Under Pressure

Today the person who started the first hedge fund at Nomura Capital died aged 46. Recently the newspapers were filled with an equity trader at Deustche bank who committed suicide. He was aged 24. I don't know which Billy Joel song suits this better. "Under Pressure" or "Only the good die young." Either way the banks will be singing "We didn't start the fire."
Will the pressure of working in the Hedge Funds and Equity affect me? I know it nearly killed me. During the financial crisis I must have hardly slept for 3 hours a day and possibly 18- 20 hours on the weekend. My whole life revolved around Bloomberg. I would be awake for the opening of the European markets at home. I would be at work for the opening of the US markets. I would see the close of the American markets at home. I would be awake for the Asian markets. I was going through my Divorce at the same time. I am really surprised that my heart did not give in. I put on tonnes of weight though. I went for a weight loss programme in India and it helped me. I went from a 46 inch waist to a 36 now. After that there were checks and balances I put into place. Writing this blog was one of them. The other is I do not deal with work from Friday evening when I leave work unless it is an absolute emergency. I do not watch any news from Friday evening to Monday morning. 
When I was 7, the famous mathmatician and astrologer predicted that I would be in the finance world. Apparently my parents laughed it off. 20 years later I landed in the heart of it. Few years back I met her. She said I would be a big man and would live to be 86. I believe in numerology more than astrology. In case I do die this year then I have written a note and sealed it. If things change then I may destroy it. Otherwise it is good till the year end.

-- Sent from my Palm Pre

Olympic Air

How can I not write something today? I am in Olympic Air right now on my way to Athens. I have just about started my journey and it is as if the entire economic condition of Greece has flashed before my very eyes. At the airport counter, the lady was old. There was only one announcement saying that passengers with infants, business class passengers and economy passengers seated between seats 20 and 27 should board. I left towards the end. I had sufficient place to stow my luggage so it didn't matter to me. When we entered the flight none of the airhostess greeted us. Then for some reason which I cannot fanthom; they discretelly removed their jackets and did the safety features in a sleeveless green dress. This was probably the second time since 1999 that I actually looked and listened to the safety protocol. Though my thoughts were on anything but the safety features. Once the safety announcements were over those jackets came back on to the disappointment to all the guys including myself. For that period I even forgot that the reclining function on my seat does not work. The toxic smell of the fat Greek guy next to me seemed light years away. I honestly cannot make out which orifice is eminating it.
Dinner is served. Italian biscuits,Danish butter and Austrian cheese. God only knows the origin of the main course and Greek salad. A passenger on the aisle is made to carry his own food and fold his tray after being served so that the food trolley can pass. Are there other flights available that may be better than Olympic? I would say definitely. However there is just one flight that leaves late in the night and that is the one that I am on.
What does this have to do with the current scenario in Greece Well everything. 10 years back Greece was an ageing economy. Then the Olympics happened in 2004. That spiced up Greece and presented it in a fresh way. To get the Olympics, Greece portrayed itself as this fresh young country. It somehow managed to sneak into the EU. In the 2008 crisis; Greece along with Ireland were the first countries to guarantee that no person having deposits in any bank in Greece will lose money if the bank defaults. One and a half years on and Greece has come to the Chinese and the EU with a begging bowl. The EU had no choice but to bail Greece out. Apparently the EU have placed strict regulations for the bail out. Bollocks. I doubt that Greece will be able to conform or meet those demands. I was not surprised when my fat co-passenger asked for a second meal. The Greeks may be back asking for more money. They'll probably get it too. So once again Greece will be ruled by a foreign power. Stripped bear of its culture. Hopefully atleast the women and wine continue to be Greek. If these two have to get adulterated then Greece will be better off surrendering its EU and Euro membership and giving it to Turkish Cyprus.

