Investing for a Recession (Part I)

One of the key rules of investing at any time is to be flexible in your approach, and not assume that whatever has worked well in the past will necessarily continue to do so in the future.

I am not going to lie: I failed to call the timing of the stock market downturn, but did see it coming. In fact, I called it too early, as after the effective collapse and nationalisation of Bear Stearns in mid-2007, my constant research through economic forecasts was enough to lead me to conclude that storm clouds were gathering and a major correction was coming. So I liquidated all my positions, and sat on mostly cash in my trading account - earning zero interest as I needed it available at short notice in case trading opportunities came up.

Another key investing rule is patience - one that amateur investors all too frequently fail to show as they get excited by a short term fluctuation in a stock price. I was patient for 6 months, as I sat there watching global indicies continue their inexorable rise upwards, and eventually I snapped and made a couple of investments in March 2008. I won't go into details of those as they are not important, but suffice to say that given the unrelenting speed of the market falls from May onwards, I am sitting on losses from those in excess of £50k.

You might whince, but another key to investing is to only invest what you can afford to lose, and while I am not happy about it, it makes no material difference - and I am happy with them both as long holds. More importantly, I have learned a very important lesson for future investing. Learning from your mistakes is the single biggest investing rule of all - and in this case it was that when all the logic points to something happening, it will do.

So by October, when all the fun had kicked off with Lehman Brothers, rather than joining the collective panic gripping many of my peers at the banks, I realised we had reached a wonderful opportunity to start making a large amount of money back from this crisis. Shorting is one, much maligned means of doing this, which is not what I do. On that note, let me say that shorting is needed for valid trading strategies (e.g. hedging), despite the criticism about naked short selling of the banks, which is for nothing other than the pursuit of speculative profit - that is an area more difficult to justify.

Instead I have been much more traditional in my approach - taking long positions (buying) stocks at a lows, and then selling them soon afterwards. The key is that what panic brings to the markets is enormous volatility. I assessed the reality of the fall out by giving it some context. Nothing like this had happened in our lifetimes - it was a cataclysmic shock that would obviously lead to enormous falls in the markets. Therefore key was to not be remotely optimistic and instead look at your worst case scenario expectations on prices and exceed them.

I recall listening on a tedious conference call at work, while idly watching the share prices of all the major banks in freefall. The two of particular interest were Morgan Stanley and Goldman Sachs at that time, due to their status as investment banks. The markets were voting with their wallets in their lack of confidence in this particular business model, and both had fallen a staggering amount in recent days. But no downturn is smooth with stocks, and in this case I had already watched GS hit a floor at $120/share and rally back upwards sharply for a couple of days, before rapidly plunging again.

As such, I watched as GS breached the psychologically important $100 mark and decided it was clearly about to drop off a cliff, despite it already being down 20% on the day. Sure enough, a moment of panic ensued as it moved down below $90/share, and I set a limit order to buy $150,000 of stock at $79/share. The stock suddenly plunged and touched a low of $77/share before spiking upwards above $90/share by the end of the day. I had an unrealised profit of $20,000 in 10 minutes. I also reasoned that based on previous rallies, all those shorting the stock would now be rushing to cover their positions, which creates a short squeeze that drives upward pressure.

Sure enough the next day, GS rose up above $120/share as I had expected, and I immediately sold out. And as I expected, the stock hovered there for a couple of days before plunging and I believe eventually hit a low in the $50/share range - it is somewhere around about $80/share as I type. It is worth noting that as I realised that £40k profit, I liquidated a bad investment from several years ago. Rather than panic or give up on it, I decided to hold and turn a negative into a positive - in this case it became a useful offset against my gains by reducing the amount I will have to pay in capital gains tax. In effect, I had recovered a large percentage of my losses from the market.

I repeated that trade further down with one of the other banks soon afterwards, and then stopped trading in them because I no longer had a strong view on what direction prices were moving and whether or not the downward trend was ending. My considered opinion was that they had further to go when later quarterly results were reported, and so it seems to have panned out as after rallies before Christmas they have plunged again.

However when you cannot decide where you think a stock is going to move, it important to not trade in it. I locked in my gains, and by December had turned £60,000 of spare change into £140,000. Where am I investing now? Two places. Most important was that I had deliberately chosen to trade in US banks throughout the process, because I had known from various research that historically Sterling was overvalued and long-overdue a downward correction.

