Earned 660 in GMAT

I had written following note in one of the GMAT forums back in Aug, 2007. I think it would useful to share it out here.
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Yesterday I gave my GMAT, and score is 660 (44,38). This is obviously disappointing as Quant score is off from my avg score from official CAT exams (47,49,48,46) and so I missed magic 7** number. I guess, I took Quant for granted and that cost me some points.

Here is what I observed during the exam:-

Analysis of Issue: something like, "Open communication between employees and company mgmt would improve company's performance".
Analysis of Argument: something like, "Powerful business leader is having stronger influence on community/nation then any govt official".

=> Quantitative was quite reasonable and pretty much in-line with OG and official-CAT exams. None of questions were from the probability, permutation/combination or standard deviation. Also, none of the question where such that I had to guess to move forward but I am sure that my answers would be wrong for some questions with higher weight (say in 700-800 range). On the part of timing, I could barely make it to 37th question in given 75 minutes and that was what happened with me during PowerPrep exams.

=> Verbal was was also pretty much inline with PowerPrep and GMATPrep questions. I could finish all but two question on time; I had to guess for last two questions (CR & SC).

RC: There were 3 RCs. One was on the solar-analogous stars and Sun, another one was on women theory (not very sure), and the last one was on corporate America & role of ROI on investment decision. None of them were of the category that could make me quit the exam unlike what I observed with some Kaplan RCs !

SC: Most of the Questions were testing very basic grammar rules explained in Manhattan GMAT while some were testing more then one grammar rules. I didn't get any SC question with entire sentence underlined but then friend of mine got 5 of them with similar score so its quite random.

CR: Some of the questions were quite tricky and interesting but then I have a strong hold on CR so enjoyed them. If I recall right, none of the questions were double bold type.

My humble opinion on best source of material and few other tit-bits...
Quantitative: OG-11, OG-Quantitative, 20 Sets and questions from various forums (gmattutor, scoretop, scorechase, urch.com etc).

Verbal: Manhattan GMAT (awesome), OG-11, OG-Verbal, SC-1000, CR-100 (pre-LSAT section), RC-1000. OG-11 does a great job in explaining why particular choice is right or wrong; understanding of this explanation is more important then rushing to try as many questions as possible. 1000-questions sets are great in setting pace as well as practicing grammar rules.

Exams: PowerPrep, GMATPrep (math is much simpler than actual exam but then score is scaled to give you correct judgment on where you stand). You can reinstall these two software to get 6x6=12 exams. I found Manhattan GMAT exams pretty much inline with OG, however sometimes their Quant questions are tougher and time consuming.

Pace: As many of you have noticed, GMAT is trying to make you rush through questions, however "fast and furious" never get along well with good GMAT score. Tough questions are having higher point weight so one is better off spending time (never more then 3 minutes) on such questions. I chose to do as many questions 'right' and then for last 2-3 questions guess if needed.
Hope any of these helps you to become better prepared for your exam. All the best !

Another look at (one of the) Valuation methods

Following up with Aug 19th post, I noticed that forward EPS could be more reliable then trailing EPS. Nway, following is one the email I sent to one of my colleague on finding fair value of an equity. Here is the example for HPQ which could be extended to any stock:-

First of all you need to find what is the minimum ROI (Return on Investment) you have to have to invest. Following is the calculation assuming that 15% is the bare minimum you would need.

FOR HPQ:
* on 10/17/2008 the price is: 40.73$/stock
* P/E = 12.60 (forward PE is 9.92 as per the http://finance.yahoo.com/q/ks?s=HPQ)
* EPS = $2.93 (current year) (http://finance.yahoo.com/q/ae?s=HPQ)
* EPS growth rate = 28.9 % (this is the conservative general growth estimate by WSJ.com we will use this conservative number).
If you look at paste few years’ actual EPS number then average is 38.83% but then there is on sharp rise in between. I took 2008 and 2009’s estimate numbers as well.
2009e: 4.10 ==>2 14%
2008e: 3.61 ==> 2 34%
2007: 2.68 ==> 2 23%
2006: 2.18 ==> 2 165%
2005: 0.82 ==> (-18%)
2004: 1.15==> 15%
2004: 0.83

* Dividend on earning = 0.32c for 3.23$ EPS so it will be 9.9% of EPS. http://finance.yahoo.com/q?s=hpq


So using TMV (Time Value of Money/ http://www.zenwealth.com/BusinessFinanceOnline/TVM/TVMCalculator.html) at current rate the 5Y earning will be 10.43$ (using 38.83% growth rate it would be 15.11$ )
At 10.43$ EPS the 9.9% dividend would be 1.033$. So total Earning at 5Y = 10.43+1.033=11.463$.

