Wow. Societe Generale just lost 4.9B euro in what looks like a fraudulent job by a junior trader. In today's hyper-automated trading desks, VaR, and layers upon layers of compliance measures, I thought maybe you could get away with a couple of hundred million, at most, before you (a) get caught, (b) reach a safe haven island, or (c) kill yourself.
Crap job by SocGen. All those millions of euros spent on risk management and compliance, and you couldn't stop a noob trader trading some vanilla futures. You might as well just have given him a nice big vault full of cash, you would have lost less money.
And while it is very very wrong and illegal and should not be done by anyone under any circumstances, kudos to the junior trader. (Hey, it's Biblical so it's OK.) You give hope to many subpar traders the world over that if they dream it, it will happen. May you receive a lucrative book/movie deal out of this. Might be the next Liar's Poker. Or not.
Thursday, 24 January 2008
Tuesday, 22 January 2008
Where's an open window when you need one?
So today, all eyes were on the bloodbath in the market, with the S&P ASX 200 shedding 7% today, officially entering "bear market" territory (thank you, Mr/Ms Hedge Fund Manager) and essentially wiping out all the gains of the past 12 months.
Neeeeeeaaat. And to have it happen during my lifetime... what a story to tell the kids. I look forward to the day when people will be writing about the current crop of wheelers and dealers, and how it was such an extravagant lifestyle fueled by debt and ego, etc etc. The 80's baby... when it comes back, it comes roaring back!
Sure, he started it, but he didn't love the 80s like I do.
Now my 99% cash allocation doesn't look so stupid anymore, and who knows, I might even go on a bit of a bargain hunt.
I like this article, dedicated to a mostly illiterate audience, just in case they've been holidaying in the Pacific for six months using the money found after they mortgaged their house and retirement savings. I especially like this section: "What is the sub-prime market?" It's you and your kind, you bogan (and valued reader).
UPDATE: The Fed has made an emergency cut of 75 bp to its target rate. George Bush also announces new expansionary policy to stimulate the economy, to be funded by a (larger-than-ever) budget deficit, and proceeds from sales of a half-share in the USA to a consortium led by the Carlyle Group and Saudi sovereign funds.
Neeeeeeaaat. And to have it happen during my lifetime... what a story to tell the kids. I look forward to the day when people will be writing about the current crop of wheelers and dealers, and how it was such an extravagant lifestyle fueled by debt and ego, etc etc. The 80's baby... when it comes back, it comes roaring back!
Sure, he started it, but he didn't love the 80s like I do.Now my 99% cash allocation doesn't look so stupid anymore, and who knows, I might even go on a bit of a bargain hunt.
I like this article, dedicated to a mostly illiterate audience, just in case they've been holidaying in the Pacific for six months using the money found after they mortgaged their house and retirement savings. I especially like this section: "What is the sub-prime market?" It's you and your kind, you bogan (and valued reader).
UPDATE: The Fed has made an emergency cut of 75 bp to its target rate. George Bush also announces new expansionary policy to stimulate the economy, to be funded by a (larger-than-ever) budget deficit, and proceeds from sales of a half-share in the USA to a consortium led by the Carlyle Group and Saudi sovereign funds.
Monday, 7 January 2008
Adios 2007, and haroo 2008
Well after the flurry of blogging leading up to the final month of the year, Rockett Fuel falters, tripped up by the many Christmas functions to attend. And a deal or three in between. So a belated Merry Christmas, Happy New Year, and so on.
Now my normal blogus modus operandi is to get one of those question lists you get from your spamming friends, and answer them here. Unfortunately I am yet to receive such spam (perhaps because I have alienated many friends in the past 12 months), so this is a placeholder entry until I find such a list.
In other news:
Oil touches USD 100/barrel.
Latest megarich toy: a brand-name US or European bank.
Rockett Fuel: go-to guy for jumpstarting failed syndications. (Well, can't link to them, obviously. Who wants to announce failed syndications?)
Now my normal blogus modus operandi is to get one of those question lists you get from your spamming friends, and answer them here. Unfortunately I am yet to receive such spam (perhaps because I have alienated many friends in the past 12 months), so this is a placeholder entry until I find such a list.
In other news:
Oil touches USD 100/barrel.
Latest megarich toy: a brand-name US or European bank.
Rockett Fuel: go-to guy for jumpstarting failed syndications. (Well, can't link to them, obviously. Who wants to announce failed syndications?)
Sunday, 25 November 2007
Wii Points Index
I recently got a Wii. How I am going to find time to play it is irrelevant, I just wanted one.
Those who have one, or may have been following its progress, would probably know that Nintendo has a Wii Points system to allow players to purchase retro games from its online channels. The games are priced by Wii Points, with the more popular/more recent games obviously charging higher prices.