My analysis concluded that an imminent recession in the UK would eventually fuel a correction in the GBP-USD exchange rate, especially given that the US was ahead in the economic cycle and already in a recession. Sure enough, with money tied up in dollars during the trades, I made considerable sums from the fall in the pound from October to December with so much money held in dollars. I then decided that since I was no longer sure about the direction of banking stocks (or most others), from researching likely directions of currencies in 2009, both sterling and the dollar were likely to continue their falls against other currencies.


As such, with a new policy of 'quantitive easing' on the horizon (aka governments printing money), that meant it was an easy decision to take a large stake in a gold ETF (exchange traded fund) in December 2008. This is effectively like buying shares that are linked to the price of gold in USD. Sure enough, with the pound falling further, I am currently sitting up 35% on my investment to date, and recommend that anybody debating what to do with their money for 2009 use the current minor sterling rally versus the dollar (as I type we are at around $1.43 to £1) and buy into a gold ETF on the London Stock Exchange for 2009.

When governments start printing money in the way they effectively are with all this debt, it will eventually stoke inflation later this year. That should lead to an increase in the price of gold, and makes it a good play until later in the year when it will be worth exiting.

You might be starting to get a taste for what investing is all about from the above outline of my investing activities since October. It is about completing your own analysis, taking into account historical statistics to give perspective, and looking ahead to do your best to assess what is logically going to happen next. If you don't know then do not do anything, but if you do think something is going to happen (such as house prices falling another 20% in the UK) then why sit around holding it?

Next time I will explain what I am doing with the majority of my money in 2009 at present.

Oh, Stop The Baracking

Well, I'll have to put aside my discussions on investment briefly, as there has been an interesting development at the bank.

By good fortune, one of the junior team members has just decided to quit. The reason is being kept secret for now, but he was a veritable Lothario despite ears that stick out like dinner plates, and there are rumours he has been sleeping with the personal assistant of a particularly senior MD in synthetics. If that got found out then it was never going to go down well - particularly if the MD was also getting some on the side.

What was more interesting however is how this fits into the impending job cuts here - our Boss announced his departure rather cryptically this morning; that is was his own decision (yeah, right), and mentioning his leaving date was still to be confirmed "pending some negotiations".

From talking to the chap in question who is leaving, this is all about when he can hand over his work, which sounds reasonable enough on the surface. However our Boss is a sly old fox, and is more likely to be delaying the whole process so that our boy counts nicely in the round of cut backs next month. A splendid idea, and at the same time the Boss can avoid making any of those nasty decisions that reduce team morale.

Otherwise I have a couple of sources dotted around in the Bank, one of whom works for global security. They are very useful to know, because as a group they need to be informed in advance when we're about to fire people so they can be ready for the odd disgruntled former banker who might come storming back into the office to vent their views on life, the universe and anti-Capitalism. Global Security's usual tactics these days has therefore been to simply lock the doors on the day of the cull - unfortunately we all know that game now so it is also taken as a sign that something is afoot.

Apart from confirming my suspicions that a cull is on its way "within a month", he also confessed his team had even gone to the length of locking the office doors periodically on other days recently, to try and make it seem more of a usual event! It sounds like they haven't got enough to do if they're wasting time with antics like that, and a few of them should join the exit queue.

Otherwise my highlight news of the day was waking up to find that the new, incoming President, Barack Obama, is taking the time to make sure we bankers are lined up as the sole fall guys for the global economic crisis. In an age of irresponsibility, there is no doubt that the City and Wall Street ought to be hung out to dry. But so too should the governments that steadily reduced the regulatory framework for years to the point where all this was possible. To use a zoological comparison, if the government is an animal keeper and the City a tiger, it's like putting the tiger in an enclosure next to some lambs, with only a low, wooden fence between them. And then blaming the tiger the next day when you get in to find a blood bath (but a fat, happy cat).

And while we're on the subject of personal responsibility, let's have a moment to think of Average Man On The Street and his stupidity in spending far beyond his means for years by borrowing against the value of his house.

In reality, Barack's barracking is a response to 'Bonusgate' - the scandal currently engulfing Bank of America / Merrill Lynch, in which former Merrills CEO John Thain opted to pay his people a fat bonus before the inevitable bad times engulfed the firm. Thain's head rolled quickly enough this month, although BoA made a poor job of trying to stitch him up by pretending they had no knowledge or influence over the decision.