So at current P/E rate, using TVM after 5Y the price would be = (P/EPS) * (EPS) = 9.92 * 11.463 = 113.71$. So if this assumptions/stat holds true then to get 113.71$ with 15% growth the fair value should be 56.53$. The current price of 40.73 is below this number so HPQ could be attractive business to own with 15% gain expectations.

Remember, here I used only one (EPS) of the many yardsticks to measure the fair value. If any of this number changes our outcome would change. When I will get some free time I will try to automate this computation using excel sheet.

Book4: Warren's 15% rule.

Reference: "How to pick stocks like Warren Buffett" chapter-12.

Warren is interested only in those stocks where he expects 15% or above return in long (say 10Y) period. This is how he isolates the attractive equities....

For instance if you are looking for IBM stock on 8/1/2008 then you would need following information.

• What is the avg P/E ratio ? Let's say it is=15.11
• What is the Earning ? Let's say it is = $8.11
• What is the Earning growth rate ? Let's say it is: 11.21% (reference).
• What is the price today (8/01/2008) ? Let's say it is: $128.00
• What is the dividend (if any) rate ? Let's say for IBM it is 25% of the Earning.

So at this rate, in next 10Y the earning will grow to (using TVM formula) $23.47/year. That makes dividend=$5.87. So total earning = 23.47 + 5.87 = $29.34.

So at current P/E rate the price of the IBM stock will be = (P/E) * (Earning) = 15.11 * 29.34 = $443.29.

On the other hand, for stock to return 15% return on your investment of $128, we need to have (using TVM formula) $ 517.83. So, we have a big gap between what is expected ($517.83) and what can be achieved ($443.29).

If we are going to get $443.29 price after 10Y then to get 15% return the expected price should be: $109.57 (on 8/1/2008). This value will compensate investor from inflation, tax, commission and risk-free return.

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Let's take the example of AXP (American Express)...

• 8/1/2008 price: $36.73
• P/E = 12.17
• Earning = $3.02
• Earning growth rate = 12.5%
• Dividend = ~24%

So, after 10Y earning = $9.80 and 10Y dividend=$2.35. Total E=9.80+2.35=$12.15.
So, at current P/E rate, after 10Y the price would be = (P/E) * E = 12.17 * 12.15 = $147.87

Now, at the current price and 15% expected return the 10Y price should be=$148.59. Ideally speaking, to get 15% return today the AXP should be priced at $36.7292, almost what is it right now. Assuming that all above assumptions hold true any price below $36.73 will be attractive to get 15% return.

However, financial market is going through some tough time so probably this price might not compensate for any upward risk in credit market.

There will be more blogs on the topics related to Warren's investment philosophy. So keeping watching.

Origins of the (.Com and Telecom) Crash

After a long pause I am writing another blog. Last week I happen to borrow another book of Roger Lowenstein-- Origins of the Crash (ISBN:159420-003-3) where he talked about the .com and telecommunication bubble, and its bust.

Just the way I anticipated , Roger has explained the factors those eventually manifested in another financial crash of the 20^th century. As the publisher put it very well “Lowenstein explains that it is the boom that needs to be explained; the crash is simply the natural consequence.”

Roger sited reasons, going back in 20 years (in ‘80s) where LBOs created pressure on mgmt to keep their stock prices up to hid any takeover attempt by LBOs. The stock options were unreasonably used as an incentive to CEO, CFO and board members to increase the so called stockholder value. This lead to myopic view of mgmt as well as WallStreet, and all the actions were driven to increase the stock value in short run. Free hand from Govt. regulators, company board and auditors allowed various kind of accounting manipulation to flourish. Company’s mgmt, who has the obligation of long term valuation of the company were busy promoting short term value of the stock. Company executives were awarded huge compensations which were independent of company’s performance.

