The story of a CEO

There is a young lady. She is quite highly educated, charming, energetic and ambitious in the eyes of many. There was once the president of a company that kept her profile in view, considering to invite her into the business. However, no action was taken.

Until one day, this lady began to look for job. That company drew her attention, and she applied for it. She got the job, as the CEO of the company.

She has been working very hard, and she appears to be well pleasing to other companies and employers. She is praised to have the potential to bring the company to another pinnacle of success. All she needs is just the time to prove it.

She has brilliant peers also, who are working as the CEO of other companies, while some are having their own businesses. When they come together, she is always the one who appears to be the brightest.

One day, the lady happens to have the opportunity to have a meal with the president, with the CEO's of other companies. After the meal, the president tells the successful stories of other CEO's to the lady, describing how they achieve their success, how they manage to create millions of dollars in a short time, how they manage to gain new business in a completely blue ocean, and so forth, as always. Feeling not comfortable to be at behind, the lady CEO begins to present to the president, how she will implement her plans, how she will put her effort into actions...

and...

... she stops...

... because she suddenly feels that she is a loser... as she suddenly realizes that, the president is not hiring her to be brilliant for display, but to create value for the company. She thoroughly cannot be compared to the other CEO's in this aspect.

The president tells her, "No worry, I will still have you as my CEO, but... but... other CEO's appear to perform much much better than you..."

She thinks in her heart: "Isn't it useless to appear outstanding in the eyes of many, but fail to please the person whom I am suppose to?"

Sleep Deprivation- A reminder to myself

Sleep Deprivation

Sleep deprivation has become one for the most pervasive health problems facing the United States. It is estimated that people on average now sleep one and a half hours less than people did a century ago. In a 2002 “Sleep in America” poll of 1,000 adults, nearly a third said that they need at least eight hours to avoid feeling sleepy the next day. However, the respondents responded that they average 6.9 hours of sleep on weeknights and 7.5 on weekend nights. Many Americans do not get the sleep they need because their schedules do not allow adequate time for it and they do not know the negative effects lack of sleep can have on their health and functioning. Others are unable to get a good night’s rest due to sleep disorders, chronic pain, medications, hot flashes, stress or health conditions such as heart disease, depression, arthritis or heart disease.

Some experts are even beginning to wonder if widespread sleep deprivation is having an effect on America’s brainpower and creativity. They are advocating that sleep deprivation be recognized with the same seriousness that is associated with the impact of alcohol on society.

Other experts dispute the existance of widespread sleep debt.

How does a lack of sleep affect the body?

One well-known study undertaken more than a decade ago showed that a rat prevented from sleeping will die in about three weeks, having lost the ability to maintain body heat and develop a fever to stave off infection. In humans, fatal familial insomnia, a degenerative brain disease, leads to death after several months, though scientists have not determined whether the cause of death is the sleep loss or other aspects of brain damage. While this disease is extremely rare, lack of sleep can have dramatic effects on quality of life.

A person who loses one night’s sleep will generally be irritable and clumsy during the next day and will either become tired easily or speed up because of adrenalin. After missing two night’s sleep, a person will have problems concentrating and will begin to make mistakes on normal tasks. Three missed nights and a person will start to hallucinate and lose grasp of reality. Someone who gets just a few hours of sleep each night occurs a large “sleep debt” and can begin to experience many of the same problems over time. A 1997 study found that people whose sleep was restricted to four to five hours per night for one week needed two full nights of sleep to recover performance, alertness and normal mood.

A recent U.S. Army study concluded sleep deprivation reduces emotional inteligence and constructive thinking skills.

Other short-term consequences include:

• Decreased daytime alertness. Loss of just one and half hours sleep can result in a 32% reduction in daytime alertness.
• Impaired memory and cognitive ability, the ability to think and process information.
• More than double the risk of sustaining an occupational injury.
• Impaired immune system.

Long-term consequences can include the following:

• High blood pressure
• Heart attack
• Heart failure
• Stroke
• Psychiatric problems such as depression and other mood disorders
• Mental impairment
• Increased mortality risk
• Relationship problems with a bed partner
• Obesity - (The link between obesity and sleep is an interesting one as lack of sleep can cause weight gain by increasing hunger and affecting metabolism, and extra weight can cause sleep disorders such as apnea which cause sleep deprivation.)

