Jérôme Kerviel was a rogue trader at Societe Generale (SG). His
trades cost the firm about $7.2B. However, there must have been a
myriad of companies that profited from these trades. I would think
that there were, let's say for argument's sake, that 1000 companies
saved about $7,200 (or increased their earnings by this same amount).
If my hypothesis is correct, than which companies profited? It seems
that the markets punished share prices when *ONE* company lost
billions of dollars, but they did *NOT* reward as much the shares of
the many companies that profited by a few millions here and there.
Another words: The reduction in market capitalization of SG < The
aggregate gains of all the companies which profited from these rogue
dealings. Please clarify and enrich us with questions/comments.
Another words, I'm trying to figure out if, overall, the economic
ecosystem neither profited or suffered from this big fiasco (is there
a conservation of economic benefits)? Did all those companies earn a
bit from that $7.2B at the expense of SG? If so, was their earnings
greater than the losses suffered by SG?
Consider what what has happened with the big drop in the DOW or S&P lately.
There has been a massive loss in value for almost everyone of trillions of bucks.
A few may have profited, most obvious short sellers, but that doesnt affect the
nett loss of trillions of bucks overall. That loss didnt end up in anyone's
You'd be wrong. You're ignoring the nett loss in the value of the market.
In theory those who shorted the market. But that doesnt mean that they made a
nett profit themselves, most of them just didnt lose as much as the worst losers
That isnt what happened either. What actually happened is that it became clear
that the market had dropped so substantially that it was possible for SG to lose
that much money when it did, and that made plenty wonder how many other
operations had lost even more money, but just hadnt fessed up to losing that yet.
Many of the operations that did make some money out of SG's fiasco arent even
Because there was a massive nett loss in value of listed securitys.
Just how many of you are there between those ears ?
Corse there was a nett loss in the value of listed securitys.
Nope, because there was a massive nett loss in the value of listed securitys.
You made a good point. However, even a stock trader can trade a share
of some DOW FUTURES for $5000, which implies that she/he feels that
the value of the Dow would be 5000 at some point in the future. Let's
assume that the "point in the future" is actually 1 business day.
Intuitively, you and I know that there is no way that our Dow Jones,
currently at over 8,000 will crash to 5,000.
Therefore, I'd buy the hell out of this FUTURES CONTRACT AND SELL
TOMORROW, AND I'D PROFIT THE DIFFERENCE OF OVER $3,000.
If you fill your car's tank of gas with 15 gallons of gas, and the
proprietor of that gas station only charged you $0.30, as opposed to
$30.00, *YOU* - the CAR OWNER - has profited to the detriment of the
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