News and Views from the heart of Hedge Fund land.
Rambling.
I have recently taken up the past time of Rambling. My newsletters are renowned for rambling, but this is not what I mean. Rambling is a UK expression for hiking (it implies a slow leisurely walk as opposed to a hike with all the requisite kit) and my love of water has inspired me to hike along the b ...
Investment Banks are the next dot com.
Having analysed and compared the Investment Bank business model versus Hedge Fund managers, it is clear that Hedge Funds are the future and Incompetent Banks are soon to be relegated to the dot com trash can.
It has taken over 50 years for the Investment Banks to be fo ...
Where is Doris Day?
During her heyday, she was a perky and joyous acctress who could make us all feel warm inside [Editor: Or quite ill too]. She got out of the business at the top, well near the top, and has rarely been seen since.
She knew when her time was up; unlike many Investment Banks and Hedge Funds ...
Something went wrong.
The incompetent banks have had it easy for many years. With large balance sheets and clever insiders to baffle regulators, a few fines here and there have had little impact on controlling their exuberance. This really annoys the regulators but there is now an opportunity to really sort ou ...
Lehman.
Lehman Bros. have been the red fox of Wall Street. Every time there is a market correction or blowup, the fingers point to Lehman as being a candidate for a fall. They have been predicted to fail, merge or be taken over every time. But it just doesn't happen. But is this time different?
With the Fed ...
Backpackers.
My biggest bug bear is when I am trying to take a photo of some unsuspecting person on a bicycle and a back packer turns 180 degrees and nearly knocks me over. I am minding my own business and my personal space is invaded by an evian cancer drinking ipod tinnitus loving discourteous playstation tu ...
Some random thoughts.
The banks are frightened of basel 2 because their trading books will have to be treated like banking assets. This means more capital, the end of esoteric structured products and traders being encouraged to be responsible. For us it means even more credit squeeze and banks offering no dece ...
Starbucks.
As you know I suffer panic attacks when I hear the word Starbucks. The business model is a symptom of our recent times. The prices are high, you have to line up behind back packers and the overly cheery customer relations officer confuses you with a wealth of choice. Then you line up again for the b ...
When is bad news really bad news?
Thankfully most Hedge Fund quant models do not react to bad news. The arrogance of the markets that bad news is always incorporated into stock and bond prices always amuses me. But I have never seen anything like it. The news is so bad, equities so over priced, I wonder if the ...
A picture says a thousand words.
Today I have decided to keep my opinions to myself and express them visually. August is the silly season and it seems sensible to join in. Today's news covers Welsh pop singers, the consolidation of the banking industry and why Goldman Sachs is at last feeling some pain. The US ...
Slavery.
What do China, Egypt, Britain, the USA and the Romans have in common? They all built their empires using cheap labor. Over the last 50 years, the West has abused, exploited and damn right enjoyed the dollar a day labor that the East has been providing. Of course, just like the rise and the fall of the ...
Who flies economy?
Having not flown at the back of plane since ...well never ...I decided in these cost cutting times to save some cash. First Class equals decent service, leg room and a top class wine list but it costs 30 times as much as flying economy. However, flying first isn't what it is cracked up to be ...
Now where was I?
4 weeks is a long time in the world of finance. Actually that is not true. We like to think that every second counts, but the reality is things happen much more slowly and in a convoluted and haphazard way; it's just those who work in finance like to think that they are always one second away ...
That's it.
The last few months have been a traumatic affair. Redemptions, irritating regulatory returns, the death of exit strategies, a demise in leverage, an explosion in health and safety legislation, a lack of alpha and a general gnawing away by the media. My hedge fund lifestyle is being challenged from a ...
Running out of ideas.
Hedge funds are divided into groups. These are called strategies and styles. Investors like that. Hedge funds don't but they will do anything for a quiet life. The problem is most of these groupings are not working in the current climate so newbie managers are looking to new types of trad ...
Signs of the Times.
Here are some observations. Just before the last nasty recession (and we had wikipedia to give us a definition) in the early 1980's, there were plenty of signals that the times were going to get a lot tougher. Take festivals. These suddenly stopped and bands started to play in clubs again. ...
Bridge over troubled water.
