The Exchange Digital Sample April 2011

Market analysis: VoluMe &

Volatility

CoMModities: Wine Market

indiCes

Celebrity trader:

adaM boulton

the perfeCt Week in dubai

are they taking oVer the forex World for good?

B E T W E E N T H E T R A D I N G F L O O R A N D T H E F I N A L S C O R E . . .

...................SPREAD BETTING...................FOREX...................CFDs...................SPORTS BETTING.............................

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THE OPEN | WELCOME

4 | THE EXCHANGE | April 2011

No matter the size and frequency of your trades, whether you’re a professional trader or an amateur, or the regularity of the success or failure of your spreads, one of the golden rules of trading has to be: never trade with money you can’t possibly afford to lose. Too conservative, I hear some of you cry? Well, for those who would disagree with me let me tell you a story I heard last month.

A friend of mine, who is relatively new to trading but has been reasonably successful to date, convinced his girlfriend to give him the money she had diligently been saving for an ISA to trade with. He promised her he could deliver far better returns on her money than an ISA ever could, and showed her his trading portfolio to prove it.

Not being a trader herself she was naturally a little sceptical about where her money would be going, and even more unconvinced her of boyfriend’s self-proclaimed magical market powers. Eventually, however, she relented and handed the money over.

After careful consideration and a great deal of market analysis a position was opened on the evening of the 10th March. The following morning the girlfriend asked, out of curiosity, to see the position in an attempt to learn more about the mechanics of trading. Unfortunately it was nowhere to be found, and neither was her money. Which was a problem.

It was only then that the television was switched on and they saw the devastation caused by the earthquake and tsunami in Japan. As horrendous as the scenes were, they did at least solve the riddle of the missing trade.

The position opened had been long on Nikkei 225 June futures.

Now I’m not criticising the trade, not even the great Jesse Livermore could predict natural disasters (even though he thought he could – see page 66 to find out more). And I bet one day it will be great story they’ll be able to share at dinner parties, but right now it definitely isn’t. I’m sure you can imagine what her reaction was when he told her where her hard earned cash had gone, which is a good thing because it obviously isn’t printable here.

So I would say this to anybody thinking about pulling a similar stunt this month, just don’t do it. Because when you trade with your better half ’s finances there’s no way you can win. Talk about setting yourself up for a fall and all that.

So trade, and trade successfully this month. Only make sure you’re not trading with money somebody else will miss. And if you still don’t think I’m right feel free to contact a Mr N. Leeson of Galway for a second opinion on that particular point.

Hope you enjoy this month’s issue.

The great relationship gamble

EDITOR’S LETTER EDITOR ALEx HAMMOND DEPUTY EDITORFRED PALLEY

ART DIRECTORALEJANDRO GUERRA-PALACIOS

WEB DEVELOPERCARLOS PEREZ

CONTRIBUTORSSANDY JADEJANICK BEECROFTDECLAN FALLONKEN FISHERMICHAEL DERKSALASTAIR MCCAIGMARK SOUTHERNJENNIFER VON STROHEALESSIO RASTANIMICHAEL HEWSONPETER WEBBWILLIAM GREY

PUBLIC RELATIONSMARK SOUTHERNPOLYGON PR

MARKETINGALBERT VELLVÉ

BUSINESS DEVELOPMENTALEx SORO

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PUBLISHED BYTHE ExCHANGE

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© 2010. The Magazine is published by The Exchange.All rights reserved. The publishers declare that anypublication of any advertisement does not carry theirendorsement or sponsorship of the advertiser or theirproducts or services unless so indicated. Contributionsare invited and, whether or not accepted, submissionswill be returned only if accompanied by a stampedaddressed envelope. No responsibility can be takenfor drawings, photographs or literary contributionsduring transmission or while in the Managing Editor’shands. Proof of receipt is no guarantee of appearance.In the absence of an agreement, the copyright of allcontributions, literary, photographic or artistic belongsto the The Exchange. This publication (or any partthereof) may not be reproduced, transmitted or storedin print or electronic format (including, but not limitedto, 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 ofthe contents or any other opinions expressed herein.

ALEX HAMMONDEDITOR


THE EXCHANGE | ISSUE 6

April 2011 | THE EXCHANGE | 7

contentsTHE OPEN

10 UPS & DOWNS12 FILM CORNER14 CELEBRITY TRADER:

AdAm BOulTON

FEATuRE ARTIClE18 ROBOT TRADERS

THE lONG24 VOLATILITY AND VOLUME26 FIRST TIME TRADER28 ANALYSIS: BLACK SWANS30 THE GOLD RALLY BUBBLE32 HOPE FOR THE US ECONOMY?34 MOVEMENT FORECASTING36 CHART WONK 38 KEN FISHER40 SPORTS EXCHANGE TRADING42 COMMODITIES: WINE INDICES

THE SPREAd46 DINNER 48 CITY GUIDE: BUDAPEST52 DUBAI56 WEEKENDS58 RESTAURANTS60 EXPERIENCE

THE ClOSE64 CHARITY66 GREAT TRADES68 WHO’S WHO72 GLOSSARY74 FUNNY MONEY

14

18

26

24

Look for the QR code to see an exclusive interview with Adam Boulton


THE OPEN | UPS AND DOWNS


betFaIr Group, the world’s largest sports betting exchange, released figures last month showing a third quarter revenue rise of 6.2 per cent. Revenue reportedly rose to £77m in the three months to the end of January.

