Cyclical Investing - Prost!

Firstly a quick word on my pre-wedding Stag weekend at Oktoberfest: excessive.. Bavarian.. fantastic! I was fortunate to go with a large group of bankers from the City (mostly Australian), who made the whole experience far better as many had been before. As such we had a great hotel just minutes from the festival, and they ensured we weren't one of the throngs without a table on the opening day.

It's a wonderful affair that despite attracting too many tourists, due to the numbers of Germans who also attend it manages to retain its cultural identify. I thought the sheer number of locals who turned up wearing traditional costume was magnificent: there is just no way we Brits would be able to take ourselves seriously wearing leather shorts.

From the singing (I challenge anybody not to have learned the lyrics to Ein Prosit by the time they leave) to the continuous shouts of 'Prost!' (cheers/bottoms up) - it was all about fun.

Oh, and for some reason I really liked the traditional Bavarian costume for the girls... I can't work out why but I'm dreaming about L wearing it now...



Champagne Tarts
On the subject of drinks, I had a few with some more senior bankers last week that was an interesting look at changing behaviour as they get older. Being mostly in their 40's and 50's they chose an old school City bar that I had never even heard of - apparently it has been around for 30 years or more, so I was informed by one fossil.

I arrived late (I still work for a living) to discover them all sprawled around several tables, reminiscing over the days when everything was charged to expenses, the Lehman Brothers collapse and generally what a complete fuck up the last year has been.

What caught my eye immediately was the lack of champagne or wine. I discounted them all vying for the first male pregnancy despite several looking due. It seems that the banker equivalent of contributing to the new Age of Austerity was everybody drinking bottled Guinness of all things. Presumably this is the 'new Champagne' in these cash strapped times - you heard it here first people, and when Diageo's shares soar on the news you know who to thank.

Still it did remind me how the days of 2005 are long gone, when amongst other bankers I had occasionally got through champers on a night out without a second thought. The bar in question was called Harry's near Cannon Street, and must hold the title of Seediest Bar In The City. On appearances, it's quite a nice little underground cellar conversion which serves good everything.

However by the time I left at 10pm the place was awash with a sea of tarted up slappers, who all clearly had arrived to play 'bed a banker'. You get the equivalent with teenage Essex girls for bankers in their 20's, so I suppose this is what they look like 20yrs on.

I watched various aforementioned tarts wander in, add another layer of foundation to cover themselves before boldy striking up conversations with the various fat bankers in their 40's and 50's dotted around the bar. What struck me were the number of single men drinking alone, and I noticed these women seemed to almost be cycling between them until they got a hit. Presumably that's my future if I stay in banking for another 20yrs - put on 40lbs and start frequenting seedy bars for illicit affairs. Yuck, what a thought.

So Many Opportunities
My thoughts are now increasingly turning to where the next big opportunity will lie after GGP as an investment. The biggest mistake many amateur investors make is to make a decision for the sake of it. Reading back I notice making that same point as I sat on significant losses on the General Growth trade back in February and March this year.

It usually takes getting burned through a couple of rash decisions before you start to realise that one of the most intelligent things you can often (but not always) do when not sure is to do nothing at all.

Buffet himself is a master at sitting on his hands when no opportunities are apparent. Berkshire Hathaway hoarded cash during the boom years, with many questioning the value of this for investors - but note how much he has been busy spending in the last 18 months by contrast. So the same of course should apply for the smaller investor, and right now the markets are like taking a walk through an orchard with trees laden with fruit. The big question however, is which will be the first to ripen, and hence which to hold as opposed to watch?

This commentary from 10 months ago is interesting, because from this you can look back and compare its accuracy:

"Even in depressed markets, it is typical for the market to stage significant bear market rallies, as witnessed in the 1930s and in Japan during the 1990s. Perhaps the best example was seen in the aftermath of the 1929 stock market crash, in which the Dow Jones Industrial Average (DJIA) rallied close to 50% from its November low to an April peak. Comparing the present day S&P/TSX with the DJIA circa 1929-1930, it is interesting to note very similar price patterns, plus seasonality which would suggest that the stock market could stage a bear market rally through the year end, as is typical at this time of year. " First Trust Quantitative Research - Dec 2008 Monthly Commentary

Not a bad observation to have made back in December 2008 I would say. So the post-1929 crash then saw a 5 month rally with a near 50% increase. Since March we have seen close to a 6 months rally now with an approximate 50% increase, but what about the future? What the commentary does not go into detail on is then pointing out that after this peak, the Dow Jones dropped back again (hence why it is referred to as a 'bear rally').

