This time it is different!

As the markets rise, and keep rising, there is euphoria all around. Everyone likes it when asset prices go up. The total wealth in the economy goes up, based on extrapolation from asset prices determined by a lot of liquidity chasing the floating stock available for sale.

 

Are the markets overheated? In some circles it is considered bad form to ask such things – "Shubh shubh bolo" is what the human mind prefers. And who wants to be left out of the party? It looks damn silly when others are making money and you are watching from the sidelines. Anyway, the prices are going up, so I will find another buyer who will buy the stuff off me at a higher price. It is called the "greater fool theory".  To answer the question as to whether the markets are overheated, I don't know. Tomorrow morning, if it has gone up, then no; if it crashes, then of course. These things are always better commented upon on hindsight.

 

One used to wonder why asset prices were not going up when the Fed started reducing interest rates and kept it low, after the 2008 meltdown. Worldwide, liquidity went up, and for years, we have had money sloshing around. But asset prices never really rose too much, at least till recently. In the last one year, asset prices across the world have gone up tremendously, including Indian stocks. The one exception in India seems to be Real Estate, where prices have stagnated for the last three years, but that is for a different set of reasons. Bond prices went up too, for a long time, as a reaction to falling yields. Is the 2008 "monetary easing" finally culminating in this price rise? In that case, what happens when the cycle reverses?

 

Long term bond yields in India have already started going up. The yields on the 10 year GSecs have gone from 6.4 percent to 7.2 percent in the last 6 months. The Fed may probably start hiking rates as well. Is this the beginning of the reversal of the cycle?

 

If you are into equities, it is good to keep a close watch on the markets. In other words, continue to ride the wave, but be prepared to sell your stock when you feel the market has started to move the other way. When that will happen, one can't say, one just has to keep a watch. The best thing to do then, would be to invest in liquid funds, and wait.

 

And to those who say that "this time it is different, this is a sustainable long-term rally because it is aided by … (name your factors here)", it is good to read articles like the one below. This one talks about how the stock market overheated and then crashed, in Bombay, in 1865!

 

Link to article:

 

http://www.business-standard.com/article/beyond-business/150-years-later-115071001354_1.html

 

History always repeats itself, but men never learn, they make the same mistakes again and again. I, however, am smarter than the rest. I shall be able to figure out when the market is going to turn and exit all my positions before all the other morons out there figure it out. The trick is to take advantage of others' greed.

 

So say I. And so said all the rich Parsi worthies of Bombay in 1865 before their world came crashing down!

(posted to my blog on 29 December, 2017)

my thoughts on a day spent with Jaggi Vasudev

A day with the 'Sadguru'

 

Having heard so much about Isha foundation and 'Sadguru', my wife and I decided to enrol for their Inner Engineering course. Normally, it is structured as a week of three-hour sessions, but this one was different. We attended three days of three-hour sessions, which was followed by, gasp, a full day with the man himself!

 

Sadguru Is due to visit Bangalore on that Sunday, so his vast organization of unpaid volunteers gets to work months in advance. The course we attended was just one among several such courses held across Bangalore for the two months previous to his visit. A vast network of pipes leading to the big day – on which day, about 6000 people land up in a stadium on the outskirts of Bangalore, ready to climax.

 

But first, about the course itself. One of their authorized 'teachers' was the course leader. A young man in his twenties, he was sufficiently indoctrinated to act mindlessly on a series of mechanical instructions which, I am sure, every course leader everywhere follows to the T. Is he going to say anything at all? No, all he has to do is to play selected snippets of the great Guru's videos, and ask all the people to gaze adoringly at the screen in a position of meditative reverence while the Guru is talking. No notebooks allowed, no notes to be taken. No questions can be asked, since the course leaders are not allowed to answer them – after all, only the Sadguru knows all the answers, mere mortals, however licensed by him, cannot be allowed to answer anything.

 

Our course leader had imbibed his lessons well. Every time the video was played, the adoration on his face was worth watching – I envied his ability to reach a state of ecstatic bliss so easily. His diction and mannerisms also in many ways resembled the Guru's, though of course a poor imitation of it. There were at least two other volunteers ensuring that no one in this small group of 20-odd people wrote down even a single word from his videos. Why such insecurity, I wondered?

 

Spirituality is like a drug – with a charismatic guru rolling off catch spiritual phrases off the tongue, it lulls the audience into a state of semi-hypnotic zombieness (if there is such a word). Writing any of that stuff and reading it in the light of the outside day would spoil that effect. Also, as our course leader let slip, the Guru is afraid that someone would copy him and start his own course. Talking of the Guru, he calls himself 'Sadguru'. By whom and how that title was conferred is unclear – but he ensures in every single video snippet of his to use that term while referring to himself, thus reinforcing the usurpation of that title by him.

