[zeyneddine]

Originally Posted by Jamroll

The problem is, as I think you mentioned earlier - that the only way to make money is by possessing up-to-the-minute information. The average investor only discovers the "breaking" news after the event, by which time it's too late to take any meaningful action.

think about it this way brother jammy, if a large number of people know the up to the minute information, there is no real benefit on acting on that information. you might make a dollar value gain, but you are not "wealthier". In essence, you have only preserved your wealth.

[IbnMardhiyah]

Originally Posted by zeyneddine

I dont need to actually study math to know how trading is successful.

Trading is a very small portion of the finance world. It didn't have much to do at all with the sub-prime crash. And as the actual numbers show, advanced mathematics are highly valuable when utilizing a variety of financial vehicles.

Even Islamically speaking, if you were trading based purely or largely on speculation it would come pretty close to haraam. So yes, having an understanding of advanced mathematics [for example as required to get into Renaissance] is paramount, whether from a strictly businss point of view or Islamic.

I don't see why you're belittling it, particularly when you have no experience.

[zeyneddine]

Originally Posted by IbnMardhiyah

Trading is a very small portion of the finance world. It didn't have much to do at all with the sub-prime crash. And as the actual numbers show, advanced mathematics are highly valuable when utilizing a variety of financial vehicles.

Even Islamically speaking, if you were trading based purely or largely on speculation it would come pretty close to haraam. So yes, having an understanding of advanced mathematics [for example as required to get into Renaissance] is paramount, whether from a strictly businss point of view or Islamic.

I don't see why you're belittling it, particularly when you have no experience.

I dont see how you are arguing with me especially since you are making your own arguments without clarifying your own experience in trading, mathematics or statistical arbitrage.

Getting into any front office position requires extensive knowledge of math, yes, but as i said, math is hardly the essential tool in trading. Case in point, Bear Stears, your very own article. Lehman, Merrill, Citigroup all suffered BILLIONS in losses. Over a $100 billion have been written off by now, more to follow. You're actually trying to convince me, and yourself, that despite all the mathematicians at these organizations, they still suffered losses, but Mr. Paulson was more brilliant than the combined intellect of all these?

All investment banks have two main spheres, either Investment banking, or trading. Sub-prime crash was just that, trading, monetizing high risk loans and packaging them out to buyers. It was structured trading.

Islamically speaking, all activities of banks are by and large, haraam. The whole concept is solely based on time value of money, which has no basis in Islam. Islam only considers money/cash as a means of exchange. The preceding was wholly off-topic.

[IbnMardhiyah]

Originally Posted by zeyneddine

Getting into any front office position requires extensive knowledge of math, yes, but as i said, math is hardly the essential tool in trading.

All of the examples that I gave were of financial professionals and institutions using mathematics to protects themselves from risk and secure greater returns. There is no known instance where an institutional investors applied known and proven advanced calculations to all the variables in the equation and suffered inordinate losses.

My point is, don't try to belittle math or downplay its role because it clearly pays. The folks at Renaissance are Masters and PhDs in that field and they know what the hell they're doing, which is why Renaissance is one of the top-performing funds on Wall Street, and that's why Simons has such a huge take-home pay. Hedge funds are distinctly different from investment banks, so comparing the two is like comparing apples and oranges.

BearStearns fell because they were too heavily reliant on a particular type of financial vehicle. That had nothing to do with math and had everything to do with poor risk management. All of the sub-prime losses suffered at other financial institutions are commensurate with their portfolio's percentage mix of CDOs. You'll notice for example that JPMorgan didn't suffer as much as BearStearns because they didn't rely so heavily on that vehicle.

I had a lot of direct albeit cursory dealings with BearStearns when I handled their telecom infrastructure account while they were buying out Canadian firms such as Crane Capital and others a few years back. I sensed a distinct change in tone of the BearStearns execs that I used to work with back in spring and summer of 2007 but to be honest, personally I had no clue it was because of the incoming crash.

When it comes to stock trading, I don't bother with it at all because the returns are so low and the risk is so high, and its not the method that the majority of successful businesspeople in the finance and trade world make their money anyways.

