May 24, 2013 § Leave a comment
(contributed piece from Wannop)
I’ve had this song by Blood Sweat and Tears in my head since I woke up this morning. My mother used to play it relentlessly when I was a teenager – drove me fucking nuts, especially when she tried to compare it with Pearl Jam. So today it’s stuck there. And I’m thinking about these markets that are levitating on Central Bank amphetamines.
Such a tempting short. But then I remember the folksy homily that the Trend Is Your Friend (or, as one moronic broker I was once forced to deal with used to say: “The trend is your mate” – irony is lost on these fuckers; they only understand beatings). So I’m standing outside having my 5th cigarette of the day and it isn’t 9.30am.
I’m balls long this market. I’ve been riding it all the way up and I’ve had a cracking month. Am I being greedy? Should I just take the profit off the table. Go away for a long weekend to my beach house down on the Cote D’Azur. Could take that Ukrainian bird from the other night. No fuck that, there’ll be plenty to choose from down there. I’m brought out of my reverie by the sight of Armstrong heaving into view.
“Alright, Mike. Give us a light.”
“Alright Strongy”, I reply, taking out my solid gold du pont lighter and firing him up. “What do you think of this market?”
“I don’t like it Mike. Toppish. Market very skittish mate. Any bad news out of Thursday’s numbers and its toast.”
I love talking to Strongy because he’s the weakest of the weak hands. Nice bloke, kind of harmless. Great barometer. If Strongy’s skittish this market still has legs.
Enjoy your fag, Strongy. I’m going back up.
I head up the escalator and formulate a plan. I head straight back upstairs and price up some teenie weekly calls to buy. This things going to the moon. I’ve just doubled my risk. When the likes of Strongy panic to buy I’ll turf it out to them. You gotta feed the ducks while they’re quacking.
By the end of the US session the market’s up another 10 points. It’s been a great week, I’m heading for the airport.
May 20, 2013 § Leave a comment
I remember my first interview at KKK Bank (as I like to call it now, though it doesn’t exist anymore).
There I was 23, straight out of St Andrews, wearing my Armani overcoat, the hope still shining bright in my eyes. For those were the days when bankers could actually walk around and tell people to “Get out of the way, I’m a banker.”
Sadly those days are long gone, for all the great professions– from lawyers to politicians, we are too scared to admit it, but they no longer care. Far be it to say that I go out and kill people for my profession! But no I am the subhuman scum!
So I went in my shiny shoes and polished back hair, looking every bit like Alec Baldwin c. GGarry GRoss, up to the 13th floor. I walked in to find this nerd, all spectacles and front teeth, couched behind the desk reading his copy of the FT. At first I thought about of doing the old Oxford joke and setting fire to his paper as he read, but then decided better of it. After a few seconds he put it down and grimaced at me.
“Tell me about the Greeks,” he said.
Of course I thought he was joking so replied – “Erm swarthy?”
He was silent.
Still no reply.
“Doesn’t like to pay tax?”
The man didn’t laugh. He said “Don’t waste my time telling me this. Tell me about the Greek alphabet?” “I said are you crazy I don’t speak Greek.”
Soon I was escorted out. What I didn’t know was that that guy, apart from being a Geek, was also fluent in the Greeks. He was also Greek (I should’ve checked his card, Eugene Papaphilippopulous). So what are the Greeks and why should we care? Well here is a simple guide for grads, care of my good friend Wannop.
Explaining the Greeks–
Alpha: the word we use when we make money.
Beta: When we don’t make any money, but nor does anyone else
Charlie: A trader’s ex-best friend
Gamma: Second order derivative. A measure of convexity. Curvature. Makes me think of the bird I met at Maddox the other night. Her name might even have been Gamma. Wait that can’t be right
Delta: the first derivative. How the price changes with respect to changes in the price of the underlying. Used colloquially by derivatives geeks to refer to the probability of something happening. Like what’s the delta on me hooking up with Gamma tonight?
Theta: The rate of decay of the asset with respect to time. Some assets decay away very rapidly. Like Gamma. Her value rapidly disappears after I’ve taken her home. It’s always the way with these eastern European chicks. On the other hand, French birds look after themselves. Much less theta there.
Rho: Sensitivity to interest rates. Like the lease on that Ferrari that I can’t afford. Rates go up and I’ll be slinking back to the dealer with keys in hand begging for mercy.
Vega. Not actually a Greek letter. Nevertheless referred to by Geeks as a Greek. Sensitivity to volatility.
