The Millenium Trilogy (Book Review)

It had been a long time since I had read fiction at any length having being busy with work and myriad such excuses. So when I had made up my mind that enough is enough, I went around, asked and looked for a good read. Given the history of my reading habits, I knew nothing short of great would get me interested. And then I found Stieg Larsson of The Millenium Trilogy fame and his lead protagonist Lisbeth Salander.

At the very outset I will admit that I have been bowled over completely by the contemporary and adult storyline, that involves themes like hacking, espionage, secret service, sex, activist journalism, and a potpourri of themes without losing the actual thread of the story.

Lisbeth Salander is one awe-inspiring woman, inherently moral and very much the sociopath in the everyday sense of the word. But she's much like John Nash, in that they share the common belief that if I can think, I can do pretty much everything. Remember that John Nash defeated schizophrenia by thinking and analyzing. Lisbeth Salander destroys the secret behind the all powerful sapo, the most clandestine of operations in the Swedish secret service. While some reviewers frown upon the use of violence by her as illegal, I like the fact that an individual is able to defend her own space when the system has not only ditched her, but also has systematically exploited her for its own needs and ends. Her individualism stands out almost in  an Ayn Rand way - remorseless and unrelenting. And it is probably the same when she bonds with people she likes and respects - complete and without inhibition.

The other main character is that of Mikael Blomkvist, an investigative journalist who lives to make that next expose that will bring down the most corrupt, whether it be humongous corporations or secret within sapo. He also lives to make love to strong women. And he does both with nuance and flair, treating them like the art that they really are.

The book left me flipping pages as fast as I my eyes could travel and my brain could process. Besides the storyline of murder, mystery and intrigue, the book trio also paints such beautiful colors and bleak shades of gray of the Swedish people, culture and countryside, that by the end you feel that you know it all. And did I add that all topics are dealt in such detail so as to leave the layman spellbound and the connoisseur impressed.

My recommendation: If you haven't read the trilogy, your should. Period. 

I am also eagerly waiting the Hollywood version of the trilogy - hopefully they pick a good team and do justice.

Stock screening ideas

I have begun to heavily involve myself in stock selection. Its very interesting to learn and read financial statements, the history of a company, its current growth drivers and its competitors. Each stock has its own story to tell. And herein lies my problem. That of there being too many publicly traded companies on the stock exchange for a human to do any fruitful analysis of a stock if we select to go in any particular lexicographical order.

Apropos to this, I have been reading a bit and have learned of a few nice ideas. The foremost of the lot is proposed by Joel Greenblatt in his book titled "The Little Book That Beats The Market" http://www.magicformulainvesting.com/book.do . The strategy that the book proposes is very simple in itself. All that we need to do is look for good companies at bargain prices. And for that, all we need to do is look for companies that give a high Return on Capital Employed (ROCE) or high Return on Assets (ROA). Such companies automatically become good since they are producing better results than their competitors and have a greater sustainability to do so going ahead. And we need to get these companies at bargain. So add to it that these companies should have a high Earnings Yield or a low P/E ratio. And you are pretty much done.

All my other reading point out that this book is pretty much correct. But as Joel Greenblatt goes on to say in the last chapter, there would be a few of us (like me), who like to think that no automatic stock selection criteria is greater than our individual capacity to select good stocks in the long run. Essentially each one of us likes to belive that we are Warren Buffets all. Or the cynic in us gets the better of our logical reasoning and having read a bit more than recommended, believes that since no automatic stock selectioin criteria worked over the long term (for example the Dogs of the Dow theory), even this is not going to work. All that it boils down to is that I like to hand pick my stocks. And this above criteria comes in real handy to get me started.

Add to the above two criterias, I found some others. All common sense, no nonsense at all. I will just list them and try to rationalize them from whatever I know.

• High Return on Capital Employed (ROCE): Shows how good the managment is, since it extracts the most out of whatever resources are available to it. Return on Assets (ROA) or Return on Equity (ROE) can also be variably used. It should be fixed at a minimum of 10%.
  
