12 months ago, the controversial trader told the BBC “Goldman Sachs rules the world”. In an exclusive column for us, he explains why he’s still a “closet bear”
Our columnist Alessio Rastani is the self-proclaimed trader who shocked the world by declaring live on BBC News that he goes to bed “every night dreaming of the next recession” and that “Goldman Sachs, not the governments, rule the world”. He’s a controversial figure, not least because he’s a self-taught non-institutional trader with no FSA license. But he certainly isn’t shy about sharing his views. Do you agree with his words? (His words are his own, and in no way endorsed by LondonlovesBusiness.com.)
One year ago I dropped a “bombshell” on live BBC news that I was “dreaming of another recession” and that I couldn’t wait to make money from a market crash.
No, your eyes are not deceiving you. That is exactly what you read and that is exactly what I said.
I say “bombshell” in quotation marks because I don’t really believe this was a surprise to most people… was it?
Wow, a trader who wants to make money – from a crash? Well, I’ll be…! It’s like I said the sky is orange and the Pope is Jewish.
I think I was naïve when it came to how I underestimated the way people would react…
If you’ve ever seen that infamous BBC video, then you’ll notice that I paused and hesitated when the female news anchor asked me what I thought the solution to the European crisis was.
For a moment I thought “should I really give some bland pointless answer to this question? The same mundane nonsense the public have heard every time some financial pundit comes on TV?”
Then I thought: “No. I’ll tell ‘em exactly what I think. No B.S.”
I dream of a crash – and I’m not ashamed to admit it.
The public reaction was a mixture of applause for my honesty, marinated in a sauce of anger at the way I said it.
As it turned out – and perhaps to everyone’s relief – my dreams of a market crash never actually materialised.
In October 2011 the market bottomed and started a rally which continued to this year.
In fact, it will probably turn out that October 2011 will most likely be the bottom for many months, and perhaps for years, to come.
The Dow Jones went from 10,404 to its current level at 13,550.
One journalist recently said to me: “Alessio, if only you had said that right now is a good time to buy stocks instead of shorting them (profiting by betting on stocks falling), you would have looked like a genius right now!”
Everyone is a genius in hindsight, right?
Anyone can pull up a chart of the stock market, look back a few months and say “Oh that was so obvious!”
But I think that the journalist had a good point.
I could have said that I was looking forward to buying stocks even cheaper. I could have said that right now was a good time to buy as the market was mostly likely about to bottom.
So why didn’t I?
The not so “impartial” media
Looking back on the events I can only think of one explanation – and this is the honest truth.
I wanted the non trading public to realise that a market crash was actually an opportunity.
I wanted folks to know that their “impartial” media is biased only towards bull markets. This can be a good thing when the economy is good, but a disaster when the market changes like it did in 2008.
In fact, to my mind, the media has an unhealthy fear and prejudice against bear markets, i.e. a seller’s market. This has always puzzled me.
I am not afraid to admit it. Last year I finally came out of the closet.
No, I did not switch my sexual preferences (even though that would probably make my life so much less complicated).
What I mean is that I revealed my true nature – which is that I am a “closet bear”.
Yes, the other, less well-known, closet.
I am not entirely sure who coined the term “closet bear” – but I think it describes me and traders like me exactly.
My definition of the term would probably be: “Traders who prefer to make money from falling markets than rising ones.” It’s not exactly Oxford English, but it will do.
We are a minority. A rare breed.
We don’t get air-time on television and radio all that much, probably because we might offend the media bias, that “bull markets good, bear markets baaaad”.
And when we do voice our opinions on national television, we may occasionally cause a huge uproar, like I did on the BBC.
It’s like we just said we are the “big bad wolf” and we like to eat little pigs.
I am not ashamed to admit it. We do need to know how to prepare for both bull and bear markets.
If the only way you know how to invest your money is in bull markets, congratulations – you’re probably in one right now and you’ll do very will by buying stocks on the way up.
But once the market changes and optimism fails… and when the ponzi scheme that is “money printing” (QE3) also fails to generate any growth…
…then the little pigs (i.e. the public) will be served as lunch for the “big bad wolf”.
For further information about trading the markets visit my website www.LeadingTrader.com.
Alessio Rastani gained fame and caused controversy last year by stating live on BBC news that he “dreams of another recession” and that “Goldman Sachs, not governments, rule the world”. The YouTube clip has since been watched over two million times, and Alessio has subsequently been interviewed by figures such as Sir David Frost. His website is LeadingTrader.com.