28JAN09:
Q1-09 DOW: 8900
Q2-09 DOW: 7250
Q3-09 DOW: 5810
Q4-09 DOW: 3960
CITI NATIONALIZED
OBAMA GETS SICK 27AUG09:
Mini Crash 21SEP09 Predicted correctly:
Bailout=Bonuses
Demise of Bear Stearns
Demise of Lehman Bros.
Demise of AIG
Subprime would cause problems
Date of 2007 crash
CRAs were to blame
G20 riots were a party
Northern Rock run
Northern Rock Nationalization
HBOS and RBS demise
UBS really was Useless
Many people have made a good living peddling courses on risk management. These two words are the most overused in the world of finance and I still haven't a clue what they really mean. We are here to make money. We hope to make easy money where the risk of us not making that money has a low probability. So if risk is one's appetite for failure then managing failure is like having a doctor at hand when you jump off a bridge with a piece of elastic attached to your legs.
In the world of finance, we like to think we are clever. Really clever. We like to think the person at the other end of the trade, our competitors and commentators are not as clever and we will make money on their lack of understanding. But this is all guff.
Hedge Funds by their nature risk manage potential losses by carrying out conta trades that have an inverse profit / loss correlation. One trade wins, the other loses and the net position is flat or maybe a slight profit. This is called hedging. It is very dull. It is not as fun as naked short selling or putting all your assets on Jolly Roger on the 1:30 at Newmarket.
But Hedge Funds have never really gone in for dull risk management and go Alpha chasing instead. This is all guff too. We are here to make money and will use complicated terms to wow over investors that we are really clever. A bit like Steve Jobs. He has convinced us all that we all need iPhones and that touch screen technology is the way forward.
I bought into this dream and upgraded my Blackberry to the new Storm. It has no tiny keyboard and like the iPhone the keyboard pops up on the screen and obscures the little desktop. My clumpy fingers make even more mistakes than usual and I get cross that it takes longer to type and email than a text on my old Nokia cell phone.
Somehow I feel this is progress and yet it isn't. 2009 will be a year of new concepts like opportunities, libor plus, capital preservation, income value fundamental low delta risk non-levered bollox. But of course nobody will believe it until the asset allocators get bored and try something new.
The CDS market is a bit like that and the news that some people have been making money illegally is not good news. But hey ho, what do expect? We like to risk manage our buying process when it comes to an auto mobile but just cross our fingers when we give our hard earned assets to advisers who have no long term intention on risk managing except ensuring they benefit and you don't.
The US, which leads the world in all things depressing has more unemployment, a dying Detroit, and a widening trade deficit. Something the rest of us can look forward to in 2009. [Editor: So Detroit means what exactly?]
Cartoon book update Heathrow. T5. WH Smiths. Travel section. Signed and numbered. Reward offered.
SWITZERLAND MAY HAVE TO PRINT MONEY TO STAVE OFF DEFLATION
South Korea cut to 3pc and Taiwan cut to 2pc, the lowest in 30 years. Both countries are facing a collapse in exports to China and traditional markets in the West.
Thomas Jordan, a board member of the SNB, said the bank was mulling extreme measures to stabilise the financial system and cushion the economy as it falls into recession next year.
"We could engage in quantitative easing and we could intervene in foreign exchange markets or we could buy up bonds and try to influence long-term interest rates. All these options are open and we're not limited in any way in choosing from among these instruments," he said.
Fintag says So will the Swiss join the Euro? They may do and then we can say goodbye to Europe's favourite tax haven.
The American car industry faced imminent collapse last night after the Senate effectively threw out a $US14 billion emergency bailout bill.
Talks between the Democrats and Republicans over the viability of a federal-funded short term rescue of General Motors and Chrysler fell part late in the evening after the two sides of the political divide failed to agree on pay for workers at the auto companies.
Harry Reid, the Democrat Senate Majority Leader, yesterday said that Capitol Hill had thrown in the towel until Barack Obama , the President-elect, took office on January 20.
