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Is it better to call your representative than trade? A present for Warren Buffet and why times are not tough for all of us…

Lobbying your government representative is all very well, but do they listen? Last week, an email dropped into the inbox of the editor of Profit & Loss from industry association SIFMA, urging him to contact his US government representative and urge the passing of the $700 billion bailout bill. Clearly members of the US Congress don’t see enough votes from workers in the financial sector – and if they did, they chose to ignore them. Of course, the financial markets were pretty busy last week (we are told), so it could be all those members were weighing up contacting their representative and selling another million dollars’ worth of financial stocks…

Warren Buffet – have we got something for you!
News last week from a firm called Actuarials Holdings LLC, which unveiled a “safe” derivative called the Clipper. The firm claims that traders can, among other things, “control total risk and highly leverage their capital”. Furthermore, they are “crash-proof” because they effectively provide stop loss protection that can be set at a variety of time horizons from 15 minutes to a month.

Hmmm, the words “highly leveraged” and “safe” in the same sentence is worrying enough, but the fact remains, investors can still get it seriously wrong – they’ll just be losing money in 15 minute intervals. Call us old-fashioned, but anytime a punter has to take a bet on market direction there is a risk involved – and risk does not make something “safe”. Warren…we’re still with you.

Times are tough(ish) in the banking world. The Australian Financial Review last week trumpeted the most expensive house purchase in Australian history – AUD 47 million. The buyer? One Ivan Ritossa, global head of foreign exchange at Barclays Capital. Beware, Ivan, the editor of Profit & Loss is now based in Sydney – and he knows where Vaucluse is…lock up the wine.

Profit & Loss

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