<story><title>Trader: I dream of another recession (and Goldman Sachs rules the world)</title><url>http://www.bbc.co.uk/news/business-15059135</url></story><parent_chain><item><author>Construct</author><text>This man is described as an &quot;independent market trader&quot; in the attached article. His twitter profile ( &lt;a href=&quot;http://twitter.com/#!/alessiorastani&quot; rel=&quot;nofollow&quot;&gt;http://twitter.com/#!/alessiorastani&lt;/a&gt; ) describes him as a &quot;Keynote speaker&quot; and a &quot;Mentor and dedicated to helping others succeed&quot;. That doesn&apos;t exactly inspire much confidence. In fact, it is pretty obvious that he has set out to make a name for himself through this controversy.&lt;p&gt;Furthermore, he has obviously bet heavily on a near-term market crash. He&apos;s now financially and emotionally invested in a market crash, so of course he will be confident that it&apos;s going to happen. And if his doomsday video circulates the internet and makes a dent, however tiny, in investor sentiment then he has also effectively pushed the market (in a very tiny way) toward his goal.&lt;p&gt;Take a look at one of his recent tweets: &quot;I&apos;ve been waiting for this stock market crash for 3 years. #finance #economy&quot;&lt;p&gt;The world economy is in trouble, no doubt, but let&apos;s remain reasonable and rational here. Spend enough time around financial types, and you can always find a doomsayer like this man in any sort of economy.</text></item></parent_chain><comment><author>leverage</author><text>This guy is an independent trader because no one would hire him. He&apos;s misguided in his understanding of the markets. Goldman Sachs is an investment bank. When he says &quot;anyone can make money from a crash&quot;, he&apos;s right: any INDEPENDENT investor/fund. Such as a hedge fund or himself, an &quot;independent trader&quot;. These people are referred to as the &quot;buy side&quot;. However, Goldman Sachs, as well as all the other banks he probably thinks &quot;rules the world&quot; is on the sell-side. The sell-side provides &quot;prime&quot; brokerage services to the buy-side clients -- that is they connect buyers and sellers via the exchanges. In fact, with the upcoming Volker rule, no investment banks will be allowed to engage in proprietary trading (trading for profit with the firms money), which is what the buy-side does.&lt;p&gt;Investment banks might actually lose money in recessions because they might take illiquid, toxic assets onto their books to service demand (point and case: the mortgage crisis). And securities is only a part of the investment bank business model. Advisory services, largely driven by M&amp;#38;A and IPO volume, provide a decent chunk of profits for banks. Capital markets dry up during recessions, which will completely stifle M&amp;#38;A and IPO activity and therefore revenue on that side of the bank.&lt;p&gt;This guy is full of shit. When asked what to invest in when the market goes down, his best advice is bonds and &quot;hedging strategies&quot;. Bonds do indeed rise in value during bear markets, however hedging has almost nothing to do with profit or loss. Hedging is risk management: covering your ass in case of an unexpected move. For example, if I expect a downward market turn, as per his advice, I might buy up treasuries. But, to &quot;hedge&quot; the possibility that the market moves UPWARDS instead, I might buy an index tracking the Dow, which will increase in value as the market moves up. In this case, hedging is actually DECREASING my profits in the case of a downward movement in the markets. There are much more intuitive ways to play a downward market.</text></comment>
<story><title>Trader: I dream of another recession (and Goldman Sachs rules the world)</title><url>http://www.bbc.co.uk/news/business-15059135</url></story><parent_chain><item><author>Construct</author><text>This man is described as an &quot;independent market trader&quot; in the attached article. His twitter profile ( &lt;a href=&quot;http://twitter.com/#!/alessiorastani&quot; rel=&quot;nofollow&quot;&gt;http://twitter.com/#!/alessiorastani&lt;/a&gt; ) describes him as a &quot;Keynote speaker&quot; and a &quot;Mentor and dedicated to helping others succeed&quot;. That doesn&apos;t exactly inspire much confidence. In fact, it is pretty obvious that he has set out to make a name for himself through this controversy.&lt;p&gt;Furthermore, he has obviously bet heavily on a near-term market crash. He&apos;s now financially and emotionally invested in a market crash, so of course he will be confident that it&apos;s going to happen. And if his doomsday video circulates the internet and makes a dent, however tiny, in investor sentiment then he has also effectively pushed the market (in a very tiny way) toward his goal.&lt;p&gt;Take a look at one of his recent tweets: &quot;I&apos;ve been waiting for this stock market crash for 3 years. #finance #economy&quot;&lt;p&gt;The world economy is in trouble, no doubt, but let&apos;s remain reasonable and rational here. Spend enough time around financial types, and you can always find a doomsayer like this man in any sort of economy.</text></item></parent_chain><comment><author>silverbax88</author><text>This is an extremely valid point. If you look at the stories that are posted daily on Yahoo! Finance, nearly all of them are market predictions by people with a vested interest in their predictions (beyond simply trying to be correct).&lt;p&gt;I think this is still lost on most consumers; most people think stock analysts are the same as economists, and that&apos;s completely wrong. A good economist will tell you that they can&apos;t predict the stock market, but they can tell you what the economy will do. That&apos;s enough to let you know that the direction of the economy and the stock market are not directly linked.</text></comment>