Is Your Hedge Fund Manager Really A Hair-Burner in Disguise?

"Those girls are not all geniuses." That was the verdict from colleague Dan Denning, who is visiting the office this week. "There are something like 8,000 hedge funds," he explained. "But there aren't 8,000 different trading strategies. Let's face it, these dudes all study the same models and same theories."

We were having breakfast together. There, on the table between the toast and the tea, was the subject of discussion: Do all these hedge funds and other sophisticated financial paraphernalia really make the world markets more stable? "No," was our conclusion.

There are two ways of looking at it: on one hand, some of the brightest minds in the financial industry have been occupied with the task of convincing investors that the proliferation of derivatives and derivatives of derivatives...and derivatives of derivatives of derivatives...actually help make the markets more stable. Investors themselves have noticed a remarkable lack of sturm and drang in the trading pits. The professionals explain that it is because sophisticated, globalized, information-drenched markets disperse risk.

"But they don't really disperse it at all," says Dan. "They aggregate it. They all trade the same things using more or less the same strategies and formulas."

Every hedge fund manager's balls pulsate with the same delusions, the same superstitions, the same prejudices and the same low predictions. Each pretends he is a disinterested scientist, carefully studying the markets with the precision of a Poincare and the intuition of an Einstein. But it’s bogus; he is actually more like Mr. Thing, a hair-stylist ready to coif his portfolio to suit the latest trends and fashions. Yes, he makes his customers look like jackasses – for who would really want his money run by a barber? But at least they look good when they go out in public. And if he charges a lot for the service – 2 and 20 is the going rate – who can argue with it? Hedge funds are the latest thing in conspicuous consumption; lowering the price would kill the whole illusion!

http://www.dailyreckoning.co.uk/article/280920063.html”>Hedge funds versus stable markets[Daily Reckoning]

Daddy Dearest

“She’s my daughter” – slap! “She’s my wife” – slap! “She’s my daughter and my wife!” Like you, we always thought that this was the stuff of movies like “Chinatown”, but in real life? Get a grip. But then along came a story about a hedgie billionaire and his long-lost love child, their hot and heavy affair and a marriage ceremony in Westminster Abbey. It reads like a Greek myth on steroids, with DNA tests on the side. We always knew that some of these guys take this Master-of-the-Universe stuff seriously, but puh-leze!

http://www.nypost.com/seven/09282006/news/nationalnews/a_father_who_married_his_daughter_nationalnews_paul_tharp.htm”>HEDGE-FUND HONCHO 'TIED KNOT' - KNOWINGLY - WITH HIS LOVE CHILD[NewYorkPost]

True or False: Harvard Business School turns out mega-crooks?

Is it coincidence or is it..…Satan! Count ‘em up: Jeff Skilling, the Enron fraudster, Shelton, the Cedant book cooker. And what do they have in common? You guessed it, MBA degrees from none other than Cambridge’s finest business school. Which only goes to show you that bad apples can thrive anywhere. Enron’s hallways were stuffed with them. Natch, Harvard and the other wannabee schools have started covering their asses by requiring ethics courses. Big whoop. As if…...

http://www.usatoday.com/money/companies/management/2006-09-27-harvard-usat_x.htm?csp=34”> Harvard Business School has turned out a lot of hot grads, and some not so stellar[USAToday]

Spitzer Uncovers Market Timing Free-for-All

Who knew New York’s Governor-to-be still had time to earn his Attorney General pay?
The man is full of surprises and depending on who you talk to, say, Brian Zino, President of J&W Seligman, other less desirable things. Seligman, it seems had been green-lighting secret timing arrangements big time. .Suspected, Seligman claimed to have conducted a thoroughly investigation and found the trouble limited to four little cases, with damage amounting to about $2 million. The real damage closer to $80 million. If they gave a Nobel for crooks with the most initiative, Seligman would be on the short list. .

http://village.albourne.com/user/news.pcg?id=23581”>Spitzer's Lawsuit Uncovers Rampant Market Timing At Seligman [Village Albourne]

We interrupt this blog for the funniest sad story you’ve ever seen

Man with 10-year erection may not get his money

A former handyman from North Providence who won more than $400,000 in a lawsuit over a malfunctioning penile implant may not get the money after a judge dismissed his claim.

Superior Court Judge Edward C. Clifton on Monday granted a request by the implant manufacturer's insurer to dismiss Charles "Chick" Lennon's claim, which his lawyers say will amount to $1 million with interest included.

The implant has caused Lennon to have an erection for 10 years.

The medical device maker's insurance company, National Union Fire Insurance Company, argued that since the device's now-defunct manufacturer, Dacomed Corp., can't be held liable for the device, it can't, either. Lennon's lawyers responded on Wednesday, saying that the Rhode Island Supreme Court affirmed the award and made it clear the insurer has to pay it.

Lennon received the steel and plastic implant in 1996, about two years before the impotence drug Viagra went on the market. The Dura-II is designed to allow impotent men to position the penis upward for sex, then lower it. But Lennon, 68, said he can't position his penis downward because the device is faulty, causing him pain and embarrassment.

http://www.msnbc.msn.com/id/15018869/

Who knew? Mystery Hedge’s Post-Katrina Trades Spark Inquiry

Securities regulators are investigating whether a big hedge fund tried to cash in on the mess that Hurricane Katrina wrought late last summer.

The mystery hedge fund allegedly made improper short sales in shares of New Orleans-based Hibernia just as Katrina was laying waste to the bank's hometown, sources say. The fund sought to profit from Wall Street speculation that the devastation caused by Katrina would force Capital One to cut the price of its planned acquisition of Hibernia.

In effect, the SEC is looking into the possibility that the hedge fund engaged in "naked shorting."

Unless you’ve been hiding your head in the sand, you know that over the past year, allegations of naked shorting have become huge on Wall Street. Some execs have tried to paint short-sellers as merchants of evil who will stop at nothing in their effort to drag down healthy businesses. But clouding these claims is the fact that many of the supposed corporate victims either aren't profitable or face other problems -- raising the question of whether chicanery is really driving the decline in their shares.

http://www.thestreet.com/_tscana/newsanalysis/banking/10310715.html

And another one bites the dust: Hedgette charged with insider trades

Tch-tch, The feds on Monday said they charged former hedge fund manager Hilary Shane with five counts of securities fraud and insider trading in the stock of Compudyne Corp.

Shane, 39, allegedly sold Compudyne shares short in 2001, based on the material, non-public information that Compudyne was engaged in a private investment in public equity offering.

"Despite the fact that the purchase agreements imposed confidentiality and trading restrictions on the investors, Shane...sold Compudyne shares short, based on the material, non-public information that Compudyne was engaged in a PIPE offering." U.S. Attorney's Office for the Southern District of New York said in a statement.

Prosecutors allege Shane, and the fund she managed, made $315,000 in profits from the short sales.

Shane faces a maximum sentence on each count of 20 years in prison and a fine of $5 million or twice the gross gain or gross loss from the offense, according to the U.S. Attorney's Office for the Southern District of New York.

http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=google&guid=%7B120F4975-490E-4429-A550-EDE106ED7E61%7D&keyword

Buffett Turns Chauffeur For Charity

What won’t Warren Buffett, the 76-year-old market deity, do if it amuses him? Well for one thing, he will soon be seen by travelers at Omaha airport donning a chauffeur's cap and parking up his 2001 Lincoln Town Car at the arrivals area to pick up an individual known only as "Bill Zanker."

Actually, it's hardly a surreal state of affairs for the controller of Berkshire Hathaway -- the pick-up is part of a reward for the winning bidder of Buffett's latest charity auction on eBay. Zanker is paying $73,200 for the Lincoln, and proceeds of the sale will go to benefit Girls Inc., a New York-based foundation that provides educational and recreational programs for girls between 6 and 18 in inner cities.

As well as his status of "Sage of Omaha," Buffett is known for online auctions which have included a specially-made, inscribed DQ ukulele and lunch-dates with the billionaire. Last June a Palo Alto, Calif.-based investor named Yongping Duan paid $620,100 for the opportunity to chew the fat with the investment guru -- nearly double the $351,100 winning bid for the previous year's meal.