[zeyneddine]

Originally Posted by IbnMardhiyah

All of the examples that I gave were of financial professionals and institutions using mathematics to protects themselves from risk and secure greater returns. There is no known instance where an institutional investors applied known and proven advanced calculations to all the variables in the equation and suffered inordinate losses.

My point is, don't try to belittle math or downplay its role because it clearly pays. The folks at Renaissance are Masters and PhDs in that field and they know what the hell they're doing, which is why Renaissance is one of the top-performing funds on Wall Street, and that's why Simons has such a huge take-home pay. Hedge funds are distinctly different from investment banks, so comparing the two is like comparing apples and oranges.

BearStearns fell because they were too heavily reliant on a particular type of financial vehicle. That had nothing to do with math and had everything to do with poor risk management. All of the sub-prime losses suffered at other financial institutions are commensurate with their portfolio's percentage mix of CDOs. You'll notice for example that JPMorgan didn't suffer as much as BearStearns because they didn't rely so heavily on that vehicle.

I had a lot of direct albeit cursory dealings with BearStearns when I handled their telecom infrastructure account while they were buying out Canadian firms such as Crane Capital and others a few years back. I sensed a distinct change in tone of the BearStearns execs that I used to work with back in spring and summer of 2007 but to be honest, personally I had no clue it was because of the incoming crash.

When it comes to stock trading, I don't bother with it at all because the returns are so low and the risk is so high, and its not the method that the majority of successful businesspeople in the finance and trade world make their money anyways.

I can deconstruct almost everything you said, but one line stands out:

That had nothing to do with math and had everything to do with poor risk management.

In all the IBs, math is used less in trading, more in risk management. Infact, ALL of trading is essentially risk management, as you seek to maximize return based on minimal risk, i.e. make money together with hedging your strategy. I am snickering right now, but oh well.

Renaissance is a non-entity, even within hedge funds. I dont know why you keep bringing it up. You're giving the example of Renaissance when I have cited the world's leading banks. UBS wrote down $12b, Citigroup over $20b, Merrill, Lehman, Credit Suisse, HSBC, all have taken massive writedowns. To further inform you, hedge funds take "views", leveraging their "bets" on a high scale. Investment banks are flow business, with near zero risk. Even then IBs have suffered losses. Read up on Amaranth, they had a similar glory story.

Btw, your website is just a place holder I was hoping to see more. More power to the Muslims.

edit: "All of the sub-prime losses suffered at other financial institutions are commensurate with their portfolio's percentage mix of CDOs"
What does this line mean?
edit edit: rereading what you wrote, didnt Buffet make all his money in stocks?

[IbnMardhiyah]

Alright yo, keep snickering.

Bye.

[zeyneddine]

Originally Posted by IbnMardhiyah

Alright yo, keep snickering.

Bye.

"yo"
bye bye.

[wheelworks]

Originally Posted by zeyneddine

edit edit: rereading what you wrote, didnt Buffet make all his money in stocks?

Yea but he had the brain for it. I think there was a lump in it somewhere that made him a genius in stocks and what not

[zeyneddine]

Originally Posted by wheelworks

Yea but he had the brain for it. I think there was a lump in it somewhere that made him a genius in stocks and what not

ofcourse brother wheels. he does have the brain for it, but its more of intuition than mathematical skills

[Jamroll]

Giggity giggity.

[zeyneddine]

Originally Posted by Jamroll

Giggity giggity.

jammy's gone mad.

[TrentReznor858]

Originally Posted by Jamroll

Giggity giggity.

"Dear Diary: JACKPOT!"

[Jack_Sparrow]

Originally Posted by IbnMardhiyah

I told my mom about it today morning before I left for work and she laughed and said alhamdulillaah.

That is disturbing. Why was she so happy about that?

[IbnMardhiyah]

Bailing Out of Bear

Star broker Douglas Sharon's story paints a vivid picture of the desperate last days of Bear Stearns



Many of Sharon's clients and their roughly $1 billion followed him to Morgan Stanley

by Michael Orey

As chaos rocked Bear Stearns during the weekend of Mar. 15-16, one of the investment bank's star brokers prepared to bolt from its Boston office. The Federal Reserve and JPMorgan Chase were rushing to rescue Bear. But Douglas A. Sharon didn't wait around to see how it all came out. Surveillance cameras captured the 50-year-old veteran and an assistant toting two boxes out of Bear's downtown building. Earlier, Sharon had frantically called dozens of skittish clients and tried to sort through the mess with other executives at the branch. "It was like the fall of Saigon in the office that weekend," says a Bear broker in Boston.

