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.

An argument for Financial Astrology

There are many charlatans, fake and superficial people who profess to practice Financial astrology but their studies and analysis is not necessarily verified or really authentic but there are some good and really knowledgable masters who do know what they are talking about. Their hints, indications and at times cryptic messages can mean a lot for the interested parties. I have been studying astrology since I was a kid and it is more than 30 years that astrology has helped me not only knowing myself but people around me, the world around me, my own past, present and future and of course the various markets I have consulted, traded and worked in. CAN WE REALLY BLINDLY trust an astrologer or what he is saying? The trust and faith only occurs when we do interpret the sayings of an astrologer correctly for our benefit. I have seen that even after knowing some predictions quite in advance, people still can lose money simply for lack of knowledge of technical or fundamental foreground knowledge or simply for poor execution.

It is not an astrologer who can misguide anyone but it is the reader who must know how to use the provided information.

Does it really work?
It does and that is why the famous saying popular in the 4 hottest capital markets, goes : Millionaires do not employ Astrologers but the Billionaires yes they do...

If you really are informed you may note that most big crashes of the markets had been predicted much in advance but most people or the crowd usually do not heed such things as these are rejected as nonsense. But the serious few who are serious to make money on day to day basis as professionals or who are open minded in all respects not only follow astrology but any other discipline that helps them achieve their goal.

Financial astrology (also known as business astrology, economic astrology, and or astro-economics) is the practice of relating the movements of celestial bodies to events in financial markets. The use of astrology in financial markets is not consistent with standard economic or financial theory, but might be considered heterodox economics. The scientific community considers astrology to be a pseudoscience.

Financial astrology is sometimes applied in the following ways:

+ Predicting major economic trends as they relate to certain cycles, specifically on the cycles of outer planets
+ Helping an investor find the best industry to be in for a particular period of time based on major planetary configurations
+ Identifying the best stocks to own during a particular time period
+ Identifying the best date and time to buy or sell a stock, asset or market
+ Correlating the Astrological aspect to the movement of stock market in day trading.
+ The practice carries the implicit "belief" that astrology is valid and influences human behavior. Although astrology is generally regarded in mainstream Western thought as having no logical basis, advocates of the efficient market hypothesis would also make the same claim with respect to most forms of technical analysis.

Evangeline Adams was one well known practitioner of financial astrology. In 1929 she predicted that the stock market would continue to rise in price. On Labor Day, September 2, she told a reporter for radio station WJZ that "the Dow Jones could climb to heaven." The next day the Dow Jones reached a record high that was not reached again until November 1954

And who on the Wall Street hired the noted astrologer Evangeline Adams? None other than J.P. Morgan. You may not know but some of the top Fund managers and other people related to capital markets do consult with a few astrologers.

WD Gann had said that Astrology was the natural law in the markets.
William Delbert Gann (6 June, 1878 – 14 June, 1955 - also known as W. D. Gann), was a finance trader who developed the technical analysis tool known as Gann angles. Gann market forecasting methods are based on geometry, astrology, and ancient mathematics.
Opinions are sharply divided on the value and relevance of his work. Gann wrote a number of books on trading that continue to help people who have some depth in this science.

L.J. Jensen, one of the founding fathers of BUSINESS WEEK, Now Bloomberg BusinessWeek, was a noted astrologer.
I can name many big names here and many noted astrologers and their amazing works, to which they dedicated their lives.

Financial astrologers who understand the markets have big customers in Hong Kong, Mumbai, Shanghai and few other top Asian markets.

More coming..

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