Investment Cycle
At a high level it is always useful to look at this old illustration of the investment cycle produced by Merrill Lynch Investment Management years ago:

Although it simplifies hugely, what this does also do is give a good sense of the need to make sure money flows regularly into different areas and sectors of the economy throughout the cycle to maximise returns. Before anybody objects or points out the danger of constantly investing/reinvesting, note I am referring to the economic cycle - which typically follows a 10-15yr cycle between peaks of each boom, so you can allow (very approximately) 2-4yrs per quarter depending upon severity.

This time, the cycle was skewed quite spectacularly after the dot com boom and crash by the flood of cheap credit, which effectively fast tracked back into a second boom. However that was exceptional, and in future it is reasonable to assume we will revert to the more standard cycle.

So firstly let's look at where we are right now - clearly in the red of recession. Looking back a year ago, you would have expected defensive sectors such as healthcare, consumer staples and utilities were the best places to put money. That would not be too far off, although the extraordinary nature of the credit crisis meant that financials have undergone an early return to favour - at least for now - with some amazing returns in the last 9 months. I would argue that this has gone beyond fair at this stage in the cycle.

In these times, this illustrates that investors should have been focusing their search for the best opportunities in the last 6 months on growth stocks above all else. I have a long term hold in the South American company Mercardo Libre for example, which has been posting very high growth levels right through the recession, and yet took a major hit on its share price during the October 2008 crash despite no rational justification.

Sure enough, its growth has continued, and has seen a 94% rise in stock price over the last 6 months, which illustrates the returns out there. In my case, I bought into MELI long ago but looking back I bought in at the wrong time in the cycle - hence why I moved into a loss through the downturn, and am only up a modest 30% after several years. A useful illustration of the power of timing however.

My view is that small caps should remain the focus for now, although investors should be increasingly eyeing up the early cycle sectors, which include consumer discretionary (financials already covered). The late cycle sectors include materials, energy, industrials and technology, and defensive include consumer staples, healthcare, utilities by the way. There is plenty of time for further analysis and I will be drawing up a candidate list to complete detailed analysis soon - just that small matter of a wedding looming on the horizon...

Tax Is A Four Letter Word

Golden Exuberance
Gold prices have surged in recent days, with the price pushing up above $1000 per troy ounce, and close to its all time high. I have expected strength throughout 2009 and so have been looking for a rise like this, which is why I took a fairly signficant position back in January. Additionally it has served as a useful hedge against both inflation and my substantial US dollar holdings.

As of this morning I took the decision to realise my gains - a fairly modest 12% but not bad over 9 months. I am not alone in believing the recent rises are unsustainable, as this article on gold prices from the Daily Telegraph outlines.

"London's leading gold forecaster has advised clients to liquidate holdings of gold and silver until the latest speculative fever abates."

I still adamantly believe that inflation is a near certainty in 2010 and beyond, as this is the easy way for politicians to offset the enormous debt that all the government support has lead to over the last year. As such I will be watching the gold price carefully over the coming months, with an aim of buying in once there is a fall back. On that note, I have continued to be surprised by the strength of the wider market recovery since March - it seems to have gone beyond rational, and a correction is necessary.

Investors seem to have become inebriated on the 6 month returns, a classic sign a bubble is forming that will surely deflate once institutions take a cold look at the economic fundamentals in the coming dark months of autumn.

Addendum: just logged back in today (Sep 18) and noticed this video linked to the right under CNBC: Commodities also discussing gold stocks losing their lustre which is worth a watch.

Capital Gains
Inevitably a significant question for any investor is when to realise profit (or loss - the latter is equally important). Like all investment decisions, that should never be taken rashly and certainly never based on emotion.

