Taking Stock

Well that was the week that was. I'll wager (if betting hasn't been outlawed) that there are more than a couple of traders sitting over a quiet cup of coffee this morning just staring into space, vacant and shell-shocked, looking out of the window (the first time in 5 days they haven't been focussed on images 18 inches in front of their face), muttering inaudible, mono-syllabic answers to their loved ones...

Huh? Oh, right. Yeah, sorry... where was I. Well, it was clear that there was 'something up' all week. I don't mean the amphetamine-fuelled price action - we've had that before (Sterling's ERM exit, Asia crisis, LTCM and Enron collapses, 9/11, 7/7) and we'll have it again. Nor do I mean the barrage of sensationalist reporting - if I have to read the adjective "unprecedented" or the phrase "uncharted territory" in one more piece of analysis, I'll.. errm.. stop reading financial markets analysis. No, it was in the conversations. Let me explain.

Your average spot monkey is a seat-of-the-pants type chap or chappess. He is not fabled for intelligence. He is known for reacting fast, obliterating wrong prices and making crude non-PC jokes in the process. He thinks that a "liquidity crisis" is when they have run out of Laurent-Perrier Rose at the Brasserie Roque. He thinks "credit crunch" is a breakfast cereal. He thinks an "Investment Banking Model" is the latest, tasty intern hiring at Goldman Sachs. The fact that I have spent a week discussing the real meaning of these terms with monkeys all over the world is the clearest barometric indication that we were sailing remarkably close to the wind.

Like some terrifying fair-ground attraction, it was palm-sweatingly scary, and yet all rather exciting at the same time. Of course it was also another valuable learning experience.

Trywalker learnt what it is like to live, and trade through a genuine financial crisis. And he started to realise why the cornerstone of any market is 'liquidity' - you only fully realise this when it is absent. This will stand him in good stead.

FVJ learnt the meaning of the word "arbitrage" (more on that another time). Then he learnt the meaning of the word "wrath", after I foolishly gave him the responsibility of taking profit on a 2-year Gold forward position (it's so far in the money, surely he can't f### that up, I thought to myself). Finally he learnt about "near-death experiences" after he sloppily sent an order that had actually already been filled. UDH Boy was up all night trying to extricate us from that particular hole (there are a few things harder to get out of during Asian hours than 25mio USD/HUF, but not many), and will probably see the funny side of it in a year or so.

Us older hands learnt, or were rudely reminded perhaps, that complacency and disaster are never really far apart...


P.S. I do hope that Patsou held onto her GS & Citi stock, which rallied 20+% yesterday. It's a lovely necklace and would be a shame to have to hock it! ;-)