As someone commented yesterday, we live in "troubled" times. Actually I think we are living in normal times. The troubled times were when I started writing this a couple of years ago and all around me at the debt-fest party were people partying as if it was 1999. The news is troubli ...
Lost in translation.
Today I am in a part of the world that has been through what the rest of the Western world is now experiencing. Stagflation. Not that it is really helping their economy but Japanese banks are in relatively good shape and so is the hedge fund industry. There are hundreds more hedge funds th ...
Fancy food.
When we are feeling flush, the thought of paying USD10 for some air, salt and fat seems reasonable to satisfy those lunchtime hunger pains. The store is yellow and black, the food served by eastern european wenches and you line up for 15 minutes.
On a trip to ING on London Wall (guess where tha ...
The dark side.
I am always uncomfortable telling you tales of woe that happened to people I know but here goes (and that includes Refco man who is an old business colleague but my lawyers have told me that under no circumstances must this be known; however since it's July 4 and the FBI are eating turkey, why n ...
That hurt.
Yesterday I was asked to complete an FSA questionnaire regarding Market Rumors. My lawyers couldn't stop laughing and nor could I as the naive questions droned on about if we had a policy and how often was it amended and how did we react to market rumors and if we kept a log how often was it reviewe ...
Even the experts sometimes get lost.
In a world where everything of value is falling in price, except the stuff we need to live like wheat and oil, creating a trading strategy becomes very hard. Even though the hedge funds, prop desks and day traders can quickly get in and out, it doesn't make it any easier th ...
Why doesn't everyone fly First Class?
It certainly beats being at the back of a plane. The cabin crew bends over backwards; the leg room is so enormous you could start a yoga class; and the food is cooked by Gordon Ramsey. All the other people around you are beautiful and interesting; the opportunities for at ...
Germany.
Sometimes it is the best in the world and other times it is useless. In the long camp we have its auto mobiles, engineering and team spirit. In the short camp we have its prime minister, its soccer team and its love of hairy armpits. So I didn't mention its banking? Well as regular readers know, I am ...
State control of the population.
Let's face it. There are too many of us. As much as nature tries to find equilibrium, whether it is via hiv aids, confirmation of the second amendment or ice caps melting, we just keep on copulating and finding ways of making us live longer.
Simple economics says more peopl ...
Key person dependency.
The problem with hedge funds is that they are run by people. People, who are critical to its success. Just like this blog. If I go on a 48 hour bender entertaining clients, you, my readers, start feeling vulnerable and look at redeeming from fintag.
Let's take Quant funds for example. ...
Pawn.
Pawn is back in fashion. Pawn shops are springing up everywhere, unless they were already there and I hadn't noticed them before. Here in Australia I have yet to find one. I am searching though. Despite the rise of ebay, it is so much easier to hand over Grandfather's hideous retirement clock for a few d ...
Who has been a naughty boy then?
This phrase either sparks fear or a sensation akin to having eaten a large bar of chocolate. Capitalism is all about doing what comes naturally until you are told off. This is where we are today. Gordon Brown is telling off the Saudis for pushing oil up; his Chancellor is telli ...
Liver damage.
Last night I had the pleasure of being entertained by a delightful Swedish analyst from BNP Paribas and in the excitement consumed too much Italian white wine. The restaurant, just off the Kings Road in Chelsea, was heaving with beautiful wealthy people who seemed oblivious to the credit crunch a ...
Opportunities.
Buying a London house boat is a great investment opportunity. With rising sea levels, thanks to all those American built polluting SUV's, London will soon be under water. House prices will not only continue to fall; people will abandon them for the hills or boats. Go long house boats.
Today w ...
When the going gets tough.
People react in different ways when the pressures mount. Sammy Israel, a hedgie on the run, decided to take his own life - and as we predicted when the news came out, he faked his own demise. Goldman stun us all again, and as someone commented yesterday on fintag it is all a bit "enr ...
Daddy, I want to work for Goldman Sachs when I grow up.
Many a child has moved their career aspiration from train driver to investment banker. It reflects the change in our society. No longer is moving a bunch of back packers from A to B enough; little Johnny Blog wants to move money around and mark to market ...
Extinction.
I found a stag beetle on a tree stump whilst taking my dog for a walk in the country. My weekends these days tend to involve swinging ...my arm around in tennis and long country walks where I contemplate the world and how it is changing. Unlike hedge funds, this beetle is nearly at the end of the r ...