• High Earnings Yield or Low Price-to-Earnings (P/E): This actually denotes how much return an individual shareholder is entitled to. I marked it to a P/E of 4. Although if you are a sophisticated investor with access to large data, you can probably go for high values of the ratio EBIDTA/EV (i.e. Earnings Before Interests, Depreciation, Taxes and Amortization / Enterprise Value )
• Low Debt / Equity ratio: Fixed at 70% and less. Any higher and there are going to be problems with the operation of the entity each time there a adverse rate move by the central banks. Although this would preclude the banking sector (which far as I know shows a high debt on its balance sheet)
• Market Capitalization: 100 crores minimum. I don't want people to run away with my money. That figure seems reasonable enough to keep the interest of other investors also piqued so that I am not the only one tracking the stock.

That's pretty much the initial screen I would apply during my stock selection. And then rank the companies on all the parameters. Those that come up higher on the list of combined rankings make the grade for my personal scrutiny and study.

That I don't fully understand the financial statements of all the sectors is a story for another day. But the above parameters at least allow me to know, which stocks I want to look at and do research on.

Recommended Read

For everyone, especially people who have just started to earn and have no dependents whatsoever to speak of, I recommend that you read Rich Dad, Poor Dad by Robert Kiyosaki and Sharon L. Lechter. On the net you would find many articles which refute the fact that the story is true. But I would still say that one must read it to get an idea of what constitutes an asset and what constitutes a liability. For those of you who have a background in finance it will make you realize the true meaning of those words. The rest of the book can be read for simple reading pleasure. I also read Cashflow Quadrant by the same authors. Not much there.

Now for those that are amateur to investing and want to get started with the capital markets, I recommend you read "One up on Wall Street" by Peter Lynch. Gives powerful insight into the world of investing and tips on where to get started, basic terms to look out for fundamental analysis.

Another book that I am reading is "Siddhartha" by Herman Hesse. You can find the online Literature Network edition here. Some amazing read for those who are searching for what is the supreme thing, for those who believe in the atman and for who are spiritually minded (as opposed to religiously). Albeit I am yet to finish the whole thing.

Recommended Read

Read the first chapter from the book "The God of Philosophy". Wow! When I sit down to read proper philosophy, it seems like a different part of the brain is functioning.

This book is essentially on the philosophy of religion.

Find the first chapter in pdf format here.

From the looks of it can't find it in any of the online stores catering in India. O my friends in the US of A, please gift me a copy... :D

Unfinished Matter

"This above does not even cover the tip of the tip of the iceberg of knowledge that can be gleaned from Vedas. Hoping to put on more of the stuff before long..."

Those are last lines from a post on my previous blog on Vedic Mathematics, something which I wrote way back in 2005. Wonder what happened in between that broke me off from the simple joys of living.

Ah! the simplicity of all such methods. I wonder why we were forced into learning by rote all those innumerable multiplication tables after encountering this side of knowledge. The only thing that was somehow included in a mathematics textbook that I can recall is synthetic division. And that too was used to divide linear algebraic factors. When it can be easily used to divide any two numbers. Just replace the 'x' in every factor with 10. You have the number and you have the result.

One thing that I knew before I started the post today is the decimals when a number is divided by 7.

For eg: 1/7 = 0.142857; 2/7 = 0.285714; 3/7 = 0. 428571; 4/7 = 0.571428;... essentially the decimals repeat themselves in the order 1 4 2 8 5 7, something which is not difficult to remember, if we notice that the number when grouped give us 14 (7 * 2), 28(14 * 2), 57(28 * 2 +1 ). Even this series follows a pattern.

