# La chienne

[Another of my French “redactions,” this piece is a translation of a joke, which perhaps didn’t translate too well. I was told that the French version was in poor taste. Now, reading it again, I feel that the English version doesn’t fare much better. You be the judge!]

[In English first]

Once, an American was in England. In a public bus, he saw an English lady sitting with her little dog, occupying two seats. The bus was crowded and many passengers were standing. The smart American, inspired, asked the lady very nicely: “Ma’am, if we put your poodle on your lap, one of us standing could sit. Much appreciated.”

To his surprise, the lady didn’t pay any attention to him. A little miffed, he repeated his request. The lady ignored him with a disdainful look. Americans are men of action, and don’t waste words (where guns and bombs would suffice, as we know). Embarrassed, and being quite American, he picked up the dog and threw it out the window and sat down in its place.

An English gentleman across the aisle was watching the whole exchange. He tut-tutted disapprovingly and said, “You Americans! Whatever you do, you do it wrong. You drive on the wrong side of the street. You hold your fork in the wrong hand. Wrong habits, wrong clothes, wrong manners! Now see what you have done!”

The American was on the defensive. “I didn’t do anything wrong. It was her fault, and you know it.”

The English gent explained, “Yes my dear fellow, but you threw the wrong bitch out the window!”

Une fois, un Américain alla en Angleterre. Dans un bus de transport en commun, il aperçut une Anglaise et son petit chien assis, occupant deux sièges. Il y avait du monde dans le bus et des personnes qui se tenaient debout. L’Américain, étant malin, eut une bonne idée. Il demanda à l’Anglaise très poliment,
“Madame, si vous mettiez votre chien sur vos genoux, une des personnes debout pourrait s’asseoir.

À son grand étonnement, l’Anglaise ne tint aucun compte de sa demande. Gênè, il répéta sa demande. L’Anglaise le regarda avec dédain et resta toujours désagréable. Les américains ne perdent pas de mots, ils sont des hommes d’action. Embarrassé et étant assez américain, il prit le chien, le jeta dehors du bus et s’assit.

Il y avait un Anglais en face qui remarqua tout ce qui se passait. Il dit,
“Les Américains! Quoique vous fassiez, vous le faites mal! Dans la rue, vous conduisez du mauvais côté. Au diner, vous prenez la fourchette avec la mauvause main. Mauvaises habitudes, mauvaises coutumes, mauvaise morale! Et maintenant, regardez ce que vous avez fait.”

L’Américain était sur la défensive,
“Et qu’est-ce que j’ai fait? C’était sa faute, et vous le savez!”

L’Anglais lui répondit,
“Oui, oui. Mais vous avez jeté la mauvaise chienne du bus!”

# La pauvre famille

[English version below]

Je connaissais une petite fille très riche. Un jour, son professeur lui a demandé de faire une rédaction sur une famille pauvre. La fille était étonnée:

“Une famille pauvre?! Qu’est-ce que c’est ça?”

Elle a demandé à sa mère:

“Maman, Maman, qu’est-ce que c’est une famille pauvre? Je n’arrive pas à faire ma rédaction.”

La mère lui a répondu:

“C’est simple, chérie. Une famille est pauvre quand tout le monde dans la famille est pauvre”

La petite fille a pensé:

“Ah! Ce n’est pas difficile”

et elle a fait sa rédaction. Le lendemain, le professeur lui a dit:

“Bon, lis-moi ta rédaction.”

Voici la réponse:

“Une famille pauvre. Il était une fois une famille pauvre. Le père était pauvre, la mère était pauvre, les enfants étaient pauvres, le jardinier était pauvre, le chauffeur était pauvre, les bonnes étaient pauvres. Voilà, la famille était très pauvre!”

In English

I once knew a rich girl. One day, her teacher at school asked her to write a piece on a poor family. The girl was shocked. “What in the world is a poor family?”

So she asked her mother, “Mummy, mummy, you’ve got to help me with my composition. What is a poor family?”

Her mother said, “That’s really simple, sweetheart. A family is poor when everybody in the family is poor.”

The rich girl thought, “Aha, that is not too difficult,” and she wrote up a piece.

The next day, her teacher asked her, “Well, let’s hear your composition.”

Here is what the girl said, “A Poor Family. Once upon a time, there was a poor family. The father was poor, the mother was poor, the children were poor, the gardener was poor, the driver was poor, the maids were poor. So the family was very poor!”

# 1984

All great books have one thing in common. They present deep philosophical inquiries, often clad in superb story lines. Or is it just my proclivity to see philosophy where none exists?

In 1984, the immediate story is of a completely totalitarian regime. Inwardly, 1984 is also about ethics and politics. It doesn’t end there, but goes into nested philosophical inquiries about how everything is eventually connected to metaphysics. It naturally ends up in solipsism, not merely in the material, metaphysical sense, but also in a spiritual, socio-psychological sense where the only hope, the only desired outcome of life, becomes death.

I think I may be giving away too much of my impressions in the first paragraph. Let’s take it step by step. We all know that totalitarianism is bad. It is a bad political system, we believe. The badness of totalitarianism can present itself at different levels of our social existence.

At the lowest level, it can be a control over our physical movements, physical freedom, and restrictions on what you can or cannot do. Try voting against a certain African “president” and you get beaten up, for instance. Try leaving certain countries, you get shot.

At a higher level, totalitarianism can be about financial freedom. Think of those in the developed world who have to juggle three jobs just to put food on the table. At a progressively subtler level, totalitarianism is about control of information. Example: media conglomerates filtering and coloring all the news and information we receive.

At the highest level, totalitarianism is a fight for your mind, your soul, and your spiritual existence. 1984 presents a dystopia where totalitarianism is complete, irrevocable, and existing at all levels from physical to spiritual.

Another book of the same dystopian kind is The Handmaid’s Tale, where a feminist’s nightmare of a world is portrayed. Here, the focus is on religious extremism, and the social and sexual subjugation brought about by it. But the portrayal of the world gone hopelessly totalitarian is similar to 1984.

Also portraying a dark dystopia is V for Vendentta, with torture and terrorism thrown in. This work is probably inspired by 1984, I have to look it up.

It is the philosophical points in 1984 that make it the classic it is. The past, for instance, is a matter of convention. If everybody believes (or is forced to believe) that events took place in a certain way, then that is the past. History is written by the victors. Knowing that, how can you trust the greatness of the victors or the evil in the vanquished? Assume for a second that Hitler had actually won the Second World War. Do you think we would’ve still thought of him as evil? I think we would probably think of him as the father of the modern world or something. Of course, we would be having this conversation (if we were allowed to exist and have conversations at all) in German.

