Money is a Glass Sword

"To be handed a lot of money is to be handed a glass sword, blade-first.
Best handle it very carefully, sir, very slowly while you puzzle
what it's for."

- Richard Bach, "The Bridge Across Forever"

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Sentinel Failure - Hedge Funds Lose Cash?

It was a simple, plain-vanilla cash management business.

How can you screw that up?

That is what the SEC and several hedge funds are asking about Sentinel Management Group.

Sentinel found a cozy niche for itself. It managed cash for futures brokers and hedge funds.

Their promise was that it would be a safe place for hedge funds to park their cash between opportunities. The money would be safe, always immediately available, and would earn more than a money market.

Now, Sentinel has filed for bankruptcy and almost half a billion dollars are missing.

What happened?

It looks like a case of old-fashioned greed.

Fear and greed are the perils you face when dealing with financial markets.

In this case, it looks like Sentinel allegedly decided to use client money (without authorization) as collateral for a loan, so that they could use leverage in the credit markets.

Needless to say, when the credit markets had their recent problems, the bank called in its loan, and Sentinel sent out a letter to its clients saying they could no longer withdraw their funds.

This shocked the hedge funds and started what may prove to be a "big messy bankruptcy".

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R.I.P. Pavarotti

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My Son and Passive Teaching, Part 2

In a previous post, I talked about how Taoism encourages you to keep quiet, don't preach, and let your actions teach.

I talked about how my 15 month old son started pretend shaving after seeing me shave.

This weekend, I got yet another example of how kids soak up information like a sponge, and are all too familar with modern technology.

We had just finished lunch at California Pizza Kitchen, and the waiter returned my wife's credit card.

My son (who is now 25 months old) grabbed the card, and started swiping it, like he was using a pretend card reader!

He even "swiped" it with the magnetic strip down!

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