Archive for the ‘Finance Humor’ Category

Occupy Main Street, Restructure America

Sunday, November 6th, 2011

November 6, 2011: It has been almost 4 years since the United States and the entire Western World has been mired in this recessionary state. What has happened should not be a surprise to anyone. After scrambling for an ever higher quality of life, sending labor-intensive industries overseas, and losing more than 2.5 million manufacturing jobs and more than 850,000 professional service and information sector jobs to outsourcing, we foolishly blame our government and the top 1% of our earning population for our hardships. Most Americans lack the skills and motivation to innovate, and are fit to work only in commoditized industries, yet most of our commoditized industries have been sent overseas. The government has unsuccessfully spent trillions on the economy to lessen market volatility, to reassure pensioners, to bolster bank and corporate balance sheets, and to create jobs. Over the past 10 years, spending growth for prisons has risen at a rate 6x the rate of spending on education because this society simply does not value education as much as it should. The truth of the matter is, we are all to blame. After inflating real estate and securities prices through leverage, after fighting senseless wars in pursuit of oil when we have enough natural gas reserves to last 200 years, and after allowing an entire generation of our citizens to lose their values of hard work and integrity, we ALL are to blame.

Instead of pushing our children to embrace globalization, we have allowed them to grow up isolated from the rest of the world. Instead of encouraging them to be productive and to earn their own keep from a young age, we have allowed them to spend hours watching brainless television and to lose themselves in drugs and alcoholism in communities where families aren’t the norm and divorce rates are greater than 70%. Instead of building secure homes, we have a bred a completely confused generation just asking to be taken advantage of by the rest of the world.

We need to OCCUPY MAIN ST.; we need to restructure America, the American lifestyle, and the American mind before it’s too late. We need to instill passion for innovation and entrepreneurship, we need to teach our children practical skills and make sure that they are proficient in math and science, we need to encourage competition, and we need to instill the values of hard work and integrity into our youth so they can grow up to be proud and self-sufficient.  No able bodied person should feel entitled to anything material in life without providing value or giving back to society.

Today, there are 45 million Americans on food stamps.

The number of very poor Americans (those at less than 50% of the official poverty level) has risen to 6.7%, or to 20.5 million.  This is the highest percentage of the population since 1993.  At least 2.2 million more Americans, a 30% rise since 2000, live in neighborhoods where the poverty rate is 40% or higher. Last year, 2.6 million more Americans descended into poverty, which was the largest increase since 1959.  In 2000, 11.3% of all Americans were living in poverty; today 15.1% of Americans are living in poverty. The poverty rate for children living in the U.S. has increased to 22%. There are 314 counties in the U.S. where at least 30% of the children are facing food insecurity. More than 20 million U.S. children rely on school meal programs to keep from going hungry. In 2010, 42% of all single mothers in the U.S. were on food stamps. More than 50 million Americans are now on Medicaid. One out of every six Americans is enrolled in at least one government anti-poverty program. I agree that we should help the poor and that compassion is a virtue, but shouldn’t these people help themselves as well? What specifically has caused their plight? Is only the government to blame? Are only the rich to blame? No, of course not.

Inflation adjusted wages have not grown since 1999, the S&P 500 is at 1998 levels, and real estate prices are at 2002 levels.  It is up to us to realize what caused the “lost decade” and avoid a “lost century.”

Why has this happened? By the 1970s, the average American was 20x richer than the average Chinese person. Today, it is only 5x. The Western world rose to power because “they had laws and rules invented by reason.” Our institutions, our basic freedoms and property rights, our discipline, and our motivation to work hard created $130 trillion of wealth in the Western World. Unfortunately, we have lost our work ethic and our intellectual drive. The average Korean works 1,000 hours more per year than the average German. The Chinese soon will have filed more intellectual property patents than the Germans. This is the END of the great divergence between the West and the East. There is little that differentiates us from the rest in a world that is being forced to understand the idea of resource scarcity more than ever before.