Fintag says This is a good thing meez thinks. Propping up useless industries, however painful makes it worse in the long run. Despite the huge tax revenues the US government receives and the fact most of this money is being used to pay pensions, they US car industry is shockingly bad.
Name me one US designed car from the last 20 years that is not only iconic but has changed the world? Er that would be there aren't any. OK, the Hummer. I will give you that one but wasn't this just a Land Rover (UK innovation although you could argue this was a rip off of the US Jeep) [Editor: Wrong blog].
The federal government registered a record budget deficit for the month of November, reflecting the impact of a recession on tax receipts and the mounting costs of the $700 billion financial rescue program.
The country remains on track to hit a record deficit of $1 trillion or more for the entire year, which would be more than double the previous all-time high set last year.
Fintag says Time to get those printing presses going ...
A second German politician has broken with diplomatic convention and criticised the UK government's response to the economic downturn.
Steffen Kampeter, of Chancellor Angela Merkel's CDU party, said moves to raise debt "were a failure of Labour policy".
He also denied that finance minister Peer Steinbruck's criticism of "crass" UK policies reflected internal German politics, as suggested by Gordon Brown.
Fintag says World War 3? I always thought it would involve nuclear weapons, not words. But I guess this could be just the beginning of something small and pathetically un-newsworthy.
Okumus Capital, a $989 million hedge fund shop, is shuttering its hedge fund and long-only offerings, FINalternatives has learned.
The New York-based firm's trio of hedge funds and its long-only fund have been burned by the financial crisis this year.
According to public data on its offerings, the $30.8 million Okumus Opportunity Partners, $19.2 million Okumus Diversified Value Partners and $2.5 million Okumus Technology Value Partners are down 42.8%, 23.83% and 5.3%, respectively, through October. Its Long-Only Partners Fund is down 15.02%.
Fintag says I know these guys well. They were billed as the next Warren Buffet because they loved research and analysis and fundamentals. Shame it didn't include capital preservation and performance.
A very sad day for me.
Book Update Heahrow airport. WH Smith. T5 (I do hate this place). Travel section. Good luck ...
CNBC'S DEUTSCH CAUGHT IN AFFAIR WITH HEDGE FUND MANAGER'S WIFE
It seems that Donny Deutsch, whose CNBC show “The Big Idea” was put on hiatus last week, has found solace in the arms of a hedge fund managers' wife. The advertising mogul has been having an affair with Lisa Sandler, the wife of hedge fund manager Andrew Sandler, according to the New York Posts' Page Six.
According to the tabloid, Andrew Sandler—son of Sandler Capital Management founder Harvey Sandler—hired a private detective a few weeks ago, suspecting that his wife was being unfaithful. The dick managed to get pictures of Lisa Sandler kissing Deutsch.
Fintag says With World War 3 around the corner what do you expect? Morals are out and hedonism are in. And who said hedgies were dull?
Bernard Madoff, the founder of Bernard Madoff Investment Securities and a former chairman of the Nasdaq stock market, was on Thursday charged by federal prosecutors with a multibillion-dollar securities fraud.
Mr Madoff, 70, told employees that he estimated the losses from this fraud to be “at least approximately $50bn”, according to federal prosecutors. Mr Madoff's firm had about $17bn in assets under management in January 2008, according to regulatory filings, and officials close to the investigation said they did not know whether the $50bn estimate was correct.
He said that he “paid investors with money that wasn't there”, that he was “broke” and “insolvent” and that he had decided that it “could not go on”, according to the complaint.
Fintag says USD50 billion ...this is unimaginable. So the man is broke. I would love to know what he spent this on because even I would have trouble.
Known as Dr. Doom, the NYU economics professor saw the mortgage-related meltdown coming.
