1.01.2005

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» TIP: Ten bucks says you're probably not going to get rid of all your bad financial habits
» RANT: When your boss can't just say no to your great idea
» TIP: A Winning Formula - how successful executives fail
» TIP: Response positively to a negative performance review
» TIP: When a word is worth $1,000 (each)
» MISC: Sometimes Silence Speaks Greater Wisdom
» TIP: Stop the cheating traders before they stop you
» TIP: Edutainment - why fun should be taken seriously
» RANT: Enslaved by our independence
» TIP: Make Millions in 30 minutes or Less

TIP: Ten bucks says you're probably not going to get rid of all your bad financial habits

via CNNMoney - So many bad habits, so little energy to change them. At some point in life, you reach the flaws-and-all years. You accept yourself as you are, complete with sins and shortcomings. Sure, some improvement is possible. But those of us who sip from the fountain of reality realize the changes won't be fast and furious in coming. That's as true of our bad financial habits as anything else. I'm not talking about crippling problems like compulsive gambling, but more everyday behaviors like procrastination and sheer neglect.

Still, just because you're not likely to reform your ways doesn't mean you can't sidestep them. So, here are some ways to outwit your bad self if you're a:

  • Piler-filer drawer stuffer: The thicker your stack of bills, statements and other financial detritus, the more reasons you'll find to clean the bathroom. When it comes to organizing files, forget perfect. Think simple. Keep a single file by your front door, suggests Ruth Hayden, author of "Your Money Life." Throw into it every bill and financial document you get in the mail. Then deal with the contents once or twice a month. You might even do so during your lunch hour at work....
  • Casual spendthrift: You don't have a debt problem. You just gasp a little when you see how much you charge every month buying things you don't really need or even want... exercise the 3-day rule. Write down what you want and then wait three days before buying it. By that point, you may decide to keep your money instead, Hayden said.
  • List-making procrastinator: You organize all the financial stuff you need to do on one list. Exhausted, you take a break ... for weeks. Then you realize you have to add to the list. To take the "sting" out of confronting all your to-dos, Rita Emmett, author of "The Procrastinator's Handbook," suggests that you:
    • Select just one thing to do.
    • Time yourself. Give yourself an hour to finish the task.
    • Ignore everything during that hour...
    • No breaks, no phone calls, no checking email.
    • Give yourself a reward. Do something you love, but rarely have time to do...
  • Accidental investor: You figure a chimp could do as good a job as you managing your portfolio. In any case, he'd certainly do it with more enthusiasm. So keep your investments simple: no individual stocks or bonds, just as few mutual funds as possible.

Category: C++ Quant > Random Walk > Ordinary vs Extraordinary > Getting Things Done

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RANT: When your boss can't just say no to your great idea

Bestseller author Kathy Sierra blogged - Tom Kelley--general manager of IDEO--believes that "devil's advocate may be the biggest innovation killer in America today." We've all been in a meeting where a passionate idea is put forth but someone plays devil's advocate and drains the life out of the room. Invoking "the awesome protective power" lets the devil's advocate be incredibly negative and slash your idea to shreds, all while appearing not only innocent but reasoned, balanced, intelligent... all attributes loaded with business "goodness". Whew! Thank GOD for the devil's advocate, or we'd all be off blundering with our stupid ideas, oblivious to the insurmountable problems we were too clueless to see... "What makes this negative persona so dangerous is that it is such a subtle threat. Every day, thousands of great new ideas, concepts, and plans are nipped in the bud by devil's advocates. Why is this persona so damning? Because a devil's advocate encourages idea wreckers to assume the most negative possible perspective, one that sees only the downside, the problems, the disasters-in-waiting. Once those floodgates open, they can drown a new initiative in negativity."

Part of the problem is simply the timing of the devil's advocate invocation; if the devil jumps in at the earliest stage, the idea never has a hope in hell, or ends up being having all of its sharp edges smoothed over. And there's a big difference between someone crushing an idea based on spinning out possible negative scenarios, vs. someone who voices a genuine concern backed with real facts.