With GGP up around 600% now since bankruptcy, and for me around 300%, I am sitting on an unrealised profit of around £250,000 (approx $400,000) at present. You might think I would also contemplate cashing in, however I consider this investment between 6 and 24 months away from reaching fair value. Additionally realising a gain of that level requires careful planning, so I am beginning to look at ways of reducing the tax level payable. Sorry Gordon, I am already 'contributing' enough to the UK's recovery.

On the subject of GGP, its spectacular rises in recent days will also likely see a correction back soon enough, although the upward trend should continue. It has been fuelled partly by the wider market reassessing the firm as a value prospect, institutional buyers returning and crucially the belief that existing shares have a significant chance of retaining value.

That has been helped by further comments on Bloomberg by David Simon of Simon Property Group yesterday, describing SPG as a "logical buyer" of General Growth Properties assets. Limited asset sales at the right price are in everybody's interests here so a deal with some of the major REIT's is looking increasingly likely to be announced over the coming months.

Deleveraging GGP is important, and is rather like selling a holiday home to reduce the mortgage on a main house: it might seem a shame, but ultimately is the route to being financially healthier in years to come through lower debt. Of greater significance to me however is this news that the US Treasury has taken on board the significant criticisms of the tax rules that penalised those seeking to manage distressed debt.

Of course, this was cited as a major factor in the inevitability of General Growth Properties needing to restructure within Chapter 11. The removal of this sends a powerful message to the credit markets that renegotiating in these times is not just possible but expected. That benefits all REIT's, but also GGP for those loans in the joint venture SPE's that are outside bankruptcy.

It also benefits General Growth by providing further evidence that equivalent extension deals will be being agreed on the wider market when included in the restructuring plan and submission to the court. I would be surprised if we did not see GGP's share price at $8/share or higher by next spring based on the current news and developments.

Trader Territory Marking

As expected, the motion filed by Hugo Boss for a relief from the automatic stay (see previous entry for link to the motion) was roundly rejected by Judge Gropper last week. Otherwise this story is doing the rounds today, and illustrates how the 'sword' of Chapter 11 can be used as a threat:

"[GGP] said it was considering ways to treat some of its subsidiaries as a single debtor and override their status as separate companies."

This is actually going over old ground, although it would be useful to clarify there is an apparent difference in how substantive consolidation is being used. The major concerns of the credit industry lie in CMBS being substantively consolidated into wider loans such that the agreed collateral is no longer secure - this been addressed in court submissions and will be protected by the replacement lien and order for GGP to provide 'adequate protection'.

There is however a desire and incentive by GGP to consolidate lender negotiations where possible through the Chapter 11 process to assist in restructuring - the two are not necessarily incompatible, although GGP is clearly using this as a threat.

A sign of the changing tide perhaps - our first new trader since 2008 joined the Desk on Monday morning. Somehow we coped after Junior Trader's departure earlier in the year - we lost a character, but not a revenue generator. However increasing volumes and opportunities are encouraging the bank to pick up some people again.

I always enjoy watching new traders when they join a Desk.. the verbal rutting with the old hands an be highly entertaining as they attempt to establish their place in the team. In fact, for those who don't work for banks, just pop on Animal Planet when you get home tonight and you'll get the idea - replace the hogs and territorial scent marking with traders crude humour.

He might have turned into a pious, hypocritical waste of time now, but back in 2007 the columnist Cityboy gave this old example of trade floor dynamics, which plays out in various forms every week:

"Why are you such a fat bastard?" said the posh salesman to the barrow-boy trader, who admittedly did look like he'd been on the notoriously unsuccessful 'all pie diet'.

The recipient of this rather innocuous insult slowly swung around in his seat and with perfect comic timing delivered the oft-used but still classic response: "Because every time I shag your wife she gives me a biscuit".

It is how well a new arrival can handle themselves and fit in with the Desk dynamics that plays a major role in their success at a bank. Obviously though, that only goes so far. Exceptional sales contacts, or an innate talent to manage large portfolios and hence bring in huge amounts of cash make those further up happy and that is what counts most of all.