Even at a personal level, the past is not as immutable as it seems. Truth is relative. Lies repeated often enough become truth. All these points are describe well in 1984, first from Winston’s point of view and later, in the philosophically sophisticated discourses of O’Brien. In a world existing in our own brain, where the phenomenal reality as we see it is far from the physical one, morality does lose a bit of its glamor. Metaphysics can erode on ethics. Solipsism can annihilate it.

A review, especially one in a blog, doesn’t have to be conventional. So let me boldly outline my criticisms of 1984 as well. I believe that the greatest fear of a normal human being is the fear of death. After all, the purpose of life is merely to live a little longer. Everything that our biological faculties do stem from the desire to exist a little longer.

Based on this belief of mine, I find certain events in 1984 a bit incongruous. Why is it that Winston and Julia don’t fear death, but still fear the telescreens and gestapo-like police? Perhaps the fear of pain overrides the fear of death. What do I know, I have never been tortured.

But even the fear of pain can be understood in terms of the ultimate fear. Pain is a messenger of bodily harm, ergo of possible death. But fear of rats?! Perhaps irrational phobias, existing at a sub-cognitive, almost physical, layer may be stronger than everything else. But I cannot help feeling that there is something amiss, something contrived, in the incarceration and torture parts of 1984.

May be Orwell didn’t know how to portray spiritual persecution. Luckily, none of us knows. So such techniques as rats and betrayal were employed to bring about the hideousness of the process. This part of the book leaves me a bit dissatisfied. After all, our protagonists knew full well what they were getting into, and what the final outcome would be. If they knew their spirit would be broken, then why leave it out there to be broken?

# Les fermiers

[English version in pink below]

Les fermiers aux États Unis ont de la chance – ils ont de grandes fermes. Ce n’est pas le cas en Mexique. Mais, le Mexicain de qui je vais vous parler, était assez content de sa ferme. Une fois, un fermier texan est venu chez notre Mexicain. Ils ont commencé à discuter de leur ferme. Le Mexicain a dit :

“Vous voyez, Señor, ma ferme, elle est assez grande. Au-delà de la maison jusqu’à la rue, et jusqu’à cette maison-là.”

Le Texan l’a trouvé drôle.

“Tu penses qu’elle est grande?”

Notre Mexicain le pensait. A-t-il dit :

Si Señor, et la vôtre, est-elle si grande?”

Le Texan lui a expliqué :

“Cher ami, viens chez moi un de ces jours. Prends ma bagnole après le petit déjeuner et conduis-la toute la journée – dans n’importe quelle direction. Tu n’arriveras pas à sortir de ma ferme. Tu piges?”

Le Mexicain a pigé.

Si Señor, je comprends. J’avais une voiture comme ça, il y a deux ans. Heureusement, un stupido l’a achetée!”

In English now:

American farmers are lucky. They have huge ranches, unlike their Mexican counterparts. But this Mexican farmer of our little story is quite pleased with his farm.

Once, a Texan rancher visited our Mexican and they started talking about their farms.

The Mexican said, “You see, Señor, I got a rather big farm. From that house over there all the way to the street and up to that house.”

The Texan found this funny. “So you think your farm is big, aye?”

Clearly, our Mexian thought so. So he siad, “Si , how about you, you got such a big farm?”

The Texan decided to get pedantic. “My dear friend,” he said, “you come to my ranch one day. Have a nice little breakfast in the morning, take my car, and drive. Whichever way you like. Till evening. You will still be within my farm. You get it now?”

The Mexican got it.

Si Señor, I understand. I had a car like that once. Luckily I managed to sell it to one stupido!”

# Les chapatis

[English Version below]

En Inde, on mange ce qui s’appelle des “chapatis”. C’est un peu comme les baguettes en France.

Une fois en Inde, deux amis se sont rencontrés. L’un a dit à l’autre :

“Dis-moi, combien de chapatis tu peux manger quand ton estomac est vide?”

L’autre (qui s’appalait Ramu) a réfléchi un peu. Et puis, il a répondu : “Boff, je dirais six.”

“Tu parles! Non, tu ne peux pas en manger six!”

“Si, je peux. On parie? Cent roupies?”

Marché conclu. Le soir, ils sont allés au restaurant. Ils ont commandé des chapatis. Notre ami Ramu, avec un peu de difficulté, a réussi à en manger six. Et il a dit : “Voilà, donne-moi mes cent roupies.”

L’autre lui a répondu : “Mais non! Tu n’as pas mangé les six chapatis quand ton estomac était vide. Après le premier, il n’était plus vide!”

Ramu était un peu bête, mais il avait un bon sens de l’humour et cette blague lui a bien plu. Il est rentré chez lui et il a appelé tout le monde : “Venez écouter ce qui m’est arrivé aujourd’hui. Je vais vous raconter une super blague.”

Il a demandé a son frère : “Dis-moi, combien de chapatis est-ce que tu peux manger quand ton estomac est vide.”

Son frère a dit : “Boff, dix.”

Ramu était très deçu.

“Ah! raté! Si tu m’avais dit six, j’avais une super blague pour vous!”

In English:

Indians eat a bread known as Chapatis, much like the ubiquitous baguettes in France.

Once, two Indian friends ran into each other. By way of conversation, one of them asked the other, “Tell me, how many chapatis do you think you can eat on an empty stomach?”

The other friend, Ramu, thought for a moment and said, “Well, I would say six.”

The first guy was incredulous. “No way man!” he said, “no way you can eat six.”

“Of course I can! Want to put some money on it? One hundred rupees?”

With the deal struck, our friends went to a restaurant in the evening. Ramu started putting away chapatis. With a bit a trouble, he managed to eat six. He then said triumphantly, “Pay up sucker, gimme my hundred rupees”

The other guy replied, “Hold your horses, cowboy! You didn’t eat all six of them on an empty stomach. After the first one, your stomach wasn’t empty!”

Ramu had a good sense of humor and enjoyed the joke although it was on him. He hurried back home and called everybody. “Listen guys, something really funny happened today. I’m going to tell you the best joke you ever heard!”

He then asked his brother, “Tell me, how many chapatis can you eat on an empty stomach?”

The brother said, “Well, ten.”

Ramu was crestfallen. He said, “Dammit, if you had just told me six, I had such a great joke for you!”

# Risks and Rewards

Everything in life comes at a cost — with a price tag seldom denominated in dollars and cents, and almost always hidden.

In our profession as quants and traders, we know we cannot accumulate if we don’t speculate (as P. G. Wodehouse puts it). So we accept and even welcome some of these price tags. We take certain risks, which we hope are calculated and understood, so that we can bring unto our employers what is theirs. These are good risks.