There was irrational euphoria about every company’s valuation irrespective of their revenue and profit potential. There were earning manipulation using SPV (Special Purpose Vehicles), special accounting methods and various derivatives. The quarterly and yearly financial statement become irrelevant, and even security analyst failed to use their critical thinking to flag the alarm. Overall market failed the “efficient value hypotheses”. Market left with redundant products (in the energy, telecommunication, internet) wit over capacity.

None of the govt/regulator bodies – SEC, Fed, Congress, Board of Directors played needed role to flag the alarm signal, and eventually when they did it was too late to fix anything. As a result small investors and employees lost billions and trillions of dollars, however, company executives made hefty money from there stocks options as well as severance package. General market (once again) lost the faith in the equity market. Though congress came up with Sarbanes-Oxley legislation to make executives and auditors accountable for their actions, huge damage was already done. The US accounting standards were manipulated to a great extend.

It seems as long as there will be greed (which is generally not good) there will be market manipulation. The most recent housing bubble bust and financial firm’s credit trouble suppose that. Over use of SPV (Special Purpose Vehicles) and complex derivatives had let window open for fraud.

Overall Roger made an interesting account of .Com and telecom bubble and bust. Just like his other book on "Buffett", even in this book I had to skip few sentences where I couldn't make great sense; but probably I might be missing some context there. I would give 4-stars to this book.

Table of Contents

	Acknowledgments	ix
1	Origins of a Culture	1
2	Early Nineties--A Culture Is Rich	15
3	Enlightenment Gets out of Hand	35
4	Number Games	55
5	Doormen at Noon	79
6	New Economy, Old Errors	101
7	Enron	127
8	Bankrupt	157
9	Year of the Locusts	189
10	Epilogue	217
	Notes	227
	Index	259

Complete Money & Investing Guidebook

While scanning investment books' stack at my local library, I came across :- "The Wall Street Journal Complete Money & Investing Guidebook" by Dave Kansas. ISBN-13: 9780307236999

The book promises to provide education on basic jargons used in investment field. It is like a '101' for all the investment vehicles in the market right now. I guess, this book has faired very well on its stated objectives. Also, book, being part of the "The Wall Street Journal" series, has lived up to the credit. Dave Kansas delivered non-biased picture of the investment market.

You can find table-of-contents at Barnes & Noble's web-page. One of the useful information is "suggested reading" list after each chapter. For handy reference, here are the sub-topics Mr. Kansas has touched upon...


STOCKS

• Two types of markets: NYSE, NASDAQ, ECN
• Indexes and how they are calculated
• Dow Jones industrials through the years
• Growth, Value and other kinds of stocks
• Bulls and Bears
• Going public (Standard IPO, Dutch-Auction IPO)
• Stock splits, buybacks and dividends
• Stock options
• Insider trading
• International Markets

Suggested Reading:
* Origins of the Crash by Roger Lowenstein
* Reminiscences of a stock operator by Edwin Lefevre
* The Number by Alex Berenson.
* Wall Street Meat by Andy Kessler

MAIN STREET

• Evaluating stocks
• Earnings
• Buying and selling stocks
• Trading online
• Short selling
• Investment clubs
• Margin
• Warren Buffett and Berkshire Hathaway
• Stock strategies
  
• Fundamental investing
• Technical and chart-based investing
  

Suggested Reading:
*Barron's guide to making investment decisions by John Prestbo and Doug Sease @
* Bull ! by Maggie Mahar
* A random Walk down Wall Street by Burton Malkiel
* Wall Street: How it works and for whom by Doug Henwood

BONDS

• The history of bonds
• Treasury bonds
• Municipal bonds
• The rating agencies: Moody's investor service; standard & Poor's.
• Bond laddering
• Agency debt. Freddie Mac, Fannie Mae etc. govt backed debts
  
• Corporate bonds
• Junk bonds
• Convertible and other types of bonds

Suggested Reading:
* The bond Bible by Marilyn Cohen
* Bill Gross on investing by William H. Gross @

WALL STREET

• Securities firms
• Brokerage
• Trading
• Research
• Research Analyst's ratings (WSJ's best on the Street guide to analysts; www.starmine.com; www.investars.com)
• Investment banking
  
• Underwriting
• Merger & Acquisitions
• Asset management
• Prime Brokerage
• Risk managers and compliance
• Wall Street's police
• SEC
• Self-regulatory organizations
• State regulators
• Other regulators
• Investor advocacy groups: CFA, aaii.com, ici.org, nasd.com.
  

