Archive for January, 2013

A Tale of the Whale

13 | By Shah Gilani

Here’s an insight for you – along with a trademark indictment, of course.

Take it with a grain of salt, because it’s just an educated guess on my part.

It’s about how the infamous London Whale may have been harpooned by spawn from his own pod.

For those who haven’t heard, the London Whale is one of the latest traders to make the headlines. Bruno Iksil was the top trader at JPMorgan Chase’s Chief Investment Office (CIO) in London. He got the nickname “the London Whale” for the outsized bets he became known for. They also called him “Voldemort” because of his supposed power in the industry.

But this is no fish story…

Crime Pays

39 | By Shah Gilani

If you didn’t catch the Frontline special, The Untouchables, on PBS last week, you should really check it out.

It’s another “What the heck is going on here?” investigation of the massive mortgage mania meltdown that begs the question: How have all of the big fish on Wall Street escaped the Justice Department’s hooks?

Lanny Breuer is the Assistant Attorney General for the Criminal Division of the Justice Department, and he’s the star of the The Untouchables. He shows the public that, basically, crime pays.

Lanny wasn’t cornered, or set up by Frontline like some Internet creep walking into a sting. He was interviewed of his own accord.

He wanted to defend his tenure at Justice and let the world know that he’s really trying, honest he is. He’s trying really hard.

Yeah, right.

Teaching You How to Fish the Markets

23 | By Shah Gilani

I got my start studying economics at UCLA. That started me on a career that’s lasted for more than 30 years, trading equities, bonds, commodities, currencies, derivatives, and real estate. It continues to be a great, rewarding career and it’s afforded me a wonderful lifestyle.

No one is born with a mastery of these fields. It takes careful study and years of experience before one gets a real grasp of economics, money, and the markets.

We live in the Information Age. There are many financial and business news outlets. Discount brokerages have opened up everywhere, putting the power directly in the traders’ hands. The Internet offers a huge body of knowledge and opinion on investing, markets, and money.

All of this – and more – is available to each of us. But I’ve been wondering why there aren’t more successful investors or traders. Then, in an “Ah-ha!” moment the other day, I realized why: No one teaches you how to “fish” the markets!

You know the old saying: Feed a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.

That’s just what I’m going to do. Starting today, and continuing on, I’m going to use our Insights and Indictments space to give vital insights on mastering the markets.

You’ll have the benefit of more than 30 years of experience and success in the palm of your hand. You will be the master of your own destiny.

Let’s start with money.

Sitting Out the Great Rotation is the Worst Mistake You Could Make

9 | By Shah Gilani

I wrote an article for Money Morning on Tuesday, “The Great Rotation Makes Stocks a Generational Buy.” This elicited many comments from my readers – some in agreement, others… not so much.

Reader Mike W. wrote, “Last week $22 billion flowed into mutual funds and ETFs. That’s the second-largest weekly flow on record. Of that… $8.9 billion flowed into equity mutual funds… the most since March 2000 and the fourth-largest weekly inflow on record.”

This echoed my statistics in the article.

Mike continued, “What happened after the [largest] inflow of $23 billion in late 2007? The stock market fell off a cliff. What happened after March of 2000? The stock market fell off a cliff.”

But there’s much more to this story.

AIG and the New Victim Mentality

39 | By Shah Gilani

I’m hurt.

Some of you made harsh comments about last week’s story. I said that AIG should sue the U.S. government and the Fed for saving it when it could have (more likely would have) gone under during the peak of the crisis in 2008.

Insights & Indictments reader Darrell said, “Enough. This is the most vile piece… I have ever read. Those people SHOULD have been allowed to fail. FULL bankruptcy! To borrow from the taxpayers to compensate the “managers” who steered us into this mess with bonuses, and then whine [when] the terms of the loan were too extreme is beyond hypocritical. Capitalism without risk is NOT capitalism. Something you would do well to learn. I am unsubscribing form this service.”


Matt chimed in, “I’m with you. Acting like AIG is a victim of the big, mean Fed is preposterous. Maybe Shah and Alex Jones should take their baloney show on the road.”

I’m shattered. I’ve been put upon. I feel victimized by these comments. Where’s the safe harbor for journalists and bloggers? How can I be criticized so harshly and not feel victimized? Oh, the humanity!

Of course I’m kidding.

I subject myself to any and all comments when I exercise my freedom of speech. I keep a “Comments” section on my website so my readers can exercise their freedom of speech. I’m not a victim. I don’t need any protection from free speech. Free speech is a two-way street.

The point is that I’m sick of the victim mentality. Are you fed up yet?

AIG Should Sue the Government

38 | By Shah Gilani

Check your indignation at the door.

If you think it’s outrageous that AIG might join a lawsuit seeking $25 billion in damages from the U.S. Government (which means you) for bailing it out with $182 billion of your money, you’re not alone.

But, don’t let your visceral reaction to what seems like ingratitude on steroids blind you.

Things are only what they seem on the surface.

The suit is being brought by Starr International, which was, at one time, AIG’s largest shareholder. Starr is controlled by Hank Greenberg, AIG’s founder and former CEO. The suit seeks remuneration in the Federal Courts, claiming shareholders’ rights to due process and equal protection were violated under Fifth Amendment safeguards against seizing property without just compensation.

What’s driving the lawsuit?

Investing for Geniuses and Idiots

11 | By Shah Gilani

Let’s talk about investing, in human terms, and how to consistently make money by being a simpleton.

Everyone loves to complicate things, which is detrimental to your financial health, especially when it comes to investing.

Personally, I think the quest for meaning has something to do with human nature (at least for humans with a modicum of intelligence) and our need to find the meaning in all things.

“What does this mean?”

Q&A with Shah

16 | By Shah Gilani

Happy New Year, everyone. 2012 went out with a bang as we saw the Fed run away with monetary policy (again!), a record fine levied against HSBC for drug money laundering, terror financing and being the banker to many of the world’s worst dictators and, finally, the run-up to the “fiscal cliff”. It’s a good thing December wasn’t any more exciting! All of you following along know I had a lot to say about all this and, it turns out, so did you…

Remember, you can share your own comments and questions with me by posting them to the bottom of any article, or emailing them to:

I may not be able to respond to everybody, but I read everything you have to say.

What’s on your mind?

Posted in Q&A