In reality that is a load of rubbish, as Thain made clear in public interviews that could not be convincingly denied by Bank of America. As such we ought to see Ken Lewis (CEO of BoA) on his way soon as well. It's entirely fair given the amount of public money being used to keep the combined bank afloat, and is probably the first signs that the compensation culture of global banking is changing forever.

Meantime for a man who spent his campaign talking about rising above finger-pointing and blame, and focusing on resolving the problems, the President seems to still have had a spare moment to give a mid-digit to Wall Street for all the problems they are going to cause him for the next couple of years. Fair enough.

For Whom The Bell Tolls

"Perchance he for whom this bell tolls may be so ill, as that he knows not it tolls for him; and perchance I may think myself so much better than I am, as that they who are about me, and see my state, may have caused it to toll for me, and I know not that."

In John Donne's round about way, he was observing how interconnected we all are, which was a good effort in a world before globalisation. On the other hand I recall learning that same lesson on the bus on the way home from school aged 14, as I sat next to one of my best friends, Birdshit. I should qualify he was named that because of a permanent, natural little blond patch in his hair that.. well, you get the idea.

I recall turning to say something to Birdshit, with my mouth wide open, and at that exact same moment he (with a streaming, heavy cold) turned and sneezed in my face. I can still remember that feeling as his snot was catapulted down my throat. The cause and effect was apparent within seconds. I had him in an armlock and was repeatedly beating his head against the glass, and then two days later I had a streaming, heavy cold up at my Grandma's.

Anyway, the events of the last year can only have confirmed to those in the City that their welfare was actually strongly interlinked with red necks in the States. I know a few who would probably snort indignantly now at such a suggestion, but the facts speak for themselves given how many currently give a best case scenario of ending 2009 still with a job.

That process of interconnectedness is beginning to get juicy here at the Bank. The bell is busy tolling like a death chime for the coming cull on the trading floor - only really noticeable during the quiet periods before Squark Box. A number of my fellow bankers have had a quiet shoulder tap or 'invitation upstairs for a chat' from an unknown HR manager in recent months, and as I mentioned previously, that process has actively fuelled fear and I think is soon about to continue.

For some who are more in need of a job than me, supporting families with all the costs associated, I can almost see the sense of semi-permanent desperation and fear. But actually the whole thing *is* an enormous joke, and we really need to confront it and realise that the worst case scenario isn't actually that big a deal.

Otherwise I wish people would stop bringing their stress to work, the City just isn't as much fun as it used to be. Until something interesting kicks off at the bank, I think it's time to get back onto investing again next time.

"Oh My God, They Killed Kenny!"

As I mentioned in my first post, it amazes me how little financial common sense many people have - in particular my colleagues. After all, these are the supposed 'Masters of the Universe' (where exactly did that ridiculous phrase come from?), who are experts in the many financial products and options for investing our money. Yet it's amazing how many are really just Average Man On The Street when it comes to making those all-important decisions that determine whether you end up with some freedom in life.

On that note, let me be clear that I see money as nothing more than an enabler in life - specifically it gives you personal freedom to decide what you want to do and when. That's why the ultra rich who wander around the shops in Knightsbridge and New Bond Street look so happy and relaxed. You can spot them a mile off, with their designer everything, styled hair, moisturised skin, and most importantly no bags under their eyes from the constant strain of life in the rat race in which we all struggle. Instead they do as they please - it's when they show all the gratitude of Paris Hilton for their position in life that the resentment rightly comes in from the rest of us.

Unlike a lot of people, I have no like or dislike of money. I think those who do are usually scared by it, because it is either a constant problem to meet bills, or they don't know what to do with what they've got. But like all fears, it's facing up to it that helps, not sticking your head in the sand and pretending it isn't important. Money ultimately will decide whether I own that house in a good area in a couple of years time, and whether I can provide for the family that L and I plan to start one day. That's a quick insight into my reasoning, along with why I have no interest in pissing my money away on ego boosts like a flash car, phone or watch.

We all know the type who do that, like a friend of mine, Big H. He's enormously proud of his house, along with his flash company car and likes to be conspicuous with his wealth by showing off various electronic gadgets like his smart phone. In short, he's the kind of overstretched financial idiot of the worst kind: shallow, materialistic, he seems to actually define himself by what he buys. He also thinks he has been clever by racking up £9000 of credit card debt, which he has been flipping every 6mths between company intro deals.