The latest auction winner takes home a Signature series Town Car with less than 14,000 miles on the odometer, a light beige interior and Buffett's "THRIFTY" license plate on the rear.

The extraodinarily frugal billionaire, had said the auction would be a good use for his roadster. "It's in great shape," he was quoted by The Associated Press as saying. "You couldn't have the money going to a better spot."

Really? If Bill Zanker was looking to make a good investment, he might have been better off stretching his budget to $93,690 for a Class “A” share of Berkshire Hathaway. According to Dave Luther, who gives appraisals at Duffy's Collectible Cars in Cedar Rapids, Indiana, the value of Buffett's car will likely decrease over the next 10 to 20 years.

http://www.forbes.com/2006/09/25/buffett-lincoln-ebay-cx_po_0925autofacescan03.html

Giving ‘til it hurts: Charity Execs' Pay Averages $327,575 in 2005

God bless the child that's got his own. The typical CEO of a large U.S. charity or foundation earned $327,575 last year, a 3.6 percent increase over 2004, according to an annual survey by the Chronicle of Philanthropy.

While nonprofit compensation has grown faster than inflation in recent years, salaries ``are not going up anywhere near what they are in the private sector,'' said Trent Stamp, executive director of Charity Navigator, a Mahwah, New Jersey-based group that evaluates the performance of nonprofit organizations. ``And for the most part when you see a salary, that's it. There's no perks, no stock, no house that comes with it, no car.''

Rising executive pay is a positive trend at a time when charities and the foundations that support them are under scrutiny by Congress and some state attorneys general, Stamp said.

A public opinion survey in July 2006 by New York University's Robert F. Wagner Graduate School of Public Service found that Americans ``continue to have serious reservations about the performance of charitable organizations,'' a sentiment that took hold during the disputes over how relief funds were distributed after the terror attacks of Sept. 11, 2001.

Subsequent controversies involving the Red Cross, the Nature Conservancy and other large nonprofits fueled the public's mistrust, the NYU study said. Stamp said that, given those challenges, nonprofits need to raise salaries in order to attract and retain qualified executives.

Huh? Run that argument by us again…..

http://www.bloomberg.com/apps/news?pid=20601088&sid=aM_9GejA3RTc&refer=home

NY SOCKS IT TO SOX! BIG APPLE MOVES TO STAY ON TOP

City Hall last week continued its fight to amend certain parts of the innovation-killing Sarbanes-Oxley Act, hiring a consultant to help it win back some of the lucrative IPO business - and reaffirm New York City's place as the financial capital of the world.

The hiring of the consultant comes after a disastrous 2005, which saw nine of the 10 largest IPOs list their shares on overseas exchanges - a trend many see as an attempt by the companies to avoid the tough-as-nails regulatory environment in the U.S.

As the gold-standard New York Stock Exchange loses to international rivals, the Big Apple takes a tremendous tax wallop - the financial-services industry accounts for 10,000 jobs and 20 percent of the tax revenue, or $6.5 billion, collected by the city last year.

Passed by Congress in 2002 in the wake of the WorldCom and Enron corporate frauds, Sarbanes-Oxley is now seen by many in the business world as too restrictive, too stifling and anti-competitive in a global business world.

"Certain parts of [Sar- banes-Oxley] are not helpful to the securities industry in New York or the United States," Deputy Mayor Dan Doctoroff told The Post last week.

He is not alone. Treasury Secretary Hank Paulson has suggested that part of Sarbanes-Oxley, specifically section 404, may be putting the U.S. at a disadvantage.

"I think the pendulum may have swung too far," he noted.

Duh! No shit, Sherlock.

http://www.nypost.com/business/battle_ready_business_david_freedlander.htm

Doing the Real Hedge fund math: The 2-and-20 Plan

We'll bet you dollars to donuts, the $1.2-trillion hedge fund biz must almost be weeping with sheer relief. What ailed Amaranth doesn't appear to be ailing everyone else. Sure, Amaranth was utterly reckless in placing roulette-style bets -- black or red --on one asset class. The wrong colour came up and the firm is finished. Rival hedge funds would never put all the chips on a 50/50 outcome.

Really? Can we talk? I mean can we talk here? The hedgies are virtually programmed to make the same mistake. What is astounding is that Amaranth and Long Term Capital Management were the only multibillion-dollar blowups of the past decade. There will be more -- there has to be -- for the simple reason that the funds' compensation schemes encourage unusually risky bets.

The Amaranth tsunami has sent ripples of fear through the industry. The hedgies will examine their portfolios closely to make sure the bulk of their capital isn't in the hands of some kid who thinks he's a whiz at egg or camel-leather futures. The risk management book will get rewritten.

But how long before the hedgies start taking crazy risks again? The "2 and 20" incentive remains in place. What's more, hedge funds' returns are mediocre at best. The widely followed Credit Suisse/Tremont hedge fund index reports a year-to-date return for multistrategy funds (as opposed to narrowly focused funds such as convertible arbitrage or emerging market funds) of 7.9 per cent.

Before you clap your hands in glee, consider the S&P 500 went up 5.8 per cent over the same period. Sobering ain't it.

http://www.theglobeandmail.com/servlet/story/LAC.20060923.RREGULY23/TPStory/Business

How much do you wanna bet this is one mean mother/I-Banker?

Without CL, this may not otherwise be possible - 37

Reply to: pers-211409622@craigslist.org

Date: 2006-09-23, 9:58PM EDT

When you go on CL, sometimes you find things, bump into them by accident, that stir you. Maybe this will do that for you?

I am a naturally dominant male, looking for an attractive submissive-female as his pet. Can I be more concise than that? Let me elaborate some more.

I am experienced and have been a dom for more than 10 years and have had a few pets during that time. If you are offended by my use of the word "pet", either you have already clicked to the next ad or are in the process of writing me hate mail. Hate mail is welcome, but do be creative. I don't want you.

The woman that I want realizes that in surrending to a dominant-male, she will experience excitement and pleasure not otherwise possible. It is really that simple. She also realizes that in her submission, she can do all or some of the things that she fantasizes about, which are currently in the dark corners of her mind. It is my role to guide her and to shine a light on these desires.

As her master, I can and will be gentle and tender. However, when the situation requires it, I will be firm and strict. Always I will be in complete control. However, your limits will be fully respected.

You will be teased during extended foreplay. During the heat of sex when you're very hot and excited...After sex, depending on the mood and my wishes, there could be caressing or punishment. Are you a good girl or bad girl? I will decide.

As stated, your submissive fantasies will be realized through mutual consent and respect for your limits...never hurt...never injured...no marks.

Respond with a description of your physical appearance, what excites you and what your limits are, and we shall proceed from there.

If you truly want this, then I am the one you want.

http://newyork.craigslist.org/mnh/m4w/211409622.html

Sell on Rosh HaShana and Buy on Yom Kippur'

Birinyi's Ticker Sense submits: With Rosh Hashanah commencing at sunset tonight, we thought it befitting to put this adage to the test after receiving inspiration from a link at the Kirk Report to an article about the roots of the saying on TheStreet.com. (According to the article, the origins of this practice seem to be the belief of Jewish investors that they should liquidate their portfolios during the holiday so that their attentions could be fully focused on their worship.)

Looking back from 1915 on, we tested the performance of the DJIA from the last close before Rosh Hashanah until the last close before Yom Kippur (nine days). Then we also looked at how the Dow did from Yom Kippur until the end of the Gregorian calendar year (December 31st).

As it turns out, the thing actually might work. The Dow averaged -0.62% from Rosh Hashanah until Yom Kippur, while it gained 1.99% from Yom Kippur to the end of the year. For those compelled to action (or to see how this year plays out), Rosh Hashanah begins tonight at sunset and Yom Kippur begins at sunset on October 1st.

http://usmarket.seekingalpha.com/article/17387

Citigroup sees S&P hitting 1,500 by end of 2007 (Who slipped the hallucinogens into the office coffee pot?)

