The MasterBlog: Craving the High That Risky Trading Can Bring

The MasterBlog: Craving the High That Risky Trading Can Bring

The MasterBlog

Hedge Fund Manager: Goodbye ...

Out in style...

Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst
into the spotlight last year (http://search.ft.com/ftArticle?queryText=lahde&aje=true&id=080115000297&ct=0 ) after his one-year-old fund returned 866
percent betting against the subprime collapse.


Last month, he did the unthinkable -- he shut things down, claiming dealing
with his bank

counterparties had become too risky. Today, Lahde passed along his "goodbye"
letter, a rollicking missive on everything from greed to economic
philosophy. Enjoy:



Today I write not to gloat. Given the pain that nearly everyone is
experiencing, that would be entirely inappropriate. Nor am I writing to make
further predictions, as most of my forecasts in previous letters have
unfolded or are in the process of unfolding. Instead, I am writing to say
goodbye.



Recently, on the front page of Section C of the Wall Street Journal, a hedge
fund manager who was also closing up shop (a $300 million fund), was quoted
as saying, "What I have learned about the hedge fund business is that I hate
it." I could not agree more with that statement. I was in this game for the
money. The low hanging fruit, i.e. idiots whose parents paid for prep
school, Yale, and then the Harvard MBA, was there for the taking. These
people who were (often) truly not worthy of the education they received (or
supposedly received) rose to the top of companies such as AIG, Bear Stearns
and Lehman Brothers and all levels of our government. All of this behavior
supporting the Aristocracy, only ended up making it easier for me to find
people stupid enough to take the other side of my trades. God bless America.



There are far too many people for me to sincerely thank for my success.
However, I do not want to sound like a Hollywood actor accepting an award.
The money was reward enough. Furthermore, the endless list those deserving
thanks know who they are.





I will no longer manage money for other people or institutions. I have
enough of my own wealth to manage. Some people, who think they have arrived
at a reasonable estimate of my net worth, might be surprised that I would
call it quits with such a small war chest. That is fine; I am content with
my rewards. Moreover, I will let others try to amass nine, ten or eleven
figure net worths. Meanwhile, their lives suck. Appointments back to back,
booked solid for the next three months, they look forward to their two week
vacation in January during which they will likely be glued to their
Blackberries or other such devices. What is the point? They will all be
forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry
Ellison will all be forgotten. I do not understand the legacy thing. Nearly
everyone will be forgotten. Give up on leaving your mark. Throw the
Blackberry away and enjoy life.



So this is it. With all due respect, I am dropping out. Please do not expect
any type of reply to emails or voicemails within normal time frames or at
all. Andy Springer and his company will be handling the dissolution of the
fund. And don't worry about my employees, they were always employed by Mr.
Springer's company and only one (who has been well-rewarded) will lose his
job.



I have no interest in any deals in which anyone would like me to
participate. I truly do not have a strong opinion about any market right
now, other than to say that things will continue to get worse for some time,
probably years. I am content sitting on the sidelines and waiting. After
all, sitting and waiting is how we made money from the subprime debacle. I
now have time to repair my health, which was destroyed by the stress I
layered onto myself over the past two years, as well as my entire life --
where I had to compete for spaces in universities and graduate schools, jobs
and assets under management -- with those who had all the advantages (rich
parents) that I did not. May meritocracy be part of a new form of
government, which needs to be established.





On the issue of the U.S. Government, I would like to make a modest proposal.
First, I point out the obvious flaws, whereby legislation was repeatedly
brought forth to Congress over the past eight years, which would have
reigned in the predatory lending practices of now mostly defunct
institutions. These institutions regularly filled the coffers of both
parties in return for voting down all of this legislation designed to
protect the common citizen. This is an outrage, yet no one seems to know or
care about it. Since Thomas Jefferson and Adam Smith passed, I would argue
that there has been a dearth of worthy philosophers in this country, at
least ones focused on improving government.



Capitalism worked for two hundred years, but times change, and systems
become corrupt. George Soros, a man of staggering wealth, has stated that he
would like to be remembered as a philosopher. My suggestion is that this
great man start and sponsor a forum for great minds to come together to
create a new system of government that truly represents the common man's
interest, while at the same time creating rewards great enough to attract
the best and brightest minds to serve in government roles without having to
rely on corruption to further their interests or lifestyles. This forum
could be similar to the one used to create the operating system, Linux,
which competes with Microsoft's near monopoly. I believe there is an answer,
but for now the system is clearly broken.