I've seen some real arses turn up over the years though, and not all have been the 19 year old Essex boy sterotypes - although on that subject, many of them are a particularly special blend of twat. With a stated aim of doing their trading exams straight out of school, these kids are often very average – not even skilled numerically - but to their credit they don't waste their time or money following a route of higher education – and with hindsight I don’t blame them.

I recall an Irish guy who arrived at a former bank I worked for, and made the mistake of continually boasting about senior roles at Morgan Stanley and Goldman Sachs previously. He also made the mistake of looking down on the rest of us and making sure everybody knew it – I think in a misguided attempt to establish himself as the alpha trader.

Unfortunately that sort of attitude doesn't endear, and within a week the team had dug the dirt on him via ex-colleagues, and confirmed his overstated role and habit for bullshit. On his first day off, the team took some time out in the morning to ceremoniously unveil a sign above his monitor reading 'Little Fella' for him to find upon his return. A reflection of his small stature in more ways than just his height.

Interestingly that was a name which stuck for the remainder of his time there..

Anyway so far our new boy seems fairly quiet - listening and learning about the non-standard systems and what portfolio's he's inheriting. Let's see whether he starts pissing off anybody over the next month or two as he comes out of his shell.

Big Fish Tantrums

I was dialed into the steering committee meeting yesterday for the post-insolvency / time wasting project , and who should dial in but the COO of the bank!

To put that into context, for those unfamiliar with working in the sector and the sheer size of the big investment banks, imagine a combination of a medieval king and Paris Hilton all rolled into one. Vast power, able to behead on a whim, combined with plenty of preening and a vast ego.

Thus he had not stopped by to listen and learn, only to be heard. Aww, bless him - isn't he cute?

We were treated to a 15min speech, although I wasn't bothered as I am not running this whole affair; it certainly didn't stop me reviewing the latest Court docs from GGP while he rambled on. In short though, he had dropped by to tell us all how pissed off he is that we have been beaten to the punch in delivering our insolvency solution by a major rival (announced in the WSJ on Tuesday).

Never mind the fact that ours will be far superior, applying not just in the US but globally, and crucially enabling Hedge Funds to margin securities rather than having to fully fund their positions - the whole point of Prime Brokerage after all. Nope, at the top this was a big corporate race, picture all the CEO's lined up in their sacks and jumping as fast as they could to the finish line. In his eyes we have lost - the trifling details are an irrelevance.

So the Court decision relating to GGP is going to take more time to reach a conclusion. Given the length of my four legal analysis posts, which in themselves are a hugely condensed summary of the arguments put forwards, I would have been surprised had the Court managed to review all of the submissions that have been flooding in right up until the last minute, much less reach a considered opinion so quickly.

The only public information out there is that the Court could take until the end of June before deciding on whether the proceedings by MetLife, Wells Fargo and ING Clarion Capital to remove their underlying collateral from the GGP bankruptcy filing are upheld. This ruling is important, as it would of course enable GGP to negotiate from a position of greater power with many more creditors, while using the combined cashflow as required, and should be able to secure more favourable extension terms. Regardless of the decision however, it will be useful for GGP to focus on its restructuring plan - expected that some time in August.

In an unrelated announced on Wednesday, Jim Graham, GGP's Director of Public Affairs also announced that the company had "very recently" made the decision not to sell the Bridgeland development as previously planned, and instead develop the site itself. This directly reflects the improvement in GGP's position since it filed for Chapter 11 and received DIP financing.

No longer is the firm desperately seeking ways to avoid Chapter 11, and is instead making considered decisions in-line with both Adam Metz and Bill Ackman's comments about there not being any rash asset sales. An encouraging sign that demonstrates mutually aligned interests with common shareholders.

Other minor points of interest this week:

• Pershing Square submitted a motion on Wednesday for their Chief Legal Officer, Roy Katzovicz, to start receiving paper copies of all notices and papers going forwards. No reason is given, but it suggests that the fund will be taking an increasingly active involvement in GGP's legal maneouvering, planning and positioning over the coming months.
• GGP have settled the DIPS financing claim with Brookfield Financial LLC and Goldman Sachs. The original claim was $5.78m, and the settlement is for $2.75m, and is fully supported by the committee of unsecured creditors.
• Ahead of the deadline for objections by unsecured creditors, various claims have been filed. This includes the occupant at various malls J.C. Penney, filed a limited objection and reservation of their rights to the inclusion of related SPE's into the GGP bankruptcy filing. They add nothing to the actual case beyond suggesting GGP's inclusion of relevant malls "blatantly ignore the due process rights of numerous Lien holders - including J.C. Penney - who have Liens in or on property owned by the Debtors [GGP]".
• A similar limited objection claim has been filed by A&K Endowment Inc, and many others - mostly around proposed amendments to establishing alternative procedures under Chapter 11.