 

There are quite a few video snippets of his floating around nowadays on Whatsapp. All of them are expertly edited versions of one of his talks – and he does not allow anyone to even take a picture or a recording, forget a video in any of his highly curated events. It is his own official photographer who takes the videos, all to be expertly edited later, and circulated in calculated snippets. Nothing about the Guru is spontaneous, everything is carefully scripted, curated, edited, and circulated, to increase his personal brand that is growing by the day.

 

He talks sense. He is quite well read. And he talks well. How he has packaged all these into a successful global enterprise, with a veritable army of unpaid acolytes, who think he is doing them a favour by allowing them to work for him free, is a miracle in marketing – Kotler and his ilk are children in front of such a genius.

 

Anyway, back to the course. We duly finish the three days and head to the Stadium on a Sunday. The first thing that strikes you is the number of volunteers, volunteers everywhere. And the meticulous organization, and minute planning, event management to the last detail. Some 6000 people file in early in the morning, and are made to sit in sections, those who paid more of course have the privilege of sitting closer to his August presence.

 

There is long ramp running down the length of the great hall, just like those in fashion shows. There is one single sofa on the stage. There is a live orchestra with top-class musicians in attendance. The man goes for quality – the musicians were really good, and the music sublime. The peaks and crescendos of the music were of course timed perfectly to his arrival and departure.

 

His videographer is ready. The audience has been assembled. All phones have been silenced, all notebooks banned. Any pen if seen outside is immediately pounced upon by one of the couple of hundred volunteers who are maintaining a close vigil with eagle eyes. The music builds up to a crescendo. The atmosphere is surcharged. Everyone's breath is bated. The stage is set for the grand entrance. And he walks in.

 

And he starts talking. It is quite an experience to hear him talk. Undoubtedly charismatic. There is something about him that can hold people spellbound for hours, and then emerge from the reverie confused about what they heard, but convinced that they just had an out-of-the-world experience.

 

His videographer is recording the whole thing. The big event of the day is supposed to be the unveiling of the Sambhavi Mudra, the Guru's own secret to emancipation, which he is going to reveal. There is a build-up to the revelation through the day. Finally when it arrives, it is totally disappointing. It is nothing but a couple of elementary asanas, and a couple of elementary pranayamas, packaged in a nice way with the names changed and a lot of mystique attached. Practice this daily, you are told, and you are sure to attain – actually, I am not sure what I am sure to attain, I was in a daze myself.

 

Once in a while, in a carefully choreographed sequence of events, coinciding with carefully orchestrated crescendos from the live band, the Guru walks down the ramp. There are four bodyguards on each side walking alongside, crouching double, almost on their knees, so that only the Guru is visible to the camera. The audience of course responds enthusiastically. They wave, cheer and clap. The video pans around. That is when it struck me. As part of the audience of 6000 I too am an unpaid extra in this great movie being filmed about the Guru's life.

 

Anyway, it was an eventful day. It is always wonderful to watch such people at work. Their personal charisma is awesome, their ability to make people to work free for them enviable, and their ability to attract acolytes, mysterious. Somewhere on the way home, undoubtedly with the help of the vicious Bangalore traffic, I snapped out of my daze.

 

And I wondered – what was that show all about? I was a willing participant to a day of orchestrated vacuity, whose sole purpose was the promotion of one man and his brand.

 

And I marvelled. Mentally saluted the great man. Anyone who can do this has something going for him which we, more mortals, cannot emulate, however much we try.

 

Glory be to the Guru! Amen.

 

Dinesh Gopalan

10 October, 2017

 

They have shut Narayana Murthy up!

When the stakeholders are too many,

Silence is preferred to rectitude.

The sins of any large family

are never discussed in public view!

The immoral can be handled,

It suits the sinners to be so;

It's the principled that are tough,

They have a button called self-destruct!

The bull run amok in China shop,

Has a reason to be so upset;

No one wants to know - they shut him up,

Morality is always shut up!

The best way to retire is to fade;

Or take a ceremonial post

where you can mouth some platitudes,

But let the world go on as before!

Narayana Murthy protests!

The patriarch of the family,

fulminates from high moral pulpit;

They disregard his legacy,

and his quaint notions of propriety!

Retirement is but a mirage

if past attachments exert a hold.

Why can't he drop it, and move on,

with death knocking at his door?

To expand influence, he ceded control;

To amass wealth, shared the family throne.

The Bedouin let the camel in:

Now the tent is no longer his own!

They may be corrupt, degenerate,

but who listens to him, patriarch of late?