Suggested Reading:
* The house of Morgan: An American banking dynasty and the rise of American finance by Ron Chernow @
* Liar's Poker: Rising through the wreckage on Wall Street by Michael Lewis
* Den of thieves by James Stewart
* The great game: The emergence of Wall Street as world power by John Steele Gordon


ECONOMICS AND MONEY

• Business cycle
• Investors and the economy
• Government data
• Jobs data
• Inflation Measures: CPI
• Retail sales
  
• Gross Domestic Product (GDP)
• The Federal Reserve
• The money supply
• Fiscal policy
• Money
• U.S.Money
• The rise of electronic money
• Bank accounts
• Trading money

Suggested Reading:
* The worldly philosophers: The lives, times and ideas of the great economic thinkers by Robert L. Heilbroner
* Basic Economics: A citizen's guide by Thomas Sowell
* Wealth of Nations by Adam Smith @
* The communist manifesto by Karl Marx
* The general theory of employment, interest and money by John Maynard @
* Maestro: Alan Greenspan and the American economy by Bob Woodward


MUTUAL FUNDS

• Stock mutual funds
• Index funds
• Growth funds
• Value funds
• Income funds
• Small-cap, large-cap, midcap
• Bond funds
• Balanced funds
• Money market funds
• Going overseas
• Other funds
• Investing in a fund
• Evaluating a mutual fund
• The rise of ETF (Exchange Traded Funds)
• Closed-end funds

Suggested Reading:
* Common sense on mutual funds by John C. Bogle @
* How mutual funds work by Albert J. Fredman @
* The intelligent asset allocator by William J. Bernstein
* Morning Star ; Smart Money


RETIREMENT INVESTING

• 401(K)
• Catch-up contributions
• Borrowing from your 401(K)
• IRAs and other retirement accounts
• Other retirement accounts
• Red flags
• Investment strategies
• Withdrawing money
• Social security
  

PRIVATE MONEY

• Some hedge fund history
• Venture capital
• Private equity

Suggested Reading:
* When genius failed by Roger Lowenstein @
* Barbarian at the gate by Bryan Burrough and John Helyar @
* The nudist on the late shift by Po Bronson


OPTIONS, FUTURES AND NONTRADITIONAL INVESTMENTS

• Futures
• Options
• Puts and Calls
• Other kinds of options
• Long-term options
• Index options
• Future options
• Nontraditional investments
• Collectibles
• Art
• Coins and stamps
• Miscellany

REAL-ESTATE INVESTING

• Our homes
• Second homes
• Income properties
• REITs (Real Estate Investment Trusts)
  

Suggested Reading:
* The McGraw-Hill 36-hour real estate investment course by Jack Cummings
* What no one ever tell you about investing in real estate by Robert J. Hill

Peep into Investment Banking

For a while now, I am getting gut feeling that I am better suitable for Investment industry then my current profession. To give justification to this thought I searched for more specifics on "investment banking". While hoping around on more information, I arrived at carrier-in-finance and a good 100+ page report(2005) from WetFeet. (ISBN:1582074321)

Following Figure shows bigger picture of the Investment Banking (IB) org. chart.


Corporate Finance
This seems to be one of the most sort after branch of IB. This group is the liaison between Wall Street and its players--money makers and money takers. If the client, generally big corporation or IPO, needs money it will approach corporate finance dept. of a IB. This group will analyze and suggest Debt and/or Equity vehicles to the client. Later CF will also value the fair and salable price of the debt/equity offering. At this juncture 'Sales' devision comes into picture to market and sell debt/equity to institutional investor, mutual fund manager, big investors etc.

Another famous and very demanding area of corporate finance would be M&A group which will propose, negotiate and lock the merger or acquisition among two suitable firms. It is obvious that when M&A talks are in the air, working hours could be crazy and very demanding.