In 1776, Adam Smith, in The Wealth of Nations, explained how the East lagged behind because it lacked capitalism and property laws. Niall Ferguson explains how in addition to this, Competition, Applied Science, Property Rights, Modern Medicine, the Consumer Society, and Work Ethic propelled the West into prosperity:


This video link by Niall Ferguson shows why the Western world may lag behind as emerging market nations continue to gain in global wealth.

I am sick and tired of watching Occupy Wall Street protests. Stupidity should not be tolerated; we should educate the rest and Occupy Main Street. I asked a protester two weeks ago why he was protesting, and he could not give me a straight answer. His parents unfortunately didn’t teach him the values of hard work and self respect. It reminds me of the guy in this video asking for “millionaires & billionaires” to pay for his college tuition: [youtube][/youtube]

Contrast that young man with this young Asian immigrant, who hasn’t been able to set up his business properly in 2 weeks because of the protesters blocking access to his food cart:


I can’t believe I would ever say this, but even Ari Gold knows better: [youtube][/youtube]

Understanding Pension Plans (CFA III) – 1

Tuesday, September 27th, 2011

One of the largest investors in hedge funds, mutual funds, and alternative asset classes, including private equity, timber, and commodities is the pension fund.  As an analyst or a portfolio manager, it is essential to understand the purpose of pension plans, how they are structured, and how they allocate risk.

A pension plan is a portfolio of assets (securities, hard assets) that can support future retirement benefits.  The promise to pay these benefits in the future is a key responsibility of the plan sponsor.

The plan sponsor is the company, non-profit, or government agency that funds the pension plan through periodic payments.

The plan participants are the individuals who receive the pension benefits as they are paid out from the pension plan.

There are also four main types of pension plans, the defined contribution plan, the profit-sharing plan, the defined benefit plan, and the cash balance plan:

1) Defined Contribution Plan: is a pension plan whose retirement payout expectations are framed by contributions to the plan by the plan sponsor.  The liability to the sponsor is only the plan contribution, not the benefit received by the plan participants.

2) Profit Sharing Plan: is a defined contribution plan, where the contributions to the plan are determined by the plan sponsor’s profitability.

3) Defined Benefit Plan: is a pension plan that is framed by the benefits paid to plan participants instead of by the contributions.  Benefits are calculated by taking to account years of service, expected return, expected salary, and other factors that will be explained later.

4) Cash Balance Plan: is a defined pension plan that maintains individual account records for plan participants.  This plan shows each member’s accrued benefits and manages accounts instead of an actual fund.


Funded Status: relationship between PV (present value) of the pension plan assets and the pension plan liabilities.

Underfunded: PV (present value) of pension plan assets here is less than the PV of the pension plan liabilities.  When plans are underfunded, the may require the sponsors to make special contributions to the plan in addition to regular contributions.

Fully Funded: PV (present value) of pension plan assets here is greater than or equal to the PV of the pension liabilities.  Sponsors can temporarily stop making contributions to the plan’s asset base when the PV of assets > PV of liabilities.

Surplus: difference between the PV of pension plan assets and the PV of pension plan liabilities.


Active lives: the number of plan participants who are not currently receiving pension payments and are still working to save for retirement.

Retired lives: the number of plan participants currently receiving benefits (retirees).

Accumulated Benefit Obligation (ABO): is the total PV of pension liabilities to date, assuming no further accumulation of benefits.

Projected Benefit Obligation (PBO): (PBO) is the ABO  plus projections of future employee compensation increases.  The PBO is the pension liability for a going concern and is the liability figure used in calculating funding status.

Total Future Liability: is the measure of pension liability that is the most comprehensive, because it takes into account not only changes in workforce and inflation in benefits, but salary increases as well.  Total future liabilty is used when setting long term objectives and goals for the plan within the IPS (Investment Policy Statement).

For graphics and links, please visit the Leverage Academy blog. Syndications may not capture the entire article.  LA also reaches thousands through its syndications.  If you wish to write an article or contribute, please feel free to e-mail the address below (Tom).

Please visit and check out our curriculum tab to sign up for our intensive investment banking, private equity, global macro and sales & trading courses in Boston & New York.  Classes will also be held online, live through video feeds at these locations.  Questions?  Feel free to e-mail thomas.r[at] with your inquiries or call our corporate line.

