refused to leave Agra to join them in Sikri. Same, is the case with the paint-seller , who frequent kitabkhana feeding him with the raw material for his art as well as the local gossip.

The historians in the court are busy writing the biography of Akbar, and Bihzad was busy painting the corresponding sketches for the great book. While this is on there is a parallel life of Akbar the Great is being prepared, this time not as an all conquering Emperor, but in a human form. The admiration to the great ruler soon becomes infatuation from the painter. The pictures of Akbar, the lover boy with Bizhad has been stolen and was produced in the royal court by the detractors . Bihzad was promptly expelled ( the magic of the pictures have spared him his life).

Now in exile, Bihzad ends up in the deserts outside the hindukush , run by another exile , a eunuch fallen out of grace from the royal harems of Akbar. Agreeing upon not revealing their identity, Bihzad spents his exile days doing errands, listening to Sufi poets, Christian missionaries and other religions sects leaders. The luck takes his turn again as one of his paintings changes his life again, this time ending up in the courts of the local king, marrying his daughter. Forced to spent the time in the harems unable to win the trust of his wife, he escape the place. Tormented by his art and destroyed by his skill, he decides to put an end to this, blindfolding himself spending his life under a tree in the market. Abused, insulted and ragged, he was later rescued by some nomads selling eggs in the market. But the art, does not leave him.

Kunal Basu, true to the book, paints the picture of Akbars court amazingly. The palace, the ministers courtiers, his royal entourage and the hunting trips, the harems filled innumerous wives and other concubines each trying to win his attention and to be the first to produce the next emperor of the kingdom, the royal eunuchs guarding and taking care of the harem, the in-court rivalry .. each were produced to the magnificent effect. The omnipresence of the emperor was through out the initial pages.

The torments of the painter, famed and destroyed by the art he know and love, is painted pretty well by the author.

" Your gift is your curse. Your defect. It'll make you suffer. Even if you wanted to escape, it wouldn't spare you. It'll cripple you, even if you flee, it'll seek its revenge."

So was the admiration turned fantasy of a teenager, falling in love with his creation ( the emperor in this case). His effort to meet his sweet-heart was denied, so was his elevation to the post of 'khwaja' by the rivals leaving him further disturbed, the only solace being alcohol and the local whorehouse.

However, to me the book did not deliver to the expectation set in the initial pages. Kunal Basu is a good writer and has very good command on the language and the subject he in his treatment. The second half of the book takes an un-convincing turn, ending with a cliched cinematic finish.


The Miniaturist ( 2003 )

Kunal Basu


248 Pages


Other Reviews: Independent , Guardian