As a continuation of the two articles “Becoming A Trader”, I am prepared to jump into a very delicate subject: finding the balance between the professional trading career and the personal life. Needless to say that one has a better chance of winning the lottery than becoming an accomplished trader and concurrently having a successful personal life. For me, there is no magic one-size-fits-all solution when solving for the optimal balance of the amount of time spent earning money and the amount of time spent with the family. Bottom line, it is all about time, not about money. Whether we are at the beginning of our career or toward the end of it, we are constantly trading our time for money. Everyone knows that the amount of time we have at our disposal is limited and irreversible. If we could find ways to earn more money, we could never make more time or turn back the clock. Continue reading ‘Between Fame And Pain’
Tag Archive for 'Witty Commentary'
Last Monday, Arizona lawmakers approved a comprehensive immigration bill aimed at fighting the illegal border crossing from Mexico, despite massive accusations of potential practices that could lead to racial profiling. Senator Al Melvin told the press that “this bill goes a long way to bringing law and order” to a state with an estimated number of 460,000 illegal immigrants and the nation’s busiest border crossing point. Prior to this bill, Arizona enacted a law in 2005 making human smuggling a crime and in 2007 it prohibited employers from hiring undocumented workers. This new bill would make it a state crime for people to not have an alien registration document and it would give police the right to question people about their immigration status. Continue reading ‘The Beginning Of The End’
Credit Default Swaps (CDS) are plain-vanilla financial contracts that allow hedging a credit exposure or betting on whether or not an underlying credit instrument (e.g., a bond, a loan) does experience a specified credit event (typically a default) within a given period of time. In plain English, the CDS buyers make money if the underlying credit name does default, whereas the CDS sellers pocket the profit otherwise. With a total notional amount exceeding $60 trillion, the credit derivatives market has gained notoriety over the last ten years but it quickly became the scapegoat for the subprime debacle, Lehman Brothers bankruptcy and the collapse of the insurance giant AIG. Nevertheless, the CDS market is back on top again, sending shockwaves in the credit world and making it harder for troubled companies or debt-strapped countries to borrow money. Continue reading ‘CDS – The Usual Suspect’
The presidential election campaign started last Friday in Romania. According to the polls, there are four major contenders: incumbent President Traian Basescu – a Liberal-Democrat (PDL), Mircea Geoana – a Social Democrat (PSD), Crin Antonescu – a Liberal (PNL) and Sorin Oprescu – an Independent. Without any political affiliation, I will impartially scrutinize the presidential candidates’ economic platforms. Among the many topics included in the abovementioned presidential aspirants’ programs, I will put the spotlight on two critical economic issues: near-term economic stimulus and fiscal policy. Continue reading ‘The Election Conundrum’
Since October 2008, more than 360 US banks have received at least $360 billion of Troubled Asset Relief program (TARP) funds from the Treasury. Of this, more than half went to the top fifteen banks in the country. This includes $145 billion of capital injections awarded to Citigroup, Bank of America, JP Morgan and Wells Fargo, the top four US commercial banks and another $10 billion each for Goldman Sachs and Morgan Stanley. There was also $40 billion in capital injections and $113 billion in credit in AIG, the insurance company that pioneered a whole new “too crook to fail” rule. In addition, by now US banks have also received at least $1.8 trillion of federal loan guarantees and $870 billion in federal loans. Believe it or not, the same day PNC Financial Group received $7.6 billion in TARP money, they acquired the rival bank National City for $5.6 billion. Continue reading ‘Greed – The Name Of The Game’
Not surprisingly, the rating agencies – Moody’s, Standard & Poor’s and Fitch, are currently tormented by a deep credibility crisis after it had been established that they awarded top ratings to scores of billions of dollars worth of sub-prime mortgage-related securities. The investors involved with these complex structured assets have relied on the agencies but they might never trust them again. The scariest thing is that the rating agencies have a serious accountability issue in admitting their flaws. For instance, I remember Moody’s claiming that employees, not the company’s practices, were to blame. Hence, they started firing the structured finance department people. Ultimately what they did was purely looking for scapegoats. What a lame excuse! Continue reading ‘The Machiavellian Watchdogs’
There are many appalling things I have learned to tolerate over the years except one: the lack of common sense. You can correct uncivilized manners, you can control vulgar speech, you can put a stop to violence but you can never treat stupidity. Few days ago I have read in the papers something utterly outrageous. According to Gheorghe Pogea – the Romanian finance minister, “in 2015, the public sector employees’ average salary will be in excess of RON 3,400, while the private sector employees will earn 31% less, averaging around RON 2,350”. He then added that “the 25% gap between the public employees (currently earning around RON 2,200) and the private employees (currently earning around RON 1,760) will become 30% in the coming years”. Let’s all move a step back, take a deep breath and start dissecting this common sense atrocity. Continue reading ‘Upside Down Meritocracy’
In baseball, the player that is supposed to bat is declared out when he misses three strikes. Switching to economics now, let’s have a walk together on the economic forecasting road. According to Professor Thomas Kida from the University of Massachusetts “… economics typically does not use the scientific method, where hypotheses are tested by observing what goes on in the economy. Instead, economists often develop elaborate theories that may be logically consistent, but are often based upon unrealistic concepts.” To me, there is nothing wrong with being off-the-chart once or twice. However, persisting in statistical outliers should strike you out from the economists’ table. As we all remember from the Latin lessons “errare humanum est perseverare diabolicum”. Then, let the case reveal itself.
Continue reading ‘Three Strikes – A Strikeout’
One-Year Anniversary
A year to the day, I took the dazzling initiative of setting up the “It Is What It Is” blog. First and foremost, all I intended was to share with my readers an unbiased and educated opinion about the complicated world of finance. Today I would like to walk through the main topics that I have addressed over the last twelve months. Where should I start? Maybe back in the summer of 2008, when I have been invited to the Romanian Diaspora Conference and where I presented my research paper “Financial Meltdown – Effect on CEE Credit Markets”. The conclusion of my work stated that Hungary, the Baltic countries and Romania are the most vulnerable economies to the global credit crunch. We all know what happened in the following months thereafter. Continue reading ‘One-Year Anniversary’