As the market news was announced the group also announced that the betting exchange would operate under a Gibraltar licence from 9th March.

“We are rolling out a planned series of major improvements to our sports betting

Betfair aNNOuNce 3Q reveNue riSe

NaSDaQ plaNNiNG a rival BiD fOr NySe eurONext

hIGh street sports clothing retailer JJB sports has revealed a rescue plan to save the troubled business which includes renovating some stores, closing some other loss-making outlets and investing in online sales.

A fall in sales has seen JJB slide into a fight for its survival, but it hoped that a makeover of the company will ease some of the financial burden on the business.

The sports chain confirmed that it would finance the changes by raising an additional £65m from shareholders. Major shareholders Harris Associates, Crystal Amber, Invesco Asset Management and the Bill & Melinda Gates Foundation Trust have agreed in

JJB SpOrtS revealS £65M recOvery StrateGy

nasdaq omX Group is expected to launch a rival bid for NYSE Euronext, the US media has reported.

Nasdaq’s bid for NYSE, which is reportedly valued at $12bn (£7.5bn) places the technology exchange in direct competition with German exchange Deutsche Boerse. A $10.2bn agreement between NYSE and Deutsche Boerse was settled in February.

Were Nasdaq’s offer to be accepted they would have to pay Deutsche Boerse a £250m break-up fee due to a clause in the contract agreement between the German exchange and NYSE intended to cement the agreement between the two parties.

If Nasdaq OMX Group were to win the race to acquire NYSE Euronext then the resulting merger would create a heavily US-oriented firm, reports suggest that should the deal happen the European assets of NYSE would be sold off.

principle to the extra fundraising.The changes to the JJB brand will be

based on six trials stores, which have seen success over and above JJB’s other outlets since they were launched. Sales at the trial stores have been running at 16% above the company average.

JJB had been in talks with rival JD sports about a potential takeover but the latter pulled out of the deal last week, citing a lack of information from JJB that would have allowed it to make a formal offer. JJB responded by calling the takeover proposal “highly conditional and lacking sufficient certainty to be deliverable”.

product which will help drive revenue growth in Q4 and into 2012,” chief executive David Yu said in a statement.

One major implementation will be the introduction of an online financial trading platform, which is still in early stages of development.

Betfair has said it expects full year profits to remain within the range of market expectations.

Since shares in Betfair were sold in an IPO last October prices have slumped over fears of increased regulation in the betting industry. Shares initially rose from 1,300 pence to 1,610 pence before falling back and was recorded this week at 887.5 pence, valuing the business at £954m.

Britain’s two biggest high street bookmakers, Ladbrokes and William Hill, also reported increased profits last month, in the most part due to improved performance in their online businesses.


THE OPEN | FILM CORNER


FILM CORNER

This issue, a generaTion-defining sci-fi epic ThaT Tells The sTory of a man coming To Terms wiTh being able To conTrol The world around him. The only problem, The world is noThing like iT seems To be.

The FilmReleased in 1999, the Matrix is the story of a man who discovers the world around him is a virtual prison, created by machines from the future to enslave the human population. A leader of the human race in the real world believes he is savior of mankind, but even Neo himself needs to be convinced of his potentially awesome powers.

The SceneAfter searching for so long, Neo finally finds himself face to face to face with the man he’s been searching for, Morpheus. His questions are finally going to be answered, but is he prepared for what he’s about to hear?

Morpheus: I imagine that right now, you’re feeling a bit like Alice. Hmm? Tumbling down the rabbit hole? Neo: You could say that. Morpheus: I see it in your eyes. You have the look of a man who accepts what he sees because he is expecting to wake up. Ironically, that’s not far from the truth. Do you believe in fate, Neo? Neo: No. Morpheus: Why not? Neo: Because I don’t like the idea that I’m not in control of my life. Morpheus: I know *exactly* what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve

felt it your entire life, that there’s something wrong with the world. You don’t know what it is, but it’s there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I’m talking about? Neo: The Matrix. Morpheus: Do you want to know what it is? Neo: Yes. Morpheus: The Matrix is everywhere. It is all around us. Even now, in this very room. You can see it when you look out your window or when you turn on your television. You can feel it when you go to

work... when you go to church... when you pay your taxes. It is the world that has been pulled over your eyes to blind you from the truth. Neo: What truth? Morpheus: That you are a slave, Neo. Like everyone else you were born into bondage. Into a prison that you cannot taste or see or touch. A prison for your mind.