Citigroup Inc. set 2007 year-end targets of 1,500 for the Standard & Poor's 500 index (that's 14.3% over 15 monnths) and 12,750 for the Dow Jones industrial average, with the cash on corporate balance sheets providing some downside protection.

In a research note, analyst Tobias Levkovich forecast another year of high-single-digit gains. The risk of a decline in the S&P 500 index was modest given that at S&P 500 companies, excluding financial firms, cash holdings are about 8 percent of market capitalization.

Citigroup said that after weighing several factors, it predicted the S&P would range between 1,400 on the low end and 1,630 on the high end as 2007 comes to a close.

Given the current yield curve, this strikes us as somewhat overly optimistic. Which brings us back to our original question. Who put what in the coffee? Or has someone been hitting the old bong?

http://www.crossingwallstreet.com/

Crusin’ CraigsList: Guys that prey together, stay together.....

2 Guys in North Jersey Seeking a Naughty Girl for Friday Night Fun! - mm4w - 27

Reply to: pers-210827997@craigslist.org

Date: 2006-09-22, 2:28PM EDT

We are 2 friends looking for some fun with a special girl on this Friday night. We can host tonight in a Bergen County estate. One is an entrepreneur in North Jersey...27, 5'9", 160 lbs, dark hair and eyes; the other a broker in the city...28, 5'10", 175 lbs, blondish hair and blue eyes. We are both well endowed and love to get crazy!!!!! If you are a single female or even a couple then get back to us! We have pics for trade but can't post them online due to our careers. (And if you don't have a car we could either come to you or pick you up)

* this is in or around Bergen County

* no -- it's NOT ok to contact this poster with services or other commercial interests

http://newyork.craigslist.org/jsy/cas/210827997.html

Note to Wall $treet: Curb Your Enthusiasm

Go know. Amaranth Advisor's misfortune turns out to be the big opportunity that wannabe energy traders have been waiting for. On Wednesday, Greenwich, Conn., hedge fund manager Amaranth told investors it had transferred its energy portfolio to a third party. That party wasn't identified, but it was later revealed that the assets were sold to two entities: Citadel Investment Group, the $12 billion Chicago hedge fund, and JPMorgan Chase .

Now, Citigroup is considering taking a stake in Amaranth. Many Wall Street banks have been taking a look at the fund in the last couple of days.

Citadel and JPMorgan are said to have taken on $2 billion and sold much of that to waiting buyers on Wednesday. Spokesmen for Citadel, JPMorgan and Citigroup wouldn't comment. JPMorgan has an existing relationship with Amaranth as its clearing bank.

The scramble to buy the trading portfolios of Amaranth, to relieve it of exposure to volatile energy markets and perhaps to salvage what assets remain and keep it running, highlights the intense interest Wall Street has in energy trading.

Many banks had gotten out of the market in the 1990s, seeing it as too volatile, and others never built up a capability. But that changed in recent years, as rivals enviously watched Goldman Sachs and Morgan Stanley rake in profits.

In 2004, Merrill Lynch bought the energy trading business of Entergy-Koch. UBS inherited 600 or so employees from Enron, the Houston energy company that collapsed in 2001. The Swiss banking concern winnowed that group down to under 100 before beginning to rebuild. Some star Enron traders founded their own firm, Centaurus Energy, in Houston.

The potential for huge losses doesn't seem to be much of a deterrent, either. So what are we missing here? The Mega-Moolah Factor.

http://www.forbes.com/business/energy/2006/09/21/amaranth-energy-trading-markets-comm-cx_lm_0921amaranth.html

Size Matters: The Forbes 400 Billionaire-O-Rama

You size queens put your hands together and give it up! For the first time, Forbes magazine's list of the 400 richest Americans consists exclusively of people worth $1 billion or more. As a group, the people who made the rankings released Thursday are worth a record $1.25 trillion, compared with $1.13 trillion last year.

In the billionaire-athon, casino magnate Sheldon Adelson pole-vaulted to No. 3 from 15 in last year's ranking, finishing behind the mainstays at Nos. 1 and 2: Microsoft Corp. founder Bill Gates and Warren Buffett of Berkshire Hathaway Inc.

Adelson is now estimated to have $20.5 billion, Buffett $46 billion and Gates $53 billion. Gates has held the No. 1 spot for the last 13 years while Buffett has been No. 2 every year since 1994 except 2000, when Larry Ellison of Oracle Corp. held that spot.

Adelson's expanding net worth is related in no small part to his decision to open a casino two years ago on the island of Macau, an emerging gambling haven off the southeastern coast of China. Profits are growing rapidly thanks to the Las Vegas Sands Corp.'s Macau casino. Adelson personally and through family trusts controls 70 percent of the company, Las Vegas Sands spokesman Ron Reese said.

Forbes estimates Adelson earned about $1 million an hour over the past two years. In the second quarter alone, the Sands Macau property saw net revenue jump to $310.4 million, up from $205.1 million a year ago. To tap the demand from gamblers in Asia going forward, the Sands Corp. plans a second property on Macau and a casino in Singapore.

The two Google Inc. founders were also big earners. Sergey Brin and Larry Page gained about $13 million a day over the last two years, according to Forbes. That puts them in 12th and 13th place, up from a tie at 16th place last year. Page and Brin also share the distinction of being, at 33 years old, the two youngest people on the list and two of only eight who are younger than 40.

http://www.nytimes.com/aponline/business/AP-Forbes-400.html

Business Schools: Who’s on First? What’s on Second?

The Wall Street Journal/Harris Interactive ranking of America's top National business schools seesawed again this year. The ranking just isn't what you'd normally expect it to be. At the top of the recruiters' lists: The University of Michgan. #2: Dartmouth (Tuck). #3: Carnegie Mellon's Tepper School of Business (as in Dave Tepper at Appaloosa). #4: Columbia. #5: University of California, Berkeley. Conspicuously absent from the top 10: Harvard (#14), Stanford (#18), Wharton (#7) and University of Chicago (#11).

Michigan and Dartmouth are clearly the schools to beat, with Dartmouth having achieved a first-place finish in three of the Journal's six annual rankings and Michigan now having scored two wins. (The University of Pennsylvania's Wharton School is the only school that has succeeded in besting Dartmouth and Michigan.)

Our other two rankings produced some surprises, as two less prominent newcomers placed first in the Regional and International categories. Arizona's Thunderbird moves up from No. 4 last year in the ranking of regional U.S. schools, while ESADE in Barcelona, Spain, leads a group of European, North American and Central American schools in the International ranking.

Michigan owes its first-place showing in part to its emphasis on practical experience in its M.B.A. program. Recruiters say they prize Michigan graduates because they can connect theory with practice. As for Thunderbird and ESADE, they share an international focus and even happen to be partners through a dual-degree program of study at both schools.

A commitment to ethics and corporate social responsibility also distinguishes all three of the top-ranked schools -- from Michigan's student projects in developing countries to ESADE's "Christian humanism" tradition of management education to the oath of ethical conduct signed by Thunderbird graduates. Next they'll want the blood of your first born.

http://online.wsj.com/public/page/2_1245.html

Are Hedges Losing Their Sizzle?

Until recently, investor money seemed to flow only one way when it came to hedge funds: in. Amaranth Advisors might change that.

Hedges’ message about big returns regardless of the market has been especially seductive the past few years -- low interest rates and lackluster stock markets made investors everywhere hungry for returns. For pension funds with large obligations to workers, the message was even more alluring. But some pension managers -- especially at public pensions -- lack the resources, expertise and time to keep a close eye on the people managing the money.

Some of these institutional players were burned by troubles at Amaranth, the Greenwich, Conn., hedge fund that lost billions of dollars in a week on bad natural-gas bets. The $7.7 billion San Diego pension fund had $175 million invested in Amaranth; 3M Co. had "less than 1%" of its pension plan -- which exceeded $9 billion at the end of 2005 -- in play.