Private Insolvency Management

Well I just got back from an amusing trip out to Zurich, where I gave a presentation to senior management in Private Wealth Management. I did a fine job of summoning faux enthusiasm as I ran through an unnecessarily lengthy presentation, explained how our absurd insolvency scheme could benefit them as well:

"And so, this scheme will enable you to provide your clients with full assurances that they will receive their money back, in the event of an insolvency at some point in the future," I pronounced confidently as I finished.

The PWM managers all looked keen, and agreed they would provide funding to have them added to my insolvency circus project, much to the delight of my Boss when I got back today. More funding equals more work for us - and a higher profile for him as he struggles to try and make MD.

As I packed up in the empty board room afterwards, a manager I used to work with came back in for a chat. He explained that the reason for this sudden interest from PWM is down to the exodus of clients in the last few months. As such, half of the room will be fearing for their own necks when this gets out, and have been looking desperately for anything that might give them an edge when trying to pick up more clients.

When I enquired why they had lost so many, he confessed that PWM have been so busy lying to them about portfolio performance for the last year, that when the bad news had to be finally reported at the year-end, it was the final straw for many.

"Look, the first casualty of a recession is honesty", he said seriously. "My problem with all this is that clients don't believe a word we tell them anymore, so I'm not sure this insolvency protection malarky is going to make any difference."

However bad I think my lot are, it was rather refreshing to get out to the most boring place to work in Europe and find out there is another group of bankers with even fewer morals.

Cull Over - But No More Complacency

I have not been writing recently because last week turned out to be quite traumatic at the bank. To everybody's surprise, after the smokes and mirrors that are rumours around these things, they instigated a full-blooded 10%+ cull from Wednesday onwards.

It was brutal, with many colleagues I rated highly and consider friends having fallen victim. Does it make this any more personal or meaningful? Not in the slightest - I have felt fully in touch with the downturn since mid-2007, this just feels like another round. Many people I have known and worked with for years mysteriously disappeared from the global email directory (the surest first sign a 'resource' has been erased). Suddenly all number of mails were bouncing, and then the biggest shock was the immediate dismissal of one of the most productive members of my own group.

With junior trader long since departed, I had long held an assumption that this would be sufficient, or at worse the other chap with a black mark on the list would get a quiet invitation from HR upstairs for a chat. As it turned out, it was nothing of the kind, and shocked everybody to the point where we all sat in silence afterwards - with the exception of an intern who could went off to the toilet, coming back later red faced, having evidently been crying.

I never really felt particularly in danger or worried, perhaps because a part of me yearns for the shove I need to move out of this profession forever. With this round the bank has reduced headcount now by approximately 30%, so should any further cuts be required there is no doubt it will be all into the meat.

Otherwise L has been getting evermore excited by the wedding later this year. I had a weekend of talk about various, tedious aspects of planning, followed by doing my best to be enthused as I was led around the Kings Road like a puppy on a leash, to inspect her in various bikini's ahead of our vacation next week. Actually that part was enjoyable.

I have made one definite decision about the future however: the 8-7 slog that I am currently enduring cannot go on for much longer. It has been observed by many that life is too short, and I don't intend to be one of those who only realises that when it is too late. As such it is time to push on full ahead with my business plan, and I need to stop leaving work pressures as an excuse as you can make anything happen with sufficient will.

The key story that for me in the last week has to be the government's hysterical response to Fred Goodwin's fat pension.

"Not even Abu Qatada at his most unappealing could hope to match the intensity of abuse heaped on The Shred."