MorAL oF The sTorY: Once you can understand the world in which you live, only then are you able to control it

What Would Gekko do?

Craig from Manchester writes:Gordon, whilst I like to think of myself as a wise investor, I always seem to be on the wrong side of natural disasters as the Japanese earthquake and tsunami once again caught me out, this time damaging my nuclear portfolio. How can I look to avoid this in future?

Gordon responds:There’s an old saying that one man’s

sorrow is another man’s gain, and never more so than in the case of natural disasters. Yet while the loss of life at the hands of Mother Nature is a truly appalling outcome, it’s one of the few things I can’t control, so I may as well make some money in the process right? I like to call it a sixth sense; you need to know which way the financial winds are blowing as it were. As when the walls come caving in, I want to be standing on the other side. They don’t call me the master of disaster for nothing Craig.

Rebecca via email, W1:I recently read The Big Squeeze by Michael Lewis and thought he gave a fascinating yet funny insight into the global financial collapse. Have you ever

thought about writing a book Gordon? And if so, would you make it funny?

Gordon writes back:The trouble with writing Rebecca, is that during the time it would take me to write a book, I could have earned ten times – no, 1000 times – as much money at my trading desk. In fact, you’re lucky I addressed you back as Rebecca rather than R; that’s cost me $50 right there. And while it’s true that money doesn’t grow on trees, that’s no reason to start chopping them down to use for books; that’s the real joke.

The ‘Tradz of Spadz’ asks:I’ve heard a lot recently about the importance of being in the right frame of mind to trade. I like to get into the

zone as the Tradz of Spadz, which you will probably have guessed isn’t my real name. Are you of that trading persuasion Gordon? Do you enjoy being the Gecko?

Gordon says:There are a lot of people out there who hate themselves. They’re crap, they’re useless and they can’t trade. Now while I’m not suggesting you’re one of these people ‘Tradz’, you’re personality disorder scares and delights me in equal measure. I may be known as the Gecko but in reality I’m a tiger, a lion, the biggest mother fucking crocodile you’ve ever seen. And when you think it’s safe to come out and trade again, I’ll sting you like a bee and plunder your honey like it’s going out of fashion.

Silver Fox Still HaS it


the open | CELEBRITY TRADER

16 | the eXChAnGe | April 2011

would probably contribute to what was already an on-going rise in the cost of oil. Then I took a few more speculative moves, I was obviously interested in the announcement from the Government concerning the BSkyB and News Corp merger so I speculated on that. I took a position on cocoa because I follow the political situation in the Ivory Coast. Fortunately almost all of the trades I made came off.”

With solid reason supporting a vast knowledge it’s unsurprising that Adam’s trading method was a success. However, even he must have been surprised at the phenomenal gains his trades made. Returning £2,173.86 of profit from his original £2,500 starting fund, his 87% profit margin dwarfed all other celebrity traders to date, as well as his own expectations.

“I wasn’t expecting to do anywhere near as well I did,” he says modestly. “But it would have been even sweeter to double my money,” he adds with a wry smile.

And how much of his success does he

AdAm wAS by fAr our best celebrity trader yet. He was really switched on with global events, as a man in his occupation is likely to be, and made several well timed trades across a broad range of markets, generating a hefty profit. Adam started with £2,500 in his City Index account and by the end of the two weeks, he had made a profit of £2,173.86, a return of an impressive 87%.

The week started with tensions in Eygpt dominating the news and subsequently Adam took a view that the situation could escalate and as such, the price of crude oil could go higher. Therefore Adam decided to trade a few asset classes that are sensitive to the situation in the Middle East and could experience some opportunistic price swings. Adam went long £4 per point of nymex crude oil and £2 per point of gold whilst simultaneously short selling the Dow Jones index, expecting the US Index to be hit in the midst of the tensions. Adam left these trades open for no more than a few days and made good returns to start the ball rolling, with his nymex crude and gold trades returning £1,077 and £452 respectively.

During the week, Adam also spotted the political situation in the Ivory Coast beginning to escalate even further and highlighted potential for further upside for Cocoa on supply disruptions. He therefore went long Cocoa, making £106.

Looking at equities to diversify his portfolio, a recommended tactic during times of economic uncertainty, Adam decided to place a short term buy trade on Lloyds in the days running up to their earnings. Unfortunately, Lloyds shares actually fell during this period and Adam’s trade was stopped out for a £90 loss.

trader’s vIewkIshan mandalIa, senIor sales trader at cIty Index

scan here to see an exclusive video.QR readers can be downloaded for free for most smartphones.

Sim

on Je

ssop

attribute to his profession? “Well, the purpose of Sky News is to give people information so that they can make decisions about their own lives and part of that is that we hope the information is useful for people who are trading. So when you have the knowledge of Sky News and its resources behind you, it can only be an enormous aid.”

