Finance Dork

File under: things that only Boondock ever found interesting or entertaining about me. In reality, my life changed the first time I ever set foot on the floor of the Chicago Board of Trade. All those childhood dreams of being the next Ryne Sandburg sank pretty quickly in the rushing river of tickers and bids and offers. Those aren't bids and asks, that equity-only stuff. It's bid or offered. I don't ask you a price, I offer you a price and I don't take your ask, I take your offer. Sorry E*Trade baby, I'm a stickler for such parlance accuracy.

It's like the first time you ever got to count P&L in millions. That's when the director of our non-taxable desk told me to always remember that it's "just a job... and not your money", though I think he really meant those in inverse order of importance. Leave it to the guy in muni-land (the most retail focused of all market segments) to hold that view. At least the Harvard MBAs at Goldman Sachs really only mess with other lesser Harvard MBAs running large multi-national organizations. That whole Wall Street vs. Mainstreet sham only really exists in the land of punditry. It's much more Wall Street vs. Wall Street. The guys that hurt individual investors don't work in midtown, they're wealth managers and mid-tier brokers in CT or NJ that invest retail money in things they barely understand, not to mention their client's. Investment bankers are immoral and have agency issues, the latter group of guys are criminals and have competency issues. There is a difference between those two predicaments.

As for me, I've been lucky to always be on the buy side where I had no conflicts. I wanted to make money on every investment idea just as much for myself as for the clients whose money was being pushed around by some 20-something who spent his weekends with his head in CFA books instead of playing beer-pong in Alphabet-City. It worked out reasonably well. I covered financials in 2006-2009. Heck of a time to cut your teeth. Dinosaur quality by SPX: 666.

I'm told that I'm young yet, which is true by most measures. I've packed a lot into the last six years though. Figuring out what it all adds up to may be more a shell game at the moment. I have a lot left to do and a new appreciation for time. In any event, I'm at least in the right field and finding my way back to the exact right position in that field. It's like the first time you ever put a full-sized position on based on your work alone. Suddenly you dream in tick-values and it takes you a good week before you can do anything other than stare at the jacked excel spreadsheet you built in an effort to track your overall P&L for the fund. Eventually you calm down and just try to work harder and smarter than the other average looking white dudes who also know anyone who speaks on CNBC is either talking their book (the smart ones) or a self-aggrandizing laughing stock (the Jim Cramer syndrome).

I like it here. I'm better at this than most other things. I'm good with that. It isn't enough to sustain me in isolation but that is hard fought lesson I'm keeping with me.

-I Heart Palindromes

Dear John

Dear Western Europe,

You are an economy that has been in secular decline since the 1800's. You have a stagnant private sector and a shrinking tax-base. You protest budget cuts with riots that force police over-time and damage property that tax coffers pay to preserve and repair. You protest the rationalization of legacy benefits tied to a great and expanding empire to the languishing Republics that now comprise you. You will have budget cuts. You will have entitlement cuts. You will have higher unemployment. You will face higher taxes. You will be forced to cope with the emigration of your most educated and talented. I am sorry Western Europe, you will go the way of all bankrupt soverigns. No matter how historically wealthy, the world will find a conservator for you that will manage your wind-down and sale. So stop throwing trash cans through the windows of the very legitimate institutions that are leaving you behind for growth elsewhere; it just makes you look like spoiled children. Which you are.

Sincerely,

The growing developed world.

-I Heart Palindromes

Skip to my...

Really man? Deutsche? What kind of deal flow were you going to get there?! You might as well have bugged the local Schwab retail brokerage office.

http://www.cnbc.com/id/42273000/

Skeptically,

-I Heart Palindromes

Subtleties

Courtesy of The General.

 

Word,

-I Heart Palindromes

 

Dino B: Apatosaurus Who?

I guess I feel a little like the Brontosaurus did when he found out, I'm sure much to his dismay, that he was not in fact... real; generally confused, a little worried, somewhat curious as to who this Apatosaurus bloke was. In Microsoft Office, if you type Apatosaurus it will automatically attempt to correct you to Brontosaurus. I think that qualifies for a level of nerd-humor beyond my own capacity for appreciation of nerd-humor. That is saying something.