Lastly, while I still have an audience, I would like to bring attention to
an alternative food and energy source. You won't see it included in BP's,
"Feel good. We are working on sustainable solutions," television
commercials, nor is it mentioned in ADM's similar commercials. But hemp has
been used for at least 5,000 years for cloth and food, as well as just about
everything that is produced from petroleum products. Hemp is not marijuana
and vice versa. Hemp is the male plant and it grows like a weed, hence the
slang term. The original American flag was made of hemp fiber and our
Constitution was printed on paper made of hemp. It was used as recently as
World War II by the U.S. Government, and then promptly made illegal after
the war was won. At a time when rhetoric is flying about becoming more
self-sufficient in terms of energy, why is it illegal to grow this plant in
this country?



Ah, the female. The evil female plant -- marijuana. It gets you high, it
makes you laugh, it does not produce a hangover. Unlike alcohol, it does not
result in bar fights or wife beating. So, why is this innocuous plant
illegal? Is it a gateway drug? No, that would be alcohol, which is so
heavily advertised in this country. My only conclusion as to why it is
illegal, is that Corporate America, which owns Congress, would rather sell
you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a
plant in your home without some of the profits going into their coffers.
This policy is ludicrous. It has surely contributed to our dependency on
foreign energy sources. Our policies have other countries literally laughing
at our stupidity, most notably Canada, as well as several European nations
(both Eastern and Western). You would not know this by paying attention to
U.S. media sources though, as they tend not to elaborate on who is laughing
at the United States this week. Please people, let's stop the rhetoric and
start thinking about how we can truly become self-sufficient.



With that I say good-bye and good luck.



All the best,



Andrew Lahde

Inflationary Holocaust Jim Rogers [video]

Inflationary Holocaust Jim Rogers [video]


http://www.youtube.com/watch?v=bIwwa5nglq0

The Master Blog: U.S.: Fannie Mae, Freddie Mac To Buy $40 Billion Per Month In Troubled Loans

The Master Blog: U.S.: Fannie Mae, Freddie Mac To Buy $40 Billion Per Month In Troubled Loans

Would you like a helicopter or minisub to go with that megayacht? - International Herald Tribune

Would you like a helicopter or minisub to go with that megayacht?

By John Tagliabue

Monday, October 1, 2007

MONACO: Massimo Vilardi, an executive with Eurocopter, came to this year's Monaco yacht show to sell helicopters.

Helicopters? At a boat show?

Yacht sales have increased 10 percent to 15 percent a year in the last few years, and this year was no exception. Since everyone who is anyone has to have a yacht, and increasingly does, what buyers want most now, naturally, are accessories: minisubmarines and helicopters.

Olivier Milliex, head of yacht finance at the Dutch bank ING, summed it up best. "Today, a mega-yacht is indispensable," he said. "It's not like 15 years ago, when a yacht was a luxury item."

Stock markets may be in rough seas and oil prices exploding, but none of that put much of a blemish on the mood at the trade fair last month in Monaco. Europeans often watch boat fairs like the canary in the coal mine to judge the overall health of their economies. But Monaco may not be the best bellwether: if other boating fairs are prêt-a-porter, Monaco is, by design, haute couture.

The annual boating trade fair, hardly the largest in a series of fairs that go from Cannes to Genoa to Fort Lauderdale, Florida, at the end of October, ran here from Sept. 19 to Sept. 22. Monaco limits the number of exhibitors to about 500; moreover, many yacht builders do not even show yachts. Their customers do not want off-the-rack yachts, they want boats custom-built to designs that will not be replicated.

One bauble that increasing numbers of big yacht buyers are asking for is a helicopter. Of course, that means adding a pilot and a mechanic to the yacht's crew, but for the people who buy these yachts, that is hardly a concern. So Vilardi, head of marketing in the business and private market segment of Eurocopter, a unit of the EADS aerospace group, has linked up with the British yacht broker Edmiston to meet their wishes. At Monaco this year, Edmiston showed a 60-meter, or 200-foot yacht with Eurocopter's smallest helicopter, which sells for about $2 million, perched atop.