Both were put into Amaranth by Connecticut's Rocaton Investment Advisors. Such consultants monitor the hedge funds they choose for investors. Amaranth's dependence on one aggressive trader -- 32-year-old Brian Hunter -- should have rung warning bells among advisers. Amaranth's dependence on natural-gas bets should also have rung bells. The hedge fund billed itself as a "multistrategy" fund, which promised investors diversification by using different approaches in different markets. But the bells weren't loud enough in this case. Rocaton declined to comment.

Even before Amaranth, there were signs the explosive growth of hedge funds was losing steam. By some measures, more funds have closed this year than opened. The failure of an especially large multistrategy fund to be truly diversified, and the failure of the watchdogs to catch it, could frighten away the kind of pension plans that were just starting to take the plunge.

http://online.wsj.com/article/SB115879946351869571.html?mod=home_whats_news_us

How the hell do you lose $5 billion in one week?

What were they thinking? Amaranth Advisors violated the numero uno rule of investing: never make a trade that could knock you out. Out of business, that is. The Greenwich, Conn.-based hedge fund was scrambling today to sell holdings after a wrong-way wager on natural gas cost it roughly half of its $9.5 billion portfolio.

Amaranth's brokers -- including Goldman Sachs and other big financial firms -– stepped in to help the hedge fund raise cash by liquidating some of its assets.

The trade that led to the huge loss was attributed to 32-year-old Brian Hunter, an experienced energy trader who headed Amaranth's energy desk for the past five months. His trades brought in $800 million for the firm last year, and Hunter pocketed at least $75 million in compensation, according to Trader Monthly magazine.

Hunter's downturn was as sudden as it was shocking. He was up about $2 billion as recently as the end of August, The Wall Street Journal reports. Then Hunter's trades lost $5 billion in about a week.

Hunter thrived on volatility, reaping profits on price declines and surges alike, the Journal reports. But late last week, Hunter watched with growing alarm as gas prices took a steep dive, particularly in futures contracts for delivery of gas for this coming winter.

"(Hunter) thought he knew what the market was doing," says Journal editor Phil Kuntz, who worked on the newspaper's coverage of the Amaranth debacle. "The commodities market is very, very volatile. You make a lot of money very, very quickly but you can lose a lot of money very quickly," Kuntz adds. "(Hunter) made about $1 billion in April. He lost a bunch of money in May, then he made a bunch of money back. He had a great August -– by the end of August (the Amaranth trading desk) was up upwards of 20% (year to date) but then they took a big hit in the course of a week in September."

http://articles.moneycentral.msn.com/Investing/CNBC/TVReports/HedgeFundDropsFiveBillionDollars.aspx

9/18 Craiglistspotting: Some schmucks don't know when to can it!

From 9/18 CraiglistSpotting:

Financial Scientist Seeking Whip-Smart, Feminine Counterpart (Midtown) 36yr

Synopsis -- Uncommonly bright (former MIT faculty) yet boyishly playful SWM seeks the companionship of a great conversationalist, reasonably attractive.

As for me, resume like stuff -- from my initial graduate work in physics to my follow-on career as in academic computer science and statistics at MIT to a recent stint as the one man research wing at a Chicago-based options trading firm to my current move to Manhattan to continue my financial investigations at a very major hedge fund, my world has alway spun around both boons and bugaboos of statistical reasoning, foundations of knowledge and mind, and the limits of reason. :-) If you like mathematical machinations, you may like me.

Hmm. A random values paragraph. It's ok if you aren't a scientist, mathematician, or philospher. It's more important to have what I've lately been calling "forensic impulses" (in homage-mockery of Pinker's Language Instinct). I.e., you believe that definite progress towards better answers does matter, even if it is often hard and ever unfinished, that being systematic aids in this project, that arguments are more than just amorphous bags of opinions and intuitions, and that "meaning" derives from a system of beliefs, and revisable beliefs inform revisable meanings, and that meaningless, useless, or otherwise evidentially disconnected constructs like Gods, imaginary friends, and the like should go (or at least not be granted more seriousness than perhaps interesting fiction or portholes into human psychology). All this can perhaps be usefully abbreviated to "getting to the bottom of things jazzes you and you have some reasonable philosophy for doing so", but I do like to be a little more specific. :-) If you can't handle such specificity, you won't like me. Also, whether you actually succeed at it or not, you should at least value applying these ideas in daily life, not jumping to and acting on very weakly substantiated inferences. Defending rash behavior as the rightful province of women will not garner my good graces. There is just no need for a manufactured crisis due to lack communication. Life is too short. What might you expect from me besides probing conversations about both lofty and everyday topics or often connections between the two? Depending on your mood, I can give you artsy or cheesy movie recommendations, refreshers or primers in math/physics/philosophy/computers/finance, a quality rubdown on a nice massage table, or a few hours of dinner conversation during which I will make you laugh, listen attentively to everything you say, and generally make you feel more well-understood than you are accustomed. I'm not much of a "bad boy". So, if mistreatment, the looming threat thereof (or mistreatment of others making you special) gets your motor running, just keep on driving. I give a lot, but I expect to get a lot back, too.

Sense of humor-wise and fun-style...I lean toward zany social commentary or self-referential (between us) over dry wit, though I am good with words and word play. You might still kick my ass at Scrabble. I'm understanding, communicative, emotionally available, open, and intuitive. I've recently taken spontaneous trips to Europe, the Caribbean, SF bay, and such. I'm playful. I might do a ju jitsu roll in the middle of a sidewalk in Rome (look out, pedestrians!) or give you a spontaneous piggy back ride in a field of snow. I'm 36, 5'8", 200, muscular (broad back, big shoulders, big chest -- an unlikely frame for my mind), Italian-Irish, dark hair and brown eyes. More pics available on request/receipt of your pics. Relationship goals. While I appreciate casual situations as an occasional psychological need and a necessary starting point of more serious affairs, my nature leans toward pair bonding and longer term romances. This is not accidental, but tied with my broader psychology. I've a strong adaptive streak in me that winds up having me attuned to a few select people in my life, and if there's a good connection I do tend to become commitment-thinking...not afraid at all. I've dated women more than 10 years my junior. Age has never been as much an issue with me as core personality.

Hobbies and activities. I also like bicycling, hiking, swimming, traveling, book browsing, shooting pool, card games, movies, really good TV (but I don't own one), etc. If you liked biking, it would be great to have company on some 20..60 mile bike rides come Springtime. Walking and talking are the best, though. Inspiration from nice environments is great, but superfluous with good matches [ at least initially ]. A good match should make for a lovely experiential partner, trusting and sharing the many facets of life. You should at least share some interests or meta-interest/intellectual style aspects so that our conversations can be, well, "pointful". And without conversation where would we be?

That's all for now. Write and ask me anything. Many women on Craigslist ostensibly desire successful, intelligent, caring men. Ante up! I'm pretty new to The City and will need a good guide...pic4pic and

all that...

Why the Rich Go Broke

George Foreman — bald, smiling and gigantic — is propped atop a stool in Gleason’s Gym, the venerable boxing haunt in Brooklyn, watching a videotape of his heavyweight championship bout in 1994 with Michael Moorer. Foreman once devastated opponents with brutal, staccato punches short on artistry and long on force. He disposed of formidable pile drivers like Joe Frazier, traded blows with dangerous magicians like Muhammad Ali, and dropped the undefeated 26-year-old Moorer in the 10th round with a right to the jaw

Foreman became the oldest heavyweight champion in history. Foreman confides in an interview that something else actually drove him back into boxing in the late 1980’s, and it had nothing to do with proving the meaninglessness of an AARP card. Having blown about $5 million, made mostly, he says, during his salad days as a young champion, he desperately needed the money he could earn by fighting again. A former street thug from Houston, accustomed to dispassionately cutting down the most ferocious of men, Mr. Foreman was on the verge of bankruptcy in the 1980’s — and it terrified him.

Even so, the trajectory of Mr. Foreman’s finances once had him headed into a gilded pantheon of big buckaroos who have squandered often-unimaginable sums of money, come perilously close to personal bankruptcy or completely lost their shirts. The ranks of well-heeled debtors include Thomas Jefferson, Buffalo Bill Cody, Mark Twain, Ulysses S. Grant, Debbie Reynolds, Michael Jackson, Dorothy Hamill, Robert Maxwell, Mike Tyson, Jack Abramoff and a long and pitiful cast of lottery winners.