Sleep Debt Can Be Dangerous

The National Highway Traffic Safety Administration estimates conservatively that, during an average year, “drowsy driving” causes 100,000 automobile wrecks, 71,000 injuries and 1,550 fatalities. The U.S. Department of Transportation reports that 20% of all drivers have dozed off at least once behind the wheel. Drowsy driving accidents are often more serious than other wrecks because they often occur on high speed highways (because the driver is maintaining the same speed for a long period of time), there is no attempt to avoid the crash since the driver’s eyes are closed and the driver is usually alone with no one to alert him or her. Adding to these alarming statistics is the fact that long-haul truck drivers tend to sleep only two to four hours per night.

In addition to truck drivers, other adults who are especially vulnerable to sleep deprivation are shift workers. An alarming increase in the frequency of accidents is seen during the graveyard shift. Notable incidents that have been due in part to sleep deprivation have included the Exxon Valdez oil spill and Three Mile Island. Shift workers are also in the top three populations at the highest risk for drowsy driving automobile accidents.

Does it make you crazy?

No, sleep deprivation does not make people mentally ill in any meaningful sense. Insomnia is a very common symptom of many mental illnesses, so confusion occasionally arises about cause and effect. But sleep researchers do not feel that sleep deprivation causes psychosis or schizophrenia or depression or similar problems.

"Visual misperceptions" happen to sleepy people, but these are not the same as hallucinations or waking dreams. Auditory hallucinations are not experienced by sleep deprived people.

Sleep deprivation and euphoria

Sleep deprivation gives a lot of people a buzz. Especially in the first night of staying up, many people experience euphoria. Indeed, sleep deprivation can even be a short-term way to address depression. The effects of depression decline. Total sleep deprivation for a whole night improves symptoms in 40-60% of patients. (In their manic phases people with bipolar disorder do not sleep much and do not need much sleep.) Unfortunately, sleep restriction is not a viable treatment for depression on an outpatient basis. Supervision is required.

Imaging research has shown that one night of sleep deprivation leads to an increase in brain dopamine levels. Dopamine is sometimes called the "pleasure neurotransmitter" because of its role in so much human behavior.

If you win you will not need to explain; if you lose you should not be there to explain!

I am quite impressed by this sentence, by Hitler.

Many times in our life, we intend to do something. We plan for it, and we try to execute our plan to realize the goal that we set. At the end, it does not matter how you start it, how you go through it; what matters is whether the goal is reached.

There is another kind of saying that we should enjoy the process instead of the result. I like the concept also, but, is it an excuse for those who fail to achieve the set goal?

There is an action implied by Hitler in this sentence: Keep silent and not to explain. For him, it seems that words do not mean anything. Win means win, lose means lose; attempts to justify the works are meaningless. So, does this mean that explanation of works are useless, as the works should have been manifested by themselves?

Personally, I am getting more and more inclined to this direction. I believe more in works, rather than in words. Afterall, it is the works that produce result, not the words. Unless, the words that we speak can bring in some result.

Perhaps, this is the reason why testimony is so important. If you have it, you don't have to explain, and people get convinced. If you don't have it, no matter how hard you try to explain, that will be to no avail.

But then, what is the use of explanation? What is the use of justification over a failure? For me, the answer is-- confidence.

When I was told that surd 2 is not a rational number, I didn't believe it. Even when I told others about this, I didn't have confidence until I PROVE it. That proof is an explanation.

When I was told that integrating 1/x dx yields log x, I didn't believe it. It was the book Calculus that taught me how they arrive at this result. The teaching is an explanation.

Now, you are told that E = mc^2. Empirically, the equation holds, but, how do you know that there is no counterexample? Yet, why are people believing that the equation is true? Eistein did not prove it, did he? Does it mean that, his equation holds, so he wins, he doesn't need to explain (prove)? We believe that it is true, because of our confidence in Einstein's brilliance?

Another one, financial model. Black Scholes formula values the options using six estimated parameters. When the valued option is not equivalent to the market price, the analysts claim that it is because of the volatility; the volatility used in the market is different from the volatility that we use. We should use "implied volatility" in the market to price the option. O, well, if this is the case, how is the market price of option firstly derived then? While there is no explanation, everybody is using it blindly? Does it mean that, as long as the pricing doesn't cause any problem SO FAR, then it shouldn't be explored any further? If this is the case, what is Black Scholes formula for? To serve as... benchmark? Is benchmark not for confidence?

