Inside the House of Money

How quick are you at spotting an opportunity. What was your reaction to recent Israel retaliation in Lebanon. Could you spot a long term opportunity in it.
The reason for the question is I am reading a very fascinating book on global macro Inside the House of Money : Top Hedge Fund Traders on Profiting in the Global Markets by Steven Dronby.



It has Market Wizard style interviews with top global macro traders. Two examples of quick thinking trades from it stand out.

Christian Siva-Jothy:

" On the morning o September 11, I was already long U.S. Fixed income as I had structured view that the U.S. economy was weak. It was a decent-sized position as I had been having a reasonable year. I was on Goldman trading floor in London and I remember hearing someone say "A plane crashed into the side of World Trade Center." The first thing I noticed on the TV was that it was a perfectly clear blue sky day. I'm a helicopter pilot and I've been flying for 14 years. I know that when you've got a plane that's going down, you don't aim for tallest building to fly into; exactly the opposite, you go into the river or you go for a flat piece of land.
I immediately thought "Terrorist act". I figured this was going to whack consumer sentiments, which was the only thing keeping the United States afloat at that point. I bought Eurodollars and calls on Eurodollars after the first plane hit but before the second. Strangely, I think they rallied no more than 13 basis points on the day. Markets can be unbelievably slow to figure out the consequences of big events. "

Here is what happened to Euro after that.




Jim Leitner

Are disaster and tragedy always a buying opportunity?
"Yeah, look at Russia or Botswana or Turkey. For example, when Turkey had a massive earthquake in 1999, we bought shares of glass manufacturers because we knew everybody was going to have to replace their windows. It was a no brainer. Turkish stocks were going down across the board but we bought all the shares of glass manufacturers we could."

The book is very good. One of the best books I have read on trading this year. I highly recommend Inside the House of Money : Top Hedge Fund Traders on Profiting in the Global Markets by Steven Dronby.