The Frustrated Money Manager


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Ex-cardinal and frustrated money manager Giovanni Angelo Becciu

Vatican used charity funds to bet on Hertz credit derivatives (FT)

Three years earlier [2015], part of a €528m Vatican portfolio “derived from donations” bought structured notes containing CDS as part of a bet that Hertz would not default on its debts by April 2020, the documents show. The company filed for bankruptcy the following month, giving the Holy See a narrow escape on the investment, which paid out in full.

Other investments made by managers for the Secretariat appointed by Cardinal Becciu include financing the 2019 film Rocketman — a biopic of the musician Elton John — according to fund documents seen by the FT.

The Secretariat also bought multiple luxury residential properties in London’s Knightsbridge, and securitisations partly comprising invoices owed by the Italian state to Vatican-controlled hospitals. 

The Secretariat’s investment in the London building known as 60 Sloane Avenue was made through a fund in Luxembourg in 2014 in a deal personally authorised by Cardinal Becciu. In June the Vatican’s state news service reported that Holy See prosecutors believe the investment caused “huge losses”.


It looks easy, doesn’t it? Managing a portfolio. Managing a football team.

We all think we could do it, which is why “frustrated money manager” is the core psycho-demographic that supports pretty much all financial media business models. Just like there’s a frustrated GM in all of us, which is why ESPN and sports talk radio exist.

The frustrated money manager is a very different animal than Davey Day Trader Portnoy, who – as best as I can tell – is a showman and impresario (compliments in my book) who uses trading and portfolio “management” to support his brand/media company and tout his direct investments (Penn National Gaming). Same with Jim Cramer.

No, the frustrated money manager is rarely public with his compulsion (or her compulsion, but honestly I think this is almost entirely a y-chromosome thing), unless he’s enjoyed a hot streak and starts bragging to his email buds. Which happens not infrequently in a bull market.

The frustrated money manager is almost always a smart, accomplished professional in his own field who believes VERY much in the existence of The Smart Money ™.

The frustrated money manager is almost always a liiiittttle bit on the make.

Like a Vatican cardinal.

It took me a long time to recognize the frustrated money manager within me, including when I WAS a money manager, and a non-frustrated one at that. And to be clear, I said “recognize”, not “eliminate” or something silly like that. No, we are ALL frustrated money managers. The only question is whether we let that dimension of our psychological makeup ruin our lives, like it did Cardinal Becciu and so many others.

Here’s the knowledge that helps me keep it under control in myself. You ready?

There is no Smart Money.

That’s the big secret. That’s the most important thing I have to say to my fellow DGs and frustrated money managers. Especially if you ARE a money manager. You can’t eliminate the DG and frustrated money manager in you, but you can control it. Internalize this little nugget and you won’t get taken for a ride to the point where you ruin your life. Please.


Comments

  1. Avatar for Zenzei Zenzei says:

    Wat? I thought you were The Smart Money ™

    Mr. Dalliard! Mr. Dalliard Ben has gone strange on us again! Call Harper! Alert the Hunts!

    https://youtu.be/HBURlcNpfoo

  2. Avatar for Zenzei Zenzei says:

    All I’m trying to say is the world needs more of Fry and Laurie.

  3. Avatar for bhunt bhunt says:

    Fry and Laurie’s bit on the Peace of Westphalia is long overdue for an Epsilon Theory feature!

  4. Avatar for mckett mckett says:

    Thank you for this Ben, sounds like something Nero Tulip has learned as well

  5. Avatar for Schase Schase says:

    Ben, don’t you think you should at least hear about my gamma neutral, positive convexity, split-strike conversion strategy before you paint me with Papal brush!

  6. Avatar for bhunt bhunt says:

    Haha! Sure. Anything for a Pack member.

  7. Avatar for Zenzei Zenzei says:

    There is a difference between trying to be The Smart Money and being smart with your money.

    Can’t lose does not equal victory. It’s not about the outcomes. It’s about the process.

  8. Knowledge of the water enables the fish to be more aware of its choices….i suppose.
    I have friends who are quite aware of the water we swim in, but have well paying jobs and nice houses/apartments with kids in fancy schools.
    They choose to live in the water. The other choice – to leave the familiar feeling of the water would be gut wrenching……

    Something I read a couple of years back- I believe it was by a Christopher Cole of Artemis….
    For a fish it is very difficult to perceive a world beyond the water…if you want to change you have to crawl out of the ocean… find a way to breath … and evolve into a new reality.”
    
    Couple of Churchill quotes that I am not sure if I read on ET or somewhere else :

    Courage is rightly esteemed to be the first of human qualities because it is the quality which guarantees all others.”
    “Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen.” - Winston Churchill

    You’re right ……Knowledge of the water alone is not enough. A conscious choice to get out of the water and not play those games that are imposed on us is the next step. And that takes balls.

  9. “ The intuitive mind is a sacred gift, & the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift” – Albert Einstein

    The rational mind deals in abstractions – logic and constructs, models, algorithms, design & analysis etc.
    Ironically, our education teaches us that is being ‘realistic and grounded’.
     
    The intuitive mind – my best guess is that we need to reconnect to what is real in the world. The physical and the emotional.  Then we can develop the trust [read : courage]  in ourselves necessary for the intuitive mind to guide us.

    Ben has some rather detailed posts on the real vs the abstract here on ET.

Continue the discussion at the Epsilon Theory Forum

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