INDUS Global Investment Research
CLARITY CONFIDENCE CONVERGENCE
Our goal is to provide quality investment research. Our investment methodology finds the best value and growth opportunities for our clients based on the current global market conditions.
Tuesday, May 5, 2020
Analyzing the 2018 Annual Report by Warren Buffett
12 Words of Wisdom from Warren Buffett
Tuesday, April 28, 2020
What are Google's Four Main Areas of Focus in 2020
Monday, April 27, 2020
What is Chaos Theory?
Financial market consists on 2 groups of people. One that think the market is 100% efficient and the other which thinks it is completely random.
So who is right?
The truth is that the markets are complex and chaotic systems and their behavior contains both a efficient and a random component. Therefore we can make a realistic stock market forecast, although it is precise only to a certain extent.
Complex chaotic systems are vulnerable to minor changes (butterfly effect applies) causing a big perturbation in the system pushing it far away from its equilibrium. This is called the butterfly effect. So if anything small happens anywhere in the world the financial markets are usually the first ones to be affected.
Wednesday, April 8, 2020
The most expensive bug in history...
The development team gets a call by CEO that they need to implement a new feature in SMARS (their system) to take trades from dark pools as well in addition to the regulated markets.
The development team had 30 days to comply with the new rule. Although the CEO himself was not in favour of this new feature he had to anyway go for it as it meant retaining existing business.
The release date for the new feature in the system was set to 9:30 AM EST on August 1, 2012
The plan was to deploy the new system behind a feature flag the week before the deadline; when the market opened on August 1, they'd simply turn it on.
At 9:30 AM EST on August 1, the Knight developers did just that: they enabled the feature flag, and SMARS began to route orders through to the RLP—they were live!
But something was wrong. Their charts showed anomalous spikes in trading activity on the open markets. At 9:34 AM, the NYSE called Knight was executing a lot of trades—so many, in fact, that trading volumes for the entire market were double their normal level.
To make matters worse, the trades they were making didn't make sense. SMARS appeared to be buying high and selling low. At the current rate, they were losing thousands of dollars per second.
Alerted to the problem, Knight's Chief Information Officer called the top operations engineers together to try to identify the root cause. The rogue orders seemed to be originating from the new RLP router code, but no one could pinpoint the bug.
20 minutes had screamed by since the market opened, and the unauthorized trades executed by SMARS already totalled well into the billions of dollars. It was time to roll back, and ask questions later.
With a shaky sense of relief, the operations team scrambled to check out the last known stable version of SMARS and deploy it to their 8 production servers.
To their horror, as soon as the router restarted, trading volumes on the NYSE spiked again: they were now executing even more trades than before.
At 9:58 AM, the Knight developers shut down SMARS entirely. It had been 8 minutes since rolling back the RLP code, and 28 minutes since the market opened.
They'd just lost their company $460 million dollars.
But what actually happened?
When the developers of Knight's high frequency trading algorithm replaced some unused legacy code, they repurposed a feature flag which had been used to disable it.
The deployment was a success for 7 of their 8 servers, but the deploy to the 8th server failed silently, meaning that one server was still running the legacy code. When they enabled the feature flag, 7 servers operated as expected; the 8th executed the legacy code, which should have never run in production.
Instead of re-deploying the new code to the 8th server, they decided to roll back to the last known good state. Unfortunately, they didn't know that the problem was the feature flag, and it didn't cross their minds to turn it off. When the old system was re-deployed, every server began to run the legacy code, dramatically compounding their losses.
Where did they go wrong?
The Knight developers should have never allowed dead code to remain in their app for so long. Had they been more proactive, they could have easily avoided catastrophe. Reusing a feature flag was a dumb mistake that just shouldn't have been made. The developers weren't entirely to blame, though—if there's one certainty in life, it's that we will make mistakes.
When they deployed SMARS, they didn't have an automated deployment pipeline, instead relying on their engineers to manually deploy the new code; as a result, they missed an important step on the fated 8th server. When the first mistake led to a crisis situation, their monitoring was inadequate, and they didn't have documented incident response procedures which could have prevented them from making an even worse mistake under pressure.
Tuesday, March 31, 2020
Why was Lehman dumped and AIG Saved during 2008?
Lehman came back from a near death experience during 1998 LTCM Collapse. They then got into risk management and got their acts together. However slowly all of that again started to fade and due to management arrogance and hubris they defied risk. This led to their collapse in 2008. AIG was more of a systemic entity backing a lot of collateral from other banks. Being more of a systemic risk it was saved.
https://knowledge.wharton.upenn.edu/article/the-good-reasons-why-lehman-failed/
Tuesday, December 3, 2019
Wednesday, November 27, 2019
Is Cash Really King?
"The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worthless over time. But good businesses are going to become worth more over time."
The above words are from the Oracle of Omaha. However, currently he is sitting on a boatload of cash around 125 Billion. Does that give any hint to the investors?
Machine Programming
Imagine dictating a problem statement to a computer and software gets generated that provides a solution. That is what machine programming is all about. Although around since the 1950s, it is now at an critical juncture.
Sunday, November 10, 2019
Weekly Roundup Nov W1 2019
Oil was up and yields were up too with a 10 year at 1.82
Yields up (means bonds prices were down) and hence risk on situation.
Since yields were up so Dollar would naturally be higher and hence gold took a downward move.
Gold was down also because of trade news on china
Yields are at the highest since Aug
Monday, November 4, 2019
Thursday, August 8, 2019
What will be impact of US China Trade Situation
U.S. Debt Will Grow: Foreigners will not be able to buy much of US issued debt (Treasuries and Bonds) so US investors may be forced to buy it.
Foreign Capital Inflows Will Fall: Foreigners will have less dollars to put back in the US economy.
Cost May be high: Tariffs will increase the costs.
Slowdown and Uncertainty : Economy may slow due to people slowing spending
Politics will be Key : Any uneasy political dialog will hurt the entire situation.