Some good articles from around the Web.
The uproar this week over the frank revelation from a trader interviewed by the BBC [1] that he planned to profit from a massive market crash (and that you can too!) was revealing.
Here’s the video:
Thanks to the combination of a suited trader dreaming of another Depression, an astonished BBC newsreader, and even a name check for Goldman Sachs, the video went viral.
Thousands of people watched in astonishment at – apparently – the notion that there are two sides to a market.
I am the first to condemn the financial industry as overpaid and overvalued [2], but trading is what traders do! Condemning this chap for taking a view is ludicrous – like condemning your plumbing for bringing some rubber gloves just in case your drains are blocked.
Remember that there’s another party on every side of the trade, who will be losing if this guy wins. Does that make the loser morally superior? Nonsense. A bearish trader buys a credit default swap betting on a Greek default, and another sells that insurance. Numbers, not morals, drive their decisions.
Active traders come a long way down the list of culpability for the woes felt by the public today – well behind dreadful over-leveraged banking, short-sighted politicians, slack rating agencies, and the greedy man in the street. The trader is just the final piece in the picture, mopping up the outcomes of decision making by the great and the good, and usually as much to blame as a beetle feasting on a carcass is for Mad Cow Disease. Neither bad nor good, and often not pretty, but pretty irrelevant.
Wishful thinking is what dominates our nursery rhyme news agenda, however. The newsreader wanted a few soundbites about ‘decisive action’ and ‘settling the markets’. Encountering a foot soldier from the front line of a market economy Did Not Compute.
Hilariously though, as The Telegraph discovered [3] this new era Gordon Gecko turned out to be less a City bestriding big swinging dick, and more simply a… good talker:
“They [the BBC] approached me. I’m an attention seeker. That is the main reason I speak. That is the reason I agreed to go on the BBC. Trading is a like a hobby. It is not a business. I am a talker. I talk a lot. I love the whole idea of public speaking.”
Which capped it all off perfectly.
The BBC betrayed its agenda, the terrified public that spread the video wanted to blame the middleman rather than their propensity to take on debt for 30 years, to abandon prudent financial planning, and to ignore rigorous thinking – whether it be the flimsiness of the Euro framework or sky-high house prices – and the middleman turned out to be a muppet.
Just another dispatch from the bear market. I redoubled my efforts to look for cheap equities in the aftermath.
From the money blogs
- In defence of short-termism – Stumbling & Mumbling [4]
- A grinder, not a gambler – iii blog [5]
- UK house prices: indices compared – Money Moves Markets [6]
- Mr Market bullying investors – Investing Caffeine [7]
- Don’t bother trying to predict interest rates – Mint [8]
- I’m in no hurry to pay down my mortgage – Canadian Finance Blog [9]
- Bad markets lead to bearish forecasts – Mint [10]
- A request for Vanguard – Oblivious Investor [11]
- Women on boards – Terry Smith [12]
Deal of the week: If you’ve been waiting for an excuse to buy a Kindle, this week’s announcement that the new, elegant and keyboard-less one will cost just £89 could be it! Pre-order now at Amazon [13].
Mainstream media money
- The changing triple-X business – The Economist [14]
- Harvard’s swelling endowment fund – BBC [15]
- 3 things holding back the US jobs market – The Motley Fool [16]
- Volatile gold unnerves investors – FT [17]
- Managers see value in corporate bonds – FT [18]
- ‘Best buy’ tables give conflicting advice – FT [19]
- Goldman: World may be headed for ‘great stagnation’ – Telegraph [20]
- Ten thousand buy the National Grid RPI bond – Telegraph [21]
- 15 income trusts with a great 25-year record – Telegraph [22]
- FTSE suffers biggest quarterly fall for nine years – Telegraph [23]
- How to get a better work-life balance – Independent [24]
- Bolton’s China trust revisited – Independent [25]
- The case for converting to LPG – The Guardian [26]
- If I ruled the world: P.J. O’Rourke – Prospect [27]
Like reading about money at the weekend? Really? Then subscribe [28]!