Donald Trump Runs for President – Obama, “You’re Fired!”

Saturday, March 19th, 2011

Donald is more of a media mogul today than an astute businessman.  He has declared bankruptcy over three times, and like most failed businessmen is now trying to take a stab at the political world.  In 2012, Mr. Trump plans to run for the U.S. presidency.  It looks like ratings on Celebrity Apprentice are going to his head.  Governor Arnold made it in California, so what can keep Trump from the White House?  We all know that California is basically a bankrupt state; I wonder what the U.S. will potentially look like in 2016, by the end of Trump’s first term?

According to AP, “Donald Trump boots contestants off his TV show with a famous two-word catch phrase: “You’re fired.” He may want the chance to say the same to President Barack Obama.

The real estate tycoon with the comb-over hairdo and in-your-face attitude plans to decide by June whether to join the field of GOP contenders competing in 2012 to make the Democratic incumbent a one-term president.

Trump insists he’s serious. He rejects skeptics’ claims that he’s using the publicity to draw viewers to “Celebrity Apprentice,” the NBC reality program he co-produces and hosts.

“The ratings on the show are through the roof. I don’t need to boost the ratings,” Trump told The Associated Press in a recent interview. “But the country is doing so badly. I wish there was someone in the Republican field I thought would be incredible because that’s what we need right now.”

If he runs, Trump would follow a well-worn path of wealthy businessmen who have sought the White House before. Recent examples include Christian Broadcasting Network founder Pat Robertson in 1988, tech mogul Ross Perot in 1992 and publishing executive Steve Forbes in 1996.

Michael Bloomberg, the billionaire New York City mayor, also has hinted at national political ambitions even as he says he won’t enter the race.

Trump is prepared to spend as much as $600 million of his personal fortune on the race. “Part of the beauty of me is that I’m very rich,” he told ABC’s “Good Morning America.”

He flirted with presidential campaigns in 1988 and 2000, but never did run.

So what makes the 2012 race any different?

Several political operatives in Washington and elsewhere say privately that Trump has reached out to them repeatedly in recent weeks to learn about the mechanics of running a campaign, asking questions about how much money he would need, what type of an organization he would have to build — and whether he could win.

Publically, Trump has taken several steps to suggest he’s not joking.

He delivered a well-received speech to the Conservative Political Action Committee conference last month in Washington. He’s done interviews with reporters in Iowa, the first-in-the-nation caucus state, and is planning a trip in June to leadoff primary state New Hampshire for a presidential candidate’s rite of passage — appearing at a political breakfast series called Politics and Eggs. Last week, Michael Cohen, one of his top business advisers who is running a draft-Trump website, met with GOP activists in Iowa.

Some people close to Trump also say they think he just might take the plunge this time.

“I think he’s looking at it fairly seriously, and he has the money and liquidity to do it. He’d make a very strong candidate,” said Dick Morris, a Democrat-turned-Republican strategist whose father was Trump’s lawyer for many years. “He’s kind of sui generis, in his own category. He’s someone who’s accomplished things and won’t take any crap.”

Republican pollster John McLaughlin said the themes Trump is stressing would find a receptive audience among GOP primary voters.

“He has a message that’s resonating: American decline, China rising, and that America needs to turn things around,” McLaughlin said. “It’s not a politically correct message and it will appeal to Republicans … and could put him in major contention.”

Famously brash, Trump minces few words when talking about his beliefs:

–China “has taken all of our jobs.” The Organization of Petroleum Exporting Countries, the Mideast oil cartel, “is ripping us right and left. … You’re going to see $5 a gallon gas pretty soon.”

–Japan, recovering from an earthquake and tsunami and trying to avert a nuclear disaster, has “ripped us off for years” as a trading partner.

–Obama should be pressed to disclose the original birth certificate. “When you look at what happens today, you look at the misconduct, the fraud and forgeries, you really want to see proof,” Trump told the AP. Obama was born and grew up in Hawaii, and his 2008 campaign issued a certification of live birth — an official document from the state.

–The “birther” movement has legitimate concerns, Trump told ABC. “The reason I have a little doubt, just a little, is because he grew up and nobody knew him.”