CF group would also offer to analyze corporate client's financial needs and propose better financial strategies.

Sales
As mentioned earlier, Sales group will offer suitable securities (stocks, bonds, derivatives etc) to its clients and making market for its underwriting clients. They ought to maintain healthy relationship with buyers. Sales group in IB, just like any other industry, interact closely with its trade and research devision to discover suitable offering to its clients.

Trading
This is another demanding (after M&A) job in IB. Trading group needs to understand the nerve of the market, and have solid knowledge of specific company, industry and economy. This group will make buy and sell calls of securities and make profit for the firm. They are the market maker. They manage their firm's investment risk.

Research
This is the area of IB which appealed me the most as I could offer few of the key ingredient of a successful equity researcher:-

• Solid understanding of the specific industry segment
• Understanding of the macro Economy
• Detail oriented approach and strong analytical skills
• Communication skills
  
• Quantitative analysis

I could leverage on my hands on experience with technology industry and strong analytical skills developed from current profession. Researcher needs to focus on portfolio of companies in given industry to forecast future earning potential and investment prospects. Researcher would analze economic trend, company's market share, short term and long term performance, strategic position against competitors ,and make investment report on the company. This report would be used by the IB firm and client who has the investment in the company and/or considering investment in the company.

Lately there is great emphasis on segregating (a.k.a. Chinese wall) research and sales devision to offer non-biased investment suggestion to clients. I appreciate its ethical importance.

Some of the significant players in IB are (ordered alphabetically) :-

1. Bank of America Securities
2. Bear Stearns
   
3. Citigroup
4. Credit Suisse and First Boston, | Equity Research (ER)
   
5. Deutsche Bank
6. Goldman Sachs
7. J.P. Morgan Chase & Co.
   
8. Lehman Brothers* | ER
   
9. Merrill Lynch | ER
   
10. Morgan Stanley
11. UBS
    

What is tested on CFA Level-I exam

I had a short stint with CFA Level-I. Though preparation started with very high ambition, the time allocation turned out little premature. CFA Institute recommends 250 hours of study with the expected background/familiarity with the topics.

I spent nearly 280 hours but familiarity was lacking. As a result, just 3 days before the exam I chose to postpone my exam for next opportunity date (June, 2008). Here is the breakdown of topics tested on CFA-I. (most of the links will fail as it will look for path on my laptop)