But this is tricky and subtle... I've been known to be the one to "voice a genuine concern backed with real facts" without stopping to consider whether those "facts" were still valid. The old, "We tried that before and it didn't work." is probably the fastest way to stop an idea, but someone always needs to ask, "Are we sure we tried EXACTLY that?" and "Has something changed in a way that invalidates what we tried earlier?" Or even just this response when someone says, "We tried that...", "You tried what?" Maybe the thing that was tried before was different in some non-obvious but profound way.

The other tricky thing is that if you try to shut a devil's advocate down, then you're perceived as being "unwilling to hear criticism" or "can't handle any disagreement". And of course, for however dangerous the devil's advocate is, there's the equally-dangerous "angel of optimism". The "angel of optimism" is one who answers every genuine criticism with a cheerful and dismissive, "Oh, there's always someone thinking the sky is falling." This doesn't mean that being cheerful and positive is a bad thing (as one who is all too often accused of playing this role), but both the angel of optimism and devil's advocate can do damage when they shut down other solutions...

One thing I know for sure, whether playing devil's advocate, angel of optimism, or any other persona, I believe the emphasis should be on offering solutions, not just criticism. Yes it's true that one can know something is wrong without knowing how to fix it, but if people tried to adopt the perspective that "I'm going to try to always include possible alternatives and solutions when I critcize", it might make meetings a little more bearable.

Category: C++ Quant > Fix the Job You Got > Ordinary vs Extraordinary

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TIP: A Winning Formula - how successful executives fail

Success usually fails, and the executives along with it, Speech Writer Jane Genova blogged, because everything keeps changing. The cluster of variables from the past that generated that particular success will most likely not work today or tomorrow. Yet, few leaders will let go of a winning formula. Just look at how beleaguered Coca-Cola wants to revive that winning commercial from the past about teaching the world to sing.

Well, the useful question to ask is, can this syndrome be prevented? You bet. There are the Warren Buffetts, the A.J. Lafleys, the Rosabeth Moss Kanters who have remained in the zone of success. No catastrophic failure... What they know, I'm convinced, is a truth as old as the philosophy of Buddhism. Buddhist tenets were put together long long ago to help mankind avoid suffering. Mankind can do that by recognizing and embracing that all things change. Nothing is permanent. Therefore, Buddhism holds that human beings will duck plenty of unnecessary pain if they don't become "attached" (big concept in eastern thought) to what is...

Category: C++ Quant > Fix the Job You Got > Opportunity vs Trap

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TIP: Response positively to a negative performance review

CNNMoney - First, breathe deep and stay calm. Then follow these tips...

Go into this meeting with the goal of coming out with three specific ideas for doing your job better. If you concentrate your attention on figuring out these three things, you'll be less likely to respond to your boss's critique with an emotional outburst.

You might also, "help your reviewer distinguish between an incident and a pattern... For instance, if he says you're not a team player, does that mean you're habitually self-absorbed under pressure, or that you lost your composure one time when you were at the end of your rope?" Likewise, was your recent mistake with a client a one-time slip-up? If so, you naturally want to avoid repeating it, but you could respectfully point out that it didn't reflect how you deal with clients in general...

After the meeting, take a little time to think calmly about what was said. Then write an e-mail to your boss outlining what you understood to be his main points and briefly tell what you plan to do about them.

Category: C++ Quant > Fix the Job You Got

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TIP: When a word is worth $1,000 (each)

Bestselling author Seth Godin blogged - ...Almost all the instances of disrespect didn't have to do with the substance of the transaction, it was the style of it. If the person had accepted some responsibility and acknowledged how I might feel, the outcome wasn't really a big deal.

"I'm really sorry you had to wait. Mr. Wilson's eardrum exploded and we're doing everything we can to help him."
"I know you worked long and hard to make this deal work, but we just can't figure it out. I'm so sorry we wasted your time."