Why can’t the wealthy restrain themselves from spending more than they have? Why do rich people, those who would seem to have all the financial padding one needs, wind up deeply in debt? Even worse, why do some of them end up broke?

Foreman, street-smart and now mindful of his wallet, has his own perceptive answers to those questions. For the man who came back from the brink, it’s all a matter of discipline and proper boundaries.

“A lot of people just don’t grow up,” he says. “I mean, 65-year-old men. They just don’t grow up. They don’t understand that money does not grow on a tree and that you’ve got to respect every dollar. Like Rip Van Winkle — the guy who slept — they party, party, party, then they wake up. ‘Oh my God!’ And they do something desperate trying to recapture what they had. And it doesn’t work like that. You must stay awake.”

http://www.nytimes.com/2006/09/17/business/yourmoney/17broke.html?ex=1158638400&en=8516b0a91ec7d0da&ei=5087%0A

Why London is Creaming Wall Street

So far this year, there have been just 17 international IPOs on the New York and Nasdaq stock markets, worth a mere $6bn in total. This is in stark contrast to the booming London IPO scene, where the London Stock Exchange (LSE) and its small-cap Alternative Investment Market (AIM) have grabbed 59 floats worth $16bn. It was not always thus: as recently as 2000, before the collapse of the dot.com bubble, 78 foreign firms listed in the United States, against just 12 in London.

This is a big British success story but the temptation to crack open the bubbly should be resisted. Britain’s continued progress in this area has more to do with the failings of other countries than with any positive developments in London.

In fact, as in virtually every other area of economic life, Britain’s tax and regulatory framework has worsened over the past few years. By a huge stroke of luck, however, the attractiveness of London’s main rival – New York – has collapsed at a much faster rate, thus boosting Britain’s competitiveness by default.

The Sarbanes-Oxley regime imposed by a short-sighted Congress in the wake of the Enron and WorldCom scandals can now be seen to be a gross over-reaction, making it excessively onerous to list on US stock exchanges or to raise capital in America. Sarbanes-Oxley’s complex reporting requirements mean that international companies like the lighter regulation they encounter in London, a location they also find attractive for a wide variety of cultural, linguistic and time-zone reasons.

London’s stunning success is the reason why Nasdaq is continuing to build up its stake in the LSE; it now owns 25% and could eventually buy the exchange. In theory, this should not be a problem: there is no real reason why a British-based company taken over by a US-based rival would suddenly have to impose US regulations on its new British operations. Companies listing in London would only be subject US rules if they were to raise capital or provide financial services in America.

In an age when the US legal system – as well a that of many other countries – is increasingly prone to extra-territoriality and often wishes to apply domestic rules even to foreign countries, what if the new US owners were suddenly forced by US courts and shareholders to introduce disastrously prescriptive American red tape to London?

For once, the British government has come up with the right answer: allow anybody to buy and own the LSE, regardless of nationality, but make sure that destructive foreign rules cannot be imposed on London.

http://www.thebusinessonline.com/Stories.aspx?London%20rules!&StoryID=38671774-5286-4EBC-A7E5-DE0F1AF1B026&SectionID=803597D7-4BD5-45D5-BF88-E1AC85BF7FDF

HEDGIES USE CHUMP CHANGE TO RIDE THE CAMPAIGN BANDWAGON

If there's one thing most hedge fund managers know it's leverage. And this year many of the biggest hedge funds in the land are using that strategy to make major bets on the midterm elections, just as regulators are stepping up their scrutiny of the industry.

Yes, it's the year of the hedge fund in national politics - as millions of dollars flow into candidates' coffers. In fact, campaign donations by the top 25 hedge funds this year have now topped $4 million - exceeding contributions for the 2004 presidential election, and more than tripling the amount donated back in 2002.

Sure, it’s chump change in the world of top hedge funds. There, top managers can easily make hundreds of millions of dollars a year, or more. But it's plenty of dough on a congressional campaign's rubber-chicken circuit, where even a $1,000 donation can merit a candidate's individual attention.

And where are the smartest money managers in the money business placing their bets?
Surprisingly, there is little hedging when it comes to which party the hedge funds are betting on in 2006. According to Bloomberg, more than two-thirds of the donations coming from big hedge funds and private-equity firms this year have been earmarked for Democrats. The top draw? New York Senator Hillary Clinton.

Clinton? Go figure.

http://www.nypost.com/business/expect_flush_hedgies_to_ride_the_campaign_bandwagon_business_terry_keenan.htm

Size Matters...Or does it?

It is research that is guaranteed to delight men - and infuriate the women in their lives. A controversial new study has claimed that men really are more intelligent than women.

The study - carried out by a man - concluded that men's IQs are almost four points higher than women's.

British-born researcher John Philippe Rushton, who previously created a furore by suggesting intelligence is influenced by race, says the finding could explain why so few women make it to the top in the workplace.

He claims the 'glass ceiling' phenomenon is probably due to inferior intelligence, rather than discrimination or lack of opportunity.

The University of Western Ontario psychologist reached his conclusion after scrutinising the results of university aptitude tests taken by 100,000 students aged 17 and 18 of both sexes.

A focus on a factors such as the ability to quickly grasp a complex concept, verbal reasoning skills and creativity - some of they key ingredients of intelligence - revealed the male teenagers had IQs that were an average of 3.63 points higher. The average person has an IQ of around 100.

The findings, which held true for all classes and levels of parental education, overturn a 100 year consensus that men and women average the same in general mental ability. They also conflict with evidence that girls do better in school exams than boys.

But Prof Rushton, who was born in Bournemouth and obtained his doctorate in social psychology from the London School of Economics, argues that the faster maturing of girls leads to them outshining boys in the classroom.

And since almost all previous data showing an absence of difference between the sexes was gathered on schoolchildren, the gender difference could easily have been missed.

'It looks like up until late adolescence, the females have the advantage over males because they mature faster, which masks the underlying difference, he said.

Although experts have accepted that men and women differ mentally, with males averaging higher on tests of 'spatial ability' and females higher on verbal tests, it was assumed the differences averaged out, leaving no difference in overall intelligence.

Prof Rushton believes the differences are directly linked to brain size, with other studies showing men having slightly bigger brains than women.

'We know that men have larger brains, even when you take into account larger body size,' said the researcher. 'That means there are more neurons. The question is what these neurons are doing in a man - and they probably have an advantage in processing information.'

It is thought the difference may date back to the Stone Age, with women seeking out men who are more intelligent than them in a bid to pass on the best genes to their children.

'Some people have suggested it evolved because women prefer men who are more intelligent than they are for husbands,' said the professor.

'Just as they prefer men who are taller than them, they also prefer a male who is a little ahead of them in IQ.'

Critics claim Prof Rushton's results could have been skewed by the inclusion of more test results from females than form males.

Prof Rushton, who four years ago triggered a scientific row by claiming intelligence and behaviour are influenced by race, with blacks being more likely to be involved in crime and Asians having a greater chance of high IQs, however, stands by his results.

'These are unpopular conclusions,' he said. 'People should not be made to feel afraid to study controversial issues.

'We have the right to find the truth. One should really look at the facts.'

His work appears to confirm British research which showed men have bigger brains and higher IQs than women, which may explain why chess grandmasters and geniuses are more likely to be male.

The analyses of more than 20,000 verbal reasoning tests taken by university students from around the world revealed that women's IQs are up to five points lower than men's .

Women needn't feel despondent, however, as the scientists believe women can achieve just as much as men - as long as they work harder.

From ThisisLondon

Go directly to Jail, Do not pass Go:, Do not collect $2MM: Monopoly gets a facelift

Personally, I always used to go for the dog. My father, if memory serves, was more of a ship man. Other members of the family had their own preferences, I forget which, although I'm fairly sure the iron never saw much action. Nor will it in the future, now that the makers of Monopoly have decided the little tokens that get pushed round the board need to be far more modern. Indeed, Hasbro has followed David Cameron and the Tory Party in the search for "relevance".