In any event, I may feel off, I may feel lost, I may have absolutely no idea what to reach out for anymore (other than odd Dinosaur metaphors, naturally), but I can certainly still write Haiku. I've said it before and I'll reiterate it for my own sake again: there wouldn't be a whole lot left of value if I ever lose my sense of humor. I can at least tether myself to that. Today, some broad market musings.

Chipotle Mexican Grill (CMG)
Go go gadget growth.
Remember, burritos won't
sell to Chinamen.

Magnatar*
Short the CDO.
The one we told Goldman to
fill with "toxic junk".

*This might be a little esoteric for my ranting blog but the fact that no major news outlet has yet highlighted the fact that what paper ended up in a particular CDO was almost always selected and/or approved by the party looking to be short the equity is still staggering to me. Poor insurance and pension funds on the other side just wanted a little more yield and a better duration match to their liabilities. Hefty price to pay.


Sell Side vs. Buy Side 
The former is a
bad joke that the latter is
too good at telling.  

BNP
Anything a French
quant can sell today. GS
will buy tomorrow. 

XAU
Not quite the Midas
touch, when the whole world finds out:
fungible is king.

PIMCO
No bid for the front 
end of the curve, just talking 
your ginormous book.

PIMCO (2)
Does this mean that Bill 
will now be shinning Black
Rock's brand new dress shoes?

Mr. Market
The sky is falling.
I say just close your eyes and
bid the Spoos. Trust me. 

Weak sauce, sorry, head is either in the clouds or in the sand. Let me know if you know which one.

-I Heart Palindromes 

 

Heading Due North

I am here to provide a general update on my moral compass.

1) Jokes about the nuclear disaster in Japan are acceptable.
2) Jokes about Knut the polar bear are in poor taste.

That is all.

Word,

-I Heart Palindromes

Story. ofmylife.

Los Angeles Hipsters: 1
I Heart Palindromes: 0

Word,


-I Heart Palindromes

post-script: Rawr.

Paging Passenger I Heart Palindromes

This is a wrap-up post to note that what fills this space is likely to be limited for a bit. Work, travel and life are about to get very very busy (by design). My core motivation for talking to the inter-web is still very much there but less productive than before. I will come back when I have something really funny and original to say; I think we both know the odds of that coming to pass on a regular basis.

Distance erodes
what was otherwise perfect.
Lost time-zone roulette.


Bid and offer it
below and above the strike.
hold your breath 'til fill.


Word,


-I Heart Palindromes

That Dog Won't Hunt

Really? This is what you went for when you all sat around and decided what you were going to name your hedge fund? These guys must be southern or something. Sniffing out those deep-value plays. I really hope that the dog with the bulls-eye also made it onto your business cards. I miss the cloistered days when you had to understand Greek mythology in order to figure out what the heck the name of a hedge fund stood for. After the Tiger cubs played-out every Tiger-iteration possible, it was all downhill.


note to self: e-mail Chase Coleman and suggest Vampire Tiger for his next macro fund. That could win me some points.

I've always enjoyed the play-on-words tendencies of finance-geeks such as myself. Like the fact that the bar at the CBOT used to be called "The Trader's Inn", though it changed its name to "Ceres" (the Greek goddess of grain -- acceptable). Or the fact that my first (and-to-be-fifth) employer's sub-prime CDO business was named after the slums of ancient Rome. Too cute.

Perhaps I'm just a bit edgy today (you can ignore the perhaps) but the idea of allocating money to a bunch of guys who want a blood-hound to be the summation of their investment acumen is a bit of a stretch for me.

CBOT
Traders, runners, props,
locals, market makers and
brokers. This is home.

ICE
Based in Atlanta?
When milliseconds matter?
That dog will not hunt.

-Dino B

Old Dog Old Tricks

It can be strange at times how competency can almost sneak up on you. I spent a good chunk of my day yesterday walking back through loan-loss provisions at mid-Atlantic community banks. I was genuinely surprised at how quickly all of that came back to me. If you don't see this as notable, pull up an income statement for a bank, or try to comprehend a balance sheet for a bulge-bracket broker. Good luck. Ruining my life for three winters/springs in the name of the CFA turned out to be worth it I suppose. I don't think I actually believe that but I certainly have to pretend.