Trump certainly has the strong opinions of a candidate.

But would the thrice-married billionaire known for his extravagant hotels and golf courses brave the mundane rituals of retail campaigning and the intense examination his business empire and personal wealth would draw?

“People thinking of running have to file a personal financial disclosure within 30 days of registering with the FEC. Does anyone really think that Donald Trump, under penalty of perjury, would file such a document?” campaign finance lawyer Jan Baran asked.

A candidacy also could present legal troubles given Trump’s web of business interests.

While Trump is not formally connected to Cohen’s draft effort, he allowed Cohen to use a Trump corporate jet for the trip. Trump booster and billionaire pharmaceutical executive Stewart Rahr paid for the trip, which led to a Federal Election Commission complaint from a supporter of Texas Republican Rep. Ron Paul.

Trump, 64, insists he’s prepared for the scrutiny.

“I always heard if you’re very, very successful, you can’t run for high political office — too many victories, fights and enemies,” Trump told the AP. “And yet that’s what this country needs. We can’t have any more of what we’re having.”

Trump’s past could dog him.

His divorce from first wife, Ivana, over his affair and subsequent marriage with actress Marla Maples made him a New York tabloid staple in the 1990s. He’s been married since 2005 to Melania Knauss, a former model from Slovenia who is 24 years his junior. His three marriages produced five children, and he has two grandchildren.

He is known for finding ways to inject himself into news of the day. Last summer, for example, he offered to buy the building set to be turned into an Islamic center near ground zero in New York City.

His politics are all over the map.

He mulled an independent White House bid in 2000. He’s made political contributions to many Democrats over the years, including New York Sens. Chuck Schumer and Kirsten Gillibrand and Senate Majority Leader Harry Reid of Nevada. Last year, Trump gave $50,000 to American Crossroads, a GOP-aligned group that spent millions to defeat Democrats nationwide.

The biggest question facing Trump may be not whether Republican voters will overlook all that. It may be whether he even wants to ask them to.”

S&P 500 2011 Median Target – 1,535, Really?

Friday, March 4th, 2011

Investment bank earnings estimates are truly bullish for 2011.  Applying a 16x-18x multiple to these forward earnings brings you to S&P levels unseen since 2007.  Unfortunately, something not included in these estimates is that for every $10 crude oil increases, S&P earnings fall by $3.  This does not even factor in the fall in consumer confidence when citizens across the globe realize that they are soon going to pay $200 to fill up a mid-sized sedan, once QE3 is unveiled and Middle Eastern governments are overthrown once and for all.  After all this is done for, oil could easily reach $130+ on a supply disruption in Saudi Arabia.

Of course, BofA’s Bianco will not discuss this.  Neither will the analysts at Barclays, who just revised their S&P 500 earnings estimates up from 1,420 to 1,450.

Please view LA’s blog entry to see the S&P earning’s table below.

Firm Strategist 2011 Close 2011 EPS RPF Model
Bank of America David Bianco 1,400 $93.00 1,535
Bank of Montreal Ben Joyce 1,300 $89.00 1,469
Barclays Barry Knapp 1,420 $91.00 1,502
Citigroup* Tobias Levkovich 1,300 $94.50 1,559
Credit Suisse Andrew Garthwaite 1,350 $91.00 1,502
Deutsche Bank Binky Chadha 1,550 $96.00 1,584
Goldman Sachs David Kostin 1,450 $94.00 1,551
HSBC Garry Evans 1,320
JPMorgan Thomas Lee 1,425 $94.00 1,551
Morgan Stanley**
Oppenheimer Brian Belski 1,325 $88.50 1,460
RBC Myles Zyblock $88.00 1,452
UBS Jonathan Golub 1,325 $93.00 1,535
Median 1,350 $93.00 1,535
Average 1,379 $92.00 1,518
High 1,550 $96.00 1,584
Low 1,300 $88.00 1,452

Wall Street’s Annual Frat Party

Wednesday, January 19th, 2011

Alan Breed – President, Edgewood Management

Peter Georgiopoulos – Chairman and CEO, General Maritime Corp.

