what the hell those guys at BMO doing? the lost all that money. aren't they supposed to be pros at that stuff ?? read article below http://www.globeinvestor.com/servle...or&date=20070427&archive=rtgam&slug=wxbmo0427
There are retail traders with fully scalable methods or strategies that make these twaddle funds or turtle soup types look like jokers. You have to realise that having a Bloomberg terminal and an army of PhD's & Quants will not rescue you from flawed strategy or risk management. Its only in the equity and corporate fixed income markets where these twats have the upper hand, but everywhere else its a very level playing field ! You trading half dressed,smelling,unshaven with Playboy magazine in one hand vs a Brooks Brothers draped clean cut Ivy League type should never ever faze you !!!
====> "BMO's commodity risk in the first quarter was 17 times greater than Royal Bank of Canada's, he said." ====> "The traders who made the bets have not lost their jobs, executives said"
they received a bonus instead. after all they could have toasted much more and that deserves some recognition.
This is a zero sum game....all players on all levels lose money at times. That said, I love to hear stories like this...thanks.
There's no question that BMOs loss is inexcusable but you can't completely ignore the big picture... Most banks that have a large presence in the energy industry provide their customers with many other services and products (investment banking, treasury, etc) that often produce significantly more revenue than what they make from making markets in energy products from said customers. Whether the losses stem from customer deal flow or spec trades is an entirely different issue...
Exactly, I have worked in the "Banks" they spend most of the time trading "OTC" with clients and then marking it, to always show a profit. Basically they have absolutely no idea how to trade. Also they have no idea whether they are profitable or not. Remember somebody has to pay the market. Contrary to popular belief its not small/retail traders, its the big banks and institutions and the central banks that are doing the paying. Which means that ultimately its the man in the street who does the paying.