Trader Morals

That’s Nick Leeson the patron saint of idiot traders, who kept gambling until he bankrupted one of Europe’s oldest banking institutions, basically just to cover his constant and increasing incompetence. He makes the leaders of the subprime meltdown look like geniuses.

But here’s the real issue you have to ask yourself, when you think of entities that are gambling with fantastic amounts of money – and honestly it’s their main job to convince you that it’s investing not gambling.

Let’s say you have the ability to make the following bet.

You’re running a hedge fund full of a bunch of rich people’s money, when you identify the following opportunity.

You have an 80% chance of making yourself one of the richest people on the planet if things go well and do really well for your investors.

Now if things get ugly (1 in 5) you’ll lose lots of rich people money and throw the entire financial system into a state of monumental chaos – and have to find another job.

Not much downside really, unless you have a conscious.

Hopefully, people don’t seek out these situations, but usually when they find themselves saddled with it – their inclination is to just pray that things will work out, which probably isn’t the best way to run billions of dollars.

Leeson, of course, didn’t even have any upside. He was just trying to save his job, which is probably the case with a lot of these guys. I’m not sure if that makes it better or worse.