That, and my great admiration for The Economist's Big Mac Index, gave me a thought: how much do these Wii Points cost in different countries? Clearly every Wii Point is exactly the same, and should theoretically be worth exactly the same. In practice, regional restrictions mean there are no arbitrage opportunities. In any case, I started with what I could find off the net, as follows:
So the lesson isn't so much about international economics and arbitrage; it's simply that UK and AUS gamers are clearly being ripped off by local retailers, who aren't passing on the benefits of a weaker USD. Time to campaign, geeks. Japanese players, as usual, are treated to an entirely different echelon of gaming goodness. I would move there just to be hooked into Nintendo nirvana.
Highly doubt this will replace the Big Mac Index; for one, it does not account for the "basket of goods". Still, makes you realise why game console makers continue to maintain region coding even though there are clear benefits to gamers to remove them (i.e. being able to import hot games from overseas, rather than relying on the pitiful supply from local distributors).
Those who have one, or may have been following its progress, would probably know that Nintendo has a Wii Points system to allow players to purchase retro games from its online channels. The games are priced by Wii Points, with the more popular/more recent games obviously charging higher prices.
That, and my great admiration for The Economist's Big Mac Index, gave me a thought: how much do these Wii Points cost in different countries? Clearly every Wii Point is exactly the same, and should theoretically be worth exactly the same. In practice, regional restrictions mean there are no arbitrage opportunities. In any case, I started with what I could find off the net, as follows:
| Cost of 2000 Wii Points | ||||
| Country | Local Currency | Store | Price (in local currency) | Implied FX Rate to USD |
| US | USD | Toys R Us | 21.9900 | 1.0000 |
| | GBP | Woolworths | 13.9900 | 1.5718 |
| AUS | AUD | EB | 35.0000 | 0.6283 |
| CAN | CAD | Sears Canada | 24.9900 | 0.8800 |
| JAP | JPY | Indicative | 2,000.0000 | 0.0110 |
| | | | | |
| Country | Local Currency | Current FX Rate (USD equiv) www.xe.com | Implied Price based on Current FX Rate | Over/(under) pricing relative to current FX rate |
| US | USD | 1.0000 | 21.9900 | N/A |
| | GBP | 2.0609 | 10.6701 | 31.11% |
| AUS | AUD | 0.8770 | 25.0741 | 39.59% |
| CAN | CAD | 0.9895 | 22.2233 | 12.45% |
| JAP | JPY | 0.0092 | 2,390.2174 | (16.33%) |
So the lesson isn't so much about international economics and arbitrage; it's simply that UK and AUS gamers are clearly being ripped off by local retailers, who aren't passing on the benefits of a weaker USD. Time to campaign, geeks. Japanese players, as usual, are treated to an entirely different echelon of gaming goodness. I would move there just to be hooked into Nintendo nirvana.
Highly doubt this will replace the Big Mac Index; for one, it does not account for the "basket of goods". Still, makes you realise why game console makers continue to maintain region coding even though there are clear benefits to gamers to remove them (i.e. being able to import hot games from overseas, rather than relying on the pitiful supply from local distributors).
Friday, 23 November 2007
Bring Green Pencil To Voting Booth!
Can't decide the lesser of several evils in this election?
Vote Laberalocrats First - with a green pencil! The ultimate fence-sitting vote, and it's QUINTUPLE VALUE voting!! (Take that, cheap Greenies with your double value voting.)
Vote Laberalocrats First - with a green pencil! The ultimate fence-sitting vote, and it's QUINTUPLE VALUE voting!! (Take that, cheap Greenies with your double value voting.)
Monday, 12 November 2007
How To Lose $3 Billion in 21 Days
Well, banker karma got to me. After the last post which arose from superchronopossession, three deals dropped on my desk at the same time, and closing pretty much one after the other (which was last Friday). Hence the extended absence of tales of Rockett Fuel office shenanigans.
Since the last post, Messrs E Stanley O'Neal and Charles O Prince III (no, the OTHER Charles) will, sadly, be leaving the great ships Merrill Lynch and Citi. In a loving tribute, both were handsomely rewarded as a result of the deft management. If you think it is easy to lose tens of billions of dollars, think about this: you have 24 hours to spend $5 million, and not a cent less, and you can't keep a cent or keep anything you buy with it or make any money out of it. Yes... not so easy to think of how to make $5 million disappear into thin air. It takes a special kind of leader to do the almost-impossible.
But my oh my, aren't we all blessed in our lifetimes to see two high-profile leaders achieve exactly this. That is why, ladies and gentlemen, they will be walking away with roughly $200 million, give or take a lazy few tens of millions. It takes talent, it takes bravado, and unrivalled knack for timing the market (i.e. jumping into high-risk debt and structured products at the exact time they were turning unsustainable). You and your silly quant models could not have timed it any better. Unless you are Bear Stearns.