Jane Gladstone – Senior Managing Director, Evercore Partners

Pam Goldman – Vice President, Invemed Associates

Joseph Goldsmith – Founder and Managing Partner, Goldsmith & Co.

Candace King-Weir – President, C.L. King & Associates

Steven Langman – Managing Director, Rhone Group

Robert Lindsay – Co-Managing Director, Lindsay Goldberg

Roberto Mingone – President, Bridger Capital

John Miller – Managing Director, Barclays Capital

Seth Novatt – Managing Director, Alliance Bernstein

Mitch Rubin – Managing Director, RiverPark

James Sampson – Senior Managing Director, Lebenthal & Co.

Peter Schulte – Managing Partner, CM Equity Partners

Michael Tennenbaum – Senior Managing Partner, Tennenbaum Capital Partners

Andy Walter – Managing Partner, Blue Orchid Capital

Meredith Whitney – CEO, Meredith Whitney Advisory Group

For members of Kappa Beta Phi, an exclusive, secretive Wall Street fraternity, plunging stock prices, the waves of layoffs and bank failures have yielded a dividend in punch lines.

“I feel like the mayor of New Orleans after Katrina,” quipped Alfred E. Smith IV, the group’s leader, or “Grand Swipe,” at the opening of its annual black-tie dinner last week. “Today, the FBI put out a warning that Al Qaeda was planning an attack to cripple the U.S. economy,” inductee Martin Gruss joked later in the evening. “I’ve got news for them, Congress has already done that.”

Though a number of the society’s luminaries — including former Bear Stearns Cos. Chief Executive James E. Cayne, Lehman Brothers Holdings Inc.’s Richard S. Fuld Jr. and ex-Merrill Lynch & Co. Chief Stanley O’Neal — have faced rebuke and were conspicuously absent, members still standing haven’t lost their sense of humor. This year’s attendees gave a rare standing ovation to a rendition of Don McLean’s “American Pie,” rewritten to read: “Bye, bye to my piece of the pie.”

Established before the stock-market crash in 1929, Kappa Beta Phi meets just once a year and always at the St. Regis, the more than a century-old Beaux Arts hotel on Fifth Avenue. The society, with its grandiose titles and playful rituals, dates back to a time before television when societies and clubs were big sources of entertainment. It also dates to when the term “Wall Street” referred to the warren of streets around the New York Stock Exchange and not to the complex, global network of hedge funds and structured derivatives it has become.

Kappa Beta Phi continued to meet through the depression — a 1932 Wall Street Journal story about the gathering carried the headline “Wall Street Chapter to Revive Ghosts of ‘Good Old Days’ Tonight” — but its annual dinner was suspended for a few years during World War II.

Kappa Beta Phi’s membership remains a roster of Wall Street power brokers past and present, including New York Mayor Michael Bloomberg and New Jersey Gov. Jon Corzine, two more no-shows at this year’s dinner. Mary Schapiro, President-elect Barack Obama’s nominee to head the Securities and Exchange Commission, is also a member, as is former Goldman Sachs & Co. Chairman John C. Whitehead. About 15 to 20 new members — eminent all — are inducted each year, having been nominated by members and approved by the group’s leaders.

But Kappa Beta Phi, whose name is a play on Phi Beta Kappa, the academic honor society, is more about cornball comedy than high finance. Its Latin motto “Dum vivamus edimus et biberimus” is freely translated as, “While we live, we eat and drink.” Like Phi Beta Kappa inductees, members of Kappa Beta Phi also receive a fob, or key. Phi Beta Kappa’s key includes a hand pointing at three stars that symbolize the society’s principles: morality, friendship and learning. Kappa Beta Phi’s key has images of a hand, a beer stein, champagne tumbler and five stars. The stars represent Hennessy cognac and the hand is there to hold a glass.

Under the painted clouds and gilt chandeliers of a room called the St. Regis Roof, this year’s attendees, including Alan Schwartz, the ex-Bear Stearns president and chief executive, and Sallie Krawcheck, the former head of Citigroup’s wealth-management arm, enjoyed an evening of ribald humor and old-fashioned hazing.