Bad risks are those we cannot understand and quantify, or measure and hedge against. They are bad because, even if we rake in some profits, we are never sure that they are commensurate with the downside we are throwing ourselves open to.
Market risk is a good risk. We know how to measure and model it, hedge against and reap rewards from it. We have smart people with bulging foreheads solving stochastic differential equations for us and simplifying the risk-reward equation.

Operational risk is a bad one. We can put as many software locks and control processes as we want around it. But we cannot prevent the rogue elements amongst us from sharing their passwords over a beer in some French brasserie. Worse, we have no idea what the rewards are when we expose ourselves to certain levels of operational risk. Heck, we don’t even know what the levels are because we have no means of quantifying it.

Incomplete appreciation of the risks involved in many situations is an almost philosophical factor that comes around to haunt us. It is not that we underestimate the risks; it is more like we are not aware of certain ramifications. The inconvenient warming of our home planet, for instance, is a consequence that the Wright brothers and Henry Ford simply could not have been aware of.

No such thing as a free lunch — the seemingly unlimited and practically free supply of nuclear energy has a not-so-hidden cost: the necessity to dispose of or securely store dangerous waste for, say, twenty thousand years. How do you store something for that long? After all, twenty thousand years ago, we were only barely human!

But the list of such boons and associated banes is endless. Think of the prosperity that a flattened world (using Thomas Friedman’s lingo) brought to emerging economies like India and China, which came at the expense of the cultural values that took thousands of years of careful nurturing.

A personal ramification of our high-powered corporate life is the alarming level of stress that we put ourselves through. Stress comes from market movements. As the sub-prime market tanked and heads started to roll, some of us had to worry about our heads. Fat bonuses of the first quarter usher in tax worries; lean bonuses indicate uncertain corporate future. Rogue traders burn billions and expose everybody to scrutiny and associated stresses. Even the lack of stress brings in some worries that the corporate world is perhaps passing us by!

When I first switched to the finance industry in late 2005, I happened to flip through an issue of the Bloomberg Market magazine. On of the first things struck me was that most of the advertisements seemed to be of expensive cars or alcohol. Is alcoholism the cost we readily dish out so that we can afford a gleaming dream machine?

Is stress a price worth paying for our corporate success? Are the risks worth their rewards?

#### Married to the Job — Till Death Do Us Part?

Stress is as much a part of our corporate careers as death is a fact of life. Still, it is best to keep the two (career and death) separate. This is the message that was lost on some hardworking young souls here in Singapore who literally worked themselves to death. So do a lot of Japanese, if we are to believe the media.

The reason for death in sedentary jobs is the insidious condition called deep vein thrombosis. This condition develops because of extended hours spent sitting, when a blood clot forms in the lower limbs. The clot then travels to the vital organs in the upper body, where it wreaks havoc including death.

The trick in avoiding such an untimely demise, of course, is not to sit for long. But that is easier said than done, when job pressure mounts, and deadlines loom.

Here is where you have to get your priorities straight. What do you value more? Quality of life or corporate success? The implication in this choice is that you can’t have both, as illustrated in the joke in investment banking that goes like: “If you can’t come in on Saturday, don’t bother coming in on Sunday!”

You can, however, make a compromise. It is possible to let go a little bit of career aspirations and improve the quality of life tremendously. This balancing act is not so simple though; nothing in life is.

Undermining work-life balance are a few factors. One is the materialistic culture we live in. It is hard to fight that trend. Second is a misguided notion that you can “make it” first, then sit back and enjoy life. That point in time when you are free from worldly worries rarely materializes. Thirdly, you may have a career-oriented partner. Even when you are ready to take a balanced approach, your partner may not be, thereby diminishing the value of putting it in practice.

These are factors you have to constantly battle against. And you can win the battle, with logic, discipline and determination. However, there is a fourth, much more sinister, factor, which is the myth that a successful career is an all-or-nothing proposition, as implied in the preceding investment banking joke. It is a myth (perhaps knowingly propagated by the bosses) that hangs over our corporate heads like the sword of Damocles.

Because of this myth, people end up working late, trying to make an impression. But an impression is made, not by the quantity of work, but by its quality. Turn in quality, impactful work, and you will be rewarded, regardless of how long it takes to accomplish it. Long hours, in my view, make the possibility of quality work remote.

Such melancholy long hours are best left to workaholics; they keep working because they cannot help it. It is not so much a career aspiration, but a force of habit coupled with a fear of social life.

To strike a work-life balance in today’s dog eat dog world, you may have to sacrifice a few upper rungs of the proverbial corporate ladder. Raging against the corporate machine with no regard to the consequences ultimately boils down to one simple realization — that making a living amounts to nothing if your life is lost in the process.

#### Spousal Indifference — Do We Give a Damn?

After a long day at work, you want to rest your exhausted mind; may be you want to gloat a bit about your little victories, or whine a bit about your little setbacks of the day. The ideal victim for this mental catharsis is your spouse. But the spouse, in today’s double income families, is also suffering from a tired mind at the end of the day.

The conversation between two tired minds usually lacks an essential ingredient — the listener. And a conversation without a listener is not much of a conversation at all. It is merely two monologues that will end up generating one more setback to whine about — spousal indifference.

Indifference is no small matter to scoff at. It is the opposite of love, if we are to believe Elie Weisel. So we do have to guard against indifference if we want to have a shot at happiness, for a loveless life is seldom a happy one.

“Where got time?” ask we Singaporeans, too busy to form a complete sentence. Ah… time! At the heart of all our worldly worries. We only have 24 hours of it in a day before tomorrow comes charging in, obliterating all our noble intensions of the day. And another cycle begins, another inexorable revolution of the big wheel, and the rat race goes on.

The trouble with the rat race is that, at the end of it, even if you win, you are still a rat!

How do we break this vicious cycle? We can start by listening rather than talking. Listening is not as easy as it sounds. We usually listen with a whole bunch of mental filters turned on, constantly judging and processing everything we hear. We label the incoming statements as important, useful, trivial, pathetic, etc. And we store them away with appropriate weights in our tired brain, ignoring one crucial fact — that the speaker’s labels may be, and often are, completely different.

Due to this potential mislabeling, what may be the most important victory or heartache of the day for your spouse or partner may accidentally get dragged and dropped into your mind’s recycle bin. Avoid this unintentional cruelty; turn off your filters and listen with your heart. As Wesley Snipes advises Woody Herrelson in White Men Can’t Jump, listen to her (or him, as the case may be.)

It pays to practice such an unbiased and unconditional listening style. It harmonizes your priorities with those your spouse and pulls you away from the abyss of spousal apathy. But it takes years of practice to develop the proper listening technique, and continued patience and deliberate effort to apply it.

“Where got time?” we may ask. Well, let’s make time, or make the best of what little time we got. Otherwise, when days add up to months and years, we may look back and wonder: Where is the life that we lost in living?