But could achieving such unprecedented success as the celebrity trader convince him that there is a future in trading? Well, maybe not for the time being at least. Like most of us Adam has a story of a friend who made a fortune and proceeded to lose it all and more, so he’s quick to heed caution to his initial success.

“My wife did suggest it to me, and I’m sure she’d be very happy if I doubled her money. But somehow I think it might be a bit different if I lost it all, that would certainly make things a bit frosty,” he jokes. “But certainly I’m going to think about it a bit more than I would have before.”


FEATURE


In defence of the (empirically proven to be profitable) robot trading programs, the majority of their trading is financially more successful than novice traders. Traders who do not know how to interpret charts and price movements will fall miserably short of the performance of a robot for the simple reason that without an appreciation of all the implements at their disposal, day trading forex becomes nothing short of a guessing game.

Two words of warning though for novice traders looking to jump into bed with a robot trading program. The first is that whilst deploying a trading robot may net you some short term gains in the markets it won’t teach you how to be a better trader yourself. Those who elect to enter the world of forex trading through a robot would be advised to undertake a training programme at the same time, as then there will come a time when you’ll be able to

outperform your robotic friend. If you fail to do this, you’ll never reach your potential as a trader.

The second issue is that you must remember no system is infallible. Trading blind i.e. without any knowledge of how to trade

forex is a dangerous risk because it imparts a tremendous amount of trust into the system, and if you can’t understand how and why the program is conducting itself in a particular way, then you don’t have any chance of picking up a potential crack in its methods. A computer interpreting graphs on your behalf sounds like the perfect solution for a novice trader struggling to get to grips with the ins and outs of forex, but it isn’t. The perfect solution is to take a step back from the markets, get yourself a play money account and learn to be a better trader.

So in conclusion The Exchange’s verdict is this: If you’re looking for a quick fix then a robot trader will look like your best friend. If you want to become a good trader on the other hand, leave him well and truly in his box. On the forex battlefield, the humans still rule supreme.

“traders who do not know how to interpret price movements will fall miserably short of the performance of a robot”


THE LONG | AnAlysis


Nick Beecroft of Saxo Bank examines factors both man-made and natural that look to have an effect on currency trading in the coming month

Early Dutch ExplorErs were astounded to see Black Swans gliding down what became known as the Swan River in Western Australia, and we have now come to use the phrase to describe the extremely unlikely, but nonetheless momentous, events which seem to be becoming ever more commonplace.

As if the event risks posed by the still unfolding North Africa/Middle East political unrest and the Eurozone sovereign debt crisis were not enough to seriously unnerve global markets, the dreadful events in Japan have added yet another reason for circumspection.

As we entered 2011, at Saxobank we expected the major economies to maintain recovery, but at a slower pace than 2010. Now we have to factor in the additional headwinds which will blow as

a result of the Japanese

earthquake, tsunami and nuclear crisis.Let us hope the latter will not deteriorate

further, and the direct effect of the disaster on the Japanese economy will be to create a V-shaped dip, and then recovery, powered by reconstruction efforts. However, perhaps the greater impact felt in the wider global economy will be yet another blow to consumer confidence-vital to the fragile recoveries we are experiencing in the developed world. Monthly consumer connfidence surveys and surveys of business confidence, e.g. Purchasing Managers Indices, for March should become some of the most avidly watched economic indicators over the next few weeks, as we

assess


THE LONG | ANALYSIS


Aroon oscillAtorUp, Down or Flat; let aroon be yoUr gUiDe says Declan Fallon oF Zignals

What does it all mean?The Aroon Oscillator is a measure of trend

strength and can be applied to any asset, including stocks, forex and commodities. The Aroon Oscillator can be applied to any time frame, from intraday to weekly or monthly periods.

The Aroon Oscillator can be used to generate trade signals, or can be used to support use of trend or momentum indicators. Readings above zero indicate an uptrend, values below zero indicate a downtrend and values around zero suggest a consolidation period.

hoW does it Work?The Aroon Oscillator is calculated as the

difference between the Aroon-Up and the Aroon-Down over a defined period, usually between 10 and 25 days, with the 25-day setting the most common. The Aroon Oscillator is bound by a range of +100 to -100 and can quickly move from one extreme to the other. The Aroon-Up and Aroon-Down measure the number of periods since price recorded an x-day high or low and

the chArt: MsFt FroM ZignAls.coM chArting ApplicAtion

both are used as an indicator in their own right.The closer the Aroon Oscillator is to +100, the

stronger the uptrend and vice versa, the closer the Aroon Oscillator is to -100, the stronger the downtrend. An Aroon Oscillator moving between -40 to +40 favours a consolidation in price action - in effect, the further away the Aroon Oscillator is from the zero line, the stronger the trend.