-- Sent from my Palm Pre

Captaining the ship

I have kept strangely quiet on the sex scandal surrounding John Terry. First I must clearly state that I am a Chelsea supporter. Secondly I support England. So considering this I will state that it will not matter whether Terry or Rio Ferdinand wears the Captains armband for England. The role of a Captain hardly amounts to anything. It is not like in Cricket where the Captain is pivotal to the success of the team. However I am shocked that Terry did something like this. Terry's wife looks anyday better than the lady he slept with. It was stupid. All of us our guilty of it. I don't mean that each person is ready to jump into bed with someone else. What I do mean though is that a lot of us try to take that little extra unnecessary risk to get that extra return which in reality we really do not need. If we are invested in a long/short equity hedge fund and a good active equity manager then is there a need to purchase a two times leverage ETF that shorts the DOW? In the long run your equity hedge fund manager will provide the best risk adjusted return. Things can go very wrong with Short ETFs. Experts are saying that this escapade would cost him Five Million Pounds and a wife and his twins. I hope she was worth it. Everything in life has a value associated with it. The trick is to judge the right future value.

-- Sent from my Palm Pre

The Volcker Rule.

I have been down with a fever ever since I came back from India on the 18th. However it looks like The Volcker Rule has scared the fever out of me. The markets have reacted negatively. Personally I am not sure what to make of it. Curbing the power of the proprietary desk is in a sense good but extending that to not investing in Hedge Funds or Private Equity is not good. If the Volcker Rule is implemented then in the future there will be very little to base a decision on whether the banks are putting their money where their mouth is. That is however the least of my concern. The greater and more immediate fear is if the banks have to pull their money out then the investor will get hit because the managers of the funds will have no choice but to sell. This will result in the same deadly spiral that we saw in September and October of 2008. I will be highly disappointed if banks are forced to sell immediately. I think I will be on my toes until things become clearer. There will be no knee jerk reaction from my side but I will be hesitant. It is Friday evening and it is time to switch off.

Snowed In

I was supposed to be at a business conference in London right now. Instead I am in Bangalore as I had difficulty getting the flight back to London due to the snow. Somehow that seems to mirror the economy. Over here it is a nice pleasant 28 celsius. In London it is freezing. People are hiring here and money is being spent by the common man. The infrastructure and real estate projects coming up in Bangalore are amazing. Some of the residential apartments coming up here and a more refined touch than some of the places in Central London. Being in India you can see why there is such a huge potential for growth. You can also see why the price of gold goes so high. People talk about the price of gold rising because it is a safe haven from the weakening currencies. However I believe that no matter what happens to the major currencies, the price of gold will rise because people in countries such as India will continue to buy it.

BASIC BRIC

The year has more or less come to an end with 4 trading days left. The major seismic change for me this year was the emergence of the so called emerging markets. The G7 and G8 have lost its power. The G20 is the way forward. Apart from that the countries that will hold the most power in global policy whether economic or otherwise will be China ,India, Russia, Brazil and South Africa. The climate conference in Copenhagen saw the replacement of Russia with South Africa to form a new group called BASIC. Next year will see a lot of funds focussed on these countries.   Now the sharpe or sortino ratio of these funds may not be as high as the BRIC or global funds but the long term annualised returns will be extremelly attractive. A fine balance will

-- Sent from my Palm Prē

What's new pussycat?

Today's events reminds me of the Tom Jones song. Abu Dhabi's bail out of Dubai has in a sense made me paranoid. There has to be a catch. I cannot believe that Abu Dhabi will give US$ 10 billion just like that. The bonds jumping nearly double in value and the dubai stock market jumping by nearly 10%. This is unreal. There has to be some kind of logic to the emotions behind the results. Then there is the news that Goldman is planning a 1 billion IPO of an energy company that has no proven oil reserves. I am no oil experts but after listening to my colleagues around me I would say I have got some kind of knowledge. Even companies with proven oil reserves run a fine line as far as profitability is concerned. However one piece of news saying that they have proven reserves could make a big difference.
It is nearly one year since my divorce. What a year it has been. A whole emotional roller coaster. I know the new year will bring in something special. I do not want to reveal it yet. Last year I was like a company facing chapter 11. In between there were some attempted mergers but I think the new year will bring more than proven reserves.
Sent from my BlackBerry® wireless device