A number of financial websites have advised people to do that in recent years, but as the country is about to find out - it is always a stupid idea to encourage spending beyond your means. Now those deals are drying up fast, so Big H finds himself with an uncertain future regarding his job, and no means to pay that back easily. Anyway back to my colleagues at the bank, as I heard an interesting story on Friday about an investment decision made by one who was an unfortunate lamb to the slaughter in the first big cull back in October.

Kenny's just one of those unfortunate types who was always one of the team comedy characters. We laughed AT him as much as with him, and he hasn't had the best run of luck in recent months. As you'll see though: calling most of it 'luck' is partly to excuse stupidity. Firstly he decided to take a holiday in the summer to Sardinia of all places, and despite the warnings from a colleague who knew the place well to not drive there, he hired a car - and promptly crashed it within 2hrs of arriving, and spent the remainder of his two week holiday in hospital recovering.

Kenny's a good chap, and was well liked around the bank to my knowledge. Unfortunately he was also not politically astute enough to ensure he massaged the ego of the most important person - the Boss. He made the mistake of complaining a little too vehemently about his bonus in December 2007 (that's the last time we expected bonuses). That seems to have been remembered, as he was first on the list our of the door. There's complaining by grumbling and looking like you expected more, and then complaining by making it personal or with veiled threats - and I heard he crossed that line.

Around that time was when all the fun with the banks was really kicking off of course: Lehman Brothers collapsed, and the vice tightening on Goldman Sachs and Morgan Stanley. Overshadowed but still high profile was Iceland, which quickly defaulted on all foreign debts, forcing the UK government to bail out UK savers. Guess who had over £100k stashed away in an Icesave account?

Although Kenny will eventually get that back, meantime he decided to 'invest' his generous redundancy package in a couple of other banks in December - namely RBS and Lloyds TSB. I can only assume his logic was that given they had fallen a lot up to now, it therefore meant now was the time to buy. I should probably point out that Kenny is no trader, but such simplistic reasoning also showed spectacular naivety to assume that more crap was not lurking under the surface at both of those banks. Particularly given that each has swallowed up a terribly run, overexposed competitor in ABN Amro and HBoS respectively. You only have to look at how Bank of America is now suffering from its forced purchase of Merrill Lynch for another example.

Everybody in the City knew both were as contaminated as Lehman Brothers.. or should I say anybody who spent some time doing some research into the matter, which is another key rule of investing.

Since Kenny decided to put in an unspecified amount into those banks, they have tanked an impressive 79% in value, which just goes to prove my point that you should never assume bankers are always competent with their money. Having said that, after the last 6 months I am likely preaching to the converted when it comes to assuming we're all incompetent, overpaid slime.

I must admit, a few of us at the bank couldn't help but laugh when we heard - it was just such a Kenny way to invest. In a post soon, I'll tell you what I have been doing with my own money in the last 6 months, and why I have been making a lot of money out of the downturn.

Whispering Rumours, Job Cuts & Backstabbing

It goes without saying that the mood in the City right now is sombre, and as bad as I have ever seen. What's more worrying is that even the old timers who are serving life sentences at the bank also comment on how they have never seen anything this bad.

However as with investing, people need to detach those emotions and put everything into perspective, or we risk sensationalising the situation like the press.

Yes we're in for a tough year or two. For the vast majority of us that simply means a little belt tightening and dealing with some jobs worries. Otherwise there is really no meaningful difference. For that minority who end up out of work or losing their homes it is a different story of course, but that's not something that will happen to me as I'm financially insulated. While I feel sorry for those in that position, you make your own bed in life to a large extent, whether you realise it or not.

Strangely I'm still fending off calls from headhunters despite the downturn, and am delaying final round interviews at a couple of decent firms purely to cover my angles ahead of the next round of job cuts at my bank. It seems a little odd to me to be in such a fortunate position, especially as I know plenty of people who have already been out of work for as much as 15mths now, which I'm sure must be horrendous.

Everyday at work, beyond the buzz of the trading floor, there are whispers as bankers quietly discuss the latest job rumours. Despite assurances from senior management after the last round before Christmas that that was it, these mostly focus upon when the next round will be. I for one am far too cynical to believe the last cull was anything other than the start of the process. Why? I researched and asked old timers what has happened before in these circumstances and they knowingly told me the process.

Senior bankers seem to actively do their best to depress their workforce in times like this. Mostly it's because rather than biting the bullet and cutting 25% of the workforce in one go like they ought to, and being able to convincingly tell all the remainder they are now safe, they instead go about it via 3 or 4 rounds of 10% cuts (or smaller rounds that are not noticed as much), spaced over a year or more. That leaves everybody scared, depressed and fearing they will be next.