It's really simple: most of the time, most of your customers will cut you slack if you just acknowledge that the outcome isn't the one they (think they) deserve. People have a hard time with this. If someone feels as though they're treating you technically correctly, they don't want to apologize. They don't want to acknowledge the feelings of the other side. This is awfully short-sighted. These are words that are worth thousands and thousands of dollars in lost sales and word of mouth.

"You must feel terrible about what happened. I know I do. If there were any way I could figure out how to make this better for you, I'd do it." When isn't that a true statement when you're dealing with an unhappy customer?

Category: C++ Quant > Fix the Job You Got > Ordinary vs Extraordinary

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MISC: Sometimes Silence Speaks Greater Wisdom

Buddhist Mystic James blogged - A dog is not considered a good dog because he is a good barker. A man is not considered a good man because he is a good talker.

Category: C++ Quant > Random Walk > Strength vs Weakness > Style vs Substance

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TIP: Stop the cheating traders before they stop you

Wilmott.Forums - ...99% of the trader are honest hard workig individuals. but bad apples do exist. they try to manipulate the trading systems, booking erroneous trades, mis-marking volatility curves... how (and if) it is possible to create a systematic process or a set of checks to minimize such cheating...

There are no people who can be shown to be higher risk than others, because if there were, you could see these things coming a mile away. Highbrow, lowbrow - bad guys don't have a profile. What is identifiable is the set of things that, right here and now seem like a no brainer but are very hard to face when you're in the thick of things:
  • People who are in over their heads. A guy who has never faced an actual market dislocation - suddenly markets move hard because of something unforseen and the guy loses track of stuff, executes incorrectly, and the problems snowball - he drags other people into it who otherwise don't do it all the time and so on. There are a LOT of people working in trading these days who have never seen a real, honest to goodness panic, and who are not qualified to cope. Ok, that's not the cheater you mentioned, but usually big f4rkups happen with guys who start out being well intentioned.
  • Bad politics on the trading desk. Again, good intentions paving the way to hell - if a trading desk boss is really good buddies with one of his traders, he will help the trader out of a jam when the jam should have been examined in the light of day. I saw this and it can be costly.
  • Times of year when things can get tense. This is obvious, or at least should be. If a guy has been losing money all year, and will likely be asked to move on after this accounting cycle, well, do you think he should have the same scrutiny as usual?... I guess at the end of the day I would say that most of the serious crap I have seen starts out with someone who probably meant well...

One approach is the "honeypot"... create an attractive vulnerability and monitor who uses it.

You can make money in anything where the compensation frequency is higher than the trading frequency. Bid it up, get paid, sell it down...

The system was put in place (a while ago) which detects most of systematic abuses. Risk managers and back office who compute PnL are separated from trading desk. This is the case in most of the hedge funds or banks. Banks also have legal compliance departments which is supposed to make sure that even tiny violations are determined. Violations that became profitable are under double scrutiny since ussualy it is zero sum game. In US orgranizations like NASD make sure that if you caught once doing the bad thing you never will get a job in the financial industry.

Sounds convincing and you would presume that JPMorgan are aware of these basic operational risk practices and yet last week a FX salesman was arrested. Terrence Gumbs (a 17-year veteran of the bank, although only 36) entered a non-existent client order to try to win back earlier losses and managed to blow another $6 million. Chump change by the real rogue trader standards of course but he'd been doing it for months which suggests he must have been able to intercept the settlement details going to the client.

Entering fictitious trades should be caught immediately when the external client/counterparty's back office denies all knowledge of them. Mis-marking positions of illiquid and exotic instruments is more difficult - although some independent group should at least be able to put upper and lower bounds on the value.

I interviewed with this MBS risk manager once, who had a very simple way of dealing with traders who do too much P&L management: if he thought a particular position was marked too low, he'd offer to buy it from him...