It is his family he hurts the most - 

No option but to shout; he lost control!

One is scared of high morality,

Of those who think they're above it all;

To protect the image they have built,

They will allow all else to fall!

Concentration and Awareness - great Tedx talk by Dandapani

Given below is a link to a great TedX talk on 'concentration'.

We are what we think - our life is a manifestation of where our energy is flowing.  The science of yoga holds this to be paramount, which is why yoga exercises are more than mere physical postures, they are exercises in controlling the mind, in making the energy flow in a desired direction, to focus within, to be aware, and to merge with all your senses into what you are doing. Yoga exercises done with this kind of awareness are a transformational experience.

Swami Satyananda of the Bihar School of Yoga in his excellent book on Kriya Yoga when he talks about meditation,  says it is impossible for people to meditate nowadays since they are never relaxed. To achieve perfect relaxation is an art in itself, and the primary pre-requisite for it is Awareness. Awareness, or absorption in any one thing, with your  mind and all your senses, leads to concentration; concentration in turn leads to a meditative state, which need not wait for you sit in the lotus position and chant some esoteric mantras - meditation can be a state which you can aim to achieve in your every activity, every moment of the day. Meditation is also something that you cannot 'do', you prepare the right conditions and just slip into it, like you slip into sleep. And extreme relaxation, which is a result of focused awareness, is the foundation to our health and well-being.

The video below is a good primer on the first step 'Awareness'.

link to talk by Dandapani: https://www.youtube.com/watch?v=4O2JK_94g3Y&t=3s

Dinesh Gopalan

mob: 9845257313; blog: http://www.dineshgopalan.com

The King and the Poisoned Wine: An interesting problem, with solution explained

The King and the Poisoned Wine: An interesting Problem

 

I got introduced recently to an interesting math problem, (thanks to Srikumar Raman). The problem goes like this:

 

A king has an important party coming up where he intends to serve the wine from his cellars. There are 500 barrels of wine in all, but there is one problem. One of those barrels contains poisoned wine – even a drop of this wine will kill.

 

The king also has a prison which is full of people whose lives are expendable. It is one of the king's pastimes to use the prisoners for various experiments where their lives are put at risk.

 

Now for the problem on hand:

 

(The requirement in each case is to find the minimum number of prisoners needed to test the wine.)

 

 

Level 1

 

The poisoned wine will kill anytime within 24 hours, i.e. if any person consumes it, he will die sometime within that period. The king wants to test the wine using his prisoners so that he finds the poisoned barrel and keeps it aside for future use, this party not being one such intended use.

 

The party is to be held 24 hours from now.

 

How many prisoners are needed in all to test the wine? Your job is to minimise the number of prisoners needed to test the wine. It does not matter how many prisoners die in the experiment.

 

Solution to Level 1:

 

In case the party is to be held at an indefinite future date, then all you need is 1 prisoner. Every 24 hours, he is fed some wine from one of the barrels. He will eventually die of poisoning, and that particular barrel can be segregated.

 

However, we have only 24 hours. Since it does not matter how many prisoners die, we need to line up the required number of prisoners, and feed them a 'combination' of wines from identified barrels. For each barrel, the combination must be unique, for example, if Prisoners  A,B,D, and E die, it will identify, say, Barrel 27, or some such.

 

How do we arrive at the most effective combinations to minimize the number of prisoners?

 

Assume there is only one prisoner. How many barrels can be tested? Two. You make him have the wine from Barrel 1. If he dies, that is the poisoned barrel; if he does not, Barrel 2 is the poisoned barrel.

 

Assume there are two prisoners. You can test four barrels. Prisoner A gets wine from Barrels 1 and 3. Prisoner B from Barrels 2 and 3. If only A dies, Barrel 1 is poisoned. If only B dies, Barrel 2 is poisoned. If A and B both die, Barrel 3 is poisoned. If none of them die, it is barrel 4 that is poisoned.

 

You get the idea. The most effective way of arriving at the combinations for 500 barrels is to number each of the barrels from 0 to 499 in binary. To write the numbers 0 and 1 in binary, you need one digit. To write 0 to 4, you need two digits, to write 0 to 8 three digits, 0 to 9 four digits and so on.

 

If there are n binary digits, we can write all the numbers from 0 to ((2 ^ n)-1)

 

You need nine binary digits to represent all numbers from 0 to 511, and hence, nine binary digits for the 500 barrels that will be numbered 0 to 499.

 

Pick 9 prisoners, label them A to I. A will represent the rightmost digit (2 ^ 0), B will represent the next digit from the right (2 ^ 1), and so on, till I, who will represent 2 ^ 8 = 256.

