Friday, January 29, 2010

Over 50.000 million dollars lost by Smart traders at large firms. How to speculate and destroy individual or an institutional portfolio?

There is a fine line between gambling and trading. Gambling is based on an intuitive idea that by betting on an uncertain outcome, winning ultimately is possible.
To take a risk in the hope of gaining an advantage is also gambling but so is trading if you really observe. Fear or Greed or guilt can make a trader into a gambler. The gamblers are losers in 99% of cases. Unfortunately traders who have clues but not the complete knowledge are also the losers in most cases; for example most novice day traders do lose most of their portfolio and almost 85 to 90 percent of derivatives or option traders do lose most of their portfolios.

Over 50 billion dollars is lost, in very recent past, by some of these so called Savvy [ignorant], Professional, smart Traders [Gamblers] at large firms which could have been saved if they had some real professional guidance or serious supervision. Of course these firms spend large budgets for teams of analysts, both technical and fundamental analysts and dozens of professionals who watch the markets they trade in. Despite all rule books, controls and supervision, BILLIONS [that is 1000 million] are lost by single traders.

It is hard to find the difference between a casino and these large mostly public firms that can lose thousands of millions of dollars. Are you being guided by a Gambler or a gambling inclined analyst or a trader? Are you employing any advisor or trader that tends to work on mere intuition secretively. Before you or your firm lose all their assets please review how and whom you trust for trading advise.

There are so many visible and invisible forces that guide the TRADER for good or bad. I have seen in my life no matter how many piles of information, analysis and how much budget for trading decisions, yet people who execute or are responsible for large sums of money, do lose.
We could save millions and billions by having secretive, hidden knowledge in different time frames. It is time to incorporate OTHER sources of knowledge in addition to the typical tradtional sources of knowledge to make the RIGHT trading decisions that result in gains.
Obviously if you are destined to lose due to your karmic and checkered past, deeds and actions or uncontrollable emotions, no amount of analysis or forecasting can save you. But those who are sensitive, intelligent, deep and intuitive they make sure that each trading decision must be evaluated before each execution.
If you are a self directed trader at home, part time trader, trader working for a large bank, firm, institution or anyone who makes decisions, please THINK that each dollar lost in bad trading decisions is capital lost. It is surely agreeable to allow some legitimate small losses while trading but losing to such a point where you destroy yourself financially or your company forever is unpardonable. Please understand that in most cases thousands of lives of families, individuals are at stake for each trading decision. So before executing be wise, look around. It sounds like the crossing of a busy highway or a very trafficked traffic signal by a pedestrian where just minor overlooking can kill or maim the pedestrian forever.Trading decisions at times are like that.

See here the list of very large trading losses that have occured in just recent past.
These are perhaps only tips of the bigger icebergs that we could never find or read about. I am sure many large firms incur major losses but they find some crafty way to offset or hide them.
In many of these cases, it is mostly a single individual found to be involved in the loss making trades, which shows that the management was either no aware or the supervising individual or team was dormant or non existing.

Nominal Amount Lost USD FX Rate at time of loss USD Equivalent at time of loss USD Inflation since loss until 2007-12-31
Real Amount Lost Country Company Source of Loss Year Person(s) associated with incident 1 EUR 4.9 bn 1.45 USD 7.1 bn 0% USD 7.1 bn France Société Générale European Index Futures 2008 Kerviel, Jérôme Jérôme Kerviel

2 USD 6.5 bn 1 USD 6.5 bn 3% USD 6.7 bn United States Amaranth Advisors Gas Futures 2006 Hunter, Brian Brian Hunter

3 USD 4.6 bn 1 USD 4.6 bn 27% USD 5.85 bn United States Long Term Capital Management Interest Rate and Equity Derivatives 1998 Meriwether, John John Meriwether

4 JPY 285 bn 109.5 USD 2.6 bn 32% USD 3.44 bn Japan Sumitomo CorporationCopper Futures 1996 Hamanaka, Yasuo Yasuo Hamanaka

5 USD 1.7 bn 1 USD 1.7 bn 40% USD 2.38 bn United States Orange CountyInterest Rate Derivatives 1994 Citron, Robert Robert Citron

6 BRL 4.62 Bn 2.20 USD 2.1 Bn ; 0% USD 2.1 bn Brazil AracruzFX Options 2008 Zaguri, Isac Isac Zaguri, Rafael Sotero

7 EUR 1.4 bn 1.25 USD 1.9 bn 3% USD 1.97 bn Austria BAWAG Foreign Exchange Trading 2000 Flöttl, Wolfgang Wolfgang Flöttl, Helmut Elsner

8 DEM 2.63 bn 0.52 USD 1.38 bn 43% USD 1.96 bn Germany Metallgesellschaft Oil Futures 1993 Schimmelbusch, Heinz Heinz Schimmelbusch