"Our motto is, 'To create what money can't buy,' " Vilardi said. "You're looking at a global offer: a car, a yacht, a helicopter, maybe a plane." And, maybe, a submarine?

Across the fair from Edmiston, the Dutch company U-Boat Worx was showing its colorful two-seater submarine, whose bulbous shape makes it look like Mickey and Minnie Mouse would drive it, with a list price of $246,000. The minisub, said Erik Hasselman, U-Boat Worx's head of sales and marketing, is ideal for stowing on a yacht, but for safety reasons can only dive to about 50 meters, where there is still surface light. "It's only for recreation," he said.

The banks at the trade fair, said Milliex of ING, were doing cross-selling: offering tax and finance advice to the same people who they serve as private banking clients.

Some wealthy customers, for example, prefer a mortgage for their yacht, taking advantage of low interest rates, rather than tying up cash in a yacht purchase. Others need advice on creating a company to buy their yacht, rather than purchase it directly, to save on taxes, or on registering their boat in a foreign country to enable them to pay lower social security contributions for crew members. Many of the yachts parked in Monaco were registered in George Town, in the Cayman Islands.

"Anyone who is in the oil business, naturally, is going to be motivated to build a yacht," said Hans-Erik Henze, senior vice president for yachts of Germany's Blohm & Voss, a division of the ThyssenKrupp steel group. "And that's where we do a lot of our business."

Blohm & Voss had the largest yacht at the show, the 105-meter Lady Moura, but it was moored offshore, not for visiting, being too large to fit Monaco's narrow harbor. Henze said the company's three yards had 15 yachts under construction. "Once, 100 meters was thought big," he said. Now we have several projects above that."

Despite the ostentation of Monaco's yacht shoppers, some bargain hunters come here, and they, in turn, are attracting shipbuilders from low cost countries. One of those was Timmerman Yachts, a Russian-Polish enterprise with yards in Moscow that is named for the Dutchman who introduced Czar Peter the Great to the art of shipbuilding. The yards build yachts in five sizes, from 25 to 47 meters, and there are 12

Asked why someone in Monaco would buy a Russian yacht, Irina Bogatyreva, a company official, replied unabashedly: "The price is cheaper, and the quality is the same as in other countries."

Curiously, some of the world's biggest yachts are owned by Russians. Roman Abramovich, the Russian tycoon, owns at least three, and has another under construction, the 165-meter Eclipse, which according to Monaco newspapers, will be outfitted with twin helicopter landing pads, and a submarine.

The high price of oil, which yachts burn as fuel, did not seem to worry anyone.

"I would say this market can withstand a lot of fluctuations, as the economy worsens," said Diane Byrd, executive editor of Power & Motor-yacht, the trade publication. "It's a small group of owners, a handful of people, and it's still growing."

Nor did the anemic U.S. dollar appear to be having much influence on the flow of orders. Westport Yachts, which showed a 50-meter, $29 million yacht, said that of five 35-meter yachts it would build next year, all were sold, and of five 40-meter yachts, three were sold.

What did seem to be creeping into the business is an awareness of the environment. In a narrow stand, Lance Sheppard hawked a foam and fiberglass product that replicates wood, like teak, hence sparing the forests.

"These days it's hard to get all types of veneers," said Sheppard, marketing director of Digital Veneer, a unit of the SMI Group, of Whangarei, New Zealand. "A lot of teak is illegally lumbered, some by the Chinese, in Burma and Nepal."

But the boat that dripped green, in spirit if not color, was a 50-meter yacht built by the Italian yard Mondo Marine. Renato Polo, a company official, listed the yacht's environmental assets: devices to recuperate its used water, filters on its twin diesel engines to capture particles, a hull covering that is benign to its marine environment, filtered glass to diminish the heat on board and hence reduce the need for air conditioning.

The $34 million yacht was built for Luciano Benetton, of the clothing chain whose ads always promoted social causes, for instance, against poverty or for education, and Benetton named it Tribu, Italian for Tribe, for his large family. Benetton gave the yacht five spacious bedrooms, each with its own bath, plus two exercise rooms and a sauna. Asked how much the environmental features would add to the bill for such a boat, Polo replied, "On a boat of this size, the difference in cost is laughable."