Category: C++ Quant > Fix the Job You Got

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TIP: Edutainment - why fun should be taken seriously

Bestseller author Kathy Sierra blogged about learning techniques. Some of my favorites are
  • Get past the brain's crap filter... to the brain, a dry, dull, academic explanation is definitely CRAP (regardless of how much your mind cares about the topic)...Learners are not "empty vessels" waiting to be filled with content pushed into it by an expert, blogger, author, etc. Learning is something that happens between the learner's ears--it's a form of co-creation between the learner and the learning experience. You can't create new pathways in someone's head... your job is to create an environment where the chances of the learner "getting it" in the way that you intend are as high as possible.
  • Use redundancy to increase understanding and retention: Redundancy doesn't mean repetition--it means "say the same thing again, but differently." And "differently" can mean:
    • From a different perspective.
    • Using a different information channel (channels include things like Graphics, Examples, Prose explanations, step-by-step instruction/tutorial, case studies, exercises, summaries, bullet points, commentary, devil's advocate, Q & A, personal POV, etc.)
    • Also, the more senses you engage, the greater the potential for retention and recall. Even having a bowl of just-popped popcorn or the smell of freshly-baked cookies while learning, can make a difference. Bummer about web-delivered content, though...
  • Use conversational language: The brain pays more attention when it thinks it's in a conversation and must "hold up its end."...
  • Use mistakes, failures, and counter-intuitive WTF?: Describing the things that do NOT work is often more effective than showing how things DO work. (We call this the "WTF learning principle"). But showing is even better than describing. And even better than showing is letting the learner experience. Take the learner down a garden path where everything makes perfect sense until it explodes. They are far more likely to remember than if you simply say, "Oh, and be sure you do it such and such a way." It's tempting to want to protect the learners from the bumps and scrapes experienced in the real world, but in many cases (with many topics) you aren't doing the learner any favors.
  • Use the filmaker (and novelist) principle of SHOW-don't-TELL: Rather than lecture about the details of how something works, let them experience how it works by walking them through a story or scenario, where they can feel the bumps along the way.
  • Use "chunking" to reduce cognitive overhead: we have very little short-term memory (RAM) in our heads. The standard rule is that we can hold roughly 7 things before we must either commit some of it to long-term storage or toss it out to take in something new. And the things you hold in short-term memory vanish as soon as there is an interruption. You look up a phone number, and as long as you repeat it to yourself and nobody asks you a question, you can remember it--usually just long enough to dial the number. By the time you finish talking to the person on the other end of the line, the number is long gone. Chunking takes fine-grained data/facts/knowledge and puts them into meaningful or at least memorable chunks to help reduce the number of things you have to hold in short-term memory, and increase the chance of retention and recall.
  • Use a spiral model to keep users engaged: Game developers know the importance of "The Next Level", and learning experiences must do the same. Each iteration through the spiral should start with a meaningful, motivating goal, followed by the interaction/activity/reading that moves you toward that goal, followed by a meaningful payoff. Ideally, the "meaningful payoff" leads right into the next motivating goal. For example, in a game the payoff for completing a level might be "You Get A New Weapon". But now that you have that new weapon, here's the cool new thing you can do that you couldn't do before. Learning doesn't need to be any different. "Imagine you want to do X on your website..." is the goal that starts the topic, but when the topic is complete, the learning content can say, "Now that you have THAT new [superpower capability], wouldn't it be cool if you could do Y?" And off they go into the next round of learning.
  • Don't rob the learner of the opportunity to think!... Think back to those teachers you had who would ask a question then immediately answer it, as opposed to those who would answer a question then just sit there... waiting...
  • Use the 80/20 principle to reduce cognitive overload. It's far more important that they nail the key things than be exposed to everything... Knowing what NOT to include is more important in learning design than knowing what TO include.
  • Emotion matters! People learn and remember that which they FEEL... One of the many ways to help tap into emotions (and increase attention and memory) is to use the brain's reaction to faces. Almost any kind of face with a strong expression evokes a part of the brain reserved just for processing faces. The ability to accurately recognize faces and read facial expressions is a key element of survival for the brain...
  • Use pacing and vary the parts of the brain you're exercising.
  • Remember, it's never about you. It's about how the learner feels about himself as a result of the learning experience... Don't use learning content as a chance to show off your knowledge--that virtually guarantees your content won't be user-friendly. Use it as a chance to help someone's life a little...