We are in the middle of a very severe recession that's going to continue through all of 2009 - the worst U.S. recession in the past 50 years. It's the bursting of a huge leveraged-up credit bubble. There's no going back, and there is no bottom to it. It was excessive in everything from subprime to prime, from credit cards to student loans, from corporate bonds to muni bonds. You name it. And it's all reversing right now in a very, very massive way. At this point it's not just a U.S. recession. All of the advanced economies are at the beginning of a hard landing. And emerging markets, beginning with China, are in a severe slowdown. So we're having a global recession and it's becoming worse.
Fintag says I think a fight between Germany and the UK is the scariest thing. We have a history and history has a record of repeating itself.
Now this is scary and likely for 2009:
1. NYSE is open 3 days a week 2. Prices and Incomes policy mean nobody is allowed to earn more than USD50k a year and all prices are determined by Obama's new Pricing Ministry 3. 1984 outsells the bible 4. Private companies are outlawed 5. Shoulder pads come back into fashion
PRIVATE EQUITY FIRMS DRINKING AT SELF-REGULATION'S LAST-CHANCE SALOON, EU WARNS
Private equity groups could face a crackdown from "trigger-happy" regulators unless they sign up to new guidelines on transparency in far greater numbers, warned Charlie McCreevy, the EU's internal market commissioner.
McCreevy is offering the industry the opportunity to regulate itself as he comes under intense pressure to consider tough mandatory regulations for private equity and hedge funds from many of the EU's 27 governments.
Fintag says What don't the EU get? The word "Private" is a clue. They are private. Why should they open up? Personally I would like to see more transparency in the world of the EU which is renowned for corruption, Luxembourg bank accounts and brothels. But I won't get this.
As much as I dislike the PE model, it is part of the capitalist dream and should be left alone.
JONES CONCEDES ERRORS WITH BACON, GRIFFIN IN STRATEGY SHAKEOUT
In the close-knit hedge fund community, where confessions of a mistake are rare, billionaires Louis Bacon, Kenneth Griffin and Paul Tudor Jones are retreating from borrowed-money bets, private equity and emerging market debt and championing more transparent stocks, bonds and currencies.
The three trading prodigies, who have earned annualized returns of more than 20 percent in careers of two decades or more, say they aren't about to lose the cachet that prevented them from ever being compared to ordinary investors.
Fintag says I am flying to Greenwich today to see my buddies. We are close knit because we all loving knitting. Seriously, I am off to drop some of my books off. More to be revealed.
Yesterday, Waterstones and Hatchards in Mayfair were planted signed copies of FINTAG'S CRAP CARTOONS - 2008 and nobody has yet told me they have found them. Fingers crossed they haven't been shop lifted or worse still trashed.
Any books found and I will offer a reward.
INNOVATIVE MULTI-MANAGER FUNDS FAVOURED BY INVESTORS SAYS SURVEY
A vast majority (94%) of financial advisers think the popularity of multi-manager funds will continue to grow. However, innovation is fundamental to their success, according to research by Skandia Investment Group.
The figures suggest multi-managers which can deliver new investment solutions that deliver against their stated investment objectives are going to be the winners.
The survey of over 300 advisers showed that over a third (67%) believed multi-manager funds would continue to be popular as long as providers continued to be innovative.
Fintag says That's me! Multi fund and innovative. Looks like my 2009 is going to be full of love.
The huge shrinkage in hedge fund assets is not limited to firms that invest in the American market.
Hedge funds that focus on emerging markets saw investors pull out $5.2 billion over the four-month period ending Oct. 31, according to new data from Hedge Fund Research. Taking into account performance-based asset losses, the capital invested in emerging markets hedge funds fell 33 percent, to less than $75 billion, over the same period.
Hit particularly hard were equity-focused funds and strategies that focused on Russia and Eastern Europe. The Russian stock market is down nearly 70 percent this year, likely causing huge losses at many hedge funds that invest there.
Fintag says Good news. No more having to work silly hours to see what is happening in the markets in India or Chile. Much more interesting watching libor rates all day long ...yawn.
55 comments
Chuffy said ...