Vanna: Sensitivity of the sensitivity to volatility with respect to the asset. Or sensitivity of the delta to the vega.
Vomma: sensitivity of the sensitivity to volatility with respect to volatility. What most, right thinking people do after reading that sentence last sentence. What I did last night in the men’s room at Roka after too many Flaming Ferraris
you get the idea.
Greeks? I don’t know! The point is who cares?! You don’t need to know. We have computers to do all these things for us now. We have quants like Eugene
So the next time someone ask you to define the Greeks in an interview punch him in the stomach and walk off. There are better things for us all to be doing.
May 15, 2013 § 1 Comment
Yes I am returned. The last you heard of me I was embroiled in that fearful Nakamura saga which nearly led to my untimely demise and worse, death, some nine-and-a-half months ago.
I pick up the story in the summer of last year.
The hedge fund business had become fraught so I decided, in my insanity, to go back to the bank. Things were different there. Very different.
Compliance officers now monitored everything you did. You weren’t allowed to take the statutory three hour broker meeting. The bosses were all 22-year old Harvard Grads with poor backgrounds (it made them hungrier).
And of course, the worst of all, they cut bonuses. They said we were to live off our basic from now on. So there I was with a making 700k, the same as a fireman. It’s impossible we told them. How can we make ends meet? Several of my colleagues left.
“Hell this ain’t no charity,” shouted Duckdown, the day they announced it. He simply picked up his bowling ball and ran out of there. The last I heard he had set up a charity for native Indians in the rainforest, was making good money out of it too.*
But no, some foolish loyalty prevented me and I stayed at the bank. I stuck it out convinced that things would turn around. I increased my short position to $13bn, sold everything I could. Started hoarding gold (long $15bn). I even had a cache of gold bars in my drawer. I broke all limits. Crashed all stop systems (helped by my old friend Abdul in IT). But nothing happened. There was no break up. Some clown, a Mickey Mouse Italian, decided to backstop the Euro. (They found an honest Italian– it was a one in a billion chance).
Christmas came and went. I obviously had no money so I went home and stayed with the parents in Suffolk (they’ve had to open the place to the public to make ends meet).
I returned in January and grown men were suicidal. Our Japanese office lost 13 guys playing sushi roulette.** Then came the crises– they cut off our internet. Men, grown men, were reduced to tears. The best minds of our generation driven insane.
Finally they got me. Someone had been reading my IM chats. I got a call. The police arrived. It wasn’t so much that I’d built up a huge unauthorised position. But rather that I didn’t know what to do with it.
But the real straw that broke the camel’s back was Eddie, my broker. He grassed me up. I’d been routing all my trades through him, you see. And you know why? Because I felt sorry for him. His wife had leukemia. She’d had a double mastectomy. I felt sorry for the guy! I really did.
But the idiot went out and bought her a spectacular new pair of tits. Apparently he got her a pair of 36dders. Unheard of on a broker’s salary. That alerted the authorities. How could a mere broker like Eddie afford to buy a boob job like that? And that was it– he told them he’d been getting all his trades from me.
In the end I walked out of there with my head held high (it was quite touching really, when the police came round all the traders did that Spartacus thing, except they said “I’m not Tim Green!” So the police led me away).
Four months in chokey is what I got. (I will perhaps recount it some day).
So what have I missed? Well Queen Elizabeth’s still on the throne. Bowie is back (never know if he rhymes with “cow” or “low”). Nuclear war has not happened. And bankers are still reviled. Plus ca change really.
Except now I am returned: things will change.
* Infact the thought ran through my mind. I seriously considered joining an environmental hedge fund investing in resource efficiency. It’s a no-brainer. The returns are massive. I mean consider the shortages in the world– food and water: people are hungry, starving. With all this climate nonsense food and crop prices are only going to go one way. What you need is a niche. Loxley joined one, cornered the Ethiopian grain market. Now every time there was a drought his position went through the roof. Clever. Tells me he loves comic relief.
** Take six rolls of sushi and put a cyanide pellet in one. Men take turns to eat a roll. It’s a very noble way to die. But the Japanese have always believed in self-sacrifice/death before humiliation. Those who are left will actually manage to get a bonus. Real nobility.
May 14, 2013 § 2 Comments
I am returned.
How long have I been out: 9 months. Where have I been: HMP Pentonville. Will I be describing it: One day.
The Reformed Hedge Funder
PS: It was a truly humbling experience
PPS: I am setting up a fund for jailed bankers. I know how hard it is. If you wish to help please reply at the bottom with your details…