Monday, November 5, 2012

How to find the truth behind what your (financial) agent tells you?

Here's a list of things that are mentioned here to detect lies by an agent.
How to tell when an agent (insurance, loan) is lying to you
Beyond this, there is one true test because at the end of the day, because actual "Numbers don't lie"*

Many agents typically sell you an investment product saying you pay x amount yearly for y years and the end of it, you get z amount. Plus, there is a bonus amount paid at the end of m years and every n years later. The agent says it as if the bonus is something free, something over and above what the company generally gives/supposed to give. This is just 'playing into' the customer's mind. Since, there are a number of different products, each with its own different flavour and rules, it is very difficult to comprehend what is the real returns expected out of the product. To decipher the real return expected out of the product, do the steps below. If you are not familiar with xls, take help of someone to follow the steps mentioned below:
Ask your agent to give you year wise, the ouflows (investment made, premiums paid, basically money going out of your pocket) and the inflows for every year (typically, a single or multiple bulk amounts at end of a number of years).
Open a new xls and enter the dates, the amount going out of your bank accounts as negative, the expected amounts as positive (in forms of bonus, returns, dividends, etc.) in three different rows.
Add these two amounts (outgo and inflow) in the next row (Row 4). (Click the pic below to zoom)

Then use the XIRR function with the net amounts as the first parameter and the dates as the second parameter to get the real compounded annual growth rate(CAGR).
CAGR describes the rate at which an investment would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the returns.
Read more on CAGR

* Numbers don't lie, but reading the numbers in a false context/background/with bias, interpretation of numbers could lead to lies. e.g.: The Indian stock market had gone up by leaps and bounds between the period 2003 and 2008 and those numbers do not lie. But expecting that same kind of growth at any other point in time (as the environment would be different wrt to interest rates, policies, inflation, currency rates, oil prices, global liquidity, attractiveness of Indian stock market vis-a-vis the other global stock markets, investor sentiment, etc.) could be equivalent to lies. If an agent shows you the best period of growth and tells you that this can be expected in the future also, do ask for the worst period of returns and ask him/her why that the worst could not repeat.

Tuesday, October 16, 2012

Hollywood Movie types

Real options and Real life options

In finance, there is a concept of Real option valuation. It is a choice that a business may gain by undertaking certain endeavors. For example, by investing in a particular project, a company may have the real option of expanding, downsizing or abandoning other projects in the future.
The property of the real option is that they generally increase in value the more uncertain the values of the underlying variables. They generally increase in value the longer the time an option can be deferred.

Real life options are somewhat different. Real life options have many interdependent variables associated with it. And hence, unlike a real option, its value increases the more shorter the time duration of its expiry.
With a three/six month or 1 year real life option, it is very difficult to plan for medium term goals and perhaps even long term goals.

Tuesday, October 2, 2012

Watches from another place

The future of Body Modification

Traditionally, Body modifications involve making holes in certain body parts like ears, nose, cheeks, etc. Some African tribes use body modification to contour their bodies like elongated necks. Some use it to have a narrow hip. 
The future of Radical Body Modification is quite different and are interesting.
Take the example below: An embedded digital watch in your hand.
Another example: Magnetic implants at fingertips
The sixth sense of the magnetic implants can be understood from the relevant text here:
"They work by creating a haptic interface. The magnet moves or vibrates when it is exposed to magnetic or electromagnetic fields. This can be felt by the same nerves that are used for touch, nerves that are extremely dense and sensitive in the fingertips. They are generally placed slightly to the side of the fingertip rather than centrally in the finger pad so that they don't affect function, and they're quite tiny, having a volume comparable to a grain of uncooked rice.
When the magnets move, you are aware of it, and it doesn't take long before this becomes a distinct sensation from touch. It doesn't just feel like having a tiny vibrator inside your finger, even though that's exactly what it is. It's more natural than that. For example, if you are feeling the electromagnetic bubble that comes off of a power transformer, like what your laptop might use, it feels like you're reaching out and touching an invisible bubble. That bubble has form (you can move your hand around to get an idea of the shape) and it has strength (the amount of power dictates how far the magnet is being moved inside your finger) and it even has "colour" (the frequency of the electromagnetic field alters how quickly the magnet vibrates).
All of this is processed on a subconscious level, and it really is like having a sixth sense. It's hard to describe just how wonderful this is — our world is so rich with electromagnetism. It's such an important part of the modern world, yet most people are blind to it. Sure, you know intellectually that it's there, and you can even detect it with various tools, but it's not the same as actually sensing it. Nor are the tools as fast or convenient.
Because I can feel the power running through cables (at household voltages anyway), and transformers are easy to detect, there are many times where I've used it to quickly diagnose hardware issues without having to pull out a multimeter. The sensitivity is high enough to detect a spinning hard drive engine through the keyboard of a laptop, or to feel a distributor firing in a car being repaired.
Of all the body modifications I've had, my magnets may be at the top of my favorites list. They're certainly the most profound in terms of expanding my world. I've had them for a bit over seven years, and I feel like if I were to lose them I would feel blind."

Thursday, September 27, 2012

5 ways to negotiate with a Hyderabadi autowala

1. Ask for sympathy (student, old age, lady, please, etc.)
2. Justify (small distance, no traffic, travelling to popular destination and hence sure another passenger, it is only day now, I travel daily at x costs)
3. Provoke/Insult them
4. Threaten (with policemen, act like a senior govt. bureaucrat, CBI officer, etc. - Anything to intimidate them to submission)
5. Default (after ride, pay what you think is right, not what they ask. Keep arguing with nothing to loose, they  understand the value of lost time in not transporting another passenger. Know that if things are going to get physical, there is that auto that can always be damaged with a stone throw.)