Today is a turning point in history.
Sounds dramatic, but we are witnessing some very sad news. My favorite, ex-hedgie (sort of) CFO has fallen through the glass ceiling; another hedgie who runs Citi has shown us he is not only incapable of being a CEO but was unable to stop his old hedge fund group going unde ...
Lucky dip.
We have no theme today. Some say it should have been legs. Others a Starbucks frothy air filled caffeine drink. So where to start? Well I thought we would look at UK property, people on the run, everything going up except returns on funds and the death of the hedge fund industry.
As you know, the ...
Don't panic.
I have carried out extensive analysis and created a calculation machine from 3 playstations and come up with the following. The British people are funnier when the chips are down. Having written this drivel for over 2 and half years, it is evident that during the boom years my newsletter was dull. ...
Bob Dylan.
Yesterday, as I got sun burned walking to a restaurant for lunch, I saw an April Fool in an Art Gallery. It was a painting by Bob Dylan. It was very poorly executed but I did notice he had autographed it. He never signs anything and never has. For a moment I thought I had to buy it. Own it. Go long. ...
What did you do this weekend?
After last week's ARK charity success, reported in many outlets with pictures of not so bling hedgies paying millions for Hedgie Junior to appear next to Uma Thurman in her next film or snapping up a brand name piece of art by con artist D Hirst, our social standing has improved s ...
Tourism.
Many countries are so useless, they can only make money by renting out hotel rooms and encouraging people to come and visit their areas of outstanding national beauty. This one egg in the basket model is very risky. One of the key indicators as to how world economies are doing is to analyse the mix of ...
Ready.
This is being typed up in the lounge at JFK as I attempt to come back home to blighty where its people are readying themselves for grim stuff. Obama has readied himself by supporting Israel and so grabbing the "Jewish" vote. No need to hire Mike Bloomberg then as Vice President? I would put money on it ...
Taking Stock.
As the brakes are put on and pundits and executioners take stock, today is the day everyone stops and thinks what to do next. Of course Bradford & Bingley took stock away from shareholders and gave them to Texas Pacific, but here we are looking at non literal stock taking. [Editor: What are you o ...
Sometimes the obvious is just too obvious.
Take Bradford & Bingley. We, most analysts, most media commentators and hedge funds have been concerned [Editor: Code for short the heck out of 'em] about their balance sheet of diminishing assets since last September. So its stock price tanked yesterday and pulled do ...
Cost Cutting.
Another of my favorite business class only airlines went down last week, SilverJet. So I flew into New York via a conventional airline, the back packer's choice - Virgin Atlantic.
The cool drive in check in service is the best in the world. After the private security, I was escorted to the cl ...
Swallows and Amazons.
Someone complained that my headline picture had no relation to anything I was writing about. Well hopefully you will understand what todays picture is about. [Editor: No?].
We are losing many friends and colleagues to the HR grim reaper but more importantly the post modernist hedge fun ...
1991.
It was a tough year, 1991, and for many grey hairs the last true recession where the Chelsea Flower show exhibits looked better than usual. The UK's housing prices have fallen faster than since this illustrious year and garden centers are booming. How many fathers are picking up children from school? How ...
The Holly and the Ivy.
The person taking my coat at the Ivy was called Holly. Well she wasn't but it seemed like an appropriate name. As regulars know I am a bit of an up market younger John Prescott who loves his food but has less body fat than Peter Crouch. The Ivy is proof that expense accounts have been cu ...
It feels good to be back.
The UK bank holiday weekend consisted of rain, gloom and doom TV programs about life after people and how oil is responsible for bipolar disorders. However, a couple of books lightened the air of desperation and the news that Global Macro funds are the new black certainly pumped up my ...
Doctor Who?
One of the UK's endearing and probably oldest running TV show features a Scotsman pretending to be an English Doctor who jumps between time in an old police box. Nobody knows his real name either. Being in such good company, I know what it is to live a lie.
Hedge Fund managers are unable to mark ...
Useless.
Luckily I don't predict the outcome of sport events for a living. Well done to Manchester United and Asia who support the team because they wear red. Stand up if you hate Man U ...
Oil reaches USD135 and now we are moving into a nasty 1970s scenario. However, oil is unlikely to be rationed because ...
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