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You Don’t Have to Sell Your Soul to Be Rich – Socially Responsible Billionaires

Do rich people only care about making more money? Not anymore. There’s a new generation of socially responsible billionaires looking to make the world a better place (at the same time as counting their cash).

From investors placing their money in green companies only to entrepreneurs who want to be known for the issues they care about, check out four of the most famous socially responsible billionaires below–and how they’re changing the world.

Larry Page

Larry Page is the co-founder of Google and number 12 in the Forbes List of Billionaires, with a net worth estimated at $39 billion. Besides his interest in consumer data, this entrepreneur puts a lot of effort into developing the charitable side of Google.

Thanks to Larry Page, Google develops technological solutions to help charities and organizations that fight hunger and poverty. The tech giant has adopted a series of green policies to reduce its carbon footprint and invests in renewable energy as well.

Evan Spiegel

Evan Spiegel is the co-founder and CEO of Snapchat. Even if his company did lose almost 40% of its value since its launch on the stock market, Spiegel is still worth around $2.5 billion and is one of just four self-made billionaires under 30.

Spiegel is only 28, but he has already stated his vision of the world on several occasions. Spiegel said at Code 2018:

“Life is really about having an impact on the world, changing the way that people experience the world, changing the way that you experience the world.”

Evan Spiegel contributed to raising money for AIDS research and community service in California. In 2017, the founders of Snapchat started the Snap Foundation, an organization that supports art and education.

Nathan Blecharczyk

Nathan Blecharczyk is co-founder and Chief Technical Officer of Airbnb. Despite his growing fortune (estimated at around $3 billion), he still rides his bike to work. And stays in Airbnb homes when traveling.

The billionaire stated more than once that he feels responsible to do good. He and his wife support St. Mary’s Center for Women and Children and contribute to College Track, a nonprofit in California that supports students from under-served communities.

Blecharczyk, together with the other co-founders of Airbnb, also announced that they join Bill Gate’s Giving Pledge, meaning that they committed to donating at least 50% of their wealth in their lifetime or in their will.

Elon Musk

Elon Musk

Elon Musk’s passion for renewable energy makes him one of the most famous socially responsible billionaires of his generation. He’s permanently investing in innovative technology that could reduce the greenhouse gas emissions. He also has a well-known penchant for all things green.

Musk is interested in educational projects as well and donates high amounts to charity. Among the Tesla CEO’s benevolent acts, he donated $15 million to the Global Learning program by XPRIZE, $250,000 and battery systems to support hurricane victims, and $480,000 to fix the water system in 12 Flint schools.

Musk also joined the Giving Pledge started by Bill Gates. More than half of his wealth will support charity for good.

These four socially responsible billionaires are playing their part in keeping our planet clean. They also donate large amounts to charity and support hundreds of smaller organizations around the globe, proving that you don’t have to sell your soul to be a billionaire. You can give back some of your success as well.

Featured image from Shutterstock.

October 10, 2018
Canopy Rivers’ Volatility Highlights Risk in Pot Stocks

Canopy Growth is one of the largest cannabis-focused companies that can be bought on a stock exchange. Pot stocks are hot with investors, but there’s every reason to be careful in a sector that’s still illegal in most countries. Canopy Growth spun off Canopy Rivers last month, but it’s been a bumpy ride.

Canopy Rivers is focused on cannabis Venture Capital (VC) investment, and their market cap initially jumped to nearly C$2 billion. The stock’s value has halved over the last couple of weeks, which should help investors realize how risky the cannabis sector can be.

Canopy Rivers stock is up and down

There’s no shortage of cannabis companies more than happy to sell their THC-encrusted dreams. But making money selling legal dope is much harder. Despite the fact that many US states have legalized weed, the federal government is still not on board. This leaves companies like Canopy Growth and Tilray in a sticky spot when it comes to expanding into the USA.

Ok, How Do You Make Money Again?

Most drug dealers talk an amazing game. Their stuff is the best you’ve ever had, and after a few tokes, you’ll be talking to unicorns. Well, the legal cannabis space seems to be shaping up to be a lot more of the same. Tilray is currently trading at around $125 USD/share, which values the company at more than $12 billion USD.

