Several years ago my family was moving to the city and while looking for a house in a community with good schools we stumbled across a school with a Pachyderm for a mascot. We laughed out loud and thought of our eldest daughter and how proud she would be to be called an Elephant, mind you at the time we were not traveling through Crimson Tide country or we would not have laughed so loud. My high school mascot was the Fletcher Fighting Senators… doesn’t that strike terror, no Wildcat, no Bulldog, not a Gorilla, not even a Pachyderm, but a Senator.
Nick names like mascots should instill some fear. Shouldn’t they demand some respect, command your attention? Another trader is in the news, the “London Whale” and “Voltermort” are nick names given to the JP Morgan trader Bruno Iksil due to the whale size of his trading positions and the evil power he held over the market. His recent trading loses are said to have been between 2 and 3 billion dollars. With a name like Voltermort he has to be the enemy, he has to shoulder the blame, and we have to make laws to protect society from his type of evil, right?
The interesting fact in the business of trading is that you have to have someone on the other side, there is a buyer and a seller. If Voltermort was selling someone else had to be taking the opposite position, are the traders betting against Bruno Iksil also evil? I have ask this question before regarding traders accused of being reckless, if the London Whale had made 2 billion dollars, would we know him, would he still be the evil Voltermort? Would any news media other than Jim Cramer be talking about him?
According to several recent news stories other large hedge fund managers and traders took heavy opposing bets, meaning they are the recipients of JP Morgan’s losses. Where are these traders? What are their nick names? We don’t know because they were successful on behalf of their investors. What if Bruno had been successful and these traders on the other side had lost 2 – 3 billion dollars? Would we be lining up the traders for each of these companies and giving them menacing nick names, Miami’s Killer Shark, South African Hippo, or the Pequod (literary reference to those that hunt Whales).
The fact is the market worked, JP Morgan made what some other traders thought were market distorting trades, so they seized a trading opportunity at JP Morgan’s expense. In this case it’s the employees and stockholders of JP Morgan that lost money. This is not a case where the innocent bystander saw his wealth taken, as was the case with MF Global. JP Morgan stockholders lost, if they are dissatisfied with the company’s performance they can do something about it and make needed changes….. AHH, but that’s the rub isn’t it? Most stockholders are also chasing the quick buck, the fast speculative fortune. Few hold stock for long periods, fewer still participate in stockholder meetings..
There are claims that state 70% of the stock trades are held for less than 11 seconds, by that standard the long term investor is the guy that buys his stock while in line at McDonalds and sells it as he sucks air through his straw finishing off a large coke. Yes, there is other research that points to an average holding time of about 7 months. Regardless which time is correct, the average owner of a particular stock today will not be eligible to attend the next stockholder meeting.
No one seems to be in it for the long term, investing has become a synonym of betting, gambling, and quick fortunes, not one of better ideas, patience, research, building better products and hard work. What Congress needs to investigate is not how or why JP Morgan lost 3 billion dollars, we don’t need laws preventing speculative trading. We need to be asking why did JP Morgan think that a 100 billion dollar bet on Credit Default Swaps was a better place to “invest” their money, than say 100,000 new startups or investing and improving 100 existing companies? What we need are policies and business environments that encourage new businesses, new startups, policies that encourage true long term business investment, that discourages short term gambling not with rules but by simply making long term business investing more attractive and more prone to success.
But what do I know I am just the Kansas Dust Devil, a former “Senator”
I need a cooler nick name
david