And so, the pewter model of the Scottie dog that taught so many children how to be cold-hearted capitalists is out, to be replaced by the Labradoodle, a labrador/poodle hybrid that is such a ridiculous creature it can only be seen on the streets of New York.

The racing car and the old boot face a similar fate, losing the battle of relevancy to the Toyota Prius and the New Balance training shoe. If even those don't tickle your fancy, you can choose to be represented by a miniature cup of Starbucks coffee, or an order of McDonald's fries, or a model of a Motorola Razr mobile phone, which given the trend towards downsizing is probably barely smaller than the phone itself. Hasbro insists the brands now included in the world's best selling-game have not paid for the privilege.

"So much of American pop culture today is represented by products that people use every day," said Mark Blecher, senior vice president for marketing at Hasbro's games unit. "We thought: 'Let's try to get iconography that's much more relevant to people today'."

I'm not sure relevance was ever the reason people choose to play Monopoly. More likely it gave the winner a fleeting and illusory feeling of what it must be like to own the world without having to suffer a conversation with Donald Trump. Fidel Castro felt it was good at instilling the American values of the free market and the Wall Street "get rich quick" mentality that he ordered all sets in Cuba destroyed.

Yet to claim the game never needed to be relevant isn't to say there aren't some interesting changes. Winning $10 in a beauty contest has become winning $100,000 in a reality TV show. Passing "Go" now earns you $2m, rather than $200. And being sent to jail (without passing Go or earning that $2m) is now saved for modern-day Kenneth Lays or Dennis Kozlowskis who commit white-collar crimes such as identity theft and insider trading. Other "Chance" cards offer a $1.5m signing-on bonus for accepting the job of chief executive at a blue-chip investment firm, or having to pay a similar amount after losing a class-action lawsuit. You can follow GlaxoSmithKline in being hit by the IRS for back taxes, or win it all back by selling your football season ticket on eBay.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/09/16/cclife16.xml

Democrats get more Wall Street Dough

Wall Street, which backed President George W. Bush and his fellow Republicans when they were riding high, is putting most of its money behind Democratic candidates in this year's U.S. congressional elections.

Democrats received $3.1 million from executives and employees at 11 leading securities firms in the first half of 2006, compared with $1.95 million for Republicans, according to Federal Election Commission figures. Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc., is among the biggest Democratic givers; John Mack, CEO of Morgan Stanley and a former Bush fund-raiser, has given more to Democrats than Republicans this year.

``Wall Street is always trying to back winners,'' said Gary Goldstein, chairman of the Whitney Group, a New York-based executive-recruitment firm specializing in securities personnel, and a self-described political independent. He and others say investment bankers see the Republicans dragged down by such issues as the war in Iraq, Bush's handling of Hurricane Katrina and the slowing U.S. economy.

Democrats last posted a significant fund-raising lead among investment banks in 2001, receiving 10 percent more than Republicans. The two parties were about even in 2002, following the Sept. 11, 2001, terrorist attacks, and Republicans got most of the donations from 2003 through 2005.

http://www.wallstreetfolly.com/

Headscratcher of the Week: Firing may be linked to sex change

There are reasonable grounds to suspect a transgender woman was fired because of her sex change, according to a first-of-its-kind state ruling issued today by the Colorado Civil Rights Division.

The agency, charged with ensuring fair employment practices, said Intermountain Testing Co. of Greenwood Village may have discriminated illegally against Danielle Cornwell on the basis of her sex. The ruling lays groundwork that allows Cornwell to pursue legal action against the company.

Cornwell, who lives in Arvada, has spent most of her life as a man named David. In June 2005, she informed her employer that she planned to change her gender, a process that involved wearing women's clothes and changing her name.

A month later, Cornwell lost her job. She had worked more than 15 years for the company, which provides testing services to the construction and manufacturing industries.

The state agency didn't buy the company's claim that a slowdown in business prompted Cornwell's dismissal. The agency noted that Cornwell was one of the company's most senior and experienced technicians.

http://www.denverpost.com/business/ci_4337916

Morgan: Off with their Heads!

Morgan Stanley reshuffled its investment-banking lineup, elevating the heads of four industry groups and in most cases replacing them with junior bankers.

Former corporate-finance group head Alan Jones will become group chairman, focusing on clients such as private-equity funds, and will be succeeded by Jason Milazzo.

Christopher Harland, former head of the media-and-telecommunications group, will become group chairman and be succeeded by new co-heads Stuart Epstein and Andrew Tisdale. Jeff Holzschuh, former head of the global power-and-utilities group, will become group chairman and be succeeded by new co-heads Jonathan Grundy and David Nastro.

The changes were outlined in a memo yesterday from investment-banking chief Walid Chammah, who also announced the promotion of four merger bankers under the continued leadership of Paul Taubman, head of global mergers.

http://online.wsj.com/article/SB115828857092264020.html?mod=home_whats_news_us

Spitzer indicts hedge fund broker in late trading case (Spitzer? Again?)

Just when you thought it was safe to go into the water…well you know what we mean, Eliot Spitzer indicted a hedge fund broker for helping clients trade mutual fund shares after hours, according to a statement from the New York Attorney General's office on Thursday. James Wilson, a stock broker from New York-based Trautman Wasserman & Co., Inc., was charged with crimes related to late trades he placed on behalf of the firm's hedge fund clients from late 2000 to September 2003, according to an 11-count indictment which was unsealed on Thursday, Spitzer's office said. The charges include a scheme to defraud in the first degree, falsifying business records in the first degree, and securities fraud in violation of New York State's Martin Act, Spitzer's office explained. Each of these charges carry a maximum penalty of four years in prison, the attorney general's office added, noting that Wilson is presumed innocent until and unless he's proven guilty.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B0B856478%2DF120%2D4C26%2D9A57%2D45CE099F97B5%7D&dist=newsfinder&siteid=google

Big Board Trader on trial says No Way, Jose

Richard Volpe, a former trader at Dutch stock-trading company Van der Moolen Holdings NV's Van der Moolen Specialists USA, the first defendant to testify in the New York Stock Exchange trading-abuses case, denied that he ever ordered anyone to make improper trades in violation of Big Board rules while working on the exchange floor.

At his trial for alleged fraud, Volpe, testified that he never ordered the clerks he worked with to make trades that were improperly positioned between buyers and sellers in order to make illicit profits for the firm or to jump ahead of customer orders. Improperly positioning oneself between ordering, instead of matching those buy and sell orders, is known as "interpositioning."

Prosecutors have accused Volpe, a floor official at the NYSE from 1996-02, of making improper trades for the firm's account in shares of Pfizer Inc. and Walt Disney Co. is charged with two counts of securities fraud and faces a maximum of 20 years in prison if convicted.

During opening statements, his lawyers described Volpe as a "dinosaur" who started at the exchange when trades were made on paper and who didn't know how to work the NYSE's computer system. His lawyers said he handled orders coming from brokers on the floor, while his clerks handled computerized orders. His lawyers argued that the clerks directed the allegedly improper trades without Mr. Volpe's knowledge.

http://online.wsj.com/article/SB115819344722162540.html?mod=mkts_main_news_hs_h

Harvard To Keep Billionaire Perv’s Gift

Moolah is moolah. It’s perfectly innocent, right? After money manager Jeffrey Epstein was charged in July with soliciting sex from prostitutes, several recipients of his donations distanced themselves from the New York billionaire. But though Epstein wrote a $6.5 million check to Harvard—with the possibility of additional millions down the line—the University said yesterday that it has no plans to return the gift.

The donation, first announced in 2003, finances the work of mathematical biologist Martin A. Nowak, the director of Harvard’s Program for Evolutionary Dynamics. Epstein agreed to consider raising his total contribution to $30 million after a review of the program’s progress. That review has not yet taken place, according to the University.

After Epstein was charged with soliciting prostitution at his Palm Beach, Fla., mansion, several politicians who had accepted campaign money from the billionaire returned the donations. They include Eliot L. Spitzer, the New York attorney general who is running for governor; Mark A. Green, a Democratic candidate for attorney general of New York; and New Mexico Gov. Bill Richardson, according to the New York Times and New York Daily News.