Functional Area	Weightage	TOPICS		STUDY SESSION	READINGS	Comments/Notes
Ethical and Professional Standards	15%	Ethical and Professional Standards		Study Session 1 (PDF)	1&2 3 4	Code of Ethics and Standards of Professional Conduct “Guidance” for Standards I – VII Introduction to the Global Investment Performance Standards(GIPS®) Global Investment Performance Standards (GIPS®) I Introduction II Provisions of the Global Investment Performance Standards II-0 Fundamentals of Compliance
	12%	Quantitative Analysis		Study Session 2 (PDF)	5 6 7 8	Time-value of money 183-224 Disc. Cash Flow Application 225-250 Stat and market returns 251-328 Probability: 329-368 (376)
				Study Session 3 (PDF)	9, 10 11 12	Com. Prob. Dist: 378-428 Sample & Estimation: 433-460 Hypothesis testing: 465-505 Correlation & Regression: 507-575
	10%	Economics	Micro	Study Session 4 (PDF)	13 14 15 16 17 18 19 20	Elasticity Efficiency and Equity Markets in Action Organizing Production Output and Costs Perfect Competition Monopoly Monopolistic Competition and Oligopoly
			Macro	Study Session 5 (PDF)	21 22 23 24 25 26 27 28	Demand and Supply in Factor Markets Monitoring Cycles, Jobs, and the Price Level Aggregate Supply and Aggregate Demand Money, Banks, and the Federal Reserve Money, Interest, Real GDP, and the Price Level Inflation Fiscal Policy Monetary Policy
			Global	Study Session 6 (PDF)	29 30 31 32	Trading with the World International Finance Foreign Exchange Foreign Exchange Parity Relations
Tools and Inputs	20%	Financial Statement Analysis		Study Session 7 (PDF)	33 34 35 36 37	FS statement caveats cash flow Analysis of Cash Flow account standards
				Study Session 8 (PDF)	38 -39	FS & Ratio analysis EPS and equity.
				Study Session 9 (PDF)	40, 41, 42, 43	Inventories Assets Capitalization Depreciation.
				Study Session 10 (PDF)	44, 45, 46	FS stmt vs Tax stmt; hidden liabilities; leasing
	8%	Corporate Finance / CF		Study Session 11 (PDF)	47 48 49 50 51	Capital Budgeting Cost of Capital Capital Structure and Leverage Dividends and Dividend Policy The Corporate Governance of Listed Companies: A Manual for investors
Portfolio Management	5%	Portfolio Management		Study Session 12 (PDF)	52 53 54	The Asset Allocation Decision (small) An Introduction to Portfolio Management (LONG) An Introduction to Asset Pricing Models (long)
	10%	Analysis of Equity Investments		Study Session 13 (PDF)	55 56 57 58	Organization and Functioning of Securities Markets (small) Security-Market Indexes (small) Efficient Capital Markets (very small) Market Efficiency and Anomalies (very small)
		Analysis of Equity Investment: Industry/Company anal.		Study Session 14 (PDF)	59-60 61 62 63 64	An Introduction to Security Valuation + Industry Analysis (large) Equity: Concepts and Techniques (very small) Company Analysis and Stock Valuation (very small) Technical Analysis (very small) Introduction to Price Multiples (very small)
	12%	Analysis of Fixed Income Investments		Study Session 15 (PDF)	65 66 67 68 69	Features of Debt Securities Risks Associated with Investing in Bonds Overview of Bond Sectors and Instruments Understanding Yield Spreads Monetary Policy in an Environment of Global Financial Markets (very very small)
Asset Evaluation		Fixed Income		Study Session 16 (PDF)	70 71 72	Introduction to the Valuation of Debt Securities Yield Measures, Spot Rates, and Forward Rates Introduction to the Measurement of Interest Rate Risk
	5%	Derivatives		Study Session 17 (PDF)	73 74 75 76 77 78	Derivative Markets and Instruments Forward Markets and Contracts Futures Markets and Contracts Option Markets and Contracts Swap Markets and Contracts Risk Management Applications of Option Strategies
	3%	Alternate Investments		Study Session 18 (PDF)	79	Alternative Investments
Exams	100 %	Sample 32 questions from CFA

Microsoft Money 2007 Deluxe

Performance is harassment and functionality is faulty

I am a seasoned user of "Microsoft Money" since 2001 and used Money-2003, 2004, 2006 and 2007 versions. On the subject of convenience and integration of multiple financial activities, Money (and for that matter even Quicken) does a fantastic job.

However, with 4-5 years of usage of 'Money', my money file has grown to nearly 19MB. Due to the large file size, I am getting pathetic performance which is quite annoying. I have a laptop with 2.4GHz dual core CPU and 1GB RAM, however very basic activity such as looking at monthly report, budget report etc. takes 2-3 minutes to display on the screen ! Even if I retry, it once again hangs for 2-4 minutes. I will be lucky if I could get 'any' operation finished faster then 5 seconds/transaction. The problem isn't with specific version but the way Money is designed to store its information. There were some discussion on improving performance by using money data on Database but Microsoft chose not to invest money on any such design change.

Another annoying thing I observed with Microsoft Money is with every newer release one will get fancier but more BUGGY software. So far I found '2004' release best in the bunch but once you upgrade the version and make new entries it is not feasible to go back to earlier version.

Let me give you an example that will explain the problem. Most common activity a user will have is it to download data from financial institutes. Money will connect to these institutes and get the data. It will turn back in 2-3 minutes with newer data and shows status 'done'. On the "Account List" you will see, for example, 5 new transaction and when you inside this account, there is no new transaction listed ! Reason is, though you got 'done' status data hasn't finished downloading. After 2-3 minutes you will get the data in the account. When you see the transactions, you won't be able to 'accept' them as it is waiting on 'something'! In short, after getting data downloaded from the institute, you won't be able to 'accept' them for nearly 3-4 minutes. I am surprised to find that Microsoft is selling software w/o testing such basic functionality !
NOTE:I noticed above mentioned bug only in 2007 release.