Hi fin. Any heads up as to if any of the books have sneaked into the square mile? Yes I'm a lowly/lonely banker in need if a good read and cheering up...
12 Dec 08 - 08:11 gmt
Finbar said ...
Square mile and Canary Wharf are next week's plants. Books etc London Wall / London Bridge and somewhere in the Wharf (I dont really know the place so advice useful)
12 Dec 08 - 08:15 gmt
cliff said ...
Brave New World's drug laden orgies can't be the worst way to live through distopia. Ps - there's a Waterstones where Ludgate Hill meets Fleet St if you're bored
12 Dec 08 - 08:30 gmt
anonymous said ...
there is a borders / waterstones or some something.. above the DLR station (keep going up the escalators... )
12 Dec 08 - 08:37 gmt
GateMeIfYouCan said ...
Any books in Geneva? we used to give out plenty of money...
12 Dec 08 - 08:47 gmt
MsR said ...
Is there a bookshop in Cheapside. I seem to have visualised one but am unsure... still soon the Royal Exchange will be discount bookshops I suspect.
12 Dec 08 - 09:30 gmt
cockyspiv said ...
MsR - how about leaving one in N1 ? That way, any one who is REALLY interested will have to subject themselves to the humiliation of "chavsville" to find one?
12 Dec 08 - 09:40 gmt
Jaa said ...
"income value fundamental low delta risk non-levered bollox"...hahaha .... thats right Fin.. the mkt goes up, the mkt goes down... which way cowboy...
12 Dec 08 - 09:45 gmt
MsR said ...
@cockyspiv: Chavsville cockyspiv you cheeky boy....we also have our fair share of mummies sitting in the all white splendour of Ottolenghi wondering if they should swap the expensive nanny for a cheaper one. Or maybe the broke banker husband for a lawyer... We will pop one in Borders in the very chavvy N1 centre en route to Canary Wharf. Already suggested it.
12 Dec 08 - 09:56 gmt
Chuffy said ...
Looking forward to the harrods sale style riots in books etc when word gets out. Ldn wall would be perfect although leadenhall mkt has better facilities nearby (lamb). Can we get a market going on which section fin will place them in?
12 Dec 08 - 10:10 gmt
GateMeIfYouCan said ...
I am amazed how few people comment on the Madoff story...This is the final nail in the FoHF coffin...there is a sense os Armageddon in that small town of mine.
12 Dec 08 - 10:12 gmt
MsR said ...
@Chuffy: Well as I was watching in Mayfair yesterday from my secret hideout, they hadn't gone. No riots. As Fin is on a plane in the fog somewhere, I may go back and sneak a look.
12 Dec 08 - 10:27 gmt
Moron said ...
i think the market has stopped going up:)))
12 Dec 08 - 10:33 gmt
anonymous said ...
Yes Madoff could be huge.... 100% capital loss for fohf...knock-on redemptions aaahhhggg!
12 Dec 08 - 10:34 gmt
Finbar said ...
Madoff could decimate the FoHF industry as so many are invested. Tis true the media have been asleep.
12 Dec 08 - 10:38 gmt
anonymous said ...
FYI, found copy number 31 of your book.
12 Dec 08 - 10:40 gmt
anonymous said ...
re. signed copy number 31...you mentioned there is a reward???(as if the book isn't reward enough!!!)...signed photo. I'm in London too.
12 Dec 08 - 10:50 gmt
MsR said ...
@ anon 10.50: Presumably as book is not bar coded you had no trouble getting it out?
12 Dec 08 - 10:51 gmt
anonymous said ...
just walked out with it MsR...as it was not the property of the bookstore...it was merely a fantastic prize in Finbar's Christmas Literary Treasure Hunt!
12 Dec 08 - 11:03 gmt
anonymous said ...
I can't believe the Madoff story? Any more reaction/opinion/insight? I also understand various banks had offered leveraged investment to retail clients to enter the fund....
