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issue 9 JUL 2011 £3.95
Celebrity Traders: Mark Ronson and Alicia Keys
The Eurozone Crisis
Stepping through a forex trend
The summer’s best travel gadgets
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THE OPEN | WELCOME
EDITOR’S LETTER EDITOR Alex Hammond ART DIRECTOR ALEJANDRO GUERRA-PALACIOS
Well, its finally here After THREE months of preparation, explanation and dedication The Exchange’s Top 50 is complete. Many names were put forward, but when it was all over only a few remained standing, the Top 50. First of all, I’d like to thank everybody who’s helped put this list together in any way, because without your input it simply wouldn’t have been possible. We received hundreds of nominations, and thousands upon thousands of votes, so thank you all for supporting the cause. It’s been a long slog, hopefully we’ve done your efforts justice. We’re sure that everyone will have their own thoughts on who should have been placed higher or lower on the list, from the sheer volume of voting it’s obvious that opinions on the matter
are very strong. But if the list sparks debate, even controversy, then we’ll consider it a job well done. And for those who thought they should be higher, well there’s always next year. And with forex strategy, sports spread betting analysis insight and commentry on the escalating Eurozone crisis, as well as our guide to The Global Party (a fantastic event you have to get involved in) and luxury travel gadgets, this issue is packed cover to cover with everything else you need to know about spread betting this month. Anyway I know you’re all dying to find out who’s come top of the pile, if you haven’t had a sneak peak already. I won’t delay you any longer. I hope you enjoy the issue.
Writers & CONTRIBUTORS SANDY JADEJA NICK BEECROFT DECLAN FALLON KEN FISHER ALASTAIR McCAIG MARK SOUTHERN Alessio Rastani Michael Hewson Peter Webb TOM ROTHERHAM CHRIS SMITH ZOE FIDDES SIMON SMITH GREG MICHALOWSKI ATIF LATIF SVETOSLAV GEORGIEV STEWART COLLINS EVE LAWRENCE SARAH MCARDLE DIGITAL CONTENT & MARKETING ANDREW CAPEL Public Relations Mark Southern Polygon PR SOCIAL MEDIA MANAGER Simon wiltshire SUBSCRIPTIONS subscription@theexchangemagazine.com
PUBLISHED BY The exchange
admin@theexchangemagazine.com
ISSN: 20472625
ALEX HAMMOND EDITOR
4 | THE EXCHANGE | July 2011
© 2011. The Magazine is published by The Exchange. All rights reserved. The publishers declare that any publication of any advertisement does not carry their endorsement or sponsorship of the advertiser or their products or services unless so indicated. Contributions are invited and, whether or not accepted, submissions will be returned only if accompanied by a stamped addressed envelope. No responsibility can be taken for drawings, photographs or literary contributions during transmission or while in the Managing Editor’s hands. Proof of receipt is no guarantee of appearance. In the absence of an agreement, the copyright of all contributions, literary, photographic or artistic belongs to the The Exchange. This publication (or any part thereof) may not be reproduced, transmitted or stored in print or electronic format (including, but not limited to, any online service, database or part of the internet), or in any other format in any media whatsoever, without the prior written permission of The Exchange. The Exchange accept no liability for the accuracy of the contents or any other opinions expressed herein.
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CONTENTS
contents 24
THE OPEN 14 UPS & DOWNS 14 CELEBRITY TRADER: MARK RONSON & ALICIA KEYS 20 NETWORKING: FTBN
FEATURE ARTICLE 24
THE TOP 50
THE LONG 52 54
20
62
THE EUROPEAN TRAIN CRASH EURO CRISIS: CHALLENGES & OPPORTUNITIES 58 ANALYSIS: FTSE 60 TRADING CFDs WITH DMA 62 KEN FISHER 64 THE ESSENCE OF FOREX 66 STEPPING THROUGH A FOREX TREND 68 THE RELATIV E PRICE INDEX 70 CHART WONK 72 TIME IS MONEY 74 ANALYSIS: SPORTS BETTING
THE SPREAD
66
78 80 84 86 88
NIGHTCLUBS CITY GUIDE: BASEL GADGETS RESTAURANTS STYLE
THE CLOSE 92 96
6 | THE EXCHANGE | July 2011
WHO’S WHO GLOSSARY
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THE OPEN | WHERE DO YOU TRADE?