In actuarial jobs, an actuary might apply a model. There are basically hundreds of models. So, the actuary "randomly" select a model. The boss asks him, why this model? He craps for hours, and the boss is convinced. What has actually happened? Is model a prediction of the future? If not, then why is the boss convinced? I guess, because of the hours of craps, the boss has gained confidence?

Another one, even physical model used by engineers. When a civil engineer builds a model for a house, they calculate the weight, the stress, the pressure, the heat limit, the sheer force, etc. If after 10 years, the building is still standing firmly, does it mean that the engineer has calculated everything rightly? Or, if a building falls because of an earthquake, that says that the engineer has done the calculation wrongly? If it would fall, why then was the building approved to be constructed in the first place? Was it not because that the government was confident in the works of the engineer?

It is all about confidence. When we have explanation, we are confident, although the explanation might have some errors also. This leads to another problem: an explanation is no longer an explanation, instead, it becomes a justification.

"Why are you late?" "Because I didn't feel well this morning. I had a 'morning sickness' ".

"Why are you late?" "Because I am lazy and I wanted to sleep a bit longer".

What is the difference? Explanation? Or justification? If you are the boss, and you hold what Hitler said, you would punish this person. But if you do not hold his concept, then how do you discern explanation and justification? Are you confident (Do you believe) in the words of your worker? So, regardless of whether or not it is an explanation or justification, you believe it or not, the fact remains the same: He is late, and his job is left undone.

Well, from romance comics or novel, the woman likes to ask the man, do you love me? Will you [fill in the blank] when [fill in the blank] if [fill in the blank]? Well, sometimes, the guy doesn't have to think so much. Why? Because these words are just for confident-building purpose! That "ifs" and "whens" might not happen at all! But for girls, how much confidence do you gain from his "I am willing"? Does his saying of those words actually imply that he will really do that if the "ifs" and "whens" happen? (if no... then why you ask? =.=|| ) Again, it is because of confidence. Man says it to build the confidence of the girl toward the guy; girl asks (and listens) to build her own confidence to the guy. Anything happen? Nothing. Just an exchange of few words.

What am I doing here? Explaining the words of Hitler? Am I giving anyone more confidence toward his words?

Stress is not an excuse

Or, stress management is important?

Everybody is also busy. Who is not?

But I guess it is fair to say that the degree of stress experienced is different.

Any stress management skills to share?

When there are too many voices...

Sometimes, we get confused when there are too many comments.

For my case, some says that I have overworked myself; I should take a rest, and enjoy my campus life. Continuing to do more shows that I am too aggressive, and that is not good at all. In addition, overworking kills health.

At the same time, some says that, I am nothing compared to some others; I should have work much more. Already at age 20, approaching 21, still no money, no career, no house, no car, no success. Some people at my age has already become a million/billionaire, and what the heck am I doing...

So, well, I reach my own consensus: I should work more, more and more, yet, work in a hidden way.

And, I think I need to delete those words like "Tired, Exhausted, Overworked, Stressed" from my brain-dictionary.

It's time for the final SOA exam- FETE!

The following is the readings for exam FETE:

