Simon Jefferson, guest contributor, writes...

I go to parties, sometimes 'til 4.
It's hard to leave when you can't find the door.
It's tough to handle this fortune and fame.
Everybody's so different, I haven't changed.
Joe Walsh, Life's been Good (to me so far)


For dedicated market watchers there are simply dozens of indicators around to spook or cheer the Bull or the Bear. For more casual observers like myself the best I can usually mange is the business news of my chosen rag and just keeping my eyes open; it's amazing what you can pick up from just walking around - never to be repeated offers, empty stores, increased vacancies etc.

One of the most striking things I have come across is the current advertising campaign of Saxo Bank in Copenhagen Airport (and other global sites). Saxo are keen to let us lose fortunes (probably with a helpful loan from them) - I refer you to their tag line:
"Dollar Drops, You earn – simple as that! Learn to trade FX like the pros. It's easier than you think."
Well, if was really that easy. But for every winner there is a loser.

All of which brings us nicely to the subject of hedges. Not the green things bordering your estate but those paragons of rectitude whose whole ethos was to "diversify risk" and whose publicity scam has been "Trust us, we're diversifying risk, we don't need regulation or some busy body sticking their nose in”. This is a lie. Not a half-truth. Nor economical with the actualité. It is a lie.

Many if not most "hedge" funds are taking big time-gambles with your and my money: witness the demise of Connecticut-based Amaranth Advisers where $6.5bn has apparently been lost from a fund "worth" $9.5bn at the beginning of August. So good were their controls and so well was the risk diversified that a 32 year old trader in Calgary was able to blow the lot.

Over here pension funds are piling in and the Financial Services Authority even wants such funds to be available to the public.

You really couldn't make it up.


NB1: Simon Jefferson is a widely-travelled and experienced finance professional; and he's cautious these days.

NB2: [Editor adds] Saxo are not alone. I have seen both HBOS plc and Société Générale aggresively touting leverage (CFDs in this case) to the general public in recent months.

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2 comments

  1. Paul Murphy // 10/05/2006 03:54:00 PM

    This is written with some passion. Anger even. Mr Adams, has someone lost you some money?

  2. RJH Adams // 10/05/2006 04:46:00 PM

    Lol - if only, then I'd have someone to blame for my own losses.

    I'll ask Simon to respond.

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