#### Stress and a Sense of Proportion

How can we manage stress, given that it is unavoidable in our corporate existence? Common tactics against stress include exercise, yoga, meditation, breathing techniques, reprioritizing family etc. To add to this list, I have my own secret weapons to battle stress that I would like to share with you. These weapons may be too potent; so use them with care.

One of my secret tactics is to develop a sense of proportion, harmless as it may sound. Proportion can be in terms of numbers. Let’s start with the number of individuals, for instance. Every morning, when we come to work, we see thousands of faces floating by, almost all going to their respective jobs. Take a moment to look at them — each with their own personal thoughts and cares, worries and stresses.

To each of them, the only real stress is their own. Once we know that, why would we hold our own stress any more important than anybody else’s? The appreciation of the sheer number of personal stresses all around us, if we stop to think about it, will put our worries in perspective.

Proportion in terms of our size also is something to ponder over. We occupy a tiny fraction of a large building that is our workplace. (Statistically speaking, the reader of this column is not likely to occupy a large corner office!) The building occupies a tiny fraction of the space that is our beloved city. All cities are so tiny that a dot on the world map is usually an overstatement of their size.

Our world, the earth, is a mere speck of dust a few miles from a fireball, if we think of the sun as a fireball of any conceivable size. The sun and its solar system are so tiny that if you were to put the picture of our galaxy as the wallpaper on your PC, they would be sharing a pixel with a few thousand local stars! And our galaxy — don’t get me started on that! We have countless billions of them. Our existence (with all our worries and stresses) is almost incomprehensibly small.

The insignificance of our existence is not limited to space; it extends to time as well. Time is tricky when it comes to a sense of proportion. Let’s think of the universe as 45 years old. How long do you think our existence is in that scale? Eight seconds if we are very lucky!

We are created out of star dust, last for a mere cosmological instant, and then turn back into star dust. DNA machines during this time, we run unknown genetic algorithms, which we mistake for our aspirations and achievements, or stresses and frustrations. Relax! Don’t worry, be happy!

Sure, you may get reprimanded if that report doesn’t go out tomorrow. Or, your trader may bite your head off if that pricing model is delayed again. Or, your colleague may send out that backstabbing email (and Bcc your boss) if you displease them. But, don’t you get it, in this mind-numbingly humongous universe, it doesn’t matter an iota. In the big scheme of things, your stress is not even static noise!

Arguments for maintaining a level of stress all hinge on an ill-conceived notion that stress aids productivity. It does not. The key to productivity is an attitude of joy at work. When you stop worrying about reprimands and backstabs and accolades, and start enjoying what you do, productivity just happens. I know it sounds a bit idealistic, but my most productive pieces of work happened that way. Enjoying what I do is an ideal I will shoot for any day.

#### Stress and Metaphysics

Realizing that our existence is a mere blink of an eye in time, and less than a speck of dust in space is a powerful way of cutting our stress to size. My favorite weapon, however, is even more potent. I ask myself a basic question — what are space and time to begin with?

These may sound like silly metaphysical musings that have no relevance to real life. But they have been the subject matter of many lifelong quests over the ages. If we, humanity as a whole, cannot stop pondering over such things, it is probably because they form the basis of our existence. Besides, our stress takes place in space and time.

Philosophical grand-standing aside, let’s get to the meat of the problem: What is space? Space seems to be closely associated with our sense of sight. It also forms the basis of our reality — everything happens in space and time. For this reason, “What are space and time?” is a question that cannot be reduced to simpler elements in our reality.

We can, however, approach the issue by posing a similar question “What is sound?” Sound is an experience associated with hearing, clearly. But what is it? The answer is hinted at in the age-old conundrum of a falling tree in a deserted forest. Does it make sound? A popular topic of conservation in cocktail parties, this question is also a serious contemplative inquiry for a Zen monk.

The knee-jerk response to the question is, yes, the tree does make sound. It’s just that there is nobody to hear it. But hear what exactly?

Sure, the falling tree creates air pressure waves. But, the waves are not sound. These waves create an electrical signal in the ear, if an ear is present. Electrical signals are electrical signals, not sound. These signals, when transported to the brain, induce neuronal firing, which is still not sound. It is a fallacy to think of sound as anything physical, anything real. Sound is an experience or a cognitive representation associated with the input signals (which are the pressure waves, we think. But are they?)

We can draw similar analogies between other sensations and the corresponding signals — taste and smell to chemical composition, for instance. What about sight? What is the “sensation” or the cognitive representation associated with sight? It is what we think of as space.

Of course, we think of space as real, as the basis of our reality. It takes more than this short column to shake our belief in it. That’s why I wrote my book — The Unreal Universe.

To me, the unreal nature of what we consider reality is more than a constant contemplation. It is a source of a Zen-like immunity against stress and other worldly worries.

Yes, stress is the cost exacted by the corporate chain of command. It is a cost most of us happily pay, for the rewards are abundantly clear. But we have to be aware of the risks associated with the rewards — both in accepting them and in declining them.

# Perception, Physics and the Role of Light in Philosophy

Reality, as we sense it, is not quite real. The stars we see in the night sky, for instance, are not really there. They may have moved or even died by the time we get to see them. This unreality is due to the time it takes for light from the distant stars and galaxies to reach us. We know of this delay.

Even the sun that we know so well is already eight minutes old by the time we see it. This fact does not seem to present particularly grave epistemological problems – if we want to know what is going on at the sun now, all we have to do is to wait for eight minutes. We only have to ‘correct’ for the distortions in our perception due to the finite speed of light before we can trust what we see. The same phenomenon in seeing has a lesser-known manifestation in the way we perceive moving objects. Some heavenly bodies appear as though they are moving several times the speed of light, whereas their ‘real’ speed must be a lot less than that.

What is surprising (and seldom highlighted) is that when it comes to sensing motion, we cannot back-calculate in the same kind of way as we can to correct for the delay in observation of the sun. If we see a celestial body moving at an improbably high speed, we cannot calculate how fast or even in what direction it is ‘really’ moving without first having to make certain further assumptions.

Einstein chose to resolve the problem by treating perception as distorted and inventing new fundamental properties in the arena of physics – in the description of space and time. One core idea of the Special Theory of Relativity is that the human notion of an orderly sequence of events in time needs to be abandoned. In fact, since it takes time for light from an event at a distant place to reach us, and for us to become aware of it, the concept of ‘now’ no longer makes any sense, for example, when we speak of a sunspot appearing on the surface of the sun just at the moment that the astronomer was trying to photograph it. Simultaneity is relative.

