The running of the bull

April 11, 2013, 11:15 AM UTC
Illustration: Jason Schneider

I was sitting in a meeting trying to figure out whether I was tired, stupid, or suffering from a surfeit of vitamin V the night before. You know vitamin V — it’s the critical nutrient you find in a chilled tumbler of Stoli.

This meeting was about technologies that might shape the communications industry in the years to come, and how to invest in them. An important matter, the kind on which you want to have a firm grasp. Or appear to.

“The question is whether development of SVOD will outstrip AVOD if EST is factored into the mix that the NVPDs are rolling out, and how those customer events transpire in an OTT or modified OTT environment for cord cutters, cord shavers, or what we call Nevers in either a C3 or C7 world,” said the guy making the presentation. Nobody said anything. There was some thoughtful blinking. The presentation rolled on.

I realized that I had let an opportunity slip by. I could have sat up and said, “Excuse me, Bob, but WTF?” I didn’t do that, because (1) while we all are permitted to be stupid now and then, the inability to mask stupidity is frowned upon, (2) I didn’t want to look unprofessional, since it’s possible I should already have dined with several NVPDs by now, and (3) I had to go to the bathroom and didn’t want this thing to go on one second longer than it had to.

So Bob never did have to translate what he’d said into English. Which is fine. We weren’t there to understand. We were there to be impressed by Bob’s ability to manage this issue for us so we wouldn’t have to (because we’re stupid) and to pay him money to do so.

Slinging incomprehensible bullshit can be an excellent strategy. Insurance guys do it when they explain why the anvil falling on your head isn’t a covered event. So do mechanics. “You’ve got ULG in your differential trans-capacitator,” the guy will say, and you nod and authorize a $1,800 repair job. But those guys are pikers compared with the masters in the manipulation of bull patties in pursuit of profit. I refer, of course, to bankers.

This fact was brought home by a hilarious report issued in March by the permanent subcommittee on investigations of the U.S. Senate titled “JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses.” We are indebted to Floyd Norris of the New York Times for bringing this document to our attention. A key passage concerns a presentation by the “whale,” Bruno Iksil, to the bank’s senior management on the criteria for making a transaction. Reasonably, Iksil suggested making “the trades that make sense,” i.e.:


  • “Sell the forward spread and buy protection on the tightening move.



    • Use indices and add to existing position.


  • Go long risk on some belly tranches, especially where defaults may realize.




  • Buy protection on HY and Xover in rallies and turn the position over to monetize volatility.”



The report notes that not one person who was interviewed understood what the dude was talking about. They approved the plan, of course.

That is why there will never be any actual reform in banking. First, these guys can ride the bull like nobody else. Second, there are more C students in banking than in many other professions, and the pressure to appear not stupid is intense. And third, there’s the greed. If you find a $100 bill on the sidewalk, do you want to know where it came from? No, you just “monetize volatility.” Which would you rather be — rich or smart? I thought so. Now let’s all go out and go long on some belly tranches. I bet they taste great.

This story is from the April 29, 2013 issue of Fortune.

Follow Stanley Bing at and on Twitter at @thebingblog.

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