Why I now dislike redneck unemployed lying useless lazy criminal borrowers even more than I did before (subprime crisis impact - it's PERSONAL)
Keeping it brief due to propensity to cry when thinking about it:
- not happy* with bonus
- not happy* with pay rise
- pay rise actually lower than that offered by competing bank earlier in the year, when I was as green as Link's costume
- making me think... can one actually do a valuation on loyalty, and therefore, did I overvalue it?
* NOTE: gross understatement of the night.
** The irony of my situation, in light of the above take on Wall St maths, is not lost on me. Please do not rub it in by pointing it out.
Since the last post, Messrs E Stanley O'Neal and Charles O Prince III (no, the OTHER Charles) will, sadly, be leaving the great ships Merrill Lynch and Citi. In a loving tribute, both were handsomely rewarded as a result of the deft management. If you think it is easy to lose tens of billions of dollars, think about this: you have 24 hours to spend $5 million, and not a cent less, and you can't keep a cent or keep anything you buy with it or make any money out of it. Yes... not so easy to think of how to make $5 million disappear into thin air. It takes a special kind of leader to do the almost-impossible.
But my oh my, aren't we all blessed in our lifetimes to see two high-profile leaders achieve exactly this. That is why, ladies and gentlemen, they will be walking away with roughly $200 million, give or take a lazy few tens of millions. It takes talent, it takes bravado, and unrivalled knack for timing the market (i.e. jumping into high-risk debt and structured products at the exact time they were turning unsustainable). You and your silly quant models could not have timed it any better. Unless you are Bear Stearns.
Why I now dislike redneck unemployed lying useless lazy criminal borrowers even more than I did before (subprime crisis impact - it's PERSONAL)
Keeping it brief due to propensity to cry when thinking about it:
- not happy* with bonus
- not happy* with pay rise
- pay rise actually lower than that offered by competing bank earlier in the year, when I was as green as Link's costume
- making me think... can one actually do a valuation on loyalty, and therefore, did I overvalue it?
* NOTE: gross understatement of the night.
** The irony of my situation, in light of the above take on Wall St maths, is not lost on me. Please do not rub it in by pointing it out.
Monday, 15 October 2007
Why bankers + free time = stupidity
Often, simply saying "I'm an investment banker" is enough to make women (esp at Establishment) swoon... if that's your thing. This list is for the more discerning banker, one who is trying to find a woman who is switched on and "gets it". And there's no better way to test her "getting-it-ness" than to pile on the jargon and see. So here we present the latest Frankenstein lovechild of banker brain power and permanently adolescent humour: banker pick-up lines.
1) Let's correlate.
2) That's not a Capital Market Line in my pocket.
3) No, it's not a Laplace distribution either.
4) I'm a big fan of two-asset models.
5) Only the price-earnings ratio matters, baby... your price, and my earnings.
6) You're already a positive NPV investment. (I've lowered my expected rate of return.)
7) I'd like to be on your efficient frontier.
8) I'll be the alpha, you be the beta.
9) I'm long-only.
10) I'd like to Ctrl + "+" then C if you'll let me.
11) I'm into M&M. No, I'm not talking about the chocolates either.
12) May I toggle your PIKs?
13) You can subordinate me tonight.
14) I'm experienced in long, drawn-out mergers.
15) Baby, you are the market portfolio.
P.S. I like this. "Take a quick look around you right now. If you are surrounded by attractive models, fast cars, and high-quality cocaine, you have a good pickup line. Either that or you are an investment banker, in which case you also probably have syphilis."
P.P.S. I don't have syphilis. Honestly.
1) Let's correlate.
2) That's not a Capital Market Line in my pocket.
3) No, it's not a Laplace distribution either.
4) I'm a big fan of two-asset models.
5) Only the price-earnings ratio matters, baby... your price, and my earnings.
6) You're already a positive NPV investment. (I've lowered my expected rate of return.)
7) I'd like to be on your efficient frontier.
8) I'll be the alpha, you be the beta.
9) I'm long-only.
10) I'd like to Ctrl + "+" then C if you'll let me.
11) I'm into M&M. No, I'm not talking about the chocolates either.
12) May I toggle your PIKs?
13) You can subordinate me tonight.
14) I'm experienced in long, drawn-out mergers.
15) Baby, you are the market portfolio.
P.S. I like this. "Take a quick look around you right now. If you are surrounded by attractive models, fast cars, and high-quality cocaine, you have a good pickup line. Either that or you are an investment banker, in which case you also probably have syphilis."
P.P.S. I don't have syphilis. Honestly.
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