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IN THE OPEN UPS AND DOWNS NETWORKING CELEBRITY TRADER
“I was only exploiting a loophole” A former stockbroker has been hit with a massive £700,000 fine by the FSA this month, after it concluded that he had manipulated the markets to profit through a number of spread betting platforms, most notably City Index. Barney Alexander’s method was a simple one; by placing a number of small orders on the stock exchange he could briefly alter index prices whilst simultaneously wagering the same prices on the spread betting platform. When the scheme, which Alexander named “System X” was discovered, he claimed he had no idea that what he was doing was outside the FSA’s permitted market conduct, and that he was merely exploiting what he
10 | THE EXCHANGE | July 2011
believed to be an inefficiency in the spread betting system. Unsurprisingly the FSA saw things differently, describing Alexander’s actions as “deliberate and repeated over a significant period of time”. He was ordered to £323,000 in restitution back to firms who had suffered losses through the scheme, of which over £300,000 was awarded to City Index, and had another £306,000 still held in spread betting accounts forfeited. He has also been banned from performing regulated functions for a minimum of five years. Mr Alexander maintains his innocence, and has called for greater clarity of the rules surrounding spread betting.
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THE OPEN | UPS AND DOWNS
UPS&DOWNS
From news stories to trading issues, a round-up of the things that have caught our eye this month
Send us your news, views, and unprintable gossip at: editor@theexchangemagazine.com
Tech stocks targeted by short-sellers
Pippa’s on top again Is there no public sphere safe from the clutches of the media juggernaut that is the Pippa Middleton machine? Apparently not, because it was her Royal Hotness who ended up being the talk of the Thomson Reuters Extel awards (and who now graces the page of The Exchange magazine). At the glittering lunch reception at London’s Guildhall for the annual wards, over 300 industry analysts and their guests were asked their opinion on various future events. Some questions were industry related, for example where the FTSE 100 would be in a year’s time. Over 75% of those asked had the markets above 5,550, and over a quarter took the bullish view that it would be over 6,000. The future wasn’t so bright for LinkedIn, however, with most agreeing that it would it would be a bear market ahead for the social media site. 20% of those polled believed shares would
12 | THE EXCHANGE | July 2011
be trading at under $10 in a year’s time. Some were more confident: 41% said it would be between $50 to $70, while other raging bulls thought it would be over $100. It floated at $45 and currently trades at $78 after reaching highs of $122. But it was Royal sister-in-law Pippa Middleton who took down the greatest prize of the night, beating off competition from Anne Widdecombe (29%), Sepp Blatter (18%) and Robert Peston (9%) as the analysts’ favourite to replace Cheryl Cole on the American X-Factor. And Pippa might even be interested, after all its not as though these analysts don’t have a record in the prediction line - last year they had Spain winning the world World Cup, that the FTSE would be over 5,500 this week and Portugal needing a bail out by the IMF. So if Pippa does wind up landing a gig sitting next to Simon Cowell, you’ll know where you heard the news break first.
The global IT sector has become one of the biggest targets for short sellers this month, in the most part due to fears surrounding vastly overpriced valuations of a number of high profile flotations, and the worry that these inflated stocks are pushing the markets towards another dot.com bubble. Hedge funds and other short-sellers sold more stocks from the listed US technology sector increasingly more frequently last month, believing that prices are destined to fall once the technology bubble bursts later this year. The poster-boy stock for the second dot. com bubble is currently LinkedIn, whose IPO currently values the social networking site at over $3billion, despite only posting profits of $15.4m for 2010. The LinkedIn IPO has been seen by many as the precursor to an expected flo tation of Facebook late in 2011 or early 2012. If the buying frenzy surrounding the LinkedIn IPO is anything to go by, analysts anticipations of a second dot.com bubble will only strengthen when the mad rush ensues to grab a piece of the much larger and more successful internet company.
