Traders Thread - Mon 24th Dec - XMAS EVE

This is a good read !!

The Long View: Harry Punter and the Bubble of Doom
By Barry Riley
Published : Dec 21 2001 15:40:02 GMT | Last Updated : Dec 21 2001 20:42:37 GMT


Where was the Canary Line platform? Harry Punter looked around bewildered at Bank Underground station in the City of London. Already he was beginning to regret signing up for a course at the Hogwash School of Investment Wizardry. And just before Christmas, too.

He reached into his pocket for the letter of instructions. "Don't be an investment mug, learn to become an investment wizard," was the strident slogan. Then he noticed the guidance at the foot of the page: "At the bottom of the main escalator walk towards the barrier marked 'No Entry' and jump through." He hesitated, but then saw two other men confidently approach the barrier and disappear behind it.

Plucking up courage he followed them into the passage beyond. One of them introduced himself as Professor Steve Newmould, a regular visiting teacher of the Hogwash School's strategy course. "The mugs fail to believe in the power of technological magic," he remarked. "But for those privileged to be in on the secret, there is no limit to the profits that can be made."

The other man said he was called Alfred Farr-Edge. "Call me Freddie," he insisted. He had enrolled for a special course in alternative investments because, he said, he didn't trust the mainstream stock and bond markets. "They are threatened by that evil genius that people are scared to name - Lord D-D-D . . ," he stammered.

"Yes," said Harry, "you mean Lord Duhmemort. I'm not scared to talk about him. He was once a famous investment wizard called Mortimer Duhm, but he set up Darkside Investment Management and started to preach doom and destruction. He was described as Duhm of DIM, and then his fanatical followers gave him the title Lord Duhmemort.

"In fact, I blame him for wiping out my parents' portfolio in 1987," Harry continued. "That is why I am so keen to learn how to rebuild the family fortune now. But, after 1987, Duhmemort appeared to lose his powers and he disappeared from sight, although there were rumours that he had been seen in the Orient around 1998."

Freddie nodded. "In the 1990s the London stock market recovered and even enjoyed a boom. But now there are stories that you-know-who is active in the UK again and is seeking to create another investment panic. It's enough to scare me, anyway."

They climbed on to a strange little Underground train and they soon arrived at what looked like Canary Wharf. But there was something odd about it: there were not three, but four skyscrapers in a row. "Surely they can't have built another one so fast," said Harry.

Indeed, the fourth tower was the tallest of all, and it carried a big sign saying Grindgits Bank. Its top was lost in swirling mist. The Hogwash School turned out to be in this building on the 13th floor, where Harry was greeted by the principal, Prof Tumblemore.

"So you are Harry Punter. The financial world is full of mugs, but you won't be a mug Punter after taking this course," the professor joked. "You will learn to play our financial game, which we call Quidrich. Your shares, I promise, will begin to fly - that's why we call them vroomstocks!"

Soon Harry settled down for the first lesson. How to make use of spelling was an important first step, and he was told how the best shares have funny names such as MMO, Spirent and Thus. He should avoid anything with a dull name that lacked any magic, such as W.H.Smith, or Smith & Nephew for that matter.

Next Steve the Strategist arrived. He quickly set up his laptop computer, connected it to a projector and sent his fingers flashing over the keyboard. Spelling was very important to him, too, and many mysterious - even spooky - words and phrases such as autocorrelation, leptokursis and Monte Carlo simulation were flashed up on to the screen.

But then alarming things began to happen. The lights went dim, and the whole building seemed to shake. The air in the room went strangely cold. From out of the shadows a terrible figure appeared with a bald, shiny head and staring red eyes. It could only be Lord Duhmemort himself!

He spoke with a rasping voice, in rhyme:

"Bubble, bubble, toil and trouble
I'll turn your portfolios into rubble
Dotcoms will transmute into dotbombs
Techs to wrecks, and high fliers to Enrons.
Get out now, and stay in cash,
Or you'll all be victims of the crash!"

He seized control of Steve's laptop computer and entered complex new programming instructions. As if by magic, all Steve's charts showing green lines rising from bottom left to top right were turned upside down. The lines, now coloured deep red, moved steeply downwards before disappearing off the bottom edges of the frames. The charts were projected one after another.

With that, waving an electronic pointer that sent out a red laser beam, like a kind of magic wand, Duhmemort moved towards a wall that appeared to be solid but turned out to have a secret door in it. He disappeared through, leaving pandemonium behind him.

Prof Tumblemore called for calm. There would be a temporary suspension of business while Grindgits secured their defences, installed new circuit-breakers to fix the lights, and organised support.

"But our investment wizardry is very powerful," he insisted. "Remember that, after this minor setback, our vroomstocks will fly even higher. Always buy on the dips." A new Quidrich training session using the latest Nimbus 2000 equipment would begin within a few minutes, he declared.

In fact the rest of the day passed uneventfully, and, going home alone on the little train Harry settled down to read the Goldman Sachs Strategy Monthly that he had been given by the Hogwash School as basic educational reading matter.

He had also been given a canary in a cage. So long as the canary was healthy, he had been told by Prof Tumblemore, his portfolio would be sure to do well. But if it seemed poorly, it was a sign of a bad atmosphere and he should watch out. If it died he should sell everything.

Just then the train lurched, and the lights dimmed; he felt a chilly presence, which seemed familiar. He turned round and saw the awful figure of Duhmemort, his face twisted in a grotesque grin. "So, Harry Punter, we meet at last," the evil wizard croaked. "I wiped out your parents years ago. They begged for mercy to be shown to their investments in Polly Peck and Coloroll, but I finished them off.

"Now, reinvigorated by a long and productive stay in Japan, and more recently by a short and extremely stimulating visit to Argentina, I have regained my powers and have been focusing them on your holdings of Marconi, Colt and Baltimore Technologies. You are doomed! I've moved the Quidrich goalposts."

Once again he began chanting in bad verse:

"Day traders, unplug and prepare for tedium,
"Up and up goes the equity risk premium.
You hope you've discovered financial fertility,
But you will be cursed with volatility.
Don't waste your time on new technology,
I advise you to study demonology!"

Frightened, Harry snatched up the Goldman Sachs document and instinctively held it up as a kind of shield.

Amazingly, purple sparks flew off it and hit Lord Duhmemort who sprouted blisters on his face and then began to shrivel away. In fact, within a few seconds he had gone!

Harry gasped with astonishment and relief. And looking out of the window of the train, which was still above ground level, he noticed that the fourth Grindgits tower had also disappeared. Sitting down exhausted, he wondered whether it had all been just a bad dream.

But had it really? Arriving back at Bank underground station he passed an evening newspaper placard that said:

"Billions wiped off share values"

He felt embarrassed carrying the birdcage, and was even more worried when he noticed that the canary was lying dead on the floor of the cage, with its legs sticking into the air.

Nearby he came across Freddie, who was finishing a call on his mobile phone. "It's a bad day for the mugs in the stock market," gloated Freddie, emitting a loud, braying laugh. "But I'm in cocoa futures. I prefer the sort of market where greedy consumers push up demand faster than the Ivory Coast can supply during a drought. The market in dotcom equities tends to work the other way round - have you noticed?

"I'm up 50 per cent since September. Ha! Ha! Ha! Do you fancy a cup of cocoa round the corner to celebrate?"

Harry said thanks, but not right now. He had to go home and plan his Christmas lunch. This year, it seemed likely, he would have to make do with roast canary.

With apologies to J.K. Rowling