Harvard will not join them. “Mr. Epstein’s gift is funding important research using mathematics to study areas such as evolutionary theory, viruses, and cancers,” a Harvard spokesman said yesterday. “The University is not considering returning this gift.”

http://www.thecrimson.com/article.aspx?ref=514182

Citi trader blows $20 million

Talk about your oversight breakdowns, a rogue Citigroup Inc. trader lost $20 million for the largest U.S. bank by hiding more than $300 million of gold and silver contracts and reporting fake prices, the New York Stock Exchange's regulatory unit said.

Gail Edmonds had as much as $373 million of open positions, nearly 75 times her trading limit, before the bank discovered her misconduct in early 2003 and fired her, the regulator said on Wednesday.

The NYSE released documents describing Edmonds' activities in connection with its decision to fine New York-based Citigroup (C.N) $500,000 for failing to properly supervise its precious metals trading desk.

"We are pleased to have this matter resolved," said Citigroup spokeswoman Danielle Romero-Apsilos. "The firm took immediate action when the matter was discovered and we have since strengthened our internal controls."

The law firm representing Edmonds did not immediately return a call seeking comment.

http://www.washingtonpost.com/wp-dyn/content/article/2006/09/13/AR2006091301370.html

How Hedge Funds Might Save You., Me, and the Whole effin’ World

“We’ll be God-damned if over the last several months fear has crept into investors psyche. While some of that might be just prudence, the kind of fear that grips most of the folks who take the time to drop me a line is often based on the role hedge funds play in the current economic cycle. It is understandable. These are a somewhat mysterious entity that fascinates those of us that report on their comings and goings and frighten those that believe they are manipulating the system for the benefit of the few.

“One note, received just last week struck me as typical.

“Carl writes: "What do you think of their [hedge funds] role in artificially keeping mortgage interest rates low by intervening in the short-term treasuries market [2-year notes] in order to flatten the yield curve with return on the 10-year notes low? I suspect there is massive collusion between the banks and the hedge funds to keep the real estate bubble from bursting at the expense of small and institutional investors, who may not be aware that housing has been the engine of the recovery that began back in 2001. What are your thoughts on this and the prospect for an economic/stock market collapse?"

“Whether or not his fear is well-founded remains to be seen, but I did answer his question, and with any luck, many similar ones.

“I replied: To answer your question about hedge funds and their role in the housing market you have to consider two questions. The first: is it necessarily a bad thing for hedge funds to play the flattened yield curve to their best advantage? And second: Are these instruments of risk actually predicting risk with their back room involvement with housing?

“Playing the flattened yield curve by trading off two-year Treasuries in favor of the price rally in the ten-year is just good a fixed income strategy. The Fed has given fixed income investors a good deal of problems especially when it comes to predicting what their next move will be.

“Hedge funds have been buying up mortgage-backed securities at a good clip recently, which does appear to be suspicious at first glance. Do they know something that we don't? The housing market's cool down is based on the assumption that the riskiest loans issued over the last several years will lead to a wave of defaults and those houses will detract from the sale of new housing.

“There are a lot of unfortunate homeowners sitting on property whose value has dropped significantly. Whether these mortgages turn negative (the loan is worth more than the underlying property - a purely paper situation that might affect about $500 billion in outstanding loans and I emphasize the word "might"), remains to be seen. There is an awful lot of talk about wage increases even as personal spending slows. and Consumers are resilient and resourceful and should they be confronted with their own personal economic slowdown, they will react rationally. This is evidenced in the lack of borrowing in the most recent months. I'm fairly certain that homeowners will pay the bills first, starting with the mortgage and keep a losing property rather than admit their mistake.

“If that is the case, mortgage-backed securities are not as risky as they would appear to be and hedge funds that realize this are being rewarded with higher yields than Treasuries of any maturity can offer….”

http://www.axcessnews.com/modules/wfsection/article.php?articleid=11206

CraigsList Spotting: Deal of the Day

I would love to pay your rent..... - 41 (Midtown West)

Reply to: pers-205382135@craigslist.org

Date: 2006-09-10, 9:04PM EDT

Hello there. I am a 41 year old banker who lives in NJ and works in midtown. I am intelligent, attractive and fun to hang out with. In fact, I'd be the kind of guy you would love to have a serious relationship with, except for the fact that I'm not single. I'll tell you exactly what I'm looking for. I'm looking for a fun, young, attractive woman to establish a very special relationship with. I would like to be your friend, confidante, mentor, lover, and, of course, benefactor. I would love to get together with you several times a month for lunch, dinner, whatever, and really have us enjoy each other's company. This is a wonderful arrangement for the right woman. I look forward to hearing back from you. Serious replies only and a picture would be most appreciated.

http://newyork.craigslist.org/mnh/m4w/205382135.html

Whatever Warren owns, Warren sees

Go know. Warren Buffett will arrive in Israel on Sunday. During the trip, he will visit Iscar Ltd. and Rambam Medical Center in Haifa, where Iscar honorary chairman Eitan Wertheimer is running a business plan. Buffett will also attend a cocktail party at the King David Hotel in Jerusalem.

Buffett is the controlling shareholder, chairman and CEO of Berkshire Hathaway Inc., which acquired 80% of Iscar at a company value of $5 billion. He will be accompanied on the visit by Wertheimer, who is currently residing in the US. This is Buffett’s first visit to Israel.

http://www.globes.co.il/serveen/globes/DocView.asp?did=1000132533&fid=1725

Harvard’s endowment grows even fatter

Surprise, surprise, the largest college endowment in the world got even bigger.

Harvard University finished their fiscal year with nearly 595 (m) million dollars in donations. That's a five (m) million dollar increase over the previous fiscal year and a 55 million dollar jump over fiscal year 2004. Harvard's total endowment is nearing 27 billion dollars.

School officials say more than 89-thousand donors contributed to Harvard in 2006, up from 88-thousand last year. The fiscal 2006 results are the second-best in Harvard's history -- ranking behind fiscal 2001 when the school brought in 658 (m) million dollars.

The most recent gifts to the school include 26 (m) million dollars from the Bill and Melinda Gates Foundation to support work in global health.

http://www.eyewitnessnewstv.com/Global/story.asp?S=5398258&nav=F2DO

FUND BETS BIG BUCKS ON HOUSING BUST

If you ever wondered why everyone hates hedge funds, here’s a pluperfect example. A New York hedge fund is betting big time on what apartment-obsessed New Yorkers have been whispering about for months: that the real estate boom is over. In July, Paulson Credit Opportunities Funds raised $147 million in equity and promptly put it to work on a leveraged $1.8 billion bet that home owners are going to have a very difficult time paying their mortgages.

The bet is concentrated on the lower end of the credit world, reckoning that the housing bubble will crack first among borrowers with the worst credit.

Although a Paulson fund spokesman declined to comment, its July letter to investors made clear that when it comes to the housing market, its research team doesn't just see the glass as half-empty, but more likely, as broken.

According to Paulson, their bet is working nicely, the fund's one month of operation has returned 2.87 percent before fees.

"Most recent housing trends continue to deteriorate," the Paulson letter said, citing "the lowest monthly [housing price] increases in 11 years." The letter also pointed to a spike in housing inventory as a sign of what it called "declining fundamentals."

http://www.nypost.com/business/home_fires_dying_business_roddy_boyd.htm

Soros Hands Over $50 Million

Financier/ philanthropist George Soros said yesterday that he was contributing $50 million big ones to support a sprawling social experiment, organized and led by the economist Jeffrey D. Sachs, that aims to help villages in Africa escape grinding poverty.

Soros’s money will, among other things, pay for fertilizers and improved seeds to raise crop yields, classrooms to improve literacy and health clinics to reduce deaths in 33 villages in 10 African countries. The hope is that poor subsistence farmers will begin earning more income by selling crops at market.

The strategy, which Sachs has been pursuing through his nonprofit group, the Millennium Promise, since 2004, is to tackle the myriad problems of poverty all at once by providing villagers with relatively inexpensive technologies and approaches, including mosquito nets that prevent malaria and stoves with chimneys that reduce deadly indoor air pollution.

