Monday, September 19, 2011


I couldn't help but smile with amusement at Kweku Abdoli's parting facebook post. Not because I ever threw the trader's equivalent of a "Hail Mary" pass. I've never countenanced such, and if I look introspectively, this is also perhaps my Achille's Heel, suffering as I do from excessive risk aversion. No. The smile-leading-to-guffaws ending in "Holy Fucking Shit!" was because I've been to my share of Grateful Dead concerts with the refrain
And its real and it wont go away, oh no
I cant get around and I cant run away
I need a miracle every day.
indelibly embossed upon my grey-matter more than 30 years later.

There are so many places to start with this one: The former Lehman Bros ummm errrr **risk manager** supposedly at the risk-helm; that it occurred within the supposed sober-minded Swiss Bastion of Stability (remaining CHF Longs take note and please re-examine thesis!!); The sheer size of the loss (WTF kind of nominal exposures did it take to generate that magnitude of red-ink?!?!?); and that, while dwarfing other rogue trading losses, still seems trifling in comparison to Madoff, GreeceIrelandPortugalUSACalifornia, FNM&FRE, and, yes, UBS's own US sub-prime write-offs and subsequent equity raise; AIG/Cassano's ridiculuous carpet-bombing of the market with sub-prime "puts", and so forth. These of course will be examined in (hopefully amusing) detail by everyone else, the results I am currently enjoying.

But the thing that struck me as most incongruous was that an apparently rather mediocre guy, with apparently no meaningful experience, or nepostistic "piston"-like ties to the bank, moves in two short years from the bank's graduate training program to head of the Delta-One Desk at one of the world's Top-10, perhaps Top-5, market institutions. See my eyes: they are blinking somewhat uncontrollably in surprise and fascination. If I had only known!! UBS would have been my counterparty of choice. Maybe I am a slow learner (I am of course!). Perhaps, as one suffering from over-aversion to risk, I tend to overestimate the complexity of things and am irrationally fearful of the number of ways one can get buggered and blind-sided. Perhaps I am unusual in my appreciation for how many less-than-salubrious ways a counter-party can "pick you off" (though I think not). And I look at UBS's competitors, be it Morgan or Goldman, and their younger MDs or desk-head 'wunderkinds' were/are generally rather impressive folk - the kind that only trench-weathered warriors would likely appoint for THEY have been around the proverbial block and DO (or should) know the score. All which leads me to back to the point of "What was UBS Management thinking promoting a guy in diapers to a war-zone flak-taking position of gravitas??!?" There is no shortage of talent around. It is not as if he is ENA-Oxbridge-MIT-CalTech apprenticed with Fisher Black or Paul Wilmott or interned five summers with Paul Julian Tudor-Soros-Bacon. It is absolsutely puzzling HOW HE OBTAINED THE KEYS TO THE CAR??

If you know, or think you know, then please do tell....(Kewpie Doll prize to best explanation!)


Anonymous said...

...because the MD who used to have the job got zeroed in 2008 and left (as did the person who would have replaced him, and so forth)

jill said...

most likely because of a shared personality disorder: that of his & that of his bosses. No need to have been around the block, and certainly no need to fear risk (what? we need no sisis here!!). The key is to convince others that you can make money in the short run [ ] so everyone can then move on to play with their own toys