For $12 billion USD investors will get a company that lost $.17 per share last quarter and has to contend with federal regulations in the US that are firmly opposed to their business model. The hopes that a publicly traded pot company will somehow take advantage of relaxed cannabis laws at a state level seem like a pipe dream.

US-based cannabis companies can’t even use the banking system, as they’re operating in violation of federal drug laws.

Canada is a more promising destination for cannabis development. Tilray has substantial Canadian operations, though that may not make as much money as investors hope.

The sale of medicinal cannabis in Canada is strictly regulated. It is unlikely that Canadian sales will match a state like California or Colorado, where cannabis is basically legal.

Too Early for Green Shoots

When Tilray went public, they were expecting to get around $15USD/share for their equity. The fact that a company that loses money in a field that was totally illegal a decade ago saw their shares rise to nearly $300USD (or a market cap of more than $20 billion USD), is a warning sign for the entire cannabis sector.

If cannabis becomes legal at a federal level in the US, the market will be enormous. But that hasn’t happened yet, and these high flying pot stocks won’t make much of a profit.

There’s nothing wrong with buying a little bit of best-in-breed issues like Canopy Growth, Tilray or Aurora Cannabis–as long as you understand they may drop to the ground before the legal cannabis industry takes off.

Canopy Rivers’ swoon over the last few weeks is a vivid demonstration of the volatility that pot investors assume in their portfolio, and there may be a lot more to come.

Featured image from Shutterstock.

October 10, 2018
The End Is in Sight for Sears as Stock Takes a Further Tumble

Struggling retail giant Sears (NASDAQ: SHLD) is limping toward bankruptcy as its stock took another major tumble on Tuesday. Sears stock fell by 9.7% percent with shares finishing the trading day down by around 6%.

Sears stock yesterday

What brought about the sudden decline? An announcement that the retailer will be adding a “restructuring expert” to the team (read bankruptcy expert). Alan Carr, CEO of Drivetrain LLC, is the latest addition to the board.

No Good Ever Came Out of Restructuring Experts

Let’s face it, pretty much nothing good has ever come out of a company hiring a “restructuring expert.” It basically spells job losses, store closures, and liquidation of assets. And, in the case of Sears, just about any measures possible to make its pending $134 million debt repayment on October 15.

While Sears chairman and CEO Eddie Lempert insisted that the company was pleased to welcome him and praised Mr. Carr for his experience in organizational change, most shareholders remain unconvinced.

That’s probably because Mr. Carr has a reputation as a bankruptcy expert and fears are rising that Sears will be forced to file for bankruptcy protection. Carr is a former restructuring lawyer at Skadden, Arps, Slate, Meagher & Flom. And his firm Drivetrain is dedicated to restructuring.

Sears: The End of an Era

The company that changed how America shopped and lived is now an empty shell of its former self with stores falling into disrepair. Easily the Walmart and Amazon of its day, Sears was America’s largest employer. But somehow the mighty giant could never quite get to grips with the 21st century, making one calamitous move after another.

Instead of adapting to meet the online shopping threat head-on, it backstepped by buying up another struggling retailer Kmart. At the same time as losing ground in the internet battle, Sears began closing stores and failing to invest in its flagship ones.

Even fellow struggling retailers like Macy’s and JCPenney pulled out all the stops and used novel ways of getting customers in stores, such as geofencing marketing, massive displays, AR and VR, and in-store incentives to post strong holiday sales last year. Sears and Kmart’s holiday sales plummeted by 16% and 17% percent.

A Grim Outlook

With second-quarter revenue at $3.2 billion (down from $4.3 billion at the same point last year) the outlook for Sears is grim. A retail dinosaur that failed to compete in the Amazon age or come up with products relevant enough to keep hold of their fickle customers. According to Lampert, if the company doesn’t take drastic action soon, any value for shareholders could be reduced or eliminated completely.