I was going to comment on this in some detail, until I happened upon this article by the great Jeff Randall, who sums up my own thoughts on this perfectly. A pathetic, transparent attempt by a discredited government to fuel the public thirst for vengence whilst deflecting attention from the real issues, including those most responsible - the government. They can only spin like this for so long before The Shred stops being the main story.

Fred Goodwin's pension is obscene under any circumstances in my opinion. But were I him and suddenly found myself called by Lord Myners with a zero notice threat, I would have responded in exactly the same way: on principle fight it all the way, and only make a decision like that when not strong-armed or threatened. Should he cave in now, his detractors will say that he only gave money back due to Gordon Brown and his pious preacher of hypocrisy Jacqui Smith - thus handing them an undeserved victory.

Sir Fred has ample opportunity to reflect on his compensation, public feelings and what is the right thing to do. A mark of the man will be seeing what he decides in 6-12mths without any such threats hanging over him.

A Glimmer of Substance Behind The Rhetoric

After my tongue-in-cheek, but undeniably slightly malicious, rumour spreading regarding the date for the next round of job cuts here, various people have wandered past my desk this morning looking both relieved and pissed off that my 'source' (aka 'my imagination') was wrong. Hey, I might still be right - I did say cover myself by saying today *or* tomorrow...

Well since I've got rather more of a sense of job security than them, L and I have opted for some sunshine in Sharm El-Sheikh in Egypt for a spring break next month. Frankly the unrepentent drizzel of London rain, and bad news from the press, are enough to make even an optimist like me start to contemplate whether it is time to pack it all in and buy a beach hut.

There has been some interesting announcements from the new US Treasury Secretary, Tim Geithner, relating to the proposed $2 trillion update to the TARP (now rebranded the Financial Stability Plan, presumably to reassure us by removing horrible words like 'troubled').

"It's been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come..."

Exactly as I expected, the programme so far seems to be a direct implementation of the skilled rhetoric with which Barack Obama has stormed the global political stage in the last 15mths. Broad in scope, inspiring hope, but with few actual specifics. However people, I think we can all quite definitely say that change has come.

Quite why the markets were expecting some kind of all-encompassing answer to this wide range of problems so soon is beyond me. Desperation most likely. The Financial Stability Plan was only a framework when the bill passed through the Senate a couple of days ago. Those buying in to capitalise on some kind of bounce are a fine example of why many lose money on the markets: were I into short selling, I would have been fully loaded up before yesterday.

Of most interest to my GGP trade is that the plan now includes the proposed relief for the Commercial Real Estate sector. In theory it will provide a means for lenders to either receive capital specifically for refinancing distressed REIT's, or roll those loans into some kind of 'bad bank' fund that reduces their own risk and exposure. Either way, once the market stops sulking, it actually has some potential to help unlock a situation where otherwise viable businesses are on the verge of bankruptcy due to the frozen commercial mortgage-backed security (CMBS) market.

Anyway, I have a fabulously quiet afternoon in prospect at the office. One of the final round interviews I had lined up with another bank was supposed to be later, but that has just been cancelled due to new hires currently not being 'commercially viable at present'. That translates into the bank realising they cannot really justify hiring when they are about to fire more employees.

Either way, given I am lucky enough to seemingly be secure for the foreseeable future I couldn't care less.. now which hotel in Sharm El-Sheikh shall I go for...

From Ruski With Love

I had a night out with some colleagues at the bank last week who were over from Moscow, and opted to take them to an excellent Russian restaurant over in Chelsea called Nikita's. It's rather like taking an American to the Texas Embassy Cantina I suppose, but I couldn't resist getting their opinion on London's alleged best for Russian cuisine. Sadly none of this is on expenses anymore - a tragic sign of the times.

Actually we had an excellent evening, and I was introduced to their nectar of choice - a fantastic vodka called 'Ruski Standard Platinum' (aka 'Russian Standard' over here). Apart from eating the finest beef stroganoff I have ever tasted, on the recommendation that "it will make it easier for you in the morning" (presumably because it is such a heavy, rich dish), we polished off two full 75clr bottles of Ruski between the four of us, and it took restraint not to order a third. [note: I have just ordered 4 bottles - a couple as gifts I might add]
To my surprise I not only slept fine, but woke up without the slightest hint of a hangover. This could be my new tipple of choice now that I'm getting a bit too old for beer. Let's face it, lager in particular is devil's piss by comparison to fine wine and spirits, and with the added bonus that it wakes you up throughout the night to continually empty your bladder.

