I am a part of the team which is responsible for management and hedging of commodities exposures. Some say corporates are good only in following advice from banks or brokerages. I do agree corporates do not have market insight of a bank. But here is a problem. It is not bank or broker or a hedge fund that has biggest risk that markets will go against them. These guys always have an option to do nothing and wait for a better trading opportunity where as we don't. We have to continue to purchase commodities, spend currencies for daily business. Such company is always exposed to changes to market price even if it decides not to hedge. In fact my company has probably one of the biggest short commodities portfolio in the world. Managing such risk effectively is a challenge. It is like being between a rock and a hard place. You get your behind kicked all the time be senior management, whether it was a missed opportunity to hedge or hedge that turned to be out of the money. Critics will say if you lost money on your hedge then you probably bought it cheaper on physical market. let's face it, nobody wants to loose money, full-stop.

So I do not have an option to do nothing as I am always in the position (short in this case). I think people like me have higher motivation to earn positive return on their portfolio then other players. In fact my intention is to bring hedging to a performance benchmark of proprietary trading.

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Monday, July 26, 2010

Last words

There is very little going on right now in the markets, so I thought I would entertain you with some jokes...


Last words of people of various professions:


The last words of a chemistry student: "Professor, believe me, this is really an interesting reaction ..."
The last words of the crew of the Airbus: "Look, the light blinked ... "
The last words of an astronaut: "No, everything is in order. I have enough air for another thirty minutes."
The last words of a truck driver: "These old bridges will stand for eternity!"
The last words of racer: "hmm, does the mechanic know I slept with his wife?"
The last words of the gatekeeper: "Over my dead body."
The last words whaler: "So, now he's hooked!"
The last words of the night watchman: "Who's there?"
The last words of the computer: "Are you sure? [Y / N]"
The last words of a photojournalist: "This is a sensational shot!"
The last words of a restaurant owner: "Did you like it?"
The last words of the  lion trainer: "I thought you fed them!? "
The last words of the President's son: "Dad, what this red button?"
The last words of the policeman: "Six shots. He had spent all his ammunition ..."
The last words of the railway engineer: "Do not worry, this train will pass through the adjacent road!"
The last words of the driver's wife: "It is clear on your right"
The last words of an electrician: "They should disable the ..."
The last words of the biologist: "This snake is known to us. Its venom is not dangerous to humans."
The last words of pizza delivery man: "You have a wonderful dog ..."
The last words of a chemist: "And if we heat it up a little bit?"
The last words of the detective: "The case is simple: the killer is you!"
The last words of a diabetic: "Was it sugar?"
The last words of the wife: "My husband will return only in the morning ..."
The last words of the inventor: "So, let's test ..."
The last words of a platoon commander: "Yes there is no living soul within a radius of 10 kilometers ...."
The last words of the butcher: "Lech, throw me that knife!"
The last words of other professionals: "Do not bother me, I know what I'm doing!"

And to add from myself:
Last words of Timothy Geithner: "There is no double dip" (heard today)



And I think you can continue and continue...

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