I wish to have a better software for my need w/o losing existing data but Microsoft hasn't offered better (not just newer) version yet. Quicken seems to have similar issues. Quicken doesn't allow any migration facility to use existing Money files under their software. Once again, I can just wish that Microsoft Money 2008 comes with higher performance and basic testing.

If you are a first time user, prefer to compare both Money and Quicken for yourself before locking your data with one of the them. With 'Money', once your file grows larger, performance deteriorate significantly.

One last point-- even with above limitations, I am better off using this software then not having it at all. Here I jotted down major limitations of Money; Microsoft does good job of marketing good points so I won't spare much time on that.

Sony KDL-40V2500 40" Bravia V-Series 1080p LCD HDTV

What a quality product Sony has offered ! Wow !

When I got into the market for HDTV, Sony + LCD was my obvious choice due to best quality experience I have noticed. I found KDL-40V2500 right for me on the aspect of size, price and technology.

With free shipping, the TV arrived in my town in just 3-4 days but it wasn't estimated to be delivered for next 6 days. I called EGL (www eaglegl com/) and they chose to deliver in just 2 days. TV came with antenna cable (you might not need it), VGA cable, remote control and batteries for remote.

Here are the list of devices I connected to give you idea what I used and what I could have used to get better quality images. FYI, I used quick-reference guide (came with the TV) to connect these devices.

DVD player: I have a very basic DVD player from cyber home. I have connected it at Video-3 using 'composite' cable. Used few DVDs and quality is AMAZING and couldn't ask for better. One can use better cable to connect. There are 5 ways to connect DVD player with your TV and here are those in the decreasing order of quality: 1) HDMI, 2) fiber optic cable, 3) Component cable, 4) S video cable, 5) composite cable.

I have used lowest quality 'composite' cable and I don't see any reason to upgrade. One can purchase 'HD upconvertible' DVD player which could give better picture even with low resolution DVDs. Blue ray player (hopefully more economical) are on the way which gives the best result.

VHS player: I have 6 years old Panasonic VHS player. I connect it to TV using 'composite' cable. As VHS player takes analog signal there is nothing much one can do. Picture quality is moderate but can't expect DVD quality here.

HOMETHEATER: I connected home theater at TV's Audio-out port using composite cable (just red and white pins) and it is using all of the 5 speakers and giving me sound sound.

LAPTOP: I have connected my laptop to TV using VGA cable I got with the TV. Set my laptop to have extended display of TV and all set to enjoy You Tube. I am thinking of getting 10ft SVGA as free cable is just 3-4 feet long.

ANTENNA: As I wasn't planning to take cable for a while, I bought Terk HDTV antenna (model: HDTVa) from amazon for 35$. Changed TV setting to search 'antenna' instead of 'cable' and it found 6 digital channels in my town (Austin, TX). You can find available digital channels in your area using www(dot)antennaweb(dot)org/aw/Address(dot)aspx. The HDTV digital channel quality was so amazing I found my money worth here. I felt like characters will come out of the TV. It was so awesome that no word can replace the experience.

Amazon offers best bang for the buck ---no-tax, free shipping and proven track record. I saved nearly 500-600$ by not purchasing from local store. Amazon provides 30 days post-sell price guarantee (which I used) and decent 7 days return policy. I got 1 years warranty from Sony and as I paid via Amex credit card so I am getting additional 1 year warranty, making it total 2 years.

I would strongly recommend this 'awesome' TV. Picture is so crisp that I fall in love with it in just 2 days. Best part is the free HDTV channels quality.

Balance Sheet of Warren's life

(My review in Amazon on the book "Buffett: The making of an American capitalist" by Roger Lowenstein. ISBN:0-679-41584-X)

I hand picked this book with the intention to know more about Mr. Buffett and this book has very well satisfied my appetite. In a very lucid way book is walking you along different phases of Warren's life. By the time I reached the last chapter, it has changed my perception about Warren's investment philosophy. In the media, Warren is portrayed at stanch follower of the theory proposed by Professor and investor Ben Graham but that it not entirely true ! Though his investing endeavor (which started in 1943, at the age of 13) is heavily influenced by Ben (since his college years in Columbia), he has adapted to the market dynamics and made choices which Ben wouldn't have made. The best part I found with Buffett is, he has always invested as a businessman rather then gambler/speculator and maintained his originality.