Trying to recall how to calculate the square of any number. Let's take 298, which is some random number but easy to use in this case. Simple steps:

1. 300 (100 * 3) - 298 = 2
2. 298 - 2 (from 1) = 296
3. 296 (from 2) * 3 (300 / 100) = 888 (300 * 3 - 4 * 3)
4. 2(from 1) ^ 2 ( you need to square atleast something, right?? ) = 4
5. 298 ^ 2 = 88804 (first 3 digits from step3 and last 2 digits from step4)

Explanation: Step1 - for a n-digited number, first figure out the base in terms of a 1 followed by n-1 zeros. For eg: if the number were to be 378 the base would be 100, if the number were to be 4781 the base would be 1000. Then figure out the multiple of that, which considering the above two cases would be (400 / 100 = ) 4, and in the second case would be (5000 / 1000 = ) 5. Then find the difference between the multiplied base and the actual number, which is 300 - 298 = 2.

Step2 - Subtract the difference from the actual number. 298 - 2 = 296.

Step3 - Multiply the result from 2 with the multiple that was found while doing step 1.

Step4 - Square the difference found in step1.

Step5 - Put results from step3 and step4 in right places. Since the base is 100, the result from step3 is to be put down as 2 digits and the result from step3 needs to be prefixed to this. If the number is big from step3 such that it cannot be accommodated in two digits, add the hundred place digit to the last digit of the result from step4 and proceed.

More examples:

278 ^ 2
Step 1: 300 - 278 = 22
Step 2: 278 - 22 = 256
Step 3: 256 * 3 = 768
Step 4: 22 ^ 2 = 484
Step 5: 278 ^ 2 = 76(8+4)84 = 7(6+1)284 = 77284

417 * 2
Step 1: 417 - 400 = 17 (since 417 is closer to 400 than 500, to reduce the work to be done in step4)
Step 2: 417 + 17 = 434
Step 3: 434 * 4 = 1736
Step 4: 17 ^ 2 = 289
Step 5: 417 ^ 2 = 173(6+2)89 = 173889

To successfully wade through step 4, you can follow the same process, albeit here the base would be 10. So recursively the square of any number can be found. But, obviously at the time I actually learned this, I was short of time and took a short cut (which I regret to this day!). I memorized the squares of all numbers from 1 - 50.

... 49 ^ 2 = 2401; 48 ^ 2 = 2304; 47 ^ 2 = 2209; 46 ^ 2 = 2116; ... et. all. I wish I had not done this and had spent more time practicing the actual method.

The one real book on this endless topic can be viewed here. I don't know if this book has the method to square the number as I describe it. But it has a lot of other such tricks up on its pages, with enough detailed algebraic explanation to satisfy the curiosity of the cat.

Lament: Sitting in front of this monitor and keyboard, I forget to use those few grey cells that I have there ( yeah, I do have some!!! ) and instead do this.

History Of My Reading Habits

Somewhere back in 1993:

A new entrant to Loyola School, Jamshedpur in the sixth grade the only things that I took a liking to was the Reading Class conducted by Mrs. Zareen Modi and the junior school library run by Mrs. Dhamodiwalla (besides of course the mathematics class by Mrs. Devi where I used to score highest in mental maths and she used to spread my fame in other classes, with a little exaggeration on my part). The Reading class had this colored books with lots of words and we had to do things with them. Each color was indicative of your grade of skill with english and even after joining a few weeks late I had almost caught up with the boy at the highest color level.

Anyways, without meandering and preening, what held my fascination most was the Junior School Library. The first day I entered the library my eyes must have popped out at seeing so many books and comics (you need that, right??) Started off with those Hardy Boys, Nancy Drew, Famous Five, Five Find-Outers by Enid Blyton, Three Investigators by Alfred Hitchcock and the related genre. Indulgent as my librarian was, she used to come early to school at 7:15am and school did not start till 7:40am. Imagine what I used to do. Go for the comics of course! Asterix, Tintin were the clear favourites (can't recall much else) and then again during the recess, while the other boys of my class devoured the snack that mom packed for me, I did the same to those books in the library.

Add to it I went to this big school to learn fine arts (painting for the uninitiated) where I met up with the Bobbsey Twins another Enid Blyton creation, although did not spend much time with them.

