The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders Read Online Free Page B

and Réunion, the island off the coast of Madagascar where he’d lived for a few years, and the nuances of betting on oil prices for a living. He spoke fluent English in a thick French accent, making the occasional word incomprehensible to an American, and glanced at his ever-present BlackBerry every so often for word on a pending merger between several Dutch kickboxing businesses he’d recently bought. He was on hiatus from trading that summer and focusedhis considerable energies instead on staging live fights that fall in Milan and Tokyo.
    Andurand was at first glance the archetypical hedge-fund trader. He was nouveau riche in a loud way, the evidence including his wife (Russian, former model), his house (a 5,000-square-foot residence on one of West London’s most charming streets), and his cars (a specially designed $1.5 million Bugatti sports car for cruising around town and a sleek black Porsche Cayenne for family trips). He wintered in Thailand, at an island resort he had bought and was remodeling, invested in movies and real estate, and was summering in a ten-bedroom château in the south of France, even though it was only his immediate family and mother-in-law there. The year before our lunch in Aix, Elton John and the Bolshoi Ballet had performed at his St. Petersburg wedding, and he’d made a film to show back in London for those who couldn’t attend.
    Despite his self-made hundreds of millions, however, Andurand was flaky in the extreme. He risked scads of money in the markets, but he couldn’t remember a doctor’s appointment without his wife’s help. Successfully scheduling a meeting with him required half a dozen e-mails, a couple of phone calls, a venue change, and a long wait. Sometimes I’d make a trip to London and he wouldn’t return my messages at all. He used these passive-aggressive tactics rather than simply saying he was unavailable, no doubt because he liked the publicity, and, ultimately, he did want to get together. But he also dreaded confrontation, which can be tough in a business where the phrase “he got his face ripped off” is about as common as “hello.” Rather than upbraiding an employee who was screwing up, he explained, he favored having a “nice chat” about whatever was going on.
    He lacked introspection. He was often hard-pressed to explain why he was comfortable taking such large risks; asked what motivated a given trade, he’d shrug and say something like, “I read a lot” or “I just saw that the price action was weird.” Then he might turn the subject to kickboxing or home design. It was hard to tell whether he had never given the original question much thought, or if he was just intensely private. He seemed to have an uncanny knack for predicting the markets using a modicum of research combined with gut instinct. A decade in oil trading, which had provided him with an inside look at how banks and physical traders moved money and contracts around, had given him a feel for the cyclical nature of trading and what flashpoints in politics or the economy would trigger price changes in petroleum contracts. As long as he was up on the news and the predominant market theories at work, he could use his horse sense to bet on up or down moves pretty accurately.
    This was possible in the oil market because the “fundamentals,” or verifiable data on supply and demand, that drove it were constantly buffeted by events that were entirely unpredictable. A trader like Andurand could study world statistics on which countries were producing oil and how much per year. He could also look at global demand figures, broken down by country or even region. But unlike a tech company that had certain fixed costs and certain booked sales, as well as identifiable costs for research and the development of new products, the world crude market could shoot higher at any moment because war broke out in a place like Nigeria or Libya. Demand in the U.S. could soften any month—even months or a