The Microsoft chart above shows how trend strength shifted dramatically to bears on February 10th 2011 as the Aroon Oscillator fell from a February 9th value of -14.29 to -71.43 as Microsoft traded at support of $27.50. The strength of the current decline is emphasised by the failure of the Aroon Oscillator to climb above -50 since the break of $27.50.

so What are the signals to look for?A cross of the zero line can be used as a trade

trigger; buy when the oscillator moves from negative to positive, sell when the oscillator moves from positive to negative.

There are also opportunities to take advantage of divergences - although not all technicians agree

the Aroon Oscillator is well suited to divergence spotting. For example, one can look to the bullish divergence occurred in Microsoft last July when a new reaction low in price was not confirmed by the Aroon Oscillator, which instead ‘stepped up’ from the previous June low. Bullish strength extended to September, this time a positive divergence formed when price failed to undercut the July low, as the Aroon Oscillator extended to its minimum -100, further suggesting a reversal.

When do I make my move?The Aroon Oscillator can be used as a

‘controller switch’ for other technical indicators. When the Aroon Oscillator is extended towards -100 or +100, trend indicators like moving averages are best employed (e.g. a price cross of a moving average). But when the Aroon Oscillator is bound between -50 to +50, momentum indicators like stochastics or relative strength can be used for trade signals. By using the Aroon Oscillator in this fashion it maximises the effectiveness of respective trend and momentum indicators.

It may be necessary to adapt the Aroon Oscillator to suit your requirements. For example, combining the Aroon Oscillator with other technicals might best employ a long period setting on the Aroon Oscillator, combined with shorter period momentum and trend indicators - the long period Aroon Oscillator acting as the filter for the more frequent signal generating short period indicators.

Whipsaws on crosses of the zero-line are not unusual. Traders using the crossover as a trade signal may find it necessary to apply a time filter to ensure the Aroon Oscillator can hold the crossover. Again referring to the Microsoft chart, the June 15th 2010 zero-line crossover was one such whipsaw signal.

Using a typical Aroon Oscillator setting of 25-days can lead to a signal lag, crossing the zero-line well after the new trend is underway. Because of this, the Aroon Oscillator does not pick out bottoms or tops, but instead looks for strong trending environments which allow you to trade with the trend.

CHART WONK #6


WINE NOT?

Risk Management in the Fine Wine Market and

the role of the Indices by William Grey, Investment

Manager, The Wine Investment Fund

Judged by the main market index, the Liv-ex 100, fine wine has been one of the very best performing assets of the last couple of years, in terms of both high returns and low volatility/risk. But how representative of the actual fine wine market is the Liv-ex 100, what alternative measures exist, and what are their characteristics? Is it possible to construct wine portfolios which carry lower – or indeed higher – levels of risk than the main index? And how would typical investment portfolios differ from this ‘benchmark’?

Fine wine market risk: market segmentationThe basic role of investment managers is to analyse risk and return in the context of the asset with which they are dealing, and in this article we look primarily at risk. In the case of wine, because what we are trading in is a physical asset there are a number of different and specific areas of risk. Some of these are what might loosely be termed ‘back office’, such as counterparty (non-delivery) risk and condition risk. Although these are important, and can occupy a significant proportion of the time of an investment manager, we do not consider them further in this article.

We focus instead on risks which directly affect the realisable value of a case of wine in perfect condition to be sold in the market, and the key ones here are:• Liquidity risk: i.e. the risk that if a particular case of wine must be sold on a given day, the condition of the market is such that a discount to the valuation price must be accepted in order to dispose of the wine. • Market risk: i.e. the valuation price itself might fall.

Our next step is to consider the wines which might, on various definitions, be categorised as ‘investment grade’. We identify twelve categories:• Château Lafite (separately because of its unique recent price evolution)• The other four left-bank first growths in the 1855 Médoc classification (Haut Brion, Latour, Margaux, Mouton)• The other six top Bordeaux wines from outside the 1855 classification (Pétrus, Cheval Blanc, Lafleur, Ausone, La Mission Haut Brion, Yquem)• The top second growths, and over-performing 3rd-5th growths in the 1855 classification (e.g. Pichon Lalande, Cos d’Estournel, Ducru Beaucaillou, Palmer, Lynch Bages etc)• Other wines in the 1855 Bordeaux classification, and similar wines from the right

THE LONG | ANALYSIS



THE SPREAD | CITY GUIDE


If cItIes could sIt down on a shrink’s couch and be psychoanalysed, it would make for interesting reading. New York would be considered paranoid to the point of paralysis, but then we would have guessed that all along. Milan would be too busy looking in the mirror to hear it being diagnosed as clinically narcissistic, and Budapest, the Capital city of Hungary, would undoubtedly be locked up in a padded room as a classic case of split-personality disorder.

