Were the Wall Street I-banks just bucket shops all along?

Discussion in 'Economics' started by Cutten, Sep 22, 2008.

  1. Ok I would exclude Goldman and maybe Morgan Stanley from this, but seriously, what happened with BSC, LEH, MER?

    As far as I can tell, they went long a load of high yield paper, short a load of premium, levered 2500%, then held on and prayed it would come back. In what way are they any different to the "bucket shops" of this or Livermore's era? I'll tell you - the bucket shops at least managed their risk.

    Think about this - spread betters like IG Index, City Index, and FinSpreads outlived 3/5ths of Wall Street. They survived this market and the I-banks didn't. Oanda and FXCM outlived BSC, LEH, and Merrill Lynch.

    The perception all these years was that Wall Street was the blue chip, Ivy league province of superstars, and that the spread betters and forex brokers were unscrupulous bucket shops run by amateurs, crooks, and pikers. Yet it turns out that they managed their risk whilst Wall Street didn't. Rather ironic, wouldn't you say?

  2. who's perception?:confused:
  3. Cutten, you bring up a very interesting point. It wasn't long ago that someone criticized me for doing the administration of my own fund rather than doing it the "Wall Street Way," and suggesting it is guys like me who give the business a bad name. I'm still generating positive returns while Wall Street is broke. A lot of good their Ivy League Degrees and Pedigree grooming did them.
  4. The 50% of Harvard grads who applied there as their #1 choice for a career in recent years. Millions of wannabees and their parents around the country. The establishment, the business media, the political class (why else appoint Paulson, Rubin etc from Wall Street to Washington?). Their sucker customers. Pretty much everyone except a few hedge fund employees, lone traders, socialists, gold bugs and permanent sceptics of authority.
  5. What you are doing is called backbone, guts and perseverance. Some might even throw in integrity and trust ...