donderdag 24 januari 2008

A Trade too Far


As a small kid I was interested in the stock exchange and the world surrounding it. It always felt like a short of game but when you really got into it, it was really interesting to read balance sheets and predict which one is going to do well.
I bought virtual shares and each evening I looked in the financial pages of the newspaper with some form of excitement and noted every share price on a piece of paper. At a certain time I added graphs and bought some real ones too and looked at the stocks with my dad. All kind of kids play but it did bring me some money and better understanding of the markets.

The other side of the trade market is of course, the traders that shout loud, make strange gestures and seems to overworked all the time but the money seems to be the main driving factor. Over the year there have been some very successful traders and or investors (Mr Buffet to name just one) and some very cocky ones too.
Living the life style and playing the stock market as a short of game and ending up with huge financial trouble for the employers they worked with. Rogue traders like Mr Leeson, bringing single handed Barings down with loses of a billion dollars!
Today the Frennch can be proud because the have there own story now.
Societe General and rogue trader Jerome Kerviel, was a little bit to optimistic and forgot to mention a number of procedures and ended up with a loss of 4.9 billion euros, roughly 4 times worse than Mr Leeson, and nobody noticed up to today...
A 31 year old trader that knew all the ins and outs and pushed his game just one trade to far. He was asked today to leave the company as well as a number of his colleagues and a law suite will probably follow.

It seems like playing Monopoly with other people's money is not without risk, people get greedy and think that will never loose or win it back soon. Trading is not a game nor a casino but with huge amounts of money being invested and everybody wants to become rich, it seems that the rules are forgotten and all is ok.
Just imagine Jerome going for a next job interview...oh you are the guy that lost almost 5 billion euros. Dont forget to close the door on your way out...

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