The City's an interesting place to work, where people do take a certain malicious glee in discussing and joking about the possibility of job losses in the same way we discuss companies and financial opportunities. I am no exception, and as such have been busy spreading the rumour that a cut is imminent in early February, and bandying around figures as high as 10-15%.

In my case I have analysed the percentage gone so far, and that estimate seems quite realistic. I have even gone so far as to draw up a spreadsheet of my team members, to work out who the next 1 or 2 should be to go in the next round. I'm being honest with myself and don't think I factor in the bottom 5, hence my assumption I should be some way off the firing line at present. Or so I like to comfort myself.

Nonetheless that doesn't take into account the huge amounts of political maneouvering and backstabbing that is an everyday part of City life. You never quite know what else is going on out of sight, particularly in earlier times at some of the other places I worked.

At another bank, when I joined I quickly worked out that a colleague, Irish Al, had a deep loathing of our manager. Not so unusual you might think, until I learned that 'The Dome', as he was known due to his shining, bald head and apparent desire for all of us to worship at his feet whenever possible to feed his ego, had secured a fast promotion from the new group head when he took over. He did this by meeting with him and planting the idea that he had come up with the idea for a new product that was making us lots of money in the markets.

The reality was that Irish Al had devised it, but to his amazement soon found himself working for the underachieving Dome - and suffering his wrath for the classic reason that he was a perceived threat. Actually now I think of it, I found out that Irish Al was fired last Wednesday from the bank.. something tells me that The Dome will still be there in his kingdom. He'll probably have his entire team sacrificed this year in order to save his own skin.

It might just disappoint you by my saying that where I work now is a refreshing improvement. That might be part of what makes it more successful. Having said that, I'm sure as times get tougher we'll see the real character of a few of those around me.

Dinner Time Conversation Killer

It is ironic that the current dinner table conversation killer these days is exactly what most over-extended people wouldn't stop twittering on about for the last 5 years.

By that I'm talking about house prices of course. Apart from a recent evening when I was forced to endure looking through a photo album of a friend's baby for an hour, I can't think of anything more boring. However there were a whole raft of people who took delight in measuring their own success by how much money they had 'made' by virtue of their house value - and telling the rest of us ad infinitum. Of course we can all see this was an illusion now, but I was one of a long-suffering minority who chose to sit out of this particular party as I could see what was coming.

If you are one of those with everything you own tied up in a house or flat, then you need to understand that housing always has and will be the British public's great illusion of wealth. An Englishman's home is his castle as they say. Yet in truth the only time housing should be seen as an investment is when it's a buy-to-let. Otherwise a house is a place to live and use - with the added bonus it can be sold on at some point of time in the future.

However ask yourself a question, what do you DO with all that money you've got tied up in a house you live in? The answer is, absolutely nothing. Money that could be making you a lot of money elsewhere is instead used to avoid paying rent. Where the Great British public justify over-extending themselves is in the naive argument that rent is "dead money" - so you have to get on the property ladder as soon as possible.

Nothing could be further from the truth, and for proof you only need look at Germany, where house ownership is something like 20% of the population. Germans are no poorer than the British - in fact given Sterling's recent collapse (more on that in a future post), they are a good deal wealthier when measured by earnings. So how can that be? The answer of course is that the money you don't stuff into a house can make you as much (or hopefully a lot more) than by simply following Average Man On The Street. Ask yourself one question: if housing is such a great investment, and everybody does it then why aren't more people rich? No, it's not just down to the amount people earn, it's what they do with it.

Unfortunately as we've seen, most people get excited by a rising number attached to their property in a housing boom, and then pretend that they have 'made' that money. Bzzzzt. As novice traders in the City learn on their first day, one of the golden rules of investing is that an unrealised profit is nothing more than a possibility at that moment in time. Not only have people spent the last 5 years happily falling under this illusion of wealth, but worse some have then borrowed more money against their house (on these unrealised profits) to spend.

That's all fine while those profits can still be realised, but the moment the market does what it does every 18 years or so and crashes, we're left with a large number of people who are about to learn this lesson in the most painful way. Point fingers of blame at the government and housing industry for allowing this to happen.

For even the many who were not so overextended but nonetheless followed the British norm of assuming buying a house or flat was a must do with their money, they are yet to learn another of the golden rules of investing - namely it is vital to detach emotion from an investment decision. Just because your house used to be valued at a certain amount doesn't mean digging your heels in and refusing to sell now if you want to move is a sensible idea.

