|London's City boys lived it up while it lasted|
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|By Khoo How San |
They sure knew how to live it up in those heady years before the investment banking crash on Sept 15.
They were the City boys, big-name investment banks' stock analysts, traders and bankers in the square-mile City of London who earned fat bonuses.
Once, a group of them and their clients took a £25,000 (S$64,000) private jet trip to Ibiza, Spain, where they were met by a limousine filled with naked prostitutes.
Many supped Cristal champagne and flaunted £3,000 tailor-made Ozwald Boateng suits, Porsches and Ferraris. Now, one of them has broken the 'code of silence', as he himself puts it.
An insider, Mr Geraint Anderson (below), has, in a book, lifted the veil on what he calls the greed, short-term gambling and bonus culture that precipitated Sept 15's crash on Wall Street and London.
Even before the book's launch in June this year, Mr Anderson, 35, had been writing a popular weekly column in thelondonpaper, a free London paper, since 2006.
'Cityboy', his pseudonym while working as a high-flying stock analyst with a top London bank, gave glimpses into the lavish lifestyle of City boys, who received bonuses of up to six figures.
With the current credit crunch the hot-button issue, his book, Cityboy: Beer And Loathing In The Square Mile, which dished out more of the excesses, has been serialised by The Times of London.
Mr Anderson, a former Dresdner Kleinwort analyst who was named 'top stock picker' for two years running, said in his book: 'I've been dragged to strip joints where I've seen married traders throw £2,000 on private dances.
'I took clients for a £1,000 noshup (lavish meal) at Petrus. They had a £30,000 bottle of wine the waiter assured me was purchased quite often.'
Some of the City boys were just 23 years old, he added.
With Lehman Brothers having gone belly up, and Merrill Lynch in a fire sale, he said it's the end of the lavish life for the City boys. They had it coming, he added.
He blamed the pervasive bonus culture among the big-name banks where highly paid staff like the City boys pushed dodgy debt products and received huge bonuses.
He spoke of CDOs, or collateralised debt obligations - complex, high-risk products that appealed, so long as the gravy train did not stop. That train did screech to a halt, with the now-infamous sub-prime lending fiasco in the US.
Mr Anderson said the traders 'raked in cash by selling mortgage-backed securities they knew would explode at a later date'.
As he told the BBC in August: 'I think the people who created these products were either stupid or they were extremely devious.
'I'm not sure which one is more worrying...The only way these products could have survived would be if interest rates stayed low for, you know, decades, or indeed the property boom continued for decades.'
He said everyone knew these scenarios were unlikely.
In other words, it was all a make-believe world, a house of cards ready to collapse.
He admitted that he was a member of this cabal and that, when he quit his bank job earlier this year, his last bonus - in six figures - was 'disgustingly huge'.
But he claimed that, unlike his extravagant bosses and colleagues, he held on to his second-hand suit and 20-year-old Vauxhall car.
'Let's not shed too many tears for these people,' he told the BBC
Aka Dr Doom, Dr Roubini is an economics professor at New York University. On September 7, 2006, at an International Monetary Fund meeting, he announced that a crisis was brewing. He said that the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession.
Homeowners would default on mortgages, trillions of dollars of mortgage-backed securities would unravel worldwide and the global financial system would shudder to a halt. These developments, he said, would cripple major financial institutions like Fannie Mae and Freddie Mac.
As Mr Roubini stepped down, his host said: “I think perhaps we will need a stiff drink
after that.” They do now.
Ron Paul - Republican Congressman
Back in September 2003, Mr Paul told a House Financial Services Committee that: “Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market.
“This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions.” Of course, if we are going to give Mr Paul credit, than we should also highlight the efforts of Peter Schiff, his economic advisor and long-time economic hawk.
Founders of www.stock-market-crash.net – website aimed at investors
The writers of this site claim that predicting crashes is, in fact, easy: “One of the greatest myths of all time is that market crashes are random, unpredictable events. The lead up to a market crash is often years in the making. Certain warning signs exist, which characterize the end of a bull market and the start of a bear market. By learning these common warning signs, you can liquidate your investments and prosper by shorting the market.”
All charts, analyses (fundamental and technical) and trading plans are built on probabilities.
Trading is not about perfection. It is about probability and progress.
Why do so many traders miss trades, waiting for exactly the right entry, beat up on themselves when it doesn't come and the position runs away while they sit there scratching their heads and condemning themselves?
Why are so many traders trying to turn a game of probability into one of near-perfect certainty?
The answer lies in one of the cardinal sins of trading which is PERFECTIONISM.
Perfectionism can be a great help to people in many professions, but can be fatal to a trader. Perfectionists, always trying to find the Holy Grail of trading go from one service to another, from one system to another, looking for a way that they can be right all the time. “YES! Now, I found it! It’s this trading room, or this service, or this indicator! Uh-Oh---Wait... something is wrong here. Not all of these trades are working and I have drawdowns! How can it be that this particular method failed and I actually had to take a loss? Must be something wrong. I will try harder and look for an even better system, a more expensive service, a new and improved guru, some absolutely no-fail software so that I can have ONLY WINNING TRADES.”