For whilst every city has its fair share of different influences, Budapest is such a series of contradictions that it makes most other European Capitals appear positively mundane.

Even the name itself is almost predictably bi-polar, coming from one side of the city being ‘Buda’, and the other side being ‘Pest’. These two factions are so utterly different they may as well be considered individual destinations on their own. However, much like Brad Pitt and Ed Norton in Fight Club, rather than work against each other, they act as two sides of the same coin; entirely different but unquestionably the same.

Located on the West side of the Danube, Buda sits above a towering tree-lined hill looking rather snootily at its less-affluent twin. Here culturally significant reminders mingle silently with obvious money. “Aspire to be us” it taunts its flip-side. The other side of the river houses Pest, which veritably snarls up at its other-half with a barely concealed passive-aggressive passion. Down here you’ll find bohemia and excess tempting its more sensible sibling to danger. ‘Come on down’ it seductively whispers. Let’s be honest, it’s a city with issues...

However, whilst it would take our psychologist an age to get to the root causes, the inherent yin and yang across everything the city does makes it a splendid weekend away for travellers wishing to experience a range of

BudapestA CACophony of ContrAdiCtionThe Hungarian Capital is famed for its ability to exist as two cities in one. Mark Southern visits to find out if it’s learned to co-habit with itself

“PeoPle converge on the city in wildly different ways which creates a marvellously eclectic, electric atmosPhere”

marvellously eclectic, electric atmosphere.Like a beast with a split personality, you’ll

never know what you’re going to get from Budapest. One thing you can guarantee though is, like owning a tiger for a pet, you know it’ll be interesting.

where to stayBeing a relatively small city means that nothing is too far away, and the business district mingles with the night-time playground district at close quarters. Cabs and trams are everywhere, and remain the quickest way to get around. However, the movie star glamour of the architecture seems wasted on four wheels, and you should try to get around on foot where possible.

Five star hotels are plentiful but the best hotel in town is the Four Seasons. Situated right on the Danube with views across both sides of the divide, the hotel is opulent to the power of majestic. Rising like an Art Nouveau

emotions in 48 hours. Visitors really do have the range of city-break

must-haves on tap here, and can lurch from one to the next, safe in the knowledge that there’ll be on their own adventures in wonderland. Top class hotels, restaurants, museums, attractions, activities and people converge on the city in wildly different ways which creates a




jewel in the glorious skyline, it’s impossible to set foot in the Four Seasons and not believe you’re James Bond. Old-school glamour and picture-postcard good looks combine to make this so unquestionably cool that you’ll feel like Moneypenny will be on the phone at any second. (www.fourseasons.com/budapest)

Alternatively, try the Boscolo New York Palace for breath-taking glamour in regal surroundings. Featuring a contender for the most ostentatious lobby in Europe, the Boscolo uses marble, and lots of it, to create a feeling of absolute wealth and splendour. Probably more suited to business than the Four Seasons, businesspeople taking clients here will astound them quicker than you can say, ‘oh my, what a lot of marble’. (www.boscolohotels.com)

where to eatIf you like goulash, you’ll love eating out in Budapest. If you don’t, then you won’t get as much from the experience as everywhere purports to offer the best in town, but cuisine is something the Hungarians take seriously so you’ll still have a great time.

Probably the most famous restaurant in Budapest is Gundel, serving traditional Hungarian fare. Here, you’ll rub shoulders with

the glitterati of Budapest society, with everyone who’s anyone fighting for the best tables in the house. Book early, as it gets busy, but by Western standards is surprisingly reasonably priced for such a prestigious place. (www.gundel.hu)

For something a little more edgy, get along to Alabardos, located in a quaint old Gothic building just across from the impressive Matthias Church. With walls covered in medieval memorabilia the atmosphere should be oppressive, but the simple local food they serve spins this on its head and provides a warm, friendly ambience. The local gyspy bands playing live give it a bohemian feel, making the restaurant one for lovers rather than clients. (www.alabardos.hu)

where to PartyNightlife is where Budapest really comes into its own. Hundreds of legal and less-legal nightspots beckon from the shadows of the imperious gothic facades, with music pumping out from the darkness below. Having a good time is the number one obsession for everyone you’ll see after dark, and you’ll not be making the most of the experience if you’re not buying into this mantra.