While the last eighteen months have been a mixed bag (read: less than stellar) for my career, no one can take away what I've already managed to cram into my head. It's like that moment in a meeting with a consultant when you realize that they have absolutely no clue how to obtain a set of quotes for a SWAP (or why GS happens to be point away from C). Or the moment where I realized that the Stanford Ph.D. portfolio manager across from me had no idea how a holding company was structured and why it mattered. I've traded domestic and foreign equities, listed and OTC futures and forwards, listed and OTC options; I know how these things quote, expire, and settle. I have put on trades for both fundamental and technical reasons. I understand how market-makers never go broke. I've modeled private equity transactions that involved warrants and trust preferred securities with step-up triggers. I can delta-hedge an options portfolio without fucking up the dividends part within the basket of equities. I have had one short get bought. I have had more than one long get bought. I know what the skew of volatility is and why it's the only thing that matters; I have my own personal theories on why the volatility of volatility matters and the reasons I love asset-classes that have no arbitrage-able underlying. I can talk to a floor trader, analyst, portfolio manager or homeless man easier than I can talk to an investment banker because I actually understand how they get paid. I know what it means to have a trade DK'd and I also know what four-letter words you use on the phone with the executing broker when it happens (answer: all of them... and some you've made up on the fly). I didn't read about these things I learned them in doing. I am happy about this.

Thank you for being subjected to my pep-talk, my largest cheerleader who usually fills this role ahead of important events can't this time around. I'll have to be self-sufficient with my ego-stroking.

With that out of the way, I'll get two of these out before I hit the road:


CBOT
Bloody Bull at five.
Delta zero over night.
In between is life.


Russell Indexes (CRS)
Finance geek at heart.
She always sells herself short.
Knows more than she knows.


Wow, I just worked a finance pun into my Haiku. I don't even know what to say.


Word,


-I Heart Palindromes
 

Haiku Part Quatre

Yes, I realize that Haiku are supposed to have allusions to nature. No, I don't care. Tony Danza > Mother Nature. That is an unadulterated fact.

Note to self: edit Tony Danza wikipedia article this afternoon.

With a lot more attention being paid to work as of late, I feel a continuation of the finance theme coming on. I recall when the CFA and being an analyst dominated my life; I may be headed back that way sans Boondock to balance it out. Oh let's be honest, she's still managing that. At least I didn't memorize all those tickers for nothing. I'm going to get this out before heading to the CMG for lunch. The one next to the SBUX down the street from the MCD where I usually pick up my NYT in the AM unless they have the WPO at the WAG.

Piper Jaffray
When you made the league
tables, we all should have known
the ride was over.

Piper Jaffray (2)
At least you have the
Minneapolis market
cornered. Am I right?

Citadel
No money made in
converts since ninety-seven.
Asian arb rescues.

BNP
Those crazy frenchmen
will write a SWAP on Harry
Potter if you ask.

Barclays
You stand alone sir.
Who knew tangible book could
really go negative?!

Barclays (2)
Sell the ETF
business already. It's
not cute anymore

Bear Stearns
Always remember.
It's just a job and it's not
your money. Right Cayne?

Word,

-I Heart Palindromes

Is it Who or Whom? No, his name is Hu.

When I read research reports I suddenly realize that the whole left-brain/right-brain business is such a farce of the human condition. How is it that the world accepts entire deficiencies from otherwise capable and successful people? This is like trying to work with an Asian quant on a problem that has more than one right answer (or worse, no exactly right answer). They'll spin in circles while they rip their hair out. That's what strong scores in math and science paired with an institutionalized lack of aptitude for anything qualitative gets you. Good luck with that.

There are only three people I have ever met in my life that I am willing to detail my thoughts on Mr. Market to and also take a book recommendation from. One happens to be dead, one happens to be a bartender at a samba bar in our nation's capitol and one happens to be a jet-setting paradox of awesome. I'm especially partial to the latter.

I had an English teacher for a mother, being good at a few things wasn't good enough in our household. I think that was a key way in which my parents attempted to prepare us Murphy's for the real world. Unless you plan to be Michael Phelps and reach your singular-skill-set peak at 22, you have to be a fairly well-rounded person. Otherwise you'll find yourself being rather uninteresting at a disturbingly early age. Of course this is the exception, not the rule (as interesting people tend to be). You should hang on to those you find.

Word,

-I Heart Palindromes