P.S: Do not use the methods in other places blindly. Each place has its own cultural norms, sensitivities and tolerances to things (like insults, default, etc.) Apply suitable method judiciously.

Sunday, September 23, 2012

Why are bike reviews pathetic?

Every auto magazine seems to write a review of the new bike. But/yet,
1. They don't talk about after sales service in various cities.
2. They don't talk how the mileage changes after the first and second servicing.
3. They don't give the height of the seat.
4. They don't give the braking distance from 60kmph to dead halt (under standard conditions)
5. They don't talk about availability of spare parts and their costs vis-a-vis competitors.
6. They don't talk about maintenance needs of the bike and its associated costs. Some bikes need special oil and are costly.
7. Not all, even give the time needed to go from 0 to 60 kmph.
8. They don't talk about emissions vis-a-vis peers.
9. As a matter of fact, after the first review of the bike, there is hardly any follow up review done with inputs from the buyers/users to get real feedback on the bikes.

One of the best advices the magazines can give based on their "knowledge" of the industry is the how much do the spares and maintenance does the bike need compared to its peers. But, no kind of real knowledge comes from the review which help in decision making while buying the bike. Instead, each of them is off showcasing how erotic literature can be used to describe biking and the bike.

Companies on the other hand, put out info which is rather non-useful. Eg: Max torque and Max Power, Carbureter, Bore x Stroke, none of which is useful to the layman/normal user. What makes sense is the graph of the torque achieved across all rpm to see if the torque is good at low rpms (preferably vis-a-vis competitors) and graph of power achieved across all rpm.

Wednesday, September 5, 2012

Solve this case

Case study:
On a lazy day in office, you dont have much to do and you staring at the Brownian motion of the leaves on the tree you can see through the window of the office building. You wonder what you want to do this weekend. You check the movies online after a 360 degree turn of the head to confirm no one is looking at your non-official work. After some 5 min, you are done finding the theater and the time of the show you want to see and where. Now what?
You start thinking of a weekend vacation and how long it has been since you had been somewhere of some significance. With some memory recollection, you remember how your colleague had talked about the great things of a nearby town - a 3hr ride by bus. Whats wrong with checking out some details? Where is this? Whats there to watch? How to get there and back? Timings of the bus, etc.
Again looking around that no one is looking at you and glancing into the boss's cubicle to confirm that he is not yet in office, you start finding details of your potential next trip.
Twenty min have passed and you have found valuable information on the place. Now, to plan the bus trip. So, you open the popular top of mind site for bus travel,
And you have entered the locations and are about to enter the dates, when suddenly, you hear a faint voice. It is not readily identifyable but slowly you realise that you recognise that voice. It is coming from behind and the loudness of the voice is slowly increasing. This is processed by the brain after your nerve cells communicate with each other by synaptic pulses as the subject is approaching nearer to you. This realisation gets your heart to beat faster of impending situation. You then realise that the voice is that of your dreaded boss who already doesnt like you and will get furious seeing you wasting time instead of doing office work, surfing sites and making travel plans. Your heart is now racing at the speed of Ussain Bolt and you are not sure what to do. Closing the tab on your browser will show the other travel sites that you have open. Closing the browser will show your desktop with no work on it. What do you do? All these scenarios are running through your head in a fraction of a second and you are sure either of two things: A miracle to save the day or to embrace the impending disaster. What do you do?

Answer: you click the link "Boss is watching? Look busy." :D

Monday, September 3, 2012

How to drink coffee aboard a flight

Step 1: Order the cabin crew a coffee or a cappuchino.
Step 2: Pay Rs.60
Step 3: Receive hot Nescafe Cappuccino - Ready to drink in a paper cup stirred with hot water by the cabin crew herself.
Step 4: After drinking, give cup to cabin crew while they come to taken things to discard.

Jet Konnect:
Step 1: Order the cabin crew a coffee.
Step 2: Pay Rs.60
Step 3: Receive a (puzzle looking) box bigger than a pack of 52 playing cards.
Step 4: Receive a big paper cup with plenty of hot water (to drink or drown oneself?) and a stirrer.
Step 5: Struggle opening the cellophane tape on the box.
Step 6: Discover three small sachets inside - one everyday whitener costing Rs.1?, one sugar packet costing another Rs.1 perhaps and one nescafe instant coffee power definitely costing Rs.1.
Step 7: Open the sugar packet and pour into cup.
Step 8: Open the dairy whitener and pour into cup.
Step 9: Struggle opening the plastic pack of instant coffee at one end. Try another end. Finally, it opens.Pour into white solution.
Step 10: Stir, stir, stir!!!
Step 11: Drink extra-diluted warm by now coffee.
Step 12: After drinking, pick all the stuff and give back to cabin crew (total of ten items including pieces of sachets [3 sachets and their respective 3 opening bits], stirrer, the box top, box bottom and paper cup)

1. A well known brand of Rs.15 worth superior 3 in 1 cappuccino sachet is being used by Indigo. Jet uses clearly evident Rs.3 worth of material for the same Rs.60 coffee. Premium feel to Indigo. Feel being looted by Jet Konnect.
2. User ordered to drink coffee in flight. Indigo served ready to drink coffee. Jet Konnect asked user to make his/her own coffee (with no real customization options) and then drink it.
3. "Order-Drink-Give cup" procedure of Indigo. "Order-Mmmaaaakkkkkeeeeeee-Drink-pick all pieces and give"  procedure of Jet Konnect.