Einstein instead redefined simultaneity by using the instants in time we detect the event. Detection, as he defined it, involves a round-trip travel of light similar to radar detection. We send out a signal travelling at the speed of light, and wait for the reflection. If the reflected pulse from two events reaches us at the same instant, then they are simultaneous. But another way of looking at it is simply to call two events ‘simultaneous’ if the light from them reaches us at the same instant. In other words, we can use the light generated by the objects under observation rather than sending signals to them and looking at the reflection.

This difference may sound like a hair-splitting technicality, but it does make an enormous difference to the predictions we can make. Einstein’s choice results in a mathematical picture that has many desirable properties, including that of making further theoretical development more elegant. But then, Einstein believed, as a matter of faith it would seem, that the rules governing the universe must be ‘elegant.’ However, the other approach has an advantage when it comes to describing objects in motion. Because, of course, we don’t use radar to see the stars in motion; we merely sense the light (or other radiation) coming from them. Yet using this kind of sensory paradigm, rather than ‘radar-like detection,’ to describe the universe results in an uglier mathematical picture. Einstein would not approve!

The mathematical difference spawns different philosophical stances, which in turn percolate to the understanding of our physical picture of reality. As an illustration, suppose we observe, through a radio telescope, two objects in the sky, with roughly the same shape, size and properties. The only thing we know for sure is that the radio waves from these two different points in the sky reach us at the same instant in time. We can only guess when the waves started their journeys.

If we assume (as we routinely do) that the waves started the journey roughly at the same instant in time, we end up with a picture of two ‘real’ symmetric lobes more or less the way see them. But there is another, different possibility and that is that the waves originated from the same object (which is in motion) at two different instants in time, reaching the telescope at the same instant. This possibility would additionally explain some spectral and temporal properties of such symmetric radio sources. So which of these two pictures should we take as real? Two symmetric objects as we see them or one object moving in such a way as to give us that impression? Does it really matter which one is ‘real’? Does ‘real’ mean anything in this context?

Special Relativity gives an unambiguous answer to this question. The mathematics rules out the possibility of a single object moving in such a fashion as to mimic two objects. Essentially, what we see is what is out there. Yet, if we define events by what we perceive, the only philosophical stance that makes sense is the one that disconnects the sensed reality from the causes lying behind what is being sensed.

This disconnect is not uncommon in philosophical schools of thought. Phenomenalism, for instance, holds the view that space and time are not objective realities. They are merely the medium of our perception. All the phenomena that happen in space and time are merely bundles of our perception. In other words, space and time are cognitive constructs arising from perception. Thus, all the physical properties that we ascribe to space and time can only apply to the phenomenal reality (the reality of ‘things-in-the-world’ as we sense it. The underlying reality (which holds the physical causes of our perception), by contrast, remains beyond our cognitive reach.

Yet there is a chasm between the views of philosophy and modern physics. Not for nothing did the Nobel Prize winning physicist, Steven Weinberg, wonder, in his book Dreams of a Final Theory, why the contribution from philosophy to physics had been so surprisingly small. Perhaps it is because physics has yet to come to terms with the fact that when it comes to seeing the universe, there is no such thing as an optical illusion – which is probably what Goethe meant when he said, ‘Optical illusion is optical truth.’

The distinction (or lack thereof) between optical illusion and truth is one of the oldest debates in philosophy. After all, it is about the distinction between knowledge and reality. Knowledge is considered our view about something that, in reality, is ‘actually the case.’ In other words, knowledge is a reflection, or a mental image of something external, as shown in the figure below.

In this picture, the black arrow represents the process of creating knowledge, which includes perception, cognitive activities, and the exercise of pure reason. This is the picture that physics has come to accept. While acknowledging that our perception may be imperfect, physics assumes that we can get closer and closer to the external reality through increasingly finer experimentation, and, more importantly, through better theorization. The Special and General Theories of Relativity are examples of brilliant applications of this view of reality where simple physical principles are relentlessly pursued using formidable machine of pure reason to their logically inevitable conclusions.

But there is another, alternative view of knowledge and reality that has been around for a long time. This is the view that regards perceived reality as an internal cognitive representation of our sensory inputs, as illustrated below.

In this view, knowledge and perceived reality are both internal cognitive constructs, although we have come to think of them as separate. What is external is not the reality as we perceive it, but an unknowable entity giving rise to the physical causes behind sensory inputs. In the illustration, the first arrow represents the process of sensing, and the second arrow represents the cognitive and logical reasoning steps. In order to apply this view of reality and knowledge, we have to guess the nature of the absolute reality, unknowable as it is. One possible candidate for the absolute reality is Newtonian mechanics, which gives a reasonable prediction for our perceived reality.

To summarize, when we try to handle the distortions due to perception, we have two options, or two possible philosophical stances. One is to accept the distortions as part of our space and time, as Special Relativity does. The other option is to assume that there is a ‘higher’ reality distinct from our sensed reality, whose properties we can only conjecture. In other words, one option is to live with the distortion, while the other is to propose educated guesses for the higher reality. Neither of these choices is particularly attractive. But the guessing path is similar to the view accepted in phenomenalism. It also leads naturally to how reality is viewed in cognitive neuroscience, which studies the biological mechanisms behind cognition.

The twist to this story of light and reality is that we seem to have known all this for a long time. The role of light in creating our reality or universe is at the heart of Western religious thinking. A universe devoid of light is not simply a world where you have switched off the lights. It is indeed a universe devoid of itself, a universe that doesn’t exist. It is in this context that we have to understand the wisdom behind the statement that ‘the earth was without form, and void’ until God caused light to be, by saying ‘Let there be light.’

The Koran also says, ‘Allah is the light of the heavens and the earth,’ which is mirrored in one of the ancient Hindu writings: ‘Lead me from darkness to light, lead me from the unreal to the real.’ The role of light in taking us from the unreal void (the nothingness) to a reality was indeed understood for a long, long time. Is it possible that the ancient saints and prophets knew things that we are only now beginning to uncover with all our supposed advances in knowledge?

There are parallels between the noumenal-phenomenal distinction of Kant and the phenomenalists later, and the Brahman-Maya distinction in Advaita. Wisdom on the nature of reality from the repertoire of spirituality is reinvented in modern neuroscience, which treats reality as a cognitive representation created by the brain. The brain uses the sensory inputs, memory, consciousness, and even language as ingredients in concocting our sense of reality. This view of reality, however, is something physics is still unable to come to terms with. But to the extent that its arena (space and time) is a part of reality, physics is not immune to philosophy.

In fact, as we push the boundaries of our knowledge further and further, we are discovering hitherto unsuspected and often surprising interconnections between different branches of human efforts. Yet, how can the diverse domains of our knowledge be independent of each other if all knowledge is subjective? If knowledge is merely the cognitive representation of our experiences? But then, it is the modern fallacy to think that knowledge is our internal representation of an external reality, and therefore distinct from it. Instead, recognising and making use of the interconnections among the different domains of human endeavour may be the essential prerequisite for the next stage in developing our collective wisdom.

