Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Monday, April 19, 2010

Satyajit Das on derivatives

Satyajit Das, author of "Traders Guns & Money - Knowns and Unknowns in the Dazzling World of Derivatives", p.54-

I used to be responsible for showing the trainees around the trading floor. "Look, it's quite simple," I said, breaking down the hierarchy of the trading floor. "There are salespeople - they lie to clients. Traders lie to sales and to risk managers. Risk managers? They lie to the people who run the place - correction, think they run the place.  The people who run the place lie to shareholders and regulators." I remembered our quantitative colleagues. "I forgot the quants - our fabulous rocket scientists! When last heard from, they were trying to develope a model for lying,"
"And clients?" one of the trainees asked tentatively. I thought about it for a few seconds. "Clients. They lie mainly to themselves!" To enter the world of derivatives trading is to enter a realm of beautiful lies.


  1. That quote truly inspires confidence in the roulette wheel that is Wall Street.

  2. The quote is a bit over the top but still it shows that when you're playing poker for millions of dollars people are ruthless. And its important to remember it's not just Wall Street. It's pharmaceutical companies, it's professional sports (steroids for example), and it's even the clergy. In "Freakonomics" Levitt showed how they detected teachers cheating on the scoring of tests to get a bigger payout from the government.
    What surprises me is that it appears we may have reached some kind of tipping point. People didn't seem so upset, for example, with municipalities getting ripped off by Wall Street selling them credit default swaps they didn't understand. To me this is a lot worse. At least with the Goldman trade the buyers were sophisticated.
    Maybe it's associating the single name Goldman Sachs here.