Money and Finance
- The 40 Highest-earning Hedge Fund Managers And Traders
In 2012, prominent hedge fund managers made headlines by successfully trading against JPMorgan Chase & Co., spending lots of money to influence the U.S. presidential election, and proclaiming that a nutritional supplements company was operating a...
- David Einhorn Tells His Side Of The Story On The Fsa's Insider Trading Fine
Prominent hedge fund manager David Einhorn, who is known for seeing problems at Lehman Brothers and publicly shorting the stock prior to the bank's demise, was fined yesterday by the U.K. Financial Services Authority. Einhorn and his fund Greenlight...
- Curse The Geniuses Who Gave Us Bank Of America - By Jonathan Weil
Ask anyone what the most immediate threats to the global financial system are, and the obvious answers would be the European sovereign-debt crisis and the off chance that the U.S. won’t raise its debt ceiling in time to avoid a default. Here’s one...
- Bruce Berkowitz: The Megamind Of Miami
Thanks to Will for passing this along.He may be the most driven investor on earth. And now the founder of the $17 billion Fairholme Fund is making the boldest bet of his career.Bruce Berkowitz is starting to sweat. It's just after 5 a.m. on a Thursday,...
- Hussman Weekly Market Comment: Earning More By Setting Aside Less
Meanwhile, it is notable that the "favorable" earnings reported by J.P. Morgan and Bank of America in the first quarter were due to reduced provisions for credit losses - charges that are largely discretionary. In the fourth quarter of 2009, J.P. Morgan...
Money and Finance
Satyajit Das on JP Morgan’s $2 Billion Loss
Having benefitted from risk management failures of others such as investment bank Bear Stearns and hedge fund Amaranth, JP Morgan (“JPM”) appears to have made an “egregious” and “self inflicted” hedging error. The bank would have done well to reflect on John Donne’s meditation: “send not to know for whom the bell tolls it tolls for thee”.
A US$2 billion Banana Skin …
The losses indicated are US$2 billion and may be higher. JPM’s share price fell around 9% (a loss of US$14 billion in market value) when the new was announced via a hastily arranged news conference. The bank also lost considerably more in reputation and franchise value.
The episode has all the usual trappings of a salacious trading disaster. Competitors had christened Bruno Iksil, one of the traders responsible – Lord Voldemort (after the Harry Potter villain). The position, which has been common knowledge in the market since early 2012 at least, was dubbed “the London whale”. After the losses were announced, the usual journalistic liberties have been taken – the whale has “beached” or “been harpooned”. A sub-editor gleefully coined the headline “Dimon is a Whale of a Hedge Fund Manager”.
But the losses raise serious issues. As they do not relate to the usual “rogue trading” incident which is typically dismissed as impossible to detect or control, the episode provides insights into the problems of modern high finance, bank strategies and regulation of markets.
- The 40 Highest-earning Hedge Fund Managers And Traders
In 2012, prominent hedge fund managers made headlines by successfully trading against JPMorgan Chase & Co., spending lots of money to influence the U.S. presidential election, and proclaiming that a nutritional supplements company was operating a...
- David Einhorn Tells His Side Of The Story On The Fsa's Insider Trading Fine
Prominent hedge fund manager David Einhorn, who is known for seeing problems at Lehman Brothers and publicly shorting the stock prior to the bank's demise, was fined yesterday by the U.K. Financial Services Authority. Einhorn and his fund Greenlight...
- Curse The Geniuses Who Gave Us Bank Of America - By Jonathan Weil
Ask anyone what the most immediate threats to the global financial system are, and the obvious answers would be the European sovereign-debt crisis and the off chance that the U.S. won’t raise its debt ceiling in time to avoid a default. Here’s one...
- Bruce Berkowitz: The Megamind Of Miami
Thanks to Will for passing this along.He may be the most driven investor on earth. And now the founder of the $17 billion Fairholme Fund is making the boldest bet of his career.Bruce Berkowitz is starting to sweat. It's just after 5 a.m. on a Thursday,...
- Hussman Weekly Market Comment: Earning More By Setting Aside Less
Meanwhile, it is notable that the "favorable" earnings reported by J.P. Morgan and Bank of America in the first quarter were due to reduced provisions for credit losses - charges that are largely discretionary. In the fourth quarter of 2009, J.P. Morgan...