Readings

Investment Decisions: The Certainty Case	26
Multi-period Capital Budgeting under Uncertainty: Real Options Analysis	47
Capital Structure and the Cost of Capital: Theory and Evidence	88
Acquisitions, Divestitures, Restructuring, and Corporate Governance (p.781-806)	26
Modeling and Risk Management for Equity-Linked Life Insurance (p.157-169)	13
One Step in the Right Direction: The New C-3a Risk-Based Capital Component	13
Risk Management Ch. 14: Capital Allocation and Performance Measurement	50
Capital Allocation in Financial Firms	9
Specialty Guide on Economic Capital (exclude appendices)	44
VAR: Seductive but Dangerous	12
A Principles-Based Reserves and Capital Standard	4
Do Life Insurer RBC Ratios Really Reflect Underlying Risk Levels? (exclude appendix)	13
Introducing Moody’s New Liquidity Model for U.S. Life Insurance Companies	14
The New Risk-Based Insurance Capital Model	43
The Cost of Capital for Financial Firms	52
Solvency Measurement for Property-Liability Risk-Based Capital Applications	16
Financial Markets and Corporate Strategy Ch. 18: How Managerial Incentives Affect Financial Decisions	27
Risk Management Ch. 2: The New Regulatory and Corporate Environment	52
Corporate Finance Theory Ch.2: Ownership, Control, and Compensation	41
Report of the American Academy of Actuaries’ C3 Life and Annuity Capital Work Group (p.1-27)	28
The New Corporate Finance Ch.31: Theory of Risk Capital in Financial Firms
Investor & Management Expectations of the “Return on Equity"	7
Capital Allocation by Percentile Layer	27
Dividend Policy: Theory and Evidence	47
Introduction	15
M&A Process Overview	44
Finance	30
Valuation Techniques	78
Integrated Risk Management Ch. 13: Contingent Leverage Strategies and Hybrid Debt	45
Financial Decision-Making: A Behavioral Perspective	25
Securitization of Life Insurance Assets and Liabilities	32
Are You Paying Too Much for That Acquisition?	11
Insurance Mergers &Acquisitions	42
Real and Illusory Value Creation by Insurance Companies (p.1-21)	22
Corporate Finance Theory Ch. 9: “Understanding and Accessing Financial Markets	58
Life, Health and Annuity Reinsurance Ch. 5: Advanced Methods of Reinsurance	74
Financial Markets and Corporate Strategy Ch. 19: The Information Conveyed by Financial Decisions	31
Integrated Risk Management Ch. 16: A Case Study: The Securitization of Catastrophic Risk	39
Provision for Equity-linked Liabilities (p.11-14)	5
Modeling Long-term Stock Returns	32
Maximum Likelihood Estimation for Stock Return Models	18
The Left-Tail Calibration Method	12
Markov Chain Monte Carlo (MCMC) Estimation	18
Swaps	31
Binomial Trees	22
Wiener Processes and Ito’s Lemma	18
The Black-Scholes-Merton model	33
Exotic Options	25
Swaps Revisited	15
Equity-Indexed Life Products	11
Variable Annuities: “No Loss” Propositions” (Sections 1 through 3.6 only)	12
What Does An Option Pricing Model Tell Us About Option Prices?	4
Investment Management for Insurers Ch 13: Problems Encountered in Valuing Interest Rate Derivatives	16
The New Corporate Finance Ch.32 How to Use the Holes in Black-Scholes	7
Modeling the Guarantee Liability	20
Dynamic hedging for separate account guarantees	24
Guaranteed Annuity Options	16
Equity-Indexed Annuities	27
The Greek letters	32
Volatility Smiles	18
Basic Numerical Procedures	44
Estimating Volatilities and Correlations	20
More on Models and Numerical Procedures (26.1, 26.2, 26.3 only)	31
Martingales and Measures	23
Interest Rate Derivatives: The Standard Market Models	20
Convexity, Timing, and Quanto Adjustments	13
Interest Rate Derivatives: Models of the Short Rate	29
Interest Rate Derivatives: HJM and LMM	18
The Oxford Guide to Financial Modeling Ch.5 and Ch.6	86
Model Risk	10
Use of Stochastic Techniques to Value Actuarial Liabilities Under Canadian GAAP	26
Investment Management for Insurers Ch. 11: “The Four Faces of an Interest Rate Model”	12
Empirical properties of asset returns: stylized facts and statistical issues	11
Validation of Long-Term Equity Return Models for Equity-Linked Guarantees	19
Market Equilibrium: CAPM and APT (pp. 164-188)	25
Efficient Capital Markets: Theory	22
Efficient Capital Markets: Evidence	33
Information Asymmetry and Agency Theory	47
An Introduction to Applicable Game Theory (p.127-149)	22
Finance Applications of Game Theory	19

It makes a total of 2191 pages. Gun it down in 3 months~~

Hate the ceding company? Or hate the disaster?

There is a reinsurance company. She offers reinsurance to a general insurance company. This general insurance company insures the houses in a village.

A hurricane comes, as it used to be. It destroys the houses, and many claims go to the general insurance company. The owner of the general insurance company hates the hurricane, and pays the claims.

However, some portion of the claims go to the reinsurer as well.