 Box: Einstein’s TrainOne of Einstein’s famous thought experiments illustrates the need to rethink what we mean by simultaneous events. It describes a high-speed train rushing along a straight track past a small station as a man stands on the station platform watching it speed by. To his amazement, as the train passes him, two lightening bolts strike the track next to either end of the train! (Conveniently, for later investigators, they leave burn marks both on the train and on the ground.) To the man, it seems that the two lightening bolts strike at exactly the same moment. Later, the marks on the ground by the train track reveal that the spots where the lightening struck were exactly equidistant from him. Since then the lightening bolts travelled the same distance towards him, and since they appeared to the man to happen at exactly the same moment, he has no reason not to conclude that the lightening bolts struck at exactly the same moment. They were simultaneous. However, suppose a little later, the man meets a lady passenger who happened to be sitting in the buffet car, exactly at the centre of the train, and looking out of the window at the time the lightening bolts struck. This passenger tells him that she saw the first lightening bolt hit the ground near the engine at the front of the train slightly ahead of when the second one hit the ground next to the luggage car at the rear of the train. The effect has nothing to do with the distance the light had to travel, as both the woman and the man were equidistant between the two points that the lightening hit. Yet they observed the sequence of events quite differently. This disagreement of the timing of the events is inevitable, Einstein says, as the woman is in effect moving towards the point where the flash of lightening hit near the engine -and away from the point where the flash of lightening hit next to the luggage car. In the tiny amount of time it takes for the light rays to reach the lady, because the train moves, the distance the first flash must travel to her shrinks, and the distance the second flash must travel grows. This fact may not be noticed in the case of trains and aeroplanes, but when it comes to cosmological distances, simultaneity really doesn’t make any sense. For instance, the explosion of two distant supernovae, seen as simultaneous from our vantage point on the earth, will appear to occur in different time combinations from other perspectives. In Relativity: The Special and General Theory (1920), Einstein put it this way: ‘Every reference-body (co-ordinate system) has its own particular time; unless we are told the reference-body to which the statement of time refers, there is no meaning in a statement of the time of an event.’

# Quant Talent Management

The trouble with quants is that it is hard to keep them anchored to their moorings. Their talent is in high demand for a variety of reasons. The primary reason is the increasing sophistication of the banking clients, who demand increasingly more structured products with specific hedging and speculative motives. Servicing their demand calls for a small army of quants supporting the trading desks and systems.

Since structured products are a major profit engine on the trading floor of most banks, this demand represents a strong pull factor for quants from competing institutions. There is nothing much most financial institutions can do about this pull factor, except to pull them back in with offers they can’t refuse.

But we can try to eliminate the push factors that are hard to identify. These push factors are often hidden in the culture, ethics and the way things get done in institutions. They are, therefore, specific to the geographical location and the social settings where the banks operate.

#### Performance Appraisal — Who Needs It?

Performance appraisal is a tool for talent retention, if used wisely. But, if misused, it can become a push factor. Are there alternatives that will aid in retaining and promoting talent?

As it stands now, we go through this ordeal of performance appraisal at least once every year. Our career progression, bonus and salary depend on it. So we spend sleepless nights agonizing over it.

In addition to the appraisal, we also get our “key performance indicators” or KPIs for next year. These are the commandments we have to live by for the rest of the year. The whole experience of it is so unpleasant that we say to ourselves that life as an employee sucks.

The bosses fare hardly better though. They have to worry about their own appraisals by bigger bosses. On top of that, they have to craft the KPI commandments for us as well — a job pretty darned difficult to delegate. In all likelihood, they say to themselves that their life as a boss sucks!

Given that nobody is thrilled about the performance appraisal exercise, why do we do it? Who needs it?

The objective behind performance appraisal is noble. It strives to reward good performance and punish poor shows — the old carrot and stick management paradigm. This objective is easily met in a small organization without the need for a formal appraisal process. Small business owners know who to keep and who to sack. But in a big corporate body with thousands of employees, how do you design a fair and consistent compensation scheme?

The solution, of course, is to pay a small fortune to consultants who design appraisal forms and define a uniform process — too uniform, perhaps. Such verbose forms and inflexible processes come with inherent problems. One problem is that the focus shifts from the original objective (carrot and stick) to fairness and consistency (one-size-fits-all). Mind you, most bosses know who to reward and who to admonish. But the HR department wants the bosses to follow a uniform process, thereby increasing everybody’s workload.

Another, more insidious problem with this consultancy driven approach is that it is necessarily geared towards mediocrity. When you design an appraisal process to cater to everybody, the best you can hope to achieve is to improve the average performance level by a bit. Following such a process, the CERN scientist who invented the World Wide Web would have fared badly, for he did not concentrate on his KPIs and wasted all his time thinking about file transfers!

CERN is a place that consistently produces Nobel laureates. How does it do it? Certainly not by following processes that are designed to make incremental improvements at the average level. The trick is to be a center for excellence which attracts geniuses.

Of course, it is not fair to compare an average bank with CERN. But we have to realize that the verbose forms, which focus on averages and promote mediocrity, are a poor tool for innovation management, especially when we are trying to retain and encourage excellence in quant talent.

A viable alternative to standardized and regimented appraisal processes is to align employee objectives with those of the institutions and leave performance and reward management to bosses. With some luck, this approach may retain fringe geniuses and promote innovation. At the very least, it will alleviate some employee anxiety and sleepless nights.

#### To Know or Not To Know

One peculiar push factor in the Asian context is the lack of respect for technical knowledge. Technical knowledge is not always a good thing in the modern Asian workplace. Unless you are careful, others will take advantage of your expertise and dump their responsibilities on you. You may not mind it as long as they respect your expertise. But, they often hog the credit for your work and present their ability to evade work as people management skills.

People management is better rewarded than technical expertise. This differentiation between experts and middle-level managers in terms of rewards is a local Asian phenomenon. Here, those who present the work seem to get the credit for it, regardless of who actually performs it. We live in a place and time where articulation is often mistaken for accomplishments.

In the West, technical knowledge is more readily recognized than smooth presentations. You don’t have to look beyond Bill Gates to appreciate the heights to which technical expertise can take you in the West. Of course, Gates is more than an expert; he is a leader of great vision as well.

Leaders are different from people managers. Leaders provide inspiration and direction. They are sorely needed in all organizations, big and small.

Unlike people mangers, quants and technical experts are smart cookies. They can easily see that if they want to be people managers, they can get started with a tie and a good haircut. If the pickings are rich, why wouldn’t they?