9 HKD 14.7 bn 7.76 USD 1.9 bn 0% USD 1.9 bn China CITIC Pacific Foreign Exchange Trading 2008 Yung, Frances Frances Yung

10 GBP 827 mio 1.6 USD 1.323 bn 36% USD 1.8 bn United Kingdom Barings Bank Nikkei Futures 1995 Leeson, Nick Nick Leeson

11 JPY 103.4 bn 94 USD 1.1 bn 36% USD 1.5 bn Japan Daiwa Bank Bonds 1995 Iguchi, Toshihide Toshihide Iguchi

12 EUR 0.75 bn 1.30 USD 0.975 bn 0% USD 0.975 France Groupe Caisse d'Epargne Derivatives 2008 Picano-Nacci, Boris Boris Picano-Nacci

13 EUR 0.60 bn USD 0.82 bn Germany WestLB Common and Preferred Shares 2007 Breuers, Friedhelm Friedhelm Breuers

14 USD 0.69 bn United States AIB/Allfirst Foreign Exchange Options 2002 Rusnak, John John Rusnak

15 GBP 0.4 bn USD 0.7 bn United Kingdom Morgan Grenfell Shares 1997 Young, Peter Peter Young

16 CDN 0.68 bn 0.9 USD 0.61 bn 2% USD 0.62 bn Canada Bank of Montreal] Natural gas derivatives 2007 David Lee, Kevin Cassidy

17 USD 0.6 bn United States Askin Capital Management Mortgage-Backed Securities 1994 Askin, David David Askin

18 USD 0.55 bn China China Aviation Oil (Singapore) Oil Futures and Options 2004 Jiulin, Chen Chen Jiulin

19 BRL 2 bio 2.00 USD 1Mio mio Brazil Sadia FX and Credit Options 2008 Ferreira, AdrianoAdriano Ferreira, Álvaro Ballejo

20 CHF 0.63 bn USD 0.5 bn United Bank of Switzerland Equity Derivatives 1998 Goldstein, Ramy Ramy Goldstein

21 USD 0.4 bn United States Manhattan Investment Fund Short IT stocks during the internet bubble 2000 Berger, Michael Michael Berger

22 EUR 0.30 bn USD 0.4 bn Austria Hypo Group Alpe Adria Foreign Exchange Trading 2004

23 EUR 0.30 bn USD 0.4 bn Dexia Bank Corporate Bonds 2001

24 DEM 0.47 bn USD 0.36 bn Germany Herstatt Bank Foreign Exchange Trading 1974 Dattel, DanyDany Dattel

25 USD 0.35 bn United States Kidder Peabody Government Bonds 1994 Jett, JosephJoseph Jett
26 USD 0.35 bn United States Calyon Credit Derivatives 2007 Bierbaum, Richard "Chip"Richard "Chip" Bierbaum

27 AUD 0.36 bn USD 0.28 bn Australia National Australia Bank Foreign Exchange Trading 2004 Duffy, LukeLuke Duffy

28 USD 0.28 bn United States State of West Virginia Fixed Income and Interest Rate Derivatives 1987 Manchin , A. JamesA. James Manchin

29 USD 0.2 bn China State Reserves Bureau Copper Scandal Copper Futures 2005 Qibing, LiuLiu Qibing

30 USD 0.28 bn United States Merrill Lynch Mortgages (IOs and POs) Trading 1987 Rubin, Howard A.Howard A. Rubin

31 USD 0.16 bn United States Procter & Gamble Interest Rate Derivatives 1994 Mains, RaymondRaymond Mains

32 GBP 90 mio USD 0.2 bn United Kingdom NatWest Interest Rate Options 1997 Papouis, KyriacosKyriacos Papouis

33 USD 0.14 bn United States MF Global Wheat Futures 2008 Dooley, EvanEvan Dooley

34 USD 0.12 bn United States Morgan Stanley Credit-index options 2008 Matt Piper

35 USD 0.11 bn United States Cuyahoga County, Ohio Leveraged Fixed Income 1994

36 SEK 630 mio USD 0.1 bn Sweden Carnegie Investment Bank Equity Derivatives 2007 CEO, CarnegieCarnegie CEO, Carnegie Board

37 USD 0.1 bn Croatia Rijeka banka (Rijeka Bank) Foreign Exchange Trading 2002 Nodilo, Eduard Eduard Nodilo

and of course thousands of Madoffs and Ponzi schemers which are in thousands, in every city, every neighborhood in any country who allure people for their savings. I do not understand who are bigger gamblers the small ponzi schemers or big traders with gambling instincts who lose it all and destroy themselves and their employers.

1 comment:

Jay Strauss said...

Thanks for your support at Jaywiz blog

seems ive got SOME people expecting miracles


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