Beyond the imminent $134 million, Sears is carrying a debt burden to the tune of $5.6 billion. But is selling off Sears’ assets really the best move for its shareholders who could end up losing out? Depends on who you talk to. It seems that CEO Mr. Lampert isn’t missing a trick. Sears has already sold off properties to Seritage Growth Properties, a real estate investment trust in which Mr. Lampert’s hedge fund has a hefty interest.

Featured image from Shutterstock.

October 10, 2018
Security Conscious? Eduardo Eurnekian’s Got a $50 Million Bulletproof House for Sale

You already know about bulletproof vests, cars, and even planes. But did you know you can now buy your own bulletproof house? The Argentinean billionaire business mogul Eduardo Eurnekian is offering the ultimate in precaution by selling off his unique bulletproof house in New York City for $50 million.

Taking luxurious ballin’ to the next level, Eurnekian’s majestic seven-story bulletproof home is located to the east of Central Park at Lenox Hill. It would make the ideal home for any self-respecting crime lord, high-profile cartel leader, or just someone with a nervous disposition.

360-Degree Billionaire Bulletproof Panorama

The ultra-luxurious bulletproof mansion is the ultimate security-conscious billionaire pad in New York. Set over a gargantuan 10,400 square feet, coming equipped with six bedrooms, eight bathrooms, and a stunning roof terrace with 360-degree panoramic views of the city.

With its own elevators, wine cellar, windows made of bulletproof glass and plenty of parking options, if you’re looking for the coolest–and safest–centrally located pad in NYC, it will cost you $50 million.

Compass Real Estate agent, Maria Belen Avellaneda, reckons there’s no architectural value for the property as a precedent has not been set for a bulletproof house in the heart of New York City. But she was extremely complimentary of the property’s unique design, saying it has:

“a notion of luxury that’s classy, refined, clean, smart, safe, efficient, striking, and linked to the ideas of technology and globalization — completely against a way of luxury that’s opulent and vulgar.”

Argentine Billionaire Lifestyle

Although Eduardo Eurnekian has been making news this week in regards to the sale of his bulletproof property, the Argentine billionaire reportedly has a net worth of $2.7 billion according to Forbes. Although, he didn’t make this year’s Forbes 400 rich list.

Eduardo Eurnekian By Mpkstroff84

The Argentinean built his empire and fortune across a wide range of businesses such as his textile factory in Palermo, Buenos Aires, before running a television company and then venturing into the airport business.

The Billionaire is now 85-years old, but he still keeps active by swimming and doing yoga on a daily basis. He really loves what he does, and recently told Forbes:

“If you work to make money, you’re screwed. You don’t work to make money. An artist doesn’t paint to make money. And a good businessman is like an artist.”

Featured image: 6sqft

October 10, 2018
Global Lego Community Rally To Raise Funds For Stolen Collection

The Lego community is a funny bunch. It’s rather like Star Trek. You either get it or you don’t. As a child, you were probably one of three kids. The one who preferred video games over putting plastic blocks together. The one who leaped with excitement at the thought of ripping open the latest box and building something cool. Or the one who handled the package and its contents like gold, appreciating its worth. If you were kid number three, you’re probably making a lot of money by now.

But regardless of your intentions with your Lego, the construction toy dating back to 1934 still draws a massive–and it seems–caring community. Yes, grown adults playing with plastic toys is a bit weird. But it turns out there are whole videos on YouTube of avid Lego fans dedicated to showing off their creations. And they rack up millions of views.

So when Lego enthusiast and master creationist French model builder Louis came home to find his entire collection of 14 years stolen by opportunist thieves, the Lego community rallied.

You don’t have to be a Lego fan to get choked up watching the YouTube video with over 800,000 views in which a broken man displays an empty room where his creations used to be.

In a heartfelt and emotional recording that he shared with fans (yes, he had a Lego building YouTube channel based around the Star Wars theme–with a massive following) he said that it was not only his Lego pieces worth tens of thousands of dollars but his entire “childhood” that had been stolen. Ouch.