As usual, once we had got through the first bottle, we moved away from tedious work discussions such as the Desk performance (bad), and rumours about job cuts (very bad, for an emerging market heavily reliant on commodities for revenue), and onto the requisite exchange of office stories that can only ever be passed on verbally. On the subject of job cuts, it has already occurred to me that I cannot refer to any details around the timing of the impending cull, because it will be too indicative of where I work. As such I shall likely write some entries at the time but not publish them until some time afterwards.

The best story of the night for me was finding out that one of the senior traders I know on the Moscow desk, whom we call Shriek due to her piercing voice, has a husband known in the office for his odd behaviour that verges on psychosis. He apparently calls Shriek at the office 30 times a day, and it has got to the extent that her team has learned his number and filters it out where possible.

It is presumably jealousy, as Shriek's psycho husband even went so far as accusing her of having an affair with one of my colleagues (at Nikita's with me that evening). Shriek's husband had 'proof' - namely that my colleague's wife "told him of the affair". Since both Shriek and my colleague knew this was utter fantasy, rather than her assuming she had a husband who was bonkers, she decided it was a plot by my colleague to ruin her marriage - and aggressively confronted him in the office.

It ended up escalating until even the regional head MD got involved.. before being hastily covered up. From what I hear, they are now quietly compiling a dossier on Shriek for a range of her own odd activity. This one will doubtless be tucked away in her HR file for use at an appropriate time. Like a round of job cuts for example.

Wedding Heaven

L seems to think that planning a wedding together is supposed to be an amazing, joyous experience, and is upset with me that I am not as enthused. Or to put it another way, that each time we discuss her plans for spending thousands on this and that, I am raising an eyebrow at where her original 'affordable' and 'low cost' wedding plans have gone. The amount she is proposing for a photographer and band are a great example.

I want to make sure that it is a wonderful day, so let me say it's not that I don't want to get married or don't care. But I really do not understand where this hideously commercialised industry has sprouted from in the last 50 years. It seems to have evolved specifically to fleece couples of as much money as possible, while delivering nothing more to make the day any more memorable or special than it was before all this was a social expectation. So what if the photo's are airbrushed with fake lighting and remove the zit which appeared on the morning of the wedding?

Perhaps it is because I am inherently one of those people who is careful with money. When I spend on something, I want to know it is good quality and will last so that I get value for money. I don't like frittering money away on something that lasts a single day and will pass in a blur.

I'll try to convince myself it's because I understand what money is all about - namely for getting us a family home, and eventually providing well for the next generation, not pissing it away because of social expectations. If truth be told, I would happily marry without all this pomp in a registry office and let my love show in other ways - not to mention the large diamond ring I got for her in last summer. That was actually part of our unofficial deal: the ring will last for the rest of her life, so I could justify spending on that, but it was in exchange for a lower key wedding. Of course, that agreement with L seems to have now completely gone out of the window - too much time watching the Wedding Channel methinks.

It's not helped by her father being a useless waste of space who has never provided for her, and so certainly won't be contributing a penny towards her wedding. In fact, I will be surprised if somebody doesn't end up paying to fly him out for the ceremony.

So anyway, this last week since L got back from seeing her family has been a mild stand off between her broaching the subject of confirming various details, and then me pointing out the huge cost and asking what other options we have available.

It's interesting from talking to my colleagues of both genders further on in life about all this. The men nod knowingly, and tell me that the same happened to them and that they felt powerless to resist. The women usually say that the costs are ridiculous, and several have admited they got carried away as well - probably with some context they can see now what a few thousand quid extra would do for their children. Anyway that's my minor rant over about weddings.

L is sulking with an extended lie-in this morning, because I am heading out all afternoon to see a football game with a former colleague from the bank. Sorry, they were corporate tickets so I couldn't say no darling... and anyway, he has has recently defected to a rival - always a good opportunity to find out the sorts of details that were going on in his area that couldn't be revealed at the time...

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.