Google, Hugo Chavez, CIA, Lehman Brothers, Goldman Sachs, Harvard University, Randomness

September 15, 2011 By Leave a Comment
The Last Days of Lehman Brothers

The Last Days of Lehman Brothers

 

The Google search “How to get in shape under a rational approach” that I did almost 3 years ago brought back disappointing results. I remember exactly when and where I was when I typed that search: September 15, 2008, on the trading floor at Lehman Brothers, my former employer. The bank had collapsed, and financial markets all over the world were in turmoil. I remember exactly what I was doing: I had returned to my desk after a meeting with Jami Miscik, the former CIA Intelligence Chief during the George W. Bush administration. Jami and her team had completed an extremely good research report which I had requested a couple of weeks earlier. I wanted to thank her personally, and as it turned out, this was the first time that fit both our schedules.

Coming back from the meeting with Jami and getting ready to leave Lehman’s offices for the last time, the simultaneous ringing of phones in the practically empty High Yield trading floor was surreal. I was one of three executives still there, and I decided to answer some of those calls. They were from clients and journalists, and I gave them whatever public information I could pass along.

There was one client in particular who was desperate for information about some of Lehman’s CLNs/Venezuela that we had sold. I remember checking on my Bloomberg terminal for quotes and was shocked to see that at some point that day Venezuela was considered less risky than Goldman Sachs. It almost looked like our friends at Goldman would be next. (Talk about things that swing!)

Anyway, this client casually told me that she had joined a gym that day and that she was seriously considering the option of moving to Miami, since the financial brokerage & banking business in Venezuela had been seriously impaired due to Hugo Chavez’ intervention policies. She also mentioned that she was starting a new diet. After talking to that client for a while, I noticed that the phones had stopped ringing.

I was in shock. Many shareholders who believed in Lehman had lost a lot of money. My colleagues had lost a lot of money. I lost a lot of money. A lot of good people lost their jobs, not only at Lehman, but all over this country, and in every industry. Massive layoffs everywhere, history in the making, and you know the rest of the story.

I thought that at 43, and in my field of work, it was going to be difficult to find another job. I could visualize what some people in the media were going to say about the crisis: “Blame the Quants for all that is wrong on Wall Street!” And some did just that. In my particular case, to make matters worse, I was obese, in the worst shape of my life, getting tired by the most minimal effort, and always coming down with something. That day, I was very sad leaving the trading floor for the last time. I put those last moments in a YouTube video, if you want to check it out.

I developed my own quantitative approach to regain my health because the markets were in a meltdown, because Lehman had collapsed, because I had stayed late for a meeting with an ex-CIA analyst, because I answered a random phone call, because a client overseas joined a gym and complained about Chavez, because I had an unfulfilled goal of getting in shape, because my Google search showed no substantial results.

All those random events had to happen for me to get serious about my health and fitness. As a matter of fact, randomness has always played an important role in my life. For example, how I ended up getting a Harvard Laspau scholarship to do my MBA at The American University in DC back in 1990. A random event was responsible for me switching careers from engineering to finance and putting my life on a totally different track.

Life keeps going, and if we don’t do anything about our goals right now, the only sure thing is that life will not stand still and wait for us to get ready. The financial crisis might have looked like the end of the world to many people, whose jobs, savings, relationships, and self-esteem were affected. My case was no exception. But on the positive side, it marked the beginning of a healthier lifestyle, the acquisition of new and fascinating sources of knowledge that I hadn’t paid attention to before (fitness, blogs, social networking, coding gadgets, etc.), and that ultimately are helping me improve physically and intellectually.

Statistically speaking, if you are an American reading this, there is a high probability (over 50%) that you are overweight or obese. If that’s the case, I hope this and future posts, and the knowledge I acquired in my transformation from fat to fit (which I will share with you) will inspire you to do the same.



Wall Street Story: From Fat Quant to Fit Nerd, Part 1

May 14, 2011 By 2 Comments

 

Before and After

From Fat Quant to Fit nerd


I love America. It’s my adopted homeland, and I have lived here more than half my life in a great city, in a great country. I went through a lot to earn my citizenship, and every day I feel lucky that I did. It is because of this that I can say: our nation is headed in the wrong direction in many areas.

One of the things that worries me is the alarming increase in obesity we’ve witnessed, especially in the last few years. Fortunately, initiatives like First Lady Michelle Obama’s Let’s Move are steps in the right direction to help reverse the trend. But we need more. And we need to understand the problem better. So if a picture’s worth a thousand words, The Quantitative Method’s visualizations are worth a million. Paraphrasing my fellow Quants at Google, “Data beats opinion”:

Note: The chart below is very data intensive and might take a while to load in your computer, depending on factors such as speed of your internet connection, time of day, traffic in Google’s cloud, etc. If you don’t see a chart, please hit reload in your web browser and wait a few seconds. Thank you.

Obesity in the US: Click, Play & Learn!


Sources: Motion Chart by Google, design and data compilation by The Quantitative Method. Data sources might include, but are not limited, to the U.S. Departmental of Labor, U.S. Census Bureau, Centers for Disease Control and Prevention, The World Bank, Wolfram Alpha, and others. Please, feel free to copy the gadget’s code and embed it in your web page, without violating Google’s and/or The Quantitative Method’s TOS and without alteration of the JAVA and HTML codes and sources used.