The book's front and back flap has summarized the book very well. Amazon hasn't provided that in "search inside" so putting it here (copyrights by Roger Lowenstein and Random House Inc.):-

"Starting from scratch, simply by picking stocks and companies for investment, Warren Buffett amassed one of the epochal fortunes of the twentieth century--an astounding net worth of $10 billion, and counting. If you had been among the lucky few sitting in his study of Omaha at the start of his career in 1956, and had invested $10,000 with him and kept your money with him throughout , your original investment would be worth $80 million today. That awesome record has made him a cult figure popularly known for his seeming contradictions: a billionaire who has a modest lifestyle, a phenomenally successful investor who eschews the revolving-door trading of modern Wall Street, a brilliant deal-maker who cultivates a homespun aura.

But just who is the Oracle of Omaha, and why is he so successful ? In his illuminating biography, journalist Roger Lowenstein drawn on three years of unprecedented access to Buffett's family, friends, and colleagues to provide the first definitive, inside account of the life and career of this American original. 'Buffett' reveals a man whose conscientiousness, integrity, and good humor exist alongside an odd emotional isolation. It shows how Buffett's investment strategy--a long-term philosophy grounded in buying stock in companies that are undervalued on the market and hanging on until their worth invariably surfaces--is a reflection of his inner self.

Intelligent and offbeat, Buffett was obsessed with money-making from childhood. His parents (particularly his stockbroker/political father) were demanding but instilled in him self-reliance and honesty. As an undergraduate at Wharton, Buffett knew as much about economics as his teacher did -- but at Columbia Business School he met Professor Ben Graham, whose investment philosophy he adopted and then improved on with his own particular genius. 'Buffett' masterfully traces its subject's life: his enormously successful partnership, his early, inspired investments in American Express and Geico, his companionship and investment with Katherine Graham of the Washington Post, his role in the Capital Cities purchase of ABC, his unique relationship with his wife and his mistress, his rescue of the scandal-ridden Saolomon Brothers. Lowenstein paints Buffett as the antithesis of the reckless mentality that fueled the financial debacle on Wall Street at the end of the 1980s, and shows him to be a man of lifelong reach for stability and security. In outlining the character traits and financial philosophy that made Buffett the country's richest man, 'Buffett' presents a landmark portrait of a uniquely American life. "

Though book has very good account of W. Buffett, it could have been written better. I will reserve 5-stars for authors such as George Anders and Uresh Vahalia. I wish I could give 4.5 starts to this book.

Blind date with CFA

Lately, since last few months, I have become avid visitor to Wikipedia, YouTube etc. websites. On every visit, I am getting the feelings of, 'Aha !'. Now, I have very useful and quality information, be it in text, audio or video format, available on my fingertip, provided I have laptop and internet to my service.

Having said that, I believe it is my moral obligation to share with my fellow netizens. my (future) experience and what I find about CFA.


CFA (Chartered Financial Analyst) is marketed as Gold Standard in financial world. To some professionals associated with WallStreet, having CFA (sometimes CFA title while sometimes just first two parts) is requirement. There is some pitch where CFA title is considered as salary booster (The CFA site says that the CFA charterholders receive a 41% higher compensation than non CFA charterholders.)

However, as of now my objective is quite limited. To explore whether CFA (Part-I) will help me to launch my endeavor in investment career more effectively ? Will the knowledge gained during CFA-I study give me strong foundation to go for MBA-Finance next year ?

CFA curriculum that includes following 10 topics seems promising:-
* Ethical standards,
* Quantitative methods,
* Economics,
* Financial statement analysis,
* Corporate Finance,
* Analysis of Equity investments,
* Fixed income investments,
* Derivatives,
* Alternate investments,
* Portfolio management.

The examinations are grouped under three levels, starting with basics and going further on integrating the topics. Here is approximate weitage each of these topics will carry (Copyrights CFA Institute):-


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