Lego Community to the Rescue

Luckily for the distraught Frenchman, the Lego community comes together in times of crisis, immediately setting up a Gofundme page to help Louis rebuild his collection. We may be desensitized to the war in Siria or earthquakes in Asia. But, the thought of losing plastic building blocks is simply too much for many of us to stand.

Louis said the thieves clearly knew what they were looking for, as they ignored other items of value, such as computers and watches, heading straight for his “Lego Room.”

He speaks of the horror of arriving home to a trail of bricks as he bounded up the stairs expecting the worst.

Bonne Nuit / https://twitter.com/republicattak

Louis posted a picture on his Twitter, simply saying “Bonne nuit” (goodnight).

Lego fans across the world were left shaking in distress. What if it had been their own collection? Their Star Wars models that had been vandalized or kidnapped or their childhood ripped away? The Gofundme campaign soon started blowing up and had already raised around $15,000 by Sunday evening, leading to Louis closing the campaign.

The Gofundme campaign raised thousands of dollars/ https://twitter.com/republicattak

He didn’t want to make money out of his loss. After all, many of these pieces money simply couldn’t buy. So, he closed the campaign and thanked everyone who contributed, promising to spend all the funds on a new LEGO adventure. Many donors also offered words of solace at this difficult time. “The people who did it are monsters,” one donor said.

October 10, 2018
Google is Not Giving Up Tech Domination – Unveils Pixel 3

Closely following reports of Google+ data breaches, the company has announced three new Google devices, including the Pixel 3, at its “Made by Google” event.

The technology colossus seems undeterred by recent scandals including the Google+ breach and subsequent closure of the platform, and a $5 billion fine from the European Commission.

The commission alleges that Google has abused its market domination by paying mobile manufacturers to include its applications. The giant has also been fined $2.7 billion for ranking its own shopping services higher than competitors in web search results.

Across Google’s software and search products, it has a billion users. Google’s search engine sees over 90% of all our web searches. For Android, it has over 76% of the market share.

Google’s adverts, on and off Google products, reach 90% of people who have access to the internet and parent company Alphabet is approaching a value of $1 trillion.

Google, like Facebook, is a daily part of our lives. Even with changing attitudes towards these massive corporations and how they collect and use our data, Google isn’t slowing its pace.

Cheaper New Google Devices

This week three new Google devices have been revealed and guess what – all three undercut their competitor’s prices. TechCrunch suggests that if a loss is being made on these devices, Google will be making it back through services.

Google’s Pixel 3 $799 smartphone base model undercuts that of the Apple iPhone XS at $999. Its new Home Hub smart home management system is $80 less than Amazon’s Echo Show. The Google Pixel Slate will be $599 versus the similar size iPad Pro at $799.

Pixel 3 in two sizes

The new devices are designed and priced for function, as well as impacting three key areas of our home technology stacks. Of course, they will be loaded with Google software products making it even easier for us to Google, Google, Google.

Getting more embedded in our lives seems to be an unhidden strategy for Google. Ivy Ross, Google’s Vice President and Head of Design said at the launch event:

“As technology progresses, it needs to be closer to us.”

Of the design and integration into our daily lives Ross added:

“It will eventually be invisible, the design challenge is to make that transition natural and inevitable. Our job is to figure out what it means to hold Google in your hand.”

To quote satirical Forbes writer Curtis Silver:

“Soon, the spaces in between the spaces where our hand stops and Google begins will be so minuscule we’ll need a microscope and a tiny Dennis Quaid to find them.”

Iimages from Google.

October 10, 2018
$2.2bn FNZ Deal One of the Largest in Fintech for 2018

Money is plowing into fintech and the deals are just getting bigger. UK-based FNZ, a financial technology solution provider has been acquired by ex-US Vice President Al Gore’s Generation Investment Management LLP (Generation), and a Canadian pension fund.

The deal sees private equity firms General Atlantic and HIG Capital sell their share of FNZ, at a stake of two-thirds, to Generation and Caisse de Depot et Placement du Quebec who teamed up to make the deal. This investment is the first by this new partnership who plan to spend around $3 billion on long-term equity investments.

Generation Investment Management was founded by Gore and an ex-Goldman Sachs partner David Blood. Caisse de Depot et Placement du Quebec is the second largest pension fund in Canada.