THE OPEN | UPS AND DOWNS
Time to Drift Away The City’s newest drinking destination, The Drift, looks set to take London by storm when it opens its doors to the public this month. The Drift can be found in the Heron Tower, making it the perfect location for a quick one at the end of another hard day in the City. However, with sleek vintage décor and a drinks menu that’s the envy of even London’s most reputable drinking
holes, don’t be surprised if just one turns into a whole more, and on a regular basis. Throw in the fact that the two-bar establishment also houses a fine dining retreat and an al-fresco terrace and it’s easy to see why The Drift is already being hyped as the newest place de-jour in the City. I know what you’re thinking, and we’ll see you there.
“Get ready for EU rules” FSA tells insurers Insurance firms must prepare for new European Union capital rules due in January 2013 until they hear otherwise, the country’s top markets regulator said in reaction to talk of a possible delay. The new Solvency II rules face a tight timetable for the highly complex set of rules but the Financial Services Authority (FSA) said it would forge ahead. “We at the FSA will be ready,” the watchdog’s chief executive Hector Sants told an FSA conference on insurance on Monday. “We do require the firms to be ready as well until we hear otherwise.” The FSA is being scrapped next year. Its powers will be divided between the Bank of England and a new standalone Financial Conduct Authority. Sants will head the Prudential Regulation Authority, which will be the new regulatory division at the Bank to supervise banks and insurers like Aviva (AV.L) and Prudential (PRU.L). Solvency II is the largest task facing regulators in the sector, which will change how insurers calculate the amount of capital they need to cover risks on their books. The EU’s financial services commissioner, Michel Barnier, said on Friday he will stick to the 2013 date in principle but there may be a soft phase-in of some elements. “If the European Commission wanted to change the implementation date then that is something we could see coming out of the sheer difficulty of the timetable,” said Julian Adams, head of insurance at the FSA. “We will be ready for whichever date is set,” Adams said.
ETF recruitment growth slows as job market continues to flatten off The employment boom in exchange traded funds appears to have come to an end, according to one the leading recruitment consultancy agencies in the City. Employment in the sector remains well above market average, but is still well down on 2010 figures. Recruitment consultants have expressed surprise at the turn in the market, claiming that they expected the increased numbers of
jobs available twelve months ago to have continued into 2011. Despite the turn in trend, there are still some bright spots for those looking to break into the industry. BlackRock, the largest global provider of ETFs, will be looking for experienced staff to manage an anticipated $2 trillion worth of additional invested funds by the end of 2012. Recruitment in ETF sales also remains high.
July 2011 | THE EXCHANGE | 13
the open | CELEBRITY TRADER
CELEBRITY TRADER Every month CityIndex and The Exchange present you with Celebrity Trader. We take an unsuspecting celebrity, take them to the trading floor, give them some money a little training and let them trade with all profits going to their chosen charity.
Music Makers Mixing it in the Markets This month’s celebrity traders are two of the biggest of the biggest stars in the music industry, Mark Ronson and Alicia Keys
14 | THE EXCHANGE | July 2011
Mark Ronson sits serenely as a king as his courtiers fabricate a hive of activity around him, hurriedly finishing off last minute sound checks in preparation for the evening’s entertainment he will be enthralling crowds with in a few hours time. We’re at the Royal Albert Hall, the venue for the Black Ball, an event Ronson is cohosting with singing sensation Alicia Keys in support of Keep a Child Alive, a charity dedicated to tackling issues of HIV and AIDS amongst children in Africa and India. Of course we’re here to talk about Mark’s time as one of this month’s celebrity traders, but almost instantaneously the conversation turns to music, and it’s immediately clear where Ronson’s passions lie. Consumed from a young age, Ronson’s life in the industry has been a roller coaster that’s seen him rise meteorically, from DJing on the New York underground scene to the summit of the popular culture, an achievement that was crowned when he won the Best Male Brit Award in 2008. Naturally Ronson can wax lyrical over the creative side of the profession, he isn’t one of the most in-demand music producers in the world for no reason, but what is perhaps surprising is the no-nonsense, clued-up approach he has to the financial side of the industry. “Make no mistake, I’m in the music business. We like to think what we do is art, and it is, but it needs to sell records for the labels so you’ve got to be aware we work in an industry,” he says when we ask about the potential conflict between the creative aspects of being an artist and the need to be profitable. But what about investing in others in the industry? Does he think there’s a profit to be made in buying up catalogues of fellow