The Addiction Grows Towards Its Peak

Next year I graduated to high school and a larger library, and as if it was ordained that my addiction to books was to grow, so did my librarian. What more could I have asked for. For the first I laid my hands on Sidney Sheldon, Harold Robbins, Jeffery Archer, John Grisham, Robin Cook, Mario Puzo and more, not to forget Mills & Boons. So you see, my horizons kinda broadened and my eyesight kinda lessened. And the indulgence of my librarian kept growing likewise. Where others were allowed to take home only a single book per week during the "library class", I was especially privileged to take home another during the weekend. The affliction reached a cresendo in the 10th grade, when I still remember there was this one week when I read seven novels. Wow! I wish I could do that again. I generally used to start reading right after lunch. My favourite setting was the chair in the balcony on the first floor. And then in falling dusk and gently flowing warm breeze from the river nearby as I became oblivious to all my surroundings. Imagine the sight as I inch closer to the actual paper of the book in failing light to see better, when all I needed to do was get up and go inside my room, or better still stand up and put on the light in the balcony.

The Sad Decline

With the competitive landscape in India to do good in the field of study which allows for only rational and logical conclusions, I too got embroiled in the "rat race". Naive that I was, I hoped that giving up my reading habit would somehow help me in concentrating better. Anyways, during those two years reading came down to almost zero but due also to the senior school library where all the books were stale acads. The only book that I remember picking up during that time was Lolita.

During this time the only reading of any note that I did was Shakespeare (The Merchant Of Venice, Hamlet), the poems prescribed in the curriculum of which I remember the titles Byzantine, Good Fences Make Good Neighbours, La Belle Dame Sans Mercy, the short stories collection.

The Gradual Return and The Happy Maturity

Finally, as everybody does, I got through some undergraduate course and landed up where the library had non-existent sense of what a novel is. But thanks to this, I turned my attention to what was available. And the world of non-fiction, newspapers and magazines exploded in front of me. Spending hours on a daily dose of The Economic Times became the norm. Besides interaction with people from diverse location brought better perspectives. Long having outgrown the Sidney Sheldons and the Jackie Collins, I shifted to Arthur Hailey, JRR Tolkien, Ayn Rand, Bertrand Russell, Stephen Hawkings, John Gribbin, besides other couple of book wonders like Arundhati Roy, Chetan Bhagat, Jhumpa Lahiri not to mention the really good ones like Gregory David Roberts and the regular management guru speak. Yeah, I know I am dropping names but I did read all those. Ok. There are people like you who have read more, but then there are people like this one friend of mine. She had this huge trunk, mind you I did not say suitcase, full of books that she carried with her when she came to college. But then there were people who hadn't read a single thing their whole life.

Also here, I must thank somebody for that quirk of fate due to which I spend six years in undergraduate college, which essentially gave me more time for reading and realisation of what to read. I uphold this habit of mine amongst the achievements of my life. People define their aim in life through lots of things, I define it through this: "If at any point of life I want to buy a book to read, I should not fall short of resource and not fall short of time to read it." Amen to that!

Today I am happy to be in a position where I can and do buy books on my whim and fancy. As a matter of fact I have bought without having finished the ealier ones bought.

Also my two-pence recommendation for anyone who wants to start reading, not having read before at all and fascinated by the world of books that a bibliophile seems to descend into. If you don't have patience, read "The Love Story" by Eric Segal. If you think you have patience, read "The Client" by John Grisham. And if you like reading also read the other one.

Update: Loss Of Memory

In all this that I have said above, I forgot to mention where the addiction actually started. It all started with the genre of Raj Comics (Nagraj, Super Commando Druv, Doga,...), Diamond Comics (Chacha Chaudhary, Billu, Pinki, ...), Manoj Comics (Bhokal, Inspector Manoj, Hawaldar Bahadur...) along with tinkle, wisdom... Phew!!! Can't even recall half the stuff that I used to read at that time in junior school as a kid.

This loss of memory: mea maxima culpa.