Saturday, September 16, 2006

World Without Engineers (Part I)

Here's a quick reminder of what the world would be without engineers. More in part deux!

Wednesday, September 13, 2006

Paper Presentation

Finally managed to send out my first ever paper. This was finance paper for a B School competition. Even if I do not win or do not get shorlisted, it gave my a lot of satisfaction. More than anything, it meant that I had to read and understand a lot of greek stuff that I initially thought was I was weak in. Anyways this is a good beginning.

Hope to do at least a few more before the course ends ,provided I can afford some time. This effort meant that I slept less than four hours every night over the past 3-4 days. Hope to catch some sleep now on the weekend.

Or maybe not...

Thursday, September 07, 2006

Skill and Resume Verification by NASSCOM?

Came across this post about NASSCOM creating a repository of information about skills of IT and BPO employees. While it solves some problems for companies and some for employees (Think lemons market...), it can potentially create a lot of trouble if not used properly. It says that the employees would decide about who can view their personal information, but do you think that a poor BPO employee can stop anyone from viewing his or her information.
Other problem would be deciding who updates the information with NASSCOM and the frequency of these updates. Lets say an ordinary IT worker, has learnt a new skill and now wants to update the skills registry, maybe to switch jobs. How would this information be authenticated. The current employer would be reluctant to update even the current skills of his/her employer on the repository. Well they can't even do it successfully on intra company databases except for a few companies. Consider this,1) why would a company, which is fighting attrition, want to update its employees skills on a common database so that others could simply poach these employees. This could also lead to a few companies blackmailing its employees. 2) If on the other hand, the employees themselves update their own skills, there would be no difference at all from the current situation or make the current situation worse. I see huge 'Agency Costs' in both these situations.

The answer is educating people about the pitfalls of resume fudging, and relying on honor system. Performace, in the first 3 months should give ample proof of the fudging if that happens.
A possible solutions could be, a registry for those who are found to have fudged data. The onus of proving the fudging should lie with the company.

Efficient Markets or A Random Walk

What affects stock prices or everyday basis?

Are markets efficient or a random walk?

If Current Price = PV of future cash flows for each share discounted at cost of equity and if stock prices change everyday than does cost of equity change everyday or cash flows change everyday ?

Is CAPM the right model for measuring the cost of equity for efficient markets or just a tool for efficient markets.? Does Cost of Equity determing P/E of stocks ? What about Sectoral effects?

Why do stock prices change every day? Is that so because of buying and selling?

If Behavioural effects determine stock prices how does it change every day?

If marakets are efficient than markets should move only on events, but what are these events? How many events take place each day? What are these events?

How do markets discount/price these events?

If large institutional investors use market models, how do they restimate risk everyday? Do they even use these models.

What causes market in efficiency?

Transaction Costs ?
Information Assymetry?
How Soon do people with information exploit this assymetry?
Minimum Tick Size?
Currency Risks?

What about trends? Bollinger Bands, Inverted Heads and shoulders, cups and handle , break outs? How come do market technical analysts make a living?

What about irrational exhuberence?

So how efficient are markets anyway? Perfectly efficient or Varyingly efficient?
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