Category: C++ Quant > Fix the Job You Got

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RANT: Enslaved by our independence

via WashingtonPost - Slogging around with a backpack, a notebook and a bottle of water, you stop for a while and stare at the historic black-and-white photographs in the National Museum of American History. You know, the ones depicting Americans going about their everyday lives: folks waiting for District trolley cars circa 1900, for instance, or people crisscrossing Pennsylvania Avenue in 1905. Notice something missing? That's right: stuff.

The people -- all ages, all colors, all genders -- are not carrying any backpacks or water bottles. They are not schlepping cell phones, cradling coffee cups or lugging laptops. They have no bags -- shopping, tote or diaper. Besides a small purse here or a walking cane or umbrella there, they are unburdened: footloose and fingers free. Now walk outside and take a look around. People on the same city streets are loaded down. They are laden with books, newspapers, Gatorade jugs, personal stereos, knapsacks, briefcases and canvas totes with high-heel shoes inside. They have iPods strapped to upper arms, fanny packs buckled around waists and house keys Velcroed to shoelaces.

Perhaps it's because we are multitaskers. Or because we're insecure. Maybe we are becoming more independent. Whatever the reasons, we are more and more burdened by our belongings...

Contemporary life is so fluid. Work bleeds into leisure activity, which oozes over into family time. We never know what we are going to need or when we are going to need it. A book when we get mired on the Metro; a juice box when we are trapped in traffic; cookies for low blood sugar moments; a flashlight in case we have a flat tire at night. "It's sort of like a safety net," Douglass says of the things we carry... The increased quantity of carry-on items for our flight through life, he says, reflects "the tendency of our society to dispense with sources of shared stability -- the long-term job, neighborhoods, unions, family dinners -- and transform us into autonomous free agents."

The Walkman, introduced in 1979, Hine says in an e-mail, "probably set the precedent; it allowed people to be physically in a space, but mentally detached. The plethora of 'communications' devices we carry are also tools of isolation from the immediate environment. And, in the words of the recruiting ad, we each become 'an army of one' carrying all our tools of survival through a presumably hostile world." It's the perfect posture for the Age of Insecurity. We fret about our jobs, families, country, manhood or womanhood, ability to be a good parent. We believe someone is out to get us. And to get our things. So, like the homeless, we carry our stuff with us. Just in case something, or anything, happens.

If wealth is judged by freedom and freedom is the state of being unencumbered, then we are a poor and burdened people...

Category: C++ Quant > Random Walk > Strength vs Weakness

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TIP: Make Millions in 30 minutes or Less

A few weeks ago I saw Elton John in concert in Indianapolis, Robert May blogged... The next day, there was a tv show about him on some educational network (he was being interviewed in front of a bunch of musicians), and someone asked him how long it took him to write "Your Song." He said about 30 minutes.

That song has made him millions of dollars. For 30 minutes worth of work.

Or, that's how some people see it. But that would be wrong. You have to peel back a layer. Elton had studied piano for years. He played hours and hours a day. He pushed himself to master his instrument until such bursts of creativity and talent seemed easy. When we wonder why we haven't had the "instant success" that so many others have, do we look at all the time they put in that we didn't? Elton John didn't really write "Your Song" in 30 minutes. He wrote it during 15 years of rigorous musical training.

Why does this matter? Because if you want to have those creative breakthroughs, if you want to make the easy money, if you want to be an instant success, you have to put in an inordinate amount of time up front. So now the secret is out, but don't worry - this is one secret that is safe in public - because most people hate hard work.

Category: C++ Quant > Fix the Job You Got

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