As well as capital investments, Gore is heavily involved in climate change organizations, as the chair of the Alliance for Climate Protection and a recipient of the Nobel Peace Prize in a joint award with the Intergovernmental Panel on Climate Change, 2007. He also sits on the board of directors for Apple and is a senior advisor to Google.

Generation is a sustainable investment management firm and has built a global research platform to integrate sustainability research into equity analysis. The investment firm seeks to identify sustainable businesses, with low-carbon outputs and which work to a healthy and safe society.

A Trillion-Dollar Market

Founded in New Zealand in 2003 and moving to Edinburgh, Scotland in 2006, FNZ provides wealth management platform technology to financial services firms including Santander, Aviva, and Barclays. Its clients currently account for around $330 billion dollars worth of global assets. The acquisition and capital injection may help FNZ to gain a larger share of what is a $30 trillion global market.

Adrian Durham, 44, founder and Group CEO of FNZ told Bloomberg the deal:

“will help us grow share in the wealth-management platform market to trillions versus hundreds of billions. You have to be a scale player.”

Both Durham and around 400 of the company’s 1,400 employees will retain shares totaling around a third of the business.

October 9, 2018
A Quarter of All US Adult Internet Users Are Self-Directed Investors

According to a report by Aite Group, online trading is on the rise. About a quarter of all US adults with internet access are now retail investors. These self-directed investors making up a large group of around 50 million people are amateur traders. This is in stark contrast to the just 2.8 million registered professionals associated with investing.

It also means that we’re headed into dangerous territory as more and more retail investors throw money they can’t afford to lose at inflated stocks based on emotion or market hype.

In an article for Fobes, David Trainer talks about the danger–and rise–of what the industry calls “noise traders.” These are individuals who distort the market by trading with accurate or incomplete information. Self-directed investors are particularly susceptible to this type of din.

Although noise traders have been around for many years, industry professionals and academics have always brushed them off as having little to no effect on the market overall.

But over the last 20 years, which includes the .com bubble, the housing bubble, and one of the largest financial crises of our time, the influence of noise traders can no longer be ignored. And with the rise of investment platforms like Robinhood and TradeStation for self-directed investors, the influence of noise traders is growing.

Noise Traders Hype the Markets

It’s hardly surprising that interest in investing online is growing. With the rise of exciting alternative investments such as cryptocurrencies and pot stocks, along with advancements in technology allowing people to buy and sell online, it’s simply easier and more attractive to younger people than investing in paper stocks.

Anyone with an internet connection and a bank account can read a few articles, company blogs or financial media and collectively force giant market swings, as witnessed by the Bitcoin phenomenon at the end of last year.

To be fair, noise traders are not only and always inexperienced retail investors buying into the hype. Noise trading can be carried out by experienced industry professionals as well. Why? Because noise trading can pay dividends. Plenty of people make plenty of money on the hype created by noise traders.

However, the danger is that experienced traders know when to buy and when to sell. They can tell how to cut through the red flags and have the experience to look beyond the marketing to the real project. They can analyze the team, the technology, the viability, and longevity. And they make trading calls based on statistics, information, and research–not with their emotions.

Pot Stocks

If you’re looking for the perfect example of noise trading on steroids, go no further than pot stocks.

Tilray Stock Freefalling

With the Tilray share price rising over 1,500% since its IPO and now displaying high volatility, Trainer comments:

“The unrealistic assumptions embedded in TLRY’s stock price, combined with the wild daily swings, make it impossible to argue that the stock is trading on any rational assessment of its projected future cash flows.”

The Solution

Noise traders like fake news and marketing hype aren’t going to die down. In fact, with the rise of internet connections, trading sites, and attractive alternative investments, they’re going to become a deafening chorus capable of distorting the market until there’s nothing behind the price but pure speculation.

Since retail investors don’t have the time or tools to get into deep financial analyses before they make a decision, there should be easier access to information.