The company alleged in a lawsuit that amid the mayhem, Sharon committed an unlawful act of disloyalty, stealing copies of confidential account documents and, more important, the lucrative clients who went with that paperwork. Sharon denied any wrongdoing, countering that his actions amounted to client triage, not treachery. A judge found no merit to Bear's claims.

The two sides continue to duke it out in arbitration, but the blow to Bear has already been dealt. With Bear and JPMorgan trying to prevent a mass client exodus, almost all of Sharon's 90 or so customers—and their roughly $1 billion—have moved to his new employer, Morgan Stanley. Documents and testimony from the legal scuffle offer a rare behind-the-scenes look at Bear's final days, as employees and clients alike scrambled to get out with as much of their money as they could. Bear says it is taking "appropriate steps to ensure employees adhere to their contractual obligations." JPMorgan declined to comment.

Sharon was recruited more than two decades ago from a rival brokerage by none other than James Cayne, then co-president of Bear and now the devastated bank's chairman. The two men hit it off so well during the initial interview that Sharon accompanied Cayne when he left the meeting to attend a funeral. By 2008, Sharon was one of the firm's top performers in private banking, controlling around $1 billion in assets and generating more than $5 million a year in commissions.

His objective for clients' money: Keep it safe. A fixed-income specialist who invested in low-risk corporate bonds and Treasuries, Sharon has described himself as "the guy who handles [clients'] Rock of Gibraltar safe money." Alan Ritchie, a 67-year-old former Boston-area manufacturing entrepreneur who now lives in Palm Beach Gardens, Fla., parked a substantial part of his assets with Sharon after he retired: "I'm very conservative. I sold my business and figured if I could get a good return on whatever I had left, that was good enough for me."

A PERFECT FIT?
In 2004, Sharon started moving some of his clients' money into a new Bear Stearns hedge fund that owned mortgage-backed securities, the prosaically named High-Grade Structured Credit Strategies Fund. The investment, which Bear marketed as extremely safe, seemed to be the perfect fit for Sharon's risk-averse strategy. At one investor conference, the fund's co-manager compared the portfolio to a bank account. Sharon sank about $60 million of client cash—as well as $500,000 of his own—into the fund and a related one.

But the two hedge funds turned out to be a dumping ground for risky subprime securities. When they collapsed last summer, helping spark a global credit crisis, Sharon and his clients lost the bulk of their investments in the funds. Furious, Sharon flew immediately to New York to meet with top management at headquarters. Clients are angry, Sharon told them, and they are going to leave.

Sharon's words proved to be prescient. By the fall, several of his clients had moved their money from Bear. The frustrated broker talked to headhunters and began considering other jobs. According to his response to the suit Bear filed against him in federal district court in Boston, he told his immediate boss that he was unhappy and felt Bear had "refused to undertake sufficient measures to appease" those who lost money when the hedge funds blew up.

Sharon eventually landed a spot at Morgan Stanley, initially agreeing to start in late April. But with the crisis mounting at Bear in mid-March, he decided to move more quickly. On Mar. 12, Bear CEO Alan Schwartz tried to soothe fears on Wall Street, saying on CNBC: "We don't see any pressure on liquidity." But such assurances only induced panic among some investors. In a statement filed with the court, Sharon said he began to receive an "onslaught" of messages from clients in the days before Schwartz's statement. Some even contacted his in-laws in Florida, seeking his personal cell-phone number. One of Sharon's investors who declined to be named says he yanked about $2 million from Bear. "I called [Sharon] and said: 'I'm hearing rumors. I would like to pull some of my money as a hedge.'"

The situation deteriorated quickly. When the Federal Reserve announced an emergency bailout for Bear on Friday, Mar. 14, Sharon said in a statement filed with the court that he "received count