12 Dec 08 - 11:05 gmt
13:45 said ...
i'm glad the markets have gained some perspective this morning - about bloody time that bear rally was ridiculous. stupid investors, irrational creatures.
12 Dec 08 - 11:18 gmt
Sweet & Sour said ...
Fincumpoop
12 Dec 08 - 11:37 gmt
Alpha60 said ...
Anyone seen GS oil forecast on alphaville. Just shows how analysts / media love attaching a narrative onto any mkt movement when they have never understood the market from the first day.
12 Dec 08 - 12:21 gmt
anonymous said ...
@MsR or Finbar: I look forward to reading your comment as to whether signed copy number 31 is the first to be found, and what the reward Finbar alluded to above is??? I wonder what it would fetch on ebay??? mmmhhh
12 Dec 08 - 12:21 gmt
mt99 said ...
No 37 found. Thank you.
12 Dec 08 - 12:29 gmt
Sweet & Sour said ...
Fincumpoop he say "Much more interesting watching libor rates all day long ...yawn." must be a bit tedious as LIBOR is announced by the BBA once a each day and then doesn't change, hmmmm, what's that smell?
12 Dec 08 - 12:52 gmt
Desperatly Seeking Fin said ...
Fin - i found a non-signed copy of the book in the 99c tray at a local thrift shop, is there a prize! - i didnt buy it though, i'll wait till it comes down in the Sale!
12 Dec 08 - 13:18 gmt
no sympathy said ...
Hats off to Madoff - if your going out, go out in style !
12 Dec 08 - 13:18 gmt
cockyspiv said ...
@MsR - i was traded in for a lawyer by an N1 inhabitant once. Must be something in the water! I will check Borders at the weekend
12 Dec 08 - 13:21 gmt
Bart Simpson said ...
(Dog n Bone) Ring Ring (Moron) Moron's Tavern here. (Bart) ... (Moron) Call for a Hugh Jass. Hugh Jass ! Somebody check the men's room for a Hugh Jass. (crowd) Ha Ha Ha !
12 Dec 08 - 14:29 gmt
Bart Simpson said ...
(Man in the back) I'm Hugh Jass (Hugh Jass) Hugh Jass here, who's speaking? (Bart) Oh, hi, I'm Bart Simpson (Hugh Jass) Hi, how can I help? (Bart) Er, this is a crank call that backfired, and I'd rather like to bail out right now. (Hugh Jass) All right, no problem, have a nice day. (Bart) Thanks, bye. (Hugh Jass) What a nice young man that was.
12 Dec 08 - 14:32 gmt
anonymous said ...
"3. 1984 outsells the bible"
More likely 'Atlas Shrugged' -- it's a more accurate depiction of what's going on, and a Library of Congress poll a few years back already found it to be the second most popular book after the bible...
12 Dec 08 - 14:47 gmt
MsR said ...
@mt99: Hurrah for you.
@anon: This is Fin's gig: I am merely his accomplice so I'm sure he will comment when he lands (if of course he took off)
@cockyspiv: Fin has run off with all his books. So I may be in Borders on Saturday, but not a free copy of the book. Have to be next week. As for that woman, she obviously got it wrong:)
12 Dec 08 - 14:49 gmt
Top Cat said ...
I've waited weeks for the book hunt, and then you pick the two days I am on holiday to do it.....grrrr. How many left unclaimed now?
12 Dec 08 - 15:00 gmt
MsR said ...
@TC: There is one still in Mayfair by the sounds of it. Next week I believe is City/Canary Wharf's turn but you never know with Fin: such a whimsical fellow. I have actually bought my copies for gifts
12 Dec 08 - 15:11 gmt
cockyspiv said ...