The material was choice, since in the year since the group last met, all five of Wall Street’s major independent investment firms have been taken over, have failed or have been transformed into commercial banks.

Society members, some wearing the society’s key on a red ribbon around their necks, started with cocktails then moved on to dinner of beef tenderloin and cheap wine — $10 bottles of Chilean cabernet sauvignon. About 150 members showed up, fewer than usual. Some, including BlackRock Inc. Chief Executive Laurence Fink and Gregory Fleming, who resigned as Merrill Lynch’s No. 2 executive the day of the dinner, only stayed for a drink.

Part Friar’s Club roast, part “Gong Show,” Kappa Beta Phi’s annual dinner is held for the official purpose of inducting new members, who sit at a long table with a black tablecloth at the front of the room. The inductees, “Neophytes” in Kappa Beta Phi parlance, must perform a variety show for the old crowd. Mr. Smith, a Wall Street veteran and great-grandson of legendary New York Gov. Al Smith, served as the evening’s master of ceremonies.

Neophyte Mr. Gruss poked fun at a fellow investor. “There’s Wilbur Ross over there,” Mr. Gruss said at one point, referring to the member who recently became the society’s “Grand Loaf,” one of Kappa Beta Phi’s four offices. “Doesn’t he look like a visitor from another planet? That’s the reason brothers and sisters shouldn’t marry.”

“There’s a need for Wall Street to have a little bit of humor,” Mr. Ross said this week. “If anything, people needed a little more cheering up this year.”

The group’s humor is anything but politically correct. One crude joke took aim at Rep. Barney Frank’s treatment of the U.S. taxpayer, with a reference to Mr. Frank’s sexual orientation. Mr. Frank is the first openly gay member of Congress.

Together with professional coaches, the Neophytes stage Wall Street’s version of pledge night. This year, at the suggestion of last year’s class, the male Neophytes appeared in falsies and pigtail wigs, some in gold and bright pink. The men, some sporting a dab of blush, also wore cheerleader skirts and shirts bearing the society’s Greek letters.

This year’s crop of 17 Neophytes included Don Donahue, chairman and chief executive of the Depository Trust & Clearing Corp., J. Tomlison Hill, vice chairman of the Blackstone Group, Peter Scaturro, former chief executive of U.S. Trust and Goldman Sachs Group Inc.’s private-wealth arm, and James S. McDonald, chief executive of Rockefeller & Co., a wealth-management firm that advises the Rockefellers and other families.

The female members of the class, dressed as male cheerleaders, wore short-hair wigs and tights. The three female Neophytes were Sarah Cogan, a partner of Simpson Thacher & Bartlett, the Wall Street law firm, Sara Ayres, managing director at New Providence Asset Management, and Marianne Brown, chief executive of OMGEO LLC, a firm that handles the post-trade details of securities transactions.

Backed by a five-piece band, the Neophytes performed renditions of musical standards, from Bing Crosby’s “White Christmas” to the Beatles. There was at least one attempt at rap, by Mr. Hill, who was quickly jeered offstage. Rockefeller’s Mr. McDonald tried to sing a version of “Joshua Fought the Battle of Jericho,” renamed “Treasury Fought the Battle of Lehman Bro.” and met a similar fate.

In one ditty, a play on Dr. Seuss’s “You’re a mean one, Mr. Grinch,” the performers took aim at several of Wall Street’s fallen stars. One target was Kappa Beta Phi member and former Grand Swipe Mr. Cayne, absent though he was. The song’s lyrics included the line, “You’re an odd one, Mr. Cayne,” and made light of his reported use of “ganja.” He has said he didn’t engage “in inappropriate conduct.”

Treasury Secretary Henry Paulson, a former Goldman Sachs CEO who is not a member, also made it into the Grinch tune: “Where’s the TARP money, Mr. Hank? Did any of it fall through the cracks? You let Lehman go under but not your beloved Goldman Sachs.”

The hit of the evening, however, was this new take on “American Pie” performed by Mr. Scaturro:

A long, long time ago…

I can still remember

How the Dow Jones used to make me smile.

And I learned my trade and had my chance

The music played I did my dance

And I made seven figures for a while.

