01 February 2018
Chin Boosts Sterling
A financial god.
By Chin Chin
Aargh! Aargh! Aargh! Aargh! Aargh! The news is enough to make you feel sick. No, I don’t mean the prospect of even more bloodshed in the Middle East as Turkey turns on the Kurds. Nor am I referring it to those harbingers of doom – droughts and starvation caused by global warming. What is really upsetting me is the condition of the pound. Yes, all right, I hear you protest that the pound did nothing in the night, that there appears to have been no curious incident and that our national currency is (or at least at the time of writing was) standing at a twelve month high against the dollar. “What is there to feel sick about?” you ask. Surely the answer is obvious. Just before the current surge in the pound I changed money into foreign currency to cover my holiday expenses for the next three years.
It seemed such a wise move at the time. Here we are in the UK, facing every sort of uncertainty regarding Brexit, with the likelihood of a big drop in the pound if we come out without a decent agreement. Well, who knows whether we will or we won’t, but common sense tells you that there will be moments along the way when it looks as though we may, moments when the pound must surely drop. Answer: change the money now so that I don’t have to do it again until more settled times. Ah, cunning, Mr Chin! I will be off on my trip to Marbella just when everyone else is stuck at home because it is too expensive to go abroad. How I shall laugh as I wander into the half empty bars, johnny foreigner fawning on me as the only Brit with money to spend. That’ll get me an extra shot of whisky in the sangria and no mistake.
Now, a mean man would have kept his astuteness to himself, would have been content to put the money on one side and use it quietly as the need arose. But a generous man sees it differently and likes to share his success with others. So I went round the office and explained my strategy to the juniors, feeling my voice deepening under the combined weight of gravitas and experience. Naturally they were fascinated. That’s not surprising. If your life is spent worrying about university debt and the difficulty of finding a home, it must be refreshing to hear how a real financial wizard operates. Then that oik from marketing had to break in. You know the type, Oxford degree in PPE, designer shirt and no tie, the infallible signs of stupidity, conceit and depravity. “Are you sure you’re up to currency speculation?” he interjected in his revoltingly over-assured voice. “I heard that it’s a young man’s game. Past it by thirty, I believe. Double past it in your case. Bet you called it wrong.”
Honestly, what a stupid thing to say. For a start, it isn’t speculation at all but rather the matching of assets against future liabilities, a prudential approach as any insurance company will tell you. Then there was the strength of my reasoning… I began to go through the logic over again, speaking with knowledge and perception like Lord Sugar on Mastermind. Instead of listening and learning something, the oik pretended to have an important engagement. “We’ll see, grandad,” he called as he left the room.
So all week I have been watching the news. Cabinet members criticise the Prime Minister. That must mean uncertainty and a few points off sterling. Mr Macron offers to lend us the Bayeux tapestry. Obviously there is a financial quid pro quo there, so again something off sterling. Macron says that there can be no special deal for British financial services. Surely sterling down again. It was with some confidence that I looked at the exchange rates this morning to see that, despite all these factors, sterling was thriving. You just can’t trust those currency trader types to be sensible. There’s a lot of in-breeding in Essex, I suppose.
It was when I was brooding on the way sterling rose just after I had sold it, that I began to consider other financial transactions I had entered into. Fixing my fuel tariff just before the drop in the oil price, for example. Buying index-free gilts just before inflation fell to nothing for another. All decisions made on the most sensible grounds. It was extraordinary how unlucky I had been.
It was then I realised that it was not luck at all. If you have read Hitchhikers Guide to the Galaxy you will remember the lorry driver who was unknowingly a rain god. Wherever he was, it rained, and if he drove to somewhere else, it rained there too. Well, perhaps I’m something similar in terms of financial transactions. If I buy the rouble, the rouble will inevitably decline. If I switch my money into US dollars, the US dollar will sink. If I lock into a fixed rate of payment, the market rate will immediately slip below it. My very participation in the market affects its level rather as, according to Heisenberg, the observation of very small particles alters their behaviour.
If that is so, knowledge of my transactions should be a valuable commodity. When the papers report “Chin sells sterling,” it will be a racing certainty that sterling will rise. Speculators will be able to make guaranteed profits by entering into the opposite transaction. It is possible that my talent extends to other areas as well. “Chin backs favourite” in the racing papers could be the cue for everyone else to back the horse which was expected to come in at number two. Fame and fortune await me. But to be more accurate it may only be fame, because if, say, I am promised a fee for selling dollars which is linked to the consequential fall in that currency, and if that fee would exceed the amount of the loss I incur from the dollar’s fall, then, viewed overall, I would be long in dollars so the market would probably go up. Accordingly, it maybe been impossible for me to use my unusual gift for my own profit.
Perhaps some complex derivative can be designed to deal with this difficulty but, for the moment, I have a more pressing problem. One or two people in the office seem to have followed my advice and the surge in the pound has reduced their holiday pots. How am I to explain to them in front of that nasty sneering yob just what it was that went wrong?