 

Like this:

 

 

I	H	G	F	E	D	C	B	A
2^8	2^7	2^6	2^5	2^4	2^3	2^2	2^1	2^0
256	128	64	32	16	8	4	2	1

 

Taking a few barrels as an example, Barrel nos. 0,8,303 401 and 499 will be represented as follows in binary:

 

	I	H	G	F	E	D	C	B	A
	2^8	2^7	2^6	2^5	2^4	2^3	2^2	2^1	2^0
	256	128	64	32	16	8	4	2	1
0	0	0	0	0	0	0	0	0	0
8	0	0	0	0	0	1	0	0	0
303	1	0	0	1	0	1	1	1	1
401	1	1	0	0	1	0	0	0	1
499	1	1	1	1	1	0	0	1	1

 

 

Number all the barrels from 0 to 499 using the above binary scheme.

 

Make Prisoner A drink the wine from all barrels marked 1 in column A.

Make Prisoner B drink the wine from all barrels marked 1 in column B.

And so on…

 

 

At the end of 24 hours, if you find A,B,C,D,F and I dead, it is barrel no. 303 that contains the poison.

 

If Barrel No. 499 has the poison, all prisoners except C and D will die.

 

If no one dies it is of course barrel no. 1 that is poisoned, since that is the only barrel from which no one drank.

 

So, in order to test 500 barrels (actually any number upto 512 barrels) you need 9 prisoners.

 

The answer is, thus, nine prisoners.

 

 

(Thanks to Dilip Thosar for solution to Level 1)

 

Level 2

 

The party is 48 hours from now – other conditions remain the same. What is the minimum number of prisoners needed?

 

 

 

Solution to Level 2

 

There are two time periods available now. So you can divide the barrels into two lots of 250 each. For the above lot, applying the same binary system explained above, you will need 8 prisoners. If you find the poisoned barrel, fine; else, use the same 8 prisoners and repeat the experiment in period 2.

 

Now, 8 prisoners is a good solution, but not the best. Let us try for a better solution.

 

When one time period was available to test the barrels, we used the number system with base 2. Now let us try using the number system with base 3. If there are n digits, we can represent 3 ^ n numbers in base 3. Base 3 of course will only use the digits 0,1 and 2.

 

6 prisoners can represent 729 numbers, viz., all numbers from 0 to 728.

 

Number the barrels using the base 3 number system, like so:

 

	F	E	D	C	B	A
	3^5	3^4	3^3	3^2	3^1	3^0
	243	81	27	9	3	1
0	0	0	0	0	0	0
8	0	0	0	0	2	2
303	1	0	2	0	2	0
401	1	1	2	2	1	2
499	2	0	0	1	1	1

 

 

For this example, let us assume Barrel No. 303 is poisoned.

 

In Period 1, let each prisoner drink wines from those barrels under his respective column that are marked "1".

 

In this case F will die. Mark a "1" under column F.

 

In Period 2, let each surviving prisoner drink wines from those barrels under his respective column that are marked "2".

 

Continuing the example,  B and D will die. Mark "2" under those columns.

 

Put "0" in the unmarked columns, i.e. columns A, C and E.

 

You end up representing the number 303 in base 3. Thus, you have found the poisoned barrel.

 

And you need only 6 prisoners to do it.

 

 

 

 

Level 3

 

The party is 72 hours from now –

 

 

Solution to Level 3:

 

This time we have three testing periods, hence represent the barrels using Base 4 notation. You will need 5 prisoners to solve the problem for anywhere upto 1024 barrels.

 

So, 5 prisoners are enough.

 

Level 4

 

The party is any 24x 9 hours from now, i.e. nine testing periods are available.

 

Solution to Level 4:

 

Since we have nine testing periods, use the decimal numbering system, the one we are all familiar with. Three prisoners are enough to take care of upto 1000 barrels.

So, in case nine testing periods are available, three prisoners are enough.

 

 

Level 5

 

Back to Level 2, i.e. the party is 48 hours from now. But with a twist. The wine will kill anytime exactly between 23 and <less than 24> hours, i.e. it will kill in 23 hours and n minutes, n being less than 60.

 

 

Solution to Level 5:

 

 

Arrange the barrels in a grid of 23 rows and 23 columns. Since there are only 500 barrels, some slots will be empty, but that does not matter.

 

You need only two prisoners. Let prisoner A drink all wines in Row 1 in Hour 1, all wines in Row 2 in Hour 2, etc.

 

Let prisoner B drink all wines in Column 1 in Hour 1, all wines in Column 2 in Hour 2, etc.

 

Both will die. Depending on when exactly each of them dies, you can establish which barrel is poisoned.

 

(Thanks to Srikumar Raman for solution to Level 5)