June 23, 2016

19 years ago I watched my trading account triple in size. Every option I owned tripled in value. In fact, I stepped into the shower after treasuries ha been trading fe about an hour and stepped out to a ringing phone. My broker, Al, wanted me to know that all my 8 bids were now 24 bids. I am pretty good at mathematics on my feet so I dropped naked onto the new tile in a house I couldn’t afford to understand 1 thing: I was right. Catastrophe is my business and business was going to be good that summer.

The 1st domino was actually in December 1996. Alan Greenspan used the words ‘irrational exuberance’ and the desk I helped manage (Australian and New Zealand dollar and South East Asian swaps) as the number 2 lost c.$250k in about 20 minutes.

After a week or so we finished the year flat. January was a month of record profits. My boss, who I disagree with at every turn, told me he was glad he hired me.

February was mixed. The Japanese Yen started feeling the pressure and stock markets across Asia began to fall. Investors were leaving in droves. I fought with my boss and got fired. I didn’t care. They had taken the wrong strategy to the board so I knew we were cooked. They fired the most senior trader in NYC the next week. By the end of August, my boss had been fired and globally they’d lost $30 million. In a market they started the year as a leader in.

The day someone called and told me my nemesis had perished, I was staring at every 1 dollar in turned into 3. The 1997 Asian flu had proved that my crazy theory was right. For the 2nd time out of 3 attempts. That’s ‘right’ 66.6% of the time. I checked and double checked. Despite hitting bids and having the cash in my Smith Barney account.

It was my 2nd hedge fund (the 1st was a disaster and a great tax write off for my investor) and I couldn’t believe it. I just kept writing spreadsheets explaining it to myself until a friend invited me to a basketball game.

A year later, Long Term Capital Management collapsed and I was right again. We tripled the fund again.

There have been sizeable events since. The dot com bubble burst. 9/11. Although I was a little distracted then. The fact that Bush got re-elected in 2004. The mortgage collapse. Something we prepared for more than 10 years earlier. Something I fought the US Government over. Losing and then winning. The collapse of Crude from $145 a barrel.

When David Cameron announced the in/out EU referendum I checked the algorithms I started writing over 22 years ago as my rabbi high fived me because I successfully priced an Italian Bond delivery saving our group (saving us money was my job) almost $500k. An equation I wrote.

Every indicator pointed towards volatility. The key to cash in this immoral and violent game I walked away from to get more experience only to get pulled back in because I have the experience now.

I’m a different person though. Time has become more important than money. Sleep has become more important than miles I might travel or strangers I might seduce. Connection has become more important than fun. Food is more important than alcohol. I feel different. I’d rather run than fight. I wish for more time with people. I haven’t gambled in a decade.

So on June 23rd I sat in front of a television. Men sat talking. I wondered if they understood that no matter what happened they’d be hitting a domino with force. Why? Because they were about to drive people crazy with speculation.

1:20 am

I saw the 1st results and explained to someone where Middlesborough was.

2:20 am

I ate some Frosties and took a walk. Sunderland had also reported. Swindon too I think. Anyone above the M25 had taken advantage of the opportunity to rebel.

3am

I took a nap.

6am

Brexit became a real word.

10am

I went to the bank. They still had cash and were advertising a 3.3% savings rate.

1pm

I ate a sandwich (Cuban Reuben) and fielded calls from investors who insisted I stay in the hotel and take meetings to explain what had happened.

Actually, they wanted to know what was going to happen.

I’m a different person. 20 years ago I would have scared them into putting cash in my care. This time I suggested that their nervousness implied a weariness with the ‘ball of confusion’ (love and rockets reference) and perhaps it was time to focus on the truth:

The world we live in isn’t the business it pretends to be. It isn’t 1 opportunity to shear a sheep after another. It isn’t something that people like Randall, Prahalad and Nader are going to abandon.

The trouble with that position is that for every world class innovator I can cite, an equal and disconcerting risk appears. So, those problem solvers are busy. We need help. We need more people in every walk of life willing to change the situation we find ourselves in by asking the question in a different way or simply not doing as we have always done.

I have no idea what’s going to happen next. I do know that the media, responsible to report as well as inform and educate aren’t asking the right questions. They’re trying to encourage an atmosphere where people think there is no answer. Financial news brands are ignoring the facts and pushing the idea of a problem too big to understand. It’s not leviathan. It’s personal. This isn’t about billions. It’s about votes, mosquitoes and cash offers from pension schemes.

Catastrophe is happening all around us though. Next door. In our families. On the streets of cities like Middlesborough where people feel abandoned or left behind.

It’s affecting everything we experience. Fear is the prevailing feeling. Trepidation is the action people take.

Watch your neighbours and friends. At the supermarket. At the pub. The decisions they’re making. The decisions they’re not. The conversations they’re no longer starting. They’re concerned about something. No 1 is sure what. It doesn’t have a name. Brexit is only 1 variable.

I look at these words and think about how 19 years ago, as pressure mounted, arrogance meant no 1 wanted to get out of the game or back down. Now people are willing to consider watching all the dominoes fall before looking at the prevailing pattern and acting then.

That’s a dangerous approach as it will mean reaction. The answer?

A collective response. Actions inspired by everything that has happened so far. Sterling hasn’t fallen from 1.58. It’s fallen from 2. The longer term the view, the more considerate of humans we have the opportunity to be. In other words, turn off the news and call a friend. Listen to their views. Learn their view.

My humble opinion is we all become clear on what we personally need and want. What we are responsible for. What people are relying on us for.

On June 25th a client asked me what they should do next. I told them to create jobs and cover their pension liabilities. Insure everything immediately.

Admittedly, that helps me. My company. My investors.

I’m not sure where that will lead. I don’t know what’s going to happen. I’m simply committed to lifting the lid, as much as I can on large decisions that affect very many people. That’s why I’ve started publishing here today. I might make it easier for someone to see the whole picture.