I remember being in the dealing room when 9/11 occured. Needless to say it was frantic. News was disjointed and contradictory with traders not having all the information they needed to keep the market under their control. As a trader managing other people’s money, this is a dangerous position to find yourself. So, the best course of action during such momentous an event? Cut your positions. I had to help many clients do this. There is no other course of action to take. It’s not your money to risk. I recall there being outrage at the time from the public because traders had been “playing the markets” and profiting from the deaths of innocents. Of course, there must have been a bit of that going on, but let us not group everyone under the same banner. Those same people could have very well lost their whole pensions if traders hadn’t acted quickly. It was similar during the recent global crisis where anyone who had even the smallest role to play in the world financial system was labelled “a banker” and tarred with the same brush as the small percentage who caused the whole debacle and who, of course should be strung up and left to rot. It’s easy to generalise but not always helpful.
My point? One action need not be all encompassing. There are bankers and there are bankers. There a ways of trading, and my argument is, there are also ways of trading! What if trading could turn a bad situation a little bit good? I’ve always advised people to buy bank shares. Why? It’s not because I’m a lover of banks. Indeed, I find myself in the boxing ring with one as we speak! However, if banks are going to rip us off, why not buy some shares and get some money back via a fat dividend?
To take the point further, let’s look at the world’s current trials and tribulations. Oil is a good example. The price of this most sought after energy source continues to escalate, in line with the strife in the Middle East and North Africa. The nuclear fiasco in Japan will probably see them need more oil as well to make up lost energy supply. Should traders be buying a rising commodity, the main reason for which it’s rallying being the defiant Arab people who are being killed for their troubles? Some would say this is immoral. Now, trading is like gambling and nothing is ever a sure bet, but some risks are less than others and you can be pretty sure that energy prices will continue to climb, at least for the time being. What if trading off other people’s ills (as many would like to see it) could actually help them? What if some institution was “moral enough” to buy energy, make a profit and give the majority of that profit to the people who are being so negatively affected by the event causing the gain in commodity price? Of course, to take that risk, an institution would want a cut, and that’s fair enough, but most of these big boys are making pretty healthy profits at the moment. I think they could take a bit of a risk.
You also have some big regimes in the Middle East turning their fat oil earnings morbidly obese at the moment, but let’s be honest, I can’t imagine them giving any to the “common folk” who they are actually in battle with, but why not play them at their own game?
The biggest problem I see is politics and with big business, financial institutions and governments all in each other’s pockets, I can hardly see this happening. With our addiction to oil, it was always going to come to this. It’s never healthy to be an addict, whether it be drugs, other people......or oil. Maybe finding an alternative energy source is our only hope. If nothing else, we can only hope that these sorts of world events bring the agenda forward a bit. It wouldn’t hurt any of us to tread a bit more lightly on our planet and green energy would be a good place to start. We’re going to have to face the stark reality of oil running dry at some point, so why wait?