“If I could invest in the back catalogue of any music artist it would be the legends of music; The Beatles, Led Zeppelin and Bob Marley” professionals? As a man with a finger placed on the pulse of the music trade more securely than almost anybody else out there, surely the concept of hand-picking artists in the same way traders buy stocks must have crossed his mind. “If I could invest in the back catalogue of any music artist it would be the legends of music; The Beatles, Led Zeppelin and Bob Marley. These guys’ back catalogues are incredible, and will always sell. That’s where I would invest,” he says. “If I was going to invest in a current artist then it’d be a massive hip hop star like Jay-Z who is going to sell records for a long time. That being said, the hip hop industry is the most hard hit by illegal downloading so maybe something that mums buy like Michael Bublé would be a more sound investment. Also Adele would be worth investing in,” he adds. Bublé over Jay-Z? Well, you heard it here first, straight from the lips of a man respected on the U.S underground clubbing scene for his unique approach to defining urban music. Now that really is a business decision and a half. Our talk does eventually come back to his time as a celebrity trader, and he’s quick to say it’s something that he’s enjoyed, even though
Simon Jessop
Simon Jessop
THE OPEN| CELEBRITY TRADER
July 2011 | THE EXCHANGE | 15
the open | CELEBRITY TRADER
TRADER’S VIEW Kishan Mandalia,
Senior Sales Trader at City Index
Mark Ronson Mark Ronson, a product of the digital age, allegedly had his first recording experiences with Pro Tools. “In my main room I’m using a Mac Pro running Mac OS 10.6.7 with Pro Tools HD and a Pro Control desk”, he claimed. It’s a fact, it’s all about Mac, therefore we weren’t surprised to find that Mr Ronson decide to take a long position on the fashionable technology stock ‘Apple’. Incredibly, with the funds he was given, he could only really afford to risk taking 10p per point, and this ironically loses him £12.80. This trade appeared to shake him slightly, as he didn’t hold the position for long. Mark also took at stab at trading the FTSE, always a favourite with our British Celebrity Traders. Mark took another long position, buying in at 5765, but had to succumb to another loss, closing out at 5731. It was an admirable tactic, attempting to buy the dips, but unfortunately he didn’t manage to pull out the show stopper this time. Trading Account total: £2,321 (a £178 loss)
16 | THE EXCHANGE | July 2011
Simon Jessop
Alicia Keys Alicia admitted having no real persuasion on the stock market, so instead of jumping on the safer band wagon of taking a spin on the FTSE or perhaps a slightly more patriotic Dow Jones, she stuck to her passions, music. Although she couldn’t invest in her own record label ‘J Records’ she took the next best thing, Sony (Sony Music entertainment). Unfortunately for Ms Keys, her strategy of ‘buy in the red and sell in the black’ did not pull through on this occasion, as Sony took a dip on the market, obviously due to the fact that she hasn’t released her highly anticipated new album yet. To counter the loss Ms Keys then attempted a rescue and bought into Warner Music at £4 per point. Unfortunately this market, which generally trades sideways but had been climbing this week, suffered a small correction, and her trade took a small loss of £28. Trading Account total: £2,424 (a £78 loss)
he experienced limited success. “The trading was something out of my normal day to day life, but it’s always good to try different things, and was a fun challenge for a good cause.” Trades in technology and the FTSE were his speculations of choice, but a series of unfortunately timed trades meant that he met with little success. Spotting potential in the FTSE, Mark had a go at buying the dips, a bold tactic indeed, but unfortunately one that ultimately proved fruitless. He also went long on Apple, but a 2% drop in share in share price cost him another chunk of his account. Just as our conversation draws to a close
we spot Alicia Keys from the corner of our eye. Despite her hectic schedule the multiGrammy award winning songstress has also been trading with City Index this month, in between organising the Black Ball, putting the finishing touches on her new album and coping with the ordeal of being a first time mum. She also suffered a small loss on her trading account after trading music shares, a fact she was quick to blame on the fact that she was unable to invest in her own record label, J records. Well, once you float Alicia, we’ll all be able to profit with you.
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