“cuisine is something the hungarians take seriously”




“nightlife is where BudaPest really comes into its own. hundreds of legal and less-legal nightsPots Beckon from the shadows of the imPerious gothic facades”

Belying its location in the more sensible part of town, the best bar you’ll go to is Oscar Café, a cool spot for locals and tourists to party the night away in style. Just big enough to feel like an event-venue, but not so cavernous it loses its soul, Oscar’s serves up whiskey and cocktails in a scene that could be out of a Hollywood picture in the 1940’s. Expect to see famous faces of the Hungarian OK Magazine circuit. (www.oscarbar.hu)

hIgh rollerBudapest is a gambler’s paradise, and features many casinos, and less-reputable places to bet big. However, for a cool atmosphere, and relaxed setting, get across to the Hilton Budapest’s chilled out casino. You won’t be hassled like you will in other less-law-abiding nightspots, and the cocktails are excellent. (www.hilton.co.uk/budapest)

culturalFew views in the city can compare with the vista that opens up at the top of St Stephen’s

Basilica. As the largest church in town, it gets busy with worshippers and tourists alike, but it’s worth waiting for. There is an elevator, but you’ll get more from it by climbing the near-400 steps before the panorama that awaits. Get there early or late though, as queues are notoriously bad.

extravaganceTo see a city from above and below is to understand it, and what better way to get the ultimate birds-eye view than to charter a helicopter ride. It being a traditional city, helipads are few and far between, so for the truly ultimate airborne experience charter a yacht with helipad on top, and take the chopper up for a spin whenever you feel like it. This also has the added advantage of memorable parties aboard your luxury sailing suite. (www.rent-helicopters.com)

get thereFlights go from around the UK priced from £99 return.


THE SPREAD | Travel

54 | THE EXCHANGE | april 2011

a sophisticated hotel brand that would offer the kind of welcome to guests that he would want to privately extend to his friends and family. Well, all I can say is that Giorgio mustn’t struggle for friends, if his welcome is even half as accommodating of that of the excellent hotel staff slinking around the building clad in the boss’ clothing.

Style-wise, it’s what you would expect from a man who stands over the fashion industry like the monolith his first hotel resides in; clean lines, pure chic colour schemes, and an overwhelming sensation that every material in every room is of the highest quality. However, it’s not the physical touches that make this an experience unlike any other I have witnessed in the world’s top hotels, but the wonderfully laid-back but professional vibe created by every employee in the building.

A great hotel has a sense of its own identity and stamps that across everything it does to create a consistent ambience, and the Armani Hotel does this exceptionally well. Put simply, it’s a stunning hotel, and one that even the most fastidious of guests would struggle to find anything not to love about it (www.armanihotels.com).

Weather in Dubai is almost guaranteed

sunshine so, after polishing off the breakfast the nice people at the Armani kindly left in the suite, I head out into the warm, dry air to visit the famous Dubai Fountains.

The Fountains stand in a man-made lagoon set into the footsteps of the Burj Khalifa, and offer an insight into the Emirate’s mindset. You can imagine the scene in the planning office; “People enjoy the Bellagio fountains in Vegas, right? Ok, let’s get the guy who choreographed that, but let’s make it twice as big.” So they did.

Readers of The Exchange Magazine wouldn’t necessarily be the first to be lining up to see fountains set to music, but a trip to Dubai really wouldn’t be the same without it.

Make sure you go, but do it after 8pm when the restaurants alongside the fountains are bustling, and the lights illuminate the dark sky with the aqua blue of the water. Surprisingly

moving stuff.Day Two is back to the tower, and exploring

up, rather than out. The Burj Khalifa holds a whole host of world

records, including the tallest restaurant in the world, At.Mosphere.

Sitting proudly on the record-breaking 122nd floor of the building, At.Mosphere is the kind of stylish eatery you would expect of the accolade, and its afternoon tea is becoming the place to go on a balmy day.

The elevator ride up is something in itself, taking just over 60 seconds to get up to the heavens above, but it’s the immediate view you witness as the doors open that really makes you understand how high you are. People are less than specks of dust; busses are no bigger than the full stop at the end of this sentence. To say the vista is remarkable is obvious, but it’s here I really start to understand the speed of this city’s transformation. In the foreground of my birds-eye view, the modern splendour is a visual explosion of innovation and craftsmanship. Tall, handsome towers compete against their neighbours casting long mid-afternoon shadows across the sculpted floor. However, one’s eye only has to wander a mile further into the distance to see the Dubai of 1965; a vast

“up here, dubaI Is laId out even more starkly”


THE CLOSE | GREAT TRADES


GREAT TRADES #5

Jesse Livermore shorts the WaLL street Crash

“the greatest trader of aLL time”

When the Wall Street Stock market craShed in 1929 it plunged america and itS civilianS into a tWelve year economic depreSSion. But for the greateSt trader of all time, the Wall Street craSh WaS nothing Short of a goldmine

From an early age it was clear that Jesse Livermore had a talent for spotting a good trade, and after leaving home aged fifteen he quickly found work chalking up prices for a stockbroking firm. It was here that he first began to learn the nuances of the stock market and found that he was particularly adept at predicting price movements. He turned this skill to his advantage at the local Boston bucket shops, where punters could bet on price changes in the market without having to buy stocks themselves. Livermore made so much money that he was banned from most bucket shops in the area, but he already had his sights set on a much bigger target.

