Daily Investment Tips

As the news of UBS $2 billion loss continues to ripple the financial markets we look back at other infamous traders who nearly brought down their employers and others like Nick Leeson who caused the collapse of Barings Bank, the United Kingdom’s oldest investment bank.

Jerome Kerviel – Former Societe Generale trader. Losses at French bank were 4.9 billion euros ($6.7 billion)

Nick Leeson – Infamous Nick caused the collapse of Barings Bank, the United Kingdom’s oldest investment bank. Nick left Baring Bank in the red for $1.4 billion. The bank went solvent.

Evan Dooley – MF Global – losses $140 million

Steve Perkins – PVM Oil Futures, losses $10 million

Alexis Stenfors – Merrill Lynch in London , losses $456 million

John Rusnak – Allied Irish Bank, losses 691 million

 

 

written by Constantine Njeru \\ tags: Allied Irish Bank, Bank Jerome, Baring Bank, Barings Bank, Collapse, Dooley, Financial Markets, French Bank, Global Losses, Investment Bank, John Rusnak, Merrill Lynch, Nick Leeson, Oil Futures, Rogue Traders, Societe Generale, Steve Perkins, Ubs

George Soros is known as “the Man Who Broke the Bank of England” after he made a reported $1 billion during the 1992 UK currency crisis. He bet against the British pound and won big.

I came across a quote by George Soros, that seems to give an easy answer as to how the famous speculator makes money in a turbulent world.

The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.

George Soros

It is clear what George Soros does, He evaluates multiple scenarios and takes position in each scenario. As the market unfolds he lets profits run on the correct scenario and cuts losses on wrong scenarios. At a single time he might be long on a position but still take a short position on the same.

To play this scenario game you need to use risk management tools such as options, futures and short sales.  For this kind of trading to be successful an investor needs to have sufficient capital to buy those tools.

written by Constantine Njeru \\ tags: 1 Billion, Bank Of England, British Pound, Currency Crisis, Economic Predictions, Financial Markets, George Soros, Investor, Losses, Money, Options Futures, Profits, Quote, Risk Management Tools, Scenario Game, Scenarios, Short Position, Speculator, Turbulent World, Uk Currency