I can’t remember if I cried when they pulled the plug on Countrywide…

It sucks that Iceland is out of ice….Bye, Bye to my piece of the pie…Now I travel coach whenever I fly…Maybe this will be the day that I die.

Waddell & Reed Guilty for Starting 1,000 Point Drop on May 6th, Barclays Executed Trade

Friday, May 14th, 2010

May 6th will be remembered as the day the DJIA dropped 1,000.  For days, market commentators blamed electronic traders and bulge bracket banks including Citigroup, but today culprit Waddell and Reed was discovered.  Waddell and Reed is one of the oldest mutual fund managers in the United States.  The firm sold 75,000 e-mini future contracts on the S&P500, throwing the market into a tail spin.  Barclays executed the trade in one single trade, instead of breaking it up into 100 or 1,000 different orders.  The negligence on Barclays’ part is mostly to blame, since one can’t blame Waddell for hedging.  We can see today, that Waddell was in the right, as the Euro fell past 1.24.

Waddell’s sell order briefly wiped out $1 trillion from the U.S. equity markets in a 20 minute period.  Over that period, over 840,000 e-mini contract futures were traded by firms including JPMorgan, Goldman Sachs, Jump Trading, Interactive Brokers, and Citadel.  Procter & Gamble fell almost 30% in 10 minutes, as shown above. (Source: ZeroHedge)

According to MarketWatch, “In response to inquiries and published reports, Waddell & Reed Financial, Inc.  today issued the following statement:

On May 6, as on many trading days, Waddell & Reed executed several trading strategies, including index futures contracts, as part of the normal operation of our flexible portfolio funds. Such trades often are executed in response to market activity, and are undertaken to protect fund investors from downside risk. We use futures trading as part of this strategy, broadly known as hedging. This is a longstanding and well monitored practice in certain of our investment portfolios. We believe we were among more than 250 firms that traded the “e-mini” security during the timeframe the market sold off.

Quotes attributed to executives at the CME and the CFTC note that Waddell & Reed has executed trades of this size previously, and indicate that we are a “bona fide hedger” and not someone intending to disrupt the markets. Further, CME noted that they identified no trading activity that contributed to the break in the equity market during this period. Like many market participants, Waddell & Reed was affected negatively by the market activity of May 6.

About the Company

Waddell & Reed, Inc., founded in 1937, is one of the oldest mutual fund complexes in the United States, having introduced the Waddell & Reed Advisors Group of Mutual Funds in 1940. Today, we distribute our investment products through the Waddell & Reed Advisors channel (our network of financial advisors), our Wholesale channel (encompassing broker/dealer, retirement, registered investment advisors as well as the activities of our Legend subsidiary), and our Institutional channel (including defined benefit plans, pension plans and endowments, as well as the activities of ACF and our subadvisory partnership with Mackenzie in Canada).

Through its subsidiaries, Waddell & Reed Financial, Inc. provides investment management and financial planning services to clients throughout the United States. Waddell & Reed Investment Management Company serves as investment advisor to the Waddell & Reed Advisors Group of Mutual Funds, Ivy Funds Variable Insurance Portfolios, Inc. and Waddell & Reed InvestEd Portfolios, Inc., while Ivy Investment Management Company serves as investment advisor to Ivy Funds, Inc. and the Ivy Funds portfolios. Waddell & Reed, Inc. serves as principal underwriter and distributor to the Waddell & Reed Advisors Group of Mutual Funds, Ivy Funds Variable Insurance Portfolios, Inc. and Waddell & Reed InvestEd Portfolios, Inc., while Ivy Funds Distributor, Inc. serves as principal underwriter and distributor to Ivy Funds, Inc. and the Ivy Funds portfolios.”

Doonesbury, A Banker’s Progress Comic

Monday, March 1st, 2010

Not Stainless Steel, But White Gold

Wednesday, February 24th, 2010

Looks like car sales are back up in Saudi with crude oil prices at $79.

Courtesy of P.S.

Interview Tips (Humor)

Sunday, February 21st, 2010

Hilarious…please don’t take it seriously



Deutsche Bank Unofficial Guide to Banking

Sunday, February 21st, 2010

A little bit outdated…