Soros’s contribution is a philanthropic departure for him. He has largely focused on fostering democracy and good government. But he said in an interview Tuesday: “It requires the support or at least benevolent attitudes from the governments concerned,” he said. “In my view, most of the poverty in the world is due to bad governance. And whether the project can overcome that is a big question. If it succeeds in 5 of 10 countries and can be scaled up, that would be a tremendous achievement.” Screw the politics. This is the real deal, George baby!

http://www.nytimes.com/2006/09/13/us/13soros.html?ref=business

Is Global Alpha bringing Goldman down?

Total Bummer! Global Alpha, Goldman’s mega-posh $10 billion hedge had a sucky August, losing nearly 10% of its value, according to a preliminary draft of a letter sent to investors in the fund. Not only is the fund's poor performance a blow to Goldman's supersavvy rep, it raises the question, did G-man make rotten bets with its own cash, which then contributed to its decline in third-quarter profit? Even if said results beat analyst expectations.

From the get-go G-man reported a slight decline in quarterly results. That ended a streak of record-breaking earnings numbers. While the firm doesn't release Global Alpha's contribution to the bottom line, it is almost certain that the fund's lackluster performance in August had an effect on results. Goldman Sachs Asset Management, the unit that houses Global Alpha, reported net revenue -- revenue minus interest income, a standard measure among brokerage firms -- of $918 million, down 4% from the second quarter but up 26% from the year-ago period. A G-man spokesman declined to comment.

Just in case you wondered, Global Alpha, until recently was virtually unknown on Wall Street, is Goldman's crown jewel in a family of alternative investments that have helped boost earnings at Goldman in recent quarters. While Global Alpha is a relatively small contributor to Goldman's net revenue, the loss is notable because it occurred across many different trading strategies. It is unusual for a hedge trading in diverse markets to have so many lousy bets at the same time.

http://online.wsj.com/article/SB115805970665660501.html?mod=home_whats_news_us

Are Hedges Risk-Averse? Really?

Why won’t John Monks hedges an effin break? He obviously has taken no oath of silence when it comes to lashing out against hedge funds. Monks, the general secretary of the European Trade Union Confederation, has joined the chorus of complainants calling hedge funds "locusts," but with a twist. He lashes out at them for suppressing innovation out of fear of shareholder backlash. "Companies doing innovative, high-risk, leading edge activities are not being given the necessary opportunities to raise capital on terms that allow them to prosper," Monks said at the Economic and Financial Affairs Council meeting last week in Helsinki.

"The pressure is all the other way to generate double-digit annual returns on capital quickly, through squeezing costs and eliminating risks." Monks' comments echo a similar refrain by Dutch union head Henk van der Kolk and German politician Fritz Munterfering who originated the disparaging "locusts" term last year. Monks, acknowledging that hedge funds maybe aren't as simple as they seem but parting with European Commission internal market and services commissioner Charlie McCreevy, who praised hedgies crucial role in keeping companies on the right path, called for the EC and the European Central Bank to launch a study of the impact of hedge funds on innovation, research and development. He pointedly said that member of financial services industry should not dominate the effort.

We second that emotion.

http://www.dailyii.com/article.asp?ArticleID=1079454&LS=EMS106229

Bernanke's Hippie Dictionary Updated

Actually we have no idea what year Fed chief Ben Bernanke wrote his “Hippie Dictionary.” But we’re glad he did. It’s actually quite good, and nicely post-modern with its inter-textual self-referentiality. Here are the excerpts reprinted by Bloomberg.

Bird -- a lady as in ``cute chick'' or ``henpecked'

Dig -- to like, to enjoy, as ``The hippie undertaker digs his work.''

Down trip -- a drag

Drag -- a down trip

Hang-up -- a neurosis or fetish

In gear -- the cat's pajamas

Lie-In -- a form of peaceful protest that often fails when demonstrators go to sleep

Square -- someone who stays home New Year's Eve to hear Guy Lombardo play ``Auld Lang Syne''

Straight -- as in ``stiff'' (see ``dig'')

Swing -- what someone does who thinks Guy Lombardo is a football coach (see square)

Trip -- a rocket flight without the rocket

Webster's Revised

Bernanke probably has little use for such words in his current line of work. Just imagine, though, if he had reason to utilize them how different the corresponding definitions would be today.

Bird -- Sandy Pianalto, the Cleveland Fed president who is a real looker, and not just by civil-servant standards.

Down trip -- bumping into CNBC's Maria Bartiromo at the White House Correspondents' dinner.

Drag -- bumping into CNBC's Maria Bartiromo at the White House Correspondent's dinner and answering a set-up question.

Hang up -- recommended policy for dealing with the press following L'affaire Bartiromo.

In gear -- a good place for the economy to be as long as inflation and inflation expectations are well-contained.

Lie-In (Lyin') -- opposite of transparent. See inflation targeting.

Square -- apt description for a man who spends his time divining the correct level for overnight interest rates (or defining hippie words while his contemporaries were out living hippie lifestyles).

Straight -- see square above.

Swing -- how Alan Greenspan saw his role in the Washington scene. (See A-list parties and Fed's July 4 shindig.)

Trip -- going to lots of places you never would have visited unless your job description required it. Alternatively, the experience of speaking to audiences whose blank stares suggest an understanding of monetary policy on a par with the family dog's.

Another way to harness the Fed chief's obvious way with words would be to adapt 1970's hippie-ese for the 21st century. The Fed's communications subcommittee, under the leadership of Governor Don Kohn, might want to consider using hipper lingo -- in the process, taking some of the mystery out of monetary policymaking -- in the statement released at the end of each meeting.

Groovin' Communication

For example, when the Fed announced Aug. 8 that it was keeping its benchmark overnight rate unchanged at 5.25 percent, it explained its decision in the following manner:

``Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.''

The hip-hop generation might find the whole arcana of monetary policy more comprehensible, not to mention appealing, if the Fed came down to the level of its audience and told it like it is:

``A group of squares in Washington decided to blow your mind, keeping the cost of dough right where it is because the economy, grooving from a psychedelic trip in the housing market, is coming down. Not wanting to take the rap for dealing bad stuff, we stiffs will do our level best to ensure the slowdown doesn't turn into a bad trip.''

You dig, man?

http://www.bloomberg.com/apps/news?pid=20601039&sid=a4U83tNPsvgY&refer=home

Are Merrill, Morgan, JPMorgan Playing Dirty?

Heavens forfend! But in July, Merrill Lynch & Co., the world's biggest brokerage firm, said it traded 2 million shares of Houston-based pipeline operator Kinder Morgan Energy Partners LP. The New York Stock Exchange said Merrill traded barely a sixth of that amount, or 351,000 shares, for the month.

No one except Merrill will ever know whether it handled the other 1.65 million shares. The discrepancy is increasingly unsettling to institutional investors and has everyone from AIG SunAmerica Asset Management Corp. in Jersey City, New Jersey, to American Century Investments in Kansas City, Missouri, in an uproar over the integrity of some of the U.S. stock market's most important data.

On any given day, the difference between what Wall Street's biggest firms say they trade and what the exchanges report is more than 30 million shares. Now, the widening disparity of data has prompted NASD, the industry's regulator, to begin a preliminary investigation into whether brokerages routinely inflate their trading on behalf of customers.

``We're concerned that firms might be providing misleading information into the marketplace that makes them appear as a bigger player than they are,'' said Tom Gira, NASD's executive vice president for market regulation. ``We're still in the process of trying to determine whether there are reasons that could possibly explain this, or it could be indicative of some pretty serious misconduct.''

NASD, which oversees more than 5,100 firms from its head office in Washington, is probing brokers for evidence that they exaggerated trading in advertisements posted on electronic data providers or online billboards. The regulator's rules prohibit publishing such information if it doesn't correspond with ``bona fide'' trades. Sure. Sure…..

http://www.bloomberg.com/apps/news?pid=20601087&sid=a4Iy3J2GROBk&refer=worldwide_news