So if you’re one of the 50 million US citizens who invest without guidance (or anywhere else for that matter), be sure to conduct your own research first. If it looks to good to be true, it probably is. Take a leaf out of Baron Rothschild’s book and buy when there is blood in the streets–not when FOMO is pumping prices to unrealistic heights and creating the mother of all bubbles.

October 9, 2018
Long-Haul Travel Soon to Be Only for the Wealthy

If you’re fed up of having to travel with the herds of unwashed masses from cattle class, relax. If Singapore Airlines get their way, long-haul travel will only be reserved for the wealthy. Starting out with the world’s longest flight from Singapore to New York, the record-breaking 10,400-mile trip won’t include economy seats. Thank goodness for that.

In an age where telecom technology is constantly getting better, physically moving oneself from place to place remains a miserable experience. Passengers are forced to rub elbows with complete strangers and have their knees pressed up against the seat in front. Not anymore.

The Singapore Airlines A350-900 Ultra Long Range aircraft will bring back the class and style to flying that’s been missing ever since “low-cost” became the mantra and you had to pay to add a suitcase to your ticket price. It appears that even amid rising oil prices and dwindling airline profits, you can give your customers a 5-star experience after all.

Singapore Route will be the world’s longest

Champagne and Lobster

Technology is advancing even in the logistics world and it seems that new aircraft that guzzle less fuel than their earlier counterparts are making the 18-hour, 45-minute flight route viable again. Without inviting the paupers.

Singapore Airlines already received the first of seven Ultra Long Range Airbus A350-900 last month. These will be used for the Singapore to New York route and also for their upcoming Los Angeles to Singapore flight.

And you won’t have to expect to be couped up like a chicken on the plane either. There’s a maximum of 161 passengers featuring 67 flat-bed seats and 94 premium economy seats at the rear (naturally).

Passengers will also be able to select their meals from the airline’s Wellness Set menu including prawn ceviche, lobster thermidor, and rib-eye steak. They’ll also be able to pay for WIFI on the flight and have access to over 200 hours of movies and TV Shows.

Sleeping Pilots

Those who wonder how the pilot will make it through 20 hours of flying time needn’t worry. There are four pilots on the flight and they’re not allowed to fly unless they haven’t flown for at least 48 hours before getting on board. They’ll also be granted at least eight hour’s sleep, compared to the usual 5.5 on a typical long-haul service.

The dimensions of the plane lend themselves nicely to the claustrophobic as well. With high ceilings, larger windows, and a wider body, there’s more room to breathe on the Singapore Airlines flight. There’s also less noise in the cabin thanks to the notable lack of cattle in the back (and also due to the noise reduction technology). LED lighting will reduce jet lag as well.

Is Singapore Airlines Setting a Precedent?

With other major airlines already in the race to outperform the Asian airliner, will Singapore Airlines set a precedent? Can we expect planes of the future to come equipped with gyms, play areas, restaurants, and cabaret? Perhaps. But one thing is for sure, with the trend back on stylish travel, you’d better start saving quick. Long haul flights could soon be just for the wealthy.

Featured Image from Shutterstock.

October 9, 2018
Who Is Einar Aas? Norway’s Biggest Trader Falls From Grace

Everyone loves a good old-fashioned rags-to-riches story. But you know what they relish even more? When the riches turn back to rags. There’s something so deliciously satisfying about wealthy people falling from grace, especially when they do it in a spectacular way like Einar Aas.

Einar Aas was one of Europe’s biggest energy traders for almost 20 years. He was Norway’s highest paying taxpayer in 2016. Last month, his trading positions were liquidated after one bet too many.

Einar Aas Was Norway’s Biggest Trader

Einer Aas was Norway’s biggest trader for almost two decades, seeing significant success in the power markets. He was also a staunchly private person to the point of paranoia. Aas bought a large house on the water in Grimstad, three hours south of Oslo. He then set about building properties around his own to further protect his privacy. Making small talk with neighbors was not part of Aas’ routine.

Grimstad Norway

Yet Einer Aas was well-known in trading circles. His name, that is, not his face. Unlike plenty of other uber-wealthy traders, Aas was also known as a phantom trader on the circuit. He didn’t attend any trader meetings or industry conferences. He wasn’t in the public eye. And he never gave an interview.