This Asian differentiation between quants and managers, therefore, makes for a strong push factor for some quants who find it worthwhile to hide their technical skills, get that haircut, grab that tie, and become a people manager. Of course, it comes down to your personal choice between fulfilment and satisfaction originating from technical authority on the one hand, and convenience and promotions arising from people skills on the other.

I wonder whether we have already made our choices, even in our personal lives. We find fathers who cannot get the hang of changing diapers household chores. Is it likely that men cannot figure out washing machines and microwaves although they can operate complicated machinery at work? We also find ladies who cannot balance their accounts and estimate their spending. Is it really a mathematical impairment, or a matter of convenience? At times, the lack of knowledge is as potent a weapon as its abundance.

#### How Much is Talent Worth?

Banks deal in money. Our profession in finance teaches us that we can put a dollar value to everything in life. Talent retention is no different. After taking care of as much of the push factors as we can, the next question is fairly simple: How much does it take to retain talent?

My city-state of Singapore suffers from a special disadvantage when it comes to talent management. We need foreign talent. It is nothing to feel bad about. It is a statistical fact of life. For every top Singaporean in any field — be it finance, science, medicine, sports or whatever — we will find about 500 professionals of equal calibre in China and India. Not because we are 500 times less talented, just that they have 500 times more people.

Coupled with overwhelming statistical supremacy, certain countries have special superiority in their chosen or accidental specializations. We expect to find more hardware experts in China, more software gurus in India, more badminton players in Indonesia, more entrepreneurial spirit and managerial expertise in the west.

We need such experts, so we hire them. But how much should we pay them? That’s where economics comes in — demand and supply. We offer attractive expatriate packages that the talents would bite.

I was on an expatriate package when I came to Singapore as a foreign talent. It was a fairly generous package, but cleverly worded so that if I became a “local” talent, I would lose out quite a bit. I did become local a few years later, and my compensation diminished as a consequence. My talent did not change, just the label from “foreign” to “local.”

This experience made me think a bit about the value of talent and the value of labels. The local quant talents, too, are beginning to take note of the asymmetric compensation structure associated with labels. This asymmetry and the consequent erosion of loyalty introduce another push factor for the local quant talents, as if one was needed.

The solution to this problem is not a stricter enforcement of the confidentiality of salaries, but a more transparent compensation scheme free of anomalies that can be misconstrued as unfair practices. Otherwise, we may see an increasing number of Asian nationals using Singapore-based banks as a stepping stone to greener pastures. Worse, we may see (as indeed we do, these days) locals seeking level playing fields elsewhere.

We need to hire the much needed talent whatever it costs; but let’s not mistake labels for talent.

#### Handling Goodbyes

Losing talent is an inevitable part of managing it. What do you do when your key quant hands in the dreaded letter? It is your worst nightmare as a manager! Once the dust settles and the panic subsides, you should ask yourself, what next?

Because of all the pull and push factors discussed so far, quant staff retention is a challenge. New job offers are becoming increasingly more irresistible. At some stage, someone you work closely with — be it your staff, your boss or a fellow team member — is going to say goodbye. Handling resignations with tact and grace is no longer merely a desirable quality, but an essential corporate skill today.

We do have some general strategies to deal with resignations. The first step is to assess the motivation behind the career choice. Is it money? If so, a counter offer is usually successful. Counter offers (both making them and taking them) are considered ineffective and in poor taste. At least, executive search firms insist that they are. But then, they would say that, wouldn’t they?

If the motivation behind the resignation is the nature of the current or future job and its challenges, a lateral movement or reassignment (possibly combined with a counter offer) can be effective. If everything fails, then it is time to bid goodbye — amicably.

It is vitally important to maintain this amicability — a fact often lost on bosses and HR departments. Understandably so because, by the time the counter offer negotiations fail, there is enough bitterness on both sides to sour the relationship. Brush those wounded feelings aside and smile through your pain, for your paths may cross again. You may rehire the same person. Or, you may end up working with him/her on the other side. Salvage whatever little you can for the sake of positive networking.

The level of amicability depends on corporate culture. Some organizations are so cordial with deserting employees that they almost encourage desertion. Others treat the traitors as the army used to — with the help of a firing squad.

Both these extremes come with their associated perils. If you are too cordial, your employees may treat your organization as a stepping stone, concentrating on acquiring only transferable skills. On the other extreme, if you develop a reputation for severe exit barriers in an attempt to discourage potential traitors, you may also find it hard to recruit top talent.

The right approach lies somewhere in between, like most good things in life. It is a cultural choice that an organization has to make. But regardless of where the balance is found, resignation is here to stay, and people will change jobs. Change, as the much overused clichÃ© puts it, is the only constant.

#### Summing Up…

In a global market that demands ever more customization and structuring, there is an unbearable amount of pull factor for good quants. Quant talent management (acquisition and retention) is almost as challenging as developing quant skills yourself.

While powerless against the pull factor, banks and financial institutions should look into eliminating hidden push factors. Develop respect and appreciation for hard-to-replace talents. Invent innovative performance measurement metrics. Introduce fair and transparent compensation schemes.

When it all fails and the talent you so long to retain leaves, handle it with tact and grace. At some point in the future, you may have to hire them. Or worse, you may want to get hired by them!

# Tsunami

The Asian Tsunami two and a half years ago unleashed tremendous amount energy on the coastal regions around the Indian ocean. What do you think would’ve have happened to this energy if there had been no water to carry it away from the earthquake? I mean, if the earthquake (of the same kind and magnitude) had taken place on land instead of the sea-bed as it did, presumably this energy would’ve been present. How would it have manifested? As a more violent earthquake? Or a longer one?

I picture the earthquake (in cross-section) as a cantilever spring being held down and then released. The spring then transfers the energy to the tsunami in the form of potential energy, as an increase in the water level. As the tsunami radiates out, it is only the potential energy that is transferred; the water doesn’t move laterally, only vertically. As it hits the coast, the potential energy is transferred into the kinetic energy of the waves hitting the coast (water moving laterally then).

Given the magnitude of the energy transferred from the epicenter, I am speculating what would’ve happened if there was no mechanism for the transfer. Any thoughts?

# Quant Life in Singapore

Singapore is a tiny city-state. Despite its diminutive size, Singapore has considerable financial muscle. It has been rated the fourth most active foreign exchange trading hub, and a major wealth management center in Asia, with funds amounting to almost half a trillion dollars, according to the Monitory Authority of Singapore. This mighty financial clout has its origins in a particularly pro-business atmosphere, world class (well, better than world class, in fact) infrastructure, and the highly skilled, cosmopolitan workforce–all of which Singapore is rightfully proud of.