MsR - Thank you for your kind words, i will be loitering around the self help / erotica section of Borders looking a bit bewildered (ps - you'll probably find Fin stuck in the bar at T5)
12 Dec 08 - 15:42 gmt
Moron said ...
bart sweetie...i'm busy now but i'll come back and take ur ass later....till then just smile and bear whatever the market is doing to u today honey........bcos its gonna get a lot worse:)
12 Dec 08 - 16:36 gmt
Moron said ...
bart sweetie...i'm busy now but i'll come back and take ur ass later....till then just smile and bear whatever the market is doing to u today honey........bcos its gonna get a lot worse:)
12 Dec 08 - 16:36 gmt
Top Cat said ...
@Ms R - thanks....some email hints would be appreciated. @Moron - I suggest you refrain from saying "I will take your ass" to young men....
12 Dec 08 - 16:41 gmt
MsR said ...
@cockyspiv: Am not sure if Borders Islington has erotica of any worth..some of the best is in fiction anyway. As for self-help well it's largely bought by women btw 27-35 the publishers tell me, so it's a good place to score..though they may want too many answers...
12 Dec 08 - 16:48 gmt
Bart Simpson said ...
I won't torment the emotionally frail. I won't torment the emotionally frail. I won't torment the emotionally frail. I won't torment the emotionally frail. I won't torment hte emotionally fr...
12 Dec 08 - 17:01 gmt
anonymous said ...
Bart Simpson you have had me cracking up with the Hugh Jass quote. Really am liking the daily quotes.
12 Dec 08 - 17:05 gmt
anonymous said ...
oh and MsR, thanks for the women/self help section tip. More tips like that pls.
12 Dec 08 - 17:08 gmt
Moron said ...
yes...animosity aside....u r incredibly funny....now smile roll over and take it again:)
12 Dec 08 - 17:10 gmt
MsR said ...
@anon: Well you can bet they'll be taking classes next year..the professional girls who have lost jobs. Usually when this happens they go and do something arty but they will probably discover domesticity with baking and sewing. And any class for young entrepreneurs...languages if all else fails...more exotic languages now, not the Romance ones. Ms R is happy to help. That is what us slightly older women are for.
12 Dec 08 - 17:26 gmt
anonymous said ...
slightly older=past it, neck has 'gone'
12 Dec 08 - 17:31 gmt
Finbar said ...
Mt99 - tht is the right answer
12 Dec 08 - 17:37 gmt
Finbar said ...
31 is also the right answer. Beers all round. Now what is the reward? I hadn't assumed they would be found
12 Dec 08 - 17:42 gmt
Bucket Boy said ...
sigh...I want one of your books but out private equity bucketshop I work for will probably be out of business soon (or at least my office will close in San Fran) and I have to save every last dime to pay my mortgage....I find your humnor typically British which means I enjoy it immensly.
12 Dec 08 - 19:11 gmt
Bucket Boy said ...
christ I type like a drunker sailor...I have to type fast so my manager doesn't see me on your site and offer me the door...appologies for my typo's
12 Dec 08 - 19:12 gmt
anonymous said ...
haven't americans been banned from this blog?..we have enough trouble with australian lesbians without having to put up with overweight blow-hard yanks
12 Dec 08 - 20:03 gmt
StoptheTroll said ...
@anonymous: Mate, just give it a break for god's sake. Your nastiness is getting really tiresome as is your assumption that somehow you own the blog. Most people are really just having a bit of discussion but you are so full of bile and hate.
12 Dec 08 - 20:28 gmt
Drive By Shooting said ...
Market is going up until January 19th, then it is going down hard again
This is so simple, why do you have to complicate it?
Buy, then sell, then sell again - retire to Mauritius - easy!
13 Dec 08 - 04:20 gmt
Moron said ...
No mate santa has already come and gone path of least resistance at this point is down
13 Dec 08 - 04:46 gmt
Funny Money said ...
Dec. 12 (Bloomberg) -- Citadel Investment Group LLC, the Chicago-based hedge-fund firm run by Kenneth Griffin, halted year- end withdrawals from its two biggest funds after investors sought to take out $1.2 billion, according to a letter sent to clients. Merry Christmas from the Scrooges at Citadel.
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