Category: Your Money

Urbanization is a Good Thing

Peepli Live

Image via Wikipedia

I watched this movie called Peepli Live, produced by Amir Khan. The story revolves around an indebted farmer who, facing a large debt, contemplates suicide. Its an interesting movie. However, right at the end, there’s commentary as to how millions of low-income farmers are being forced to forgo their (small) land-holdings and migrate to the city. Here’s the thing: I don’t see it as a bad thing that needs to be reversed. Rather, the role of the government and society should be to ease the transition.

Urbanization allows efficient allocation of public services. It is easier to serve a city with 10 schools rather than 10 small villages with 1 school. The problem is that by portraying urbanization as bad, subsistence farming as good we are trying to swim against the tide and misallocating capital (like the insanely evil NREGA.) We would be better off focusing on easing the transition that is already taking place by focusing on city planning.

Subsistence farming was never a good idea. Lack of scale and under-capitalization implies that millions of farmers in India lead a hand-to-mouth existence. We should be focusing on providing better options for livelihood generation rather than putting poverty on the pedestal and trying to wish the problem away.

Urbanization is a good thing and it is going to continue being a predominant trend of our times. Deal with it.

Sunder’s List: Dow +4.1%

Santa Claus' rallye team

Image by yourbartender via Flickr

Coordinated Central Bank Action fires up a rally of epic proportions: best day since March 2009. Things got so bad (rumors are that a giant European bank almost failed), that the US Fed decided to bail out Europe. The rest of the world is rallying on this sudden injection of liquidity, so watch for our very own NIFTY to spike. There maybe one more trigger to sustain this rally, the US job report tomorrow might surprise to the upside. Has the Santa Claus rally begun?

Money flowing out of India putting a brake on divestments? No problem, lets just ask State Owned Companies to buy back their shares! (FT)

Enjoy todays rally but keep an eye out for the exit.

Twitter: @SunderStockViz

Technical Analysis of the Financial Markets: Ch 6

This is a review of the 6th chapter of John J. Murphy’s Technical Analysis of the Financial Markets.

Continuation Patterns

Continuation patterns are shorter terms patterns that indicate that a current price action is nothing more than a pause in an existing trend and that the previous trend will resume later.

Triangle

There are three types of triangles:

  1. Symmetrical (coil): Formed out of two trendlines where the upper one descending and the lower line ascending.
  2. Ascending: Formed out of a rising lower line and a flat upper line.
  3. Descending: Formed out of a flat lower line and a descending upper line

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The Broadening Formation (Megaphone Top)

imageIt looks like a triangle turned backwards and represents an out-of-control market. Volume tends to increase along with the wider price swings.

 

 

 

 

Flags and Pennants

Flags and Pennants represent brief pauses in a one-directional market and they need to be preceded by sharp, straight line moves.

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A flag should slope against the trend and volume should dry up during the formation and build again during the breakout. The flag usually forms during the mid-point of the move.

A Pennant represents a small symmetrical triangle. imageVolume should be light during its formation. The move after the pennant should duplicate the move before its formation.

Both patterns are short-term and should be completed within 1-3 weeks with volumes drying up during their formation.

The Wedge

The wedge formation is very similar to a symmetrical triangle, except that it has a prominent slant. A falling wedge is considered bullish whereas a rising wedge is considered bearish.

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The Rectangle (Trading Range)

It usually just represents a consolidation area after which the previous trend resumes. A decisive close outside the upper/lower boundary signals a completion.

The Measured Move (Swing)image

It describes the movement of a stock when a major advance or decline is divided into two equal and parallel moves. The moves should be fairly orderly and well defined.

 

 

The Continuation Head & Shoulders

The price action looks similar to a Rectangular pattern except that the middle trough, in an uptrend, tends to be lower than the other two shoulders. In a downtrend, the middle peak exceeds the other two peaks.

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Next: Chapter 7 – Volume & Open Interest

Sunder’s List

English: CNBC’s “Mad Money with Jim Cramer” ca...

Image via Wikipedia

Europe is beginning to get tiring. All the announcements and the subsequent denials put the market through a 3 days up-down cycle. Citi says that we need to write-off Europe for the next three years. The bounce off over-sold conditions (the dead cat bounce) can’t hide material weakness in US stocks.

However, there are a couple of contrarian signals that we need to be aware of. One of them is Jim Cramer asking us to sell the rally. Usually he is a good indicator of what not to do. The other is that the S&P 500 is potentially showing an inverse H&S. As goes America, so goes the world, so watch out for that breakout.

At least one big fan of gold is waiting on the sidelines: Jim Rogers says that the yellow metal is in for a correction. Be aware.

Good luck and follow me on twitter!

Digital Creativity?

Sand printer, presented at SIGGRAPH 2004

Image via Wikipedia

I still remember fooling around with Coral Draw when I was in school. I was completely in love with it back then. And somewhere in the haze of home works and exams, I lost touch with it. Today, I experienced the same old feeling watching a buddy of mine work on Photoshop. He was explaining how buttons are made: the shading, highlights, brightness gradients etc. And then it hit me: just about every form of creativity is going digital.

What started with expensive 2D animation tools for movies have crossed over to the consumer domain. Be it Photoshop, Avid, Instagram or Windows Live Movie Maker, artists have access to a amazingly powerful set of tools to express their creativity. And its not just images that have gone digital, it’s the entire universe of content including music and writing. And it is not just two dimensions either, I know at least two startups who are working on consumer 3D printing. Just like how engineers moved from the slide-rule to CAD/CAM, future artists would’ve seen the easel only in museums.

So what does it mean to the creative process? One thing for sure: more. The one giant advantage that digital creation offers is the undo button. You no longer have to throw away a perfectly good copy just because you smudged the corner. It allows the artist to be do more. And with all things digital, the artist who knows a little bit of programming would have a natural advantage in this scheme of things. Take a look at Scott Draves: a “software artist.” I ran into to him in SIGGRAPH (a computer graphics conference) where he was presenting digital art when it was still in its infancy. As tools get more powerful and mobile, we are headed towards an exciting convergence between art and computer science.

Hello Mr. Artist, got Python?