Among the highly skilled workforce are scattered a hundred or so typically timid and self-effacing souls with bulging foreheads and dreamy eyes behind thick glasses. They are the Singaporean quants, and this short article is their story.

Quants command enormous respect for their intellectual prowess and mathematical knowledge. With flattering epithets like “rocket scientists” or simply “the brain,” quants silently go about their jobs of validating pricing models, writing C++ programs and developing complicated spreadsheet solutions.

But knowledge is a tricky thing to have in Asia. If you are known for your expertise, it can backfire on you at times. Unless you are careful, others will take advantage of your expertise and dump their responsibilities on you. You may not mind it as long as they respect your expertise. But, they often hog the credit for your work and present their ability to evade work as people management skills. And people managers (who may not actually know much) do get better compensated. This paradox is a fact of quant life in Singapore. The admiration that quants enjoy does not always translate to riches here.

This disparity in compensation may be okay. Quants are not terribly interested in money for one logical reason–in order to make a lot of it, you have to work long hours. And if you work long hours, when do you get to spend the money? What does it profit a man to amass all the wealth in the world if he doesn’t have the time to spend it?

Besides, quants seem to play by a different set of rules. They are typically perfectionist by nature. At least, I am, when it comes to certain aspects of work. I remember once when I was writing my PhD thesis, I started the day at around nine in the morning and worked all the way past midnight with no break. No breakfast, lunch or dinner. I wasn’t doing ground-breaking research on that particular day, just trying to get a set of numbers (branching ratios, as they were called) and their associated errors consistent. Looking back at it now, I can see that one day of starvation was too steep a price to pay for the consistency.

Similar bouts of perfectionism might grip some of us from time to time, forcing us to invest inordinate amounts of work for incremental improvements, and propelling us to higher levels of glory. The frustrating thing from the quants’ perspective is when the glory gets hogged by a middle-level people manager. It does happen, time and again. The quants are then left with little more than their flattering epithets.

I’m not painting all people managers with the same unkindly stroke; not all of them have been seduced by the dark side of the force. But I know some of them who actively hone their ignorance as a weapon. They plead ignorance to pass their work on to other unsuspecting worker bees, including quants.

The best thing a quant can hope for is a fair compensation for his hard work. Money may not be important in and of itself, but what it says about you and your station in the corporate pecking order may be of interest. Empty epithets are cheap, but it when it comes to showing real appreciation, hard cash is what matters, especially in our line of work.

Besides, corporate appreciation breeds confidence and a sense of self-worth. I feel that confidence is lacking among Singaporean quants. Some of them are really among the cleverest people I have met. And I have traveled far and wide and met some very clever people indeed. (Once I was in a CERN elevator with two Nobel laureates, as I will never tire of mentioning.)

This lack of confidence, and not lack of expertise or intelligence, is the root cause behind the dearth of quality work coming out of Singapore. We seem to keep ourselves happy with fairly mundane and routine tasks of implementing models developed by superior intelligences and validating the results.

Why not take a chance and dare to be wrong? I do it all the time. For instance, I think that there is something wrong with a Basel II recipe and I am going to write an article about it. I have published a physics article in a well-respected physics journal implying, among other things, that Einstein himself may have been slightly off the mark! See for yourself at http://TheUnrealUniverse.com.

Asian quants are the ones closest to the Asian market. For structures and products specifically tailored to this market, how come we don’t develop our own pricing models? Why do we wait for the Mertons and Hulls of the world?

In our defense, may be some of the confident ones that do develop pricing models may move out of Asia. The CDO guru David Li is a case in point. But, on the whole, the intellectual contribution to modern quantitative finance looks disproportionately lopsided in favor of the West. This may change in the near future, when the brain banks in India and China open up and smell blood in this niche field of ours.

Another quality that is missing among us Singaporean parishioners is an appreciation of the big picture. ClichÃ©s like the “Big Picture” and the “Value Chain” have been overused by the afore-mentioned middle-level people managers on techies (a category of dubious distinction into which we quants also fall, to our constant chagrin) to devastating effect. Such phrases have rained terror on techies and quants and relegated them to demoralizing assignments with challenges far below their intellectual potential.

May be it is a sign of my underestimating the power of the dark side, but I feel that the big picture is something we have to pay attention to. Quants in Singapore seem to do what they are asked to do. They do it well, but they do it without questioning. We should be more aware of the implications of our work. If we recommend Monte Carlo as the pricing model for a certain option, will the risk oversight manager be in a pickle because his VaR report takes too long to run? If we suggest capping methods to renormalize divergent sensitivities of certain products due to discontinuities in their payoff functions, how will we affect the regulatory capital charges? Will our financial institute stay compliant? Quants may not be expected to know all these interconnected issues. But an awareness of such connections may add value (gasp, another managerial phrase!) to our office in the organization.

For all these reasons, we in Singapore end up importing talent. This practice opens up another can of polemic worms. Are they compensated a bit too fairly? Do we get blinded by their impressive labels, while losing sight of their real level of talent? How does the generous compensation scheme for the foreign talents affect the local talents?

But these issues may be transitory. The Indians and Chinese are waking up, not just in terms of their economies, but also by unleashing their tremendous talent pool in an increasingly globalizing labor market. They (or should I say we?) will force a rethinking of what we mean when we say talent. The trickle of talent we see now is only the tip of the iceberg. Here is an illustration of what is in store, from a BBC report citing the Royal Society of Chemistry.

 National test set by Chinese education authorities for pre-entry students As shown in the figure, in square prism $ABCD-A_1B_1C_1D_1,$$AB=AD=2, DC=2\sqrt(3), A1=\sqrt(3), AD\perp DC, AC\perp BD,$ and foot of perpendicular is $E$, Prove: $BD\perp A_1C$ Determine the angle between the two planes $A_1BD$ and $BC_1D$ Determine the angle formed by lines $AD$ and $BC_1$ which are in different planes.
 Diagnostic test set by an English university for first year students In diagram (not drawn to scale), angle $ABC$ is a right angle, $AB = 3m$ $BC = 4m$ What is the length $AC$? What is the area of triangle $ABC$ (above)? What is the tan of the angle $ABC$ (above) as a fraction?

The end result of such demanding pre-selection criteria is beginning to show in the quality of the research papers coming out of the selected ones, both in China and India. This talent show is not limited to fundamental research; applied fields, including our niche of quantitative finance, are also getting a fair dose of this oriental medicine.

Singapore will only benefit from this regional infusion of talent. Our young nation has an equally young (professionally, that is) quant team. We will have to improve our skills and knowledge. And we will need to be more vocal and assertive before the world notices us and acknowledges us. We will get there. After all, we are from Singapore–an Asian tiger used to beating the odds.

Photo by hslo