There is currently a belief amongst home owners that reeks of desperation - namely that the market is simply going to bounce like a ball off its bottom and start shooting back upwards. Nothing could be further from the truth: house prices historically always have a sharp peak at the top as the boom becomes unsustainably fast and then sharply reverses. However that is followed by a near-equivalent fall down on the other side. House prices will continue to fall fast and then that pace will decline until it slows gradually to zero and only gradually begins a rise years later.

We have at least another 20-25% to fall before house prices reach the bottom, and when they do, they will do little other than stay at that level for another 3-5years. That means we won't start to see significant rises in house prices again until around 2014 or 2015.

But most people don't think rationally through the process. Most people don't take the time to research the housing market before buying to understand what has always happened before, and hence try to work out will happen again in such a cyclical market. Nope, we're going to grit our teeth and hold on for another year... as I said, it's that Average Man On The Street mentality which is why most people end up without much money.

No, for anybody debating whether to sell right now the answer is a resounding yes. Be realistic, take that perceived 'hit' compared to the price at the peak, and then put furniture into storage and rent for another 18-24mths. Why sit around holding a falling asset all the way to the bottom if you know it's going to fall?

With stocks, amateur investors often make the same mistake. I certainly did in my earlier years, falling in love with a particular company's product or idea and buying the bullshit press releases to convince myself that I should hold on. It's knowing when to realise your gain (or loss) and get out that is even more important than knowing when to get in.

Nobody should be looking to go into the housing market until mid-2010 at the earliest. In the meantime there are much more profitable places to put your money, but that's for another post.

Meantime I'm sitting here putting off tidying up the house before my fiancee, L, gets back from her extended visit to see her family. She's been away for a week, busy planning for our wedding later this year. Naturally I find the whole process incredibly tedious and am feigning interest throughout as all men do. Wish me luck tomorrow - when I pick her up from Heathrow I suspect it's going to be a day that feels like the baby photo album all over again...

Doom, Doom & More Doom

Well, it has certainly been an interesting year, with an even more interesting one coming. I am not one to sit around piously lecturing others, but I am sure I'm not alone in hoping that, once and for all, this downturn changes the world's views on personal and institutional responsibility forever.

First of all though, without wishing to point out the obvious, I have decided to start writing a blog.

It's hardly an original idea these days, but after the events of the last six months in particular, I am tired of listening to the press twittering on with its simplistic explanations to a public more than capable of following the detail. And of watching often laughable 'experts' talking about areas in which they largely know nothing about. Perhaps I find it more tiresome than most because I am in a better position than many to understand what has been going on, what is going to happen, and what to do to make money in these tough times. So that's what this blog is about.. and I'll of course update you on what's going on in the world of investment banking throughout - the kind of detail we must never reveal, naturally.

I have worked for investment banks for over a decade, and have escaped the current job "bloodbath" (to quote the amusingly overused phrase used describing any cut) while watching mostly likeable but average colleagues fall by the wayside. That's not to say I'm something exceptional, but I do work hard with the output and hours that make me useful even to my boss. The indications seem ok for me going forwards, helped because I work for one of the world's top investment banks best weathering the economic storm (i.e. it's not effectively nationalised like all the British banks). I suppose many people dream of a job like mine, but for nothing more than the pay.

But I'm far from satisfied. It's not what I want to do in life, and never was. I've ended up here more as a distraction until I can satisfy a long-standing urge I've had since I was 10yrs old to set up my own business and create something more meaningful (at least by my own definition). I'd like to do that rather than retiring as a fat, purple faced banker with a puréed liver, as most of those around me will, having been nothing more than a small cog in a very big machine.

The last 18mths have increased my desire to plan an exit by confirming what I always suspected - that the value our industry offers in providing important services is but a distraction in the pursuit of profits which are nothing more than the transfer of wealth from one party to another.

So that's what this blog is about. I'll give my opinions on current events and news, discuss what I'm investing in with my own money and why, and the latter might be most useful to you as I am absolutely amazed how few people have even an ounce of common sense when it comes to looking after their money. How much you earn helps, but it's amazing how naive most people are with their cash - and that includes my colleagues, hence the number of overpaid bankers in deep trouble now they have lost their jobs.

If you have any comments along the way then please do drop them after a post, and I'll try not to leave too lengthy gaps between updates.