Erm, well, should the reinsurer hate the hurricane, or the ceding company?

I would say, I hate exams, especially UTAR exams!

No money no talk?

I used to think that, money is important, but not everything.

Starting from, drinking. I need to pay for it. An ice-kosong now costs RM 0.50.

Followed by eating. In PJ area, the cheapest rice with 1 vegetable cost me around RM 1.50- RM2.

Then, transport. To tour around Klang Valley, I think, the minimum amount I have to spend is RM 2. I can take Rapid KL and reuse the ticket for whole day. If I take LRT or Metrobus, it is going to cost more. Car? I need more than RM 1000 to get one.

Place to stay? The cheapest place that I am aware of now is RM 200, per month.

Study? Assume that I don't go for class. I buy myself photocopied materials, say, 100 pages. That costs me RM 0.04*100= RM 4.

Let us move one to greater one.

I want to go for tour? Just talk about the most frequent and easiest touring- Shopping. It takes me transportation expenses, drinks, if the time is long, meals. And shopping, the expenses can go almost uncounted number. O, yea, if I don't want, I may want to have a walk in the garden of my condo. Oops, sorry. If I want to have a condo, I can either purchase it at RM 300k or around that, or, I rent it at RM 200 per month. No free tour for me. Sorry.

I want to earn money? Alright. I want to send resume, I need computer. Buy a computer? Prepare myself at least RM 1000. If not, cyber cafe might be a good place. 1 hour, RM1. O man. I hate working. So troublesome. What about starting my own business? Come on! What can I give the market, if I have no money to create it, process it, hire people to do? Alright. Assume that I do everything myself. I still need to eat, and drink and sleep... and they are not cost-free.

Alright, well, I have brain. I can sell it. But, O no! Who knows that I got brain? I have to prove it! Erm... prove that I have brain... perhaps, by exams? O man! I forgot, people charge exam fee!

Alright. Selling brain doesn't work. I sell my muscle. I am powerful. I can do heavy works. I can stand hot weather, cold weather, light, darkness. I am not afraid. Oops! I fall sick! I don't have insurance coverage! O, man, I should have owned an insurance coverage. But wait... how much should I pay for insurance premium?

O~ I have no way. If I have nothing in my pocket, I can't continue. I beg perhaps. In Pudu Raya. Argh, I don't know which one is faster: Collecting enough money for a meal, or the speed of getting hungry...

O gosh! I have no more way. I have to go home. Yea, home sweet home. At home, I think at home I don't have to think about money. Yea yea, I know, I should not just wait for people to feed me. I should go to work also... But... to the very least... they will not dislike me because I have no money gua... I can work later one...

Haha. Yea, they won't kick you out. They might not scold you directly. Because they give you face. But one thing: They will think that you are rubbish. They are waiting for you to say: "I have caused you much trouble. I think I should leave now."

One of my female tutor said this before: Don't buy me flowers. Don't buy me this and that. Just give me cash, or give me diamonds in Valentines. That is how your show me sincerity.

Well, final voice: "If you don't have money, you better shut up."

An option trader

There is a trader, who trades option. His goal is to be a multi-billionaire.

When he first stepped in the commercial world, he was attracted. He could go for Forex market, he could go for bond market, he could go for stock market, he could go for derivatives market, he could go for real estate market, and he could go for commodity market.

He saw the potential in derivatives market, and he decided to go for it.

Not long after he entered into the field, he purchased a call option. The strike price was low, but the underlying asset is a fast-growth asset. Not volatile.

One day, he suddenly became so confident. He felt that the stock was going up for sure. So, to make more money, he sold the call option, and got a forward contract instead, since forward contract is free.

He does not buy the stock immediately, because he has no cash.

He is now waiting for maturity date. He is afraid that the management is not doing their job well. He now joins the company, to make sure that the forward happens to be in-the-money.

O yea, the option was not a European one, but a Bermuda option.

Some said he was too crazy to sell the option. Some said, under such circumstances, his decision was right. Some said, well, it depends on the management.

This trader is in the management now. And suddenly he realizes: O, it is not just all about management! The market makers and speculators are also influencing the stock price!

So, this trader goes to be a speculator now.

That's why, he has three jobs. And he is still happy for his condition.

If we can love someone not for ourselves, then it is a true love

Erm... just came to think about it... =)