I've long felt that the market wunderkind with their ever more arcane financial "instruments" run rings around their bosses — to the danger of us all. Unless trading is very simple (and it may be), I cannot understand how a man in his mid-twenties has acquired the experience to see beyond his year-end bonus and take the long view.
It seems my fears are not entirely misplaced.
From the FT (Thursday, 26th Oct.), a letter:-
"Even the Professionals don't know all hedge fund risks".
"...If competent authorities such as Jean-Claude Trichet, president of the European Central Bank, tell us that they neither fully understand the new complex products nor have full oversight about the possible domino effects of collapses of larger sizes, how can we then be sure that bigger and more complex collapses can be carried by the regulated part of the market?
...it is questionable that professional and institutional investors know all these risks. Since they do not play with the money only of rich people, but also with the hard-earned money of pensioners and workers, we would be inclined to regulate and monitor these so-called professionals more closely, to prevent them from running after hype, and the super-profits conjured up to them."
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