Livermore turned his attention the Wall Street and began speculating more seriously. Electing to go with perceived hunches as opposed to any recognised system of the day, he scored his first big windfall in 1906 by shorting the bullish Pacific Union railroad operator. Days after the trade one of the worst earthquakes in human history devastated San Francisco, reducing Jo

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much of Pacific Union’s infrastructure to rubble. Livermore profited to the tune of $300,000 and, although there was no possible way he could have predicted the natural disaster, this set the tone for much of the trading career of “The Great Bear of Wall Street”.

Just one year later Livermore was one of the few to realise that stock prices had reached an untenable position and shorted the market just before the crash of 1907. Again he made significant gains, which brought his personal wealth to over $3m. The profits accrued were impressive, but Livermore’s greatest trade was still to come.

But the time the Wall Street crash of 1929 occurred Livermore was already a major player in the US stock market. He’d made a fortune trading a bull market in the 1920s but saw the same circumstances arising in 1929 as he had seen in 1907, where a lack of capital existed to buy stock. This factor, coupled with the fact speculators would be forced to sell by margin


THE CLOSE | FUNNY MONEY


FRED PALLEY

The consequences of the devastating earthquake-tsunami-nuclear meltdown combo that hit Japan last month is something that will undoubtedly receive unparalleled media coverage, both humanitarian and financial, and so to avoid spending every living moment reading up on its fallout, I thought it wise to focus on somewhere with a somewhat brighter immediate future than the Far East this month.

The Costa Del Sol is the place I am referring to, and by brighter I mean sunshine and not a lot else. At this point I must point out that the Costa Del Sol, for those of you who, like me, speak not a word of Spanish, is in Spain. And Spain, as we all know, boasts an official unemployment level of 24%. Yes, you read it right, 24%; a figure that doesn’t require a maths guru to establish that for every party of four enjoying an evening of tapas on a Saturday night out, one of them is guaranteed to do a runner if they are the unfortunate loser of credit card roulette. A worrying statistic indeed.

More worrying still though, is the fact that of those other three people who do actually have jobs, none of them seem to be doing any work either. And that’s because the Spanish working day, if you can call it that, follows the step by step guide to successfully screw up your economy with remarkable precision. If you aren’t familiar with the Spanish working day then it goes something like this: arrive at work around midday; take an hour for lunch at one o’clock (this is usually a power nap at your desk); head home at three o’clock for your afternoon siesta. And that’s it.

The simple answer to pulling Spain out of the financial hole it has gradually dug for itself of course, would be to set alarm clocks for 7am and

Costa Del Catastrophe With Mother Nature WreakiNg havoc oN JapaN aNd castiNg shadoWs over its oNce iMperious ecoNoMy, FreD palley poNders Whether a siMilar catastrophe oN the costa del sol Would iN fact be a blessiNg iN disguise for the poor MaN of europe’s oWN ecoNoMy.

inform them that rolling out of bed at the crack of noon is no longer financially viable. Yet the problem our Spanish friends have is that they are caught up in a vicious cycle that in no way lends itself to boosting the state of the nation’s economy.

Getting out of bed at 7am is not only a hefty shock to a system that’s already on its last legs – and could cause untold damage and destruction if implemented – it’s also not logistically possible as no one goes to bed in Spain until 4am at the earliest. Well why not go to bed earlier then you may ask? Again, impossible, as in line with Spanish tradition, eating your evening meal anytime before midnight is considered a sacrilege at best and possibly even a crime. Add

to the mix the fact that if you’re going out for dinner rather than consuming it on the sofa in front of the TV, the earliest you’re looking at tucking into your starter is 1am.

Things don’t end here however, as once you’ve eaten your tapas, gone to bed and struggled through two or three hours of dozing at your desk, along comes the economic ball-breaker that is the mother of all ball-breakers; the siesta. This is the time slot between 4pm and 8pm when the whole country comes to a standstill and nothing gets done. Even if you happen to be thinking about trying to get something done, you can forget it as you’ll be in a minority of one with everyone else asleep, employed or unemployed.

At this stage of proceedings the camel – or should we say donkey – has a back which isn’t merely broken but utterly shattered and unfixable no matter who the vet. Yet incredibly there is still one final straw in play here as a direct result of the siesta; namely that Spaniards don’t get tired again until much, much later. So even if a new economic policy to get

Spain out of this whirlpool of financial doom decreed that a light paella at 9pm before being tucked up in bed by 11pm was the order of the day, they’d still be lying wide awake in bed until well after 3am as they’re all slept out from earlier.The only feasible remedy to get the Spanish economy back in shape therefore, and to jumpstart the working day out of its current malaise, would be some kind of cataclysmic event that is best left to Mother Nature. Now while I would never wish untold misery on anyone – especially those who provide us Brits with a nice holiday destination – is it not time Mother Nature shifted her attentions from Japan to the Costa Del Sol? It’s for their own financial benefit after all.


The Exchange Digital Sample April 2011

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