The previous chart is a good way to show that the problem is bad and getting worse. I’m not saying these things to depress anyone; I’m saying them because these realizations shocked me into action. They were the trigger that shot me into the next phase of my life. Believe me, I know about obesity. I became sensitive to this subject in September 2008. Back then I was working for Lehman Brothers; ‘ground zero’ of the financial crisis. After Lehman’s collapse, I took a long, hard look at myself in the mirror. I saw a 43-year-old, depressed, obese Wall Street executive who had specialized in an area of  finance that was taking a lot of heat. But I also saw my inner Quant.

Quants are, essentially, problem solvers, and at that point I had two big problems: 1) The credit crisis and the job implications for me and thousands of other people, and 2) the gradual deterioration of my health due to my obesity & work related stress. There was nothing I could do about problem 1 for the time being, but about problem 2, the Quant in the mirror looked back at me and said “You can solve this!” Let me stop right now to tell you that if you’re looking for a quick fix to lose weight fast, then you might as well move on to another site, because my story is not for you. If, on the other hand, you’re looking for unique knowledge to empower you to accomplish your fitness goals, to look at things in new ways, to learn how to find hope in adversity, this and future posts might be just the thing.

Back to the story: I was a fat Quant looking for a rational method of getting in shape, and in line with my Quant mentality. A good Quant knows that asking the right question brings you halfway to the answer. So, in 2008 I googled “How to get in shape under a rational approach”. For that type of very specific search, I got no significant results, but thousands of “Lose Weight Fast!”, “Get a Six Pack in Two Weeks” and things like that. So I committed to researching the topic, developing a scientific and unbiased analysis, and using the findings on myself in real time.

First, a little about my view of how data works. Numbers don’t lie. And if you use bad data, and/or somehow fudge the results of data, I can tell you that things will go wrong. Depending on the system, one or two errors can be tolerated without major interruptions. However, once errors build up to a critical point in any system, they will reach a tipping point where the system will likely collapse like a house of cards. This will almost always lead to a worst-case scenario. Without a dissipation mechanism, cumulative errors will correct themselves by bringing the whole system from one side to the other, wreaking havoc in the process,  just as a pendulum swings from one extreme to the other trying to find balance. That sort of “havoc” can kill you, impair economies, and even create social unrest, like the cases of Egypt and Libya, and who knows what might happen to this country with the high unemployment rates we are experiencing (and my data shows that the unemployment momentum & dissatisfaction is growing, so I predict some “unrest” down the road, as I hope to explain in a later blog).

Examples of things that get out of whack could be years of bad eating and drinking habits leading to a massive heart attack; securitizing sub-prime mortgages without proper due diligence on the mortgages or the analytical methods used to rate them, or selling bonds backed by movie receivables without doing the homework to understand the basic Hollywood equation. Or diets that make you lose weight fast by making you lose muscle mass and fat, only to gain all the weight back and more a few months down the road, and with serious damage to your metabolism.

I have firsthand experience with cumulative errors, having witnessed the phenomenon in action on Wall Street. At a more Main Street level, I’ve experienced accumulated errors in my own health: years of bad eating and lack of exercise had gradually deteriorated my health, led to early symptoms of metabolic syndrome and potentially decreased my life expectancy.

As a good Quant, I am obsessed with data, and had been manually collecting certain types of data since 1987 for whatever analysis I was into. Since then, I’ve been collecting and storing data first in written form, then on 5 1/4-inch disks, 3 1/2-inch floppys, magnetic tapes, zip disks, CDs, DVDs, hard drives, you name it. In 1990 I got my first email and Unix (the granddaddy of Linux) account and that year started to add some rudimentary types of online data collection to my offline data collection. But first I had to tweak certain tools, or develop my own, since Mosaic (the first browser) had not even been invented yet, and I had to use Gopher, IRC and FTP to collect data.

I keep my most interesting data in relational databases. Once I have it there, I can create all kinds of interesting relationships among data items for further analysis and insight. Right now, post-Wall Street credit crunch, the most powerful visual analysis of data is the one I am just discovering by interfacing my databases with Google docs. I never knew that getting in shape could be quantified and optimized – two of my favorite things, and the basis of this Quantitative Method blogzine.

I hope I can pass some of my experience of getting in shape along to you and help make a difference in your life. ‘Creating to share’ is a fascinating, rewarding concept that Silicon Valley knows very well. In future posts, I’ll write more about the specific techniques I used, and how you might be able to use them too. I’ll also code some fun java “gadgets” to illustrate the concepts presented in my blogs. But it’s important to me to tell the backstory of my approach. I did this because I wanted to keep my problem-solving skills honed and find applications outside finance, and to prove, at least to myself, that I’m still creative at what I do.   Now when I look in the mirror, I am 95.4% satisfied with my transformation “From Fat to Fit”, but still experimenting to reach a 99.6% level of satisfaction.

Note: At the request of many readers, I compiled a list of specific, step by step guidelines to follow and resources to use if you want to replicate my transformation from fat to fit. Please, visit The Fit Quant blog.