He didn’t gad about town lavishly spending his wins. He simply amassed his fortune betting on Nordic power from his own seaside home surrounded by empty buildings.

Einar Aas Early Days

A straight-A student, it was evident from early on that Aas was going to be a success. In fact, he was described in his school yearbook as the “bookmaker of the class.” According to Bloomberg, he was also known for his love of gambling, frequently betting on horses and playing poker.

He graduated from Norway’s top business school, the Norwegian School of Economics, whose elite alumni include the CEO of energy company Equinor ASA, and Head of Norway’s $1 trillion wealth fund.

Aas broke into the world of trading as a risk manager for Interkraft Trading, where he was able to marry his passions for numbers with his lust for gambling. With unwavering dedication, Aas soon became the company’s best trader before leaving to set up his own energy company with three colleagues.

He then established a private investment company with just 250 000 NOK in initial capital. Aas then traded in his name directly as of 2005.

His old boss at Interkraft said that Aas was always the first person in the office and that he had a very good understanding of the relationship between risk and return.

Making Big Investments

Aas is best known for trading in the Nordic power market, but he also invested a significant amount in property as his fortune grew. He bought a luxury apartment in one of Oslo’s most exclusive waterfront districts.

Despite energy markets taking a pummeling around the world in recent years, Aas rolled with the punches, posting a total taxable income of 3.5 billion kroner ($420 million) since 2002. After an exceptionally profitable year in 2016, he became Norway’s highest individual taxpayer of the year. Tax records are public property in this Nordic country.

Things couldn’t get better for the man with the Midas touch and he was known by his peers for taking the biggest and best bets in the market.

A Gamble that Didn’t Pay Off

Last month, Aas took one gamble too many and it would be his last as a trader. The 47-year-old was expelled from the Nasdaq after racking up losses of hundreds of millions of euros. It seems that Einer Aas miscalculated the risk/return ratio on this occasion, betting that the spread between the German and Nordic power would narrow. It didn’t.

Instead, carbon emission allowances went on a bull run pushing up the German energy market, and poor weather forecasts pummeled the Nordic market.

German-Nordic Spread

In a statement to Norway’s Dagens Naeringsliv, he admitted to taking a position that was simply too big in relation to the liquidity in the market. After massive adjustments in prices in both the German and Nordic contracts, Aas was forced to pay out his last free liquid funds to the exchange. But it wasn’t enough.

On Tuesday, September 11 Aas was declared in default and placed under administration. His portfolio was liquidated the next day.

The Nasdaq called it a true “Black Swan event.” Aas’ fall from grace isn’t just a blow to the former multimillionaire but also for the stock exchange who bought the market in 2010 in a bid to move into commodities.

The world’s oldest power market used to be the pinnacle of electricity trading. Today it is at its lowest level since 1999. An aging and weak market mourning the loss of one of its biggest traders.

But How Was This Possible in the First Place?

In normal circumstance, traders are overseen by a clearer, otherwise known as a guarantor of trades. Aas had none. A clearer could have acted as the safeguard to stopping his bets earlier by demanding collateral.

The absence of this key safeguard is now a question that Nasdaq Clearing will have to answer. How was Aas allowed to operate outside the usual trading protocols?

Furthermore, it isn’t only the Nasdaq who had to front the loss. Other clearing members including brokerages, banks, and utilities had to step in to top up Nasdaq’s default fund to cover Aas’ losses of over 100 million euros.

A temporary Junior Capital facility was set up to help replenish the fund with around 19 million euros and, in fact, by the following Monday morning, almost 90% of the lost funds had already been replaced.

The world of energy trading in Norway will carry on without the phantom trader whose extravagant bets will be missed. As will his fat tax contributions in the seaside town of Grimstad.

And as for Aas? One can’t help but imagine him coming to terms with his losses as only he would. Alone. Staring out at the waterfront, sipping on Akvavit and wondering what gamble he’ll take on next.

Images from Shutterstock.

October 9, 2018