What makes a trader?
Update: While I was busy tapping away at this blog post, the Telegraph published an article on their website in which they quote Rastani confessing that he’s “an attention seeker. That is the main reason I speak.”, before going on to reveal that “Trading is a like a hobby. It is not a business. I am a talker. I talk a lot. I love the whole idea of public speaking.”
Yesterday, the BBC News channel broadcast a live interview with a “trader” named Alessio Rastani, in which he made various provocative statements that have been widely reported and debated across both traditional and social media. The story came to my attention yesterday evening, so I watched the interview online.
He didn’t come across as the sort of person who works in the financial markets. In fact, to me, he came across as the sort of person you occasionally encounter in various fields who claim to be an “expert” or a “guru” but who are, in fact, self-promoting attention-seekers. You see a lot of these in the tech startup industry or the information (or “cyber”) security space. A good starting-point for determining whether someone is a genuine expert or a charlatan is to find out what he does, where he works, what his background is, that sort of thing. So, I decided to do a quick background check on Mr Rastani.
My first stop was the FSA register. In order to carry out a “controlled function” (like trading) for a financial services firm, you have to be approved and registered with the FSA. You can do a search and find out where someone is working currently, where they’ve worked previously and whether they’ve been disciplined by the FSA.
For example, if you search for alleged rogue trader Kweku Adoboli, you’ll find that someone with that first and last name is on the register, although he’s not currently performing a controlled function (unsurprising, given he’s currently on remand):
If you check Mr Adoboli’s history, you’ll find that he performed various controlled functions for UBS Limited and UBS AG from March 2006 until 15th September (which, coincidentally, is the day he was arrested):
So if you want to know whether someone’s a trader, this is a good place to start. However, there is no record of a Mr (or Ms) Rastani having ever worked in a controlled function in the UK:
Even if he had previously been a trader with a bank, but since left, there would be a record (as there is for Mr Adoboli). So, the conclusion we can draw from this is that Mr Rastani has never been a trader for a City firm.
Does that mean he’s not a trader? Well, not necessarily. It all depends on how you define the term “trader”. Obviously, there’s the stereotypical image of the high-flying City boy, with half a dozen screens in front of him, holding a phone to each ear, shouting “Buy!” into one and “Sell!” into the other but the definition of the word can be stretch far beyond the type of people who appear in the FSA Register. Essentially, anyone who trades can be described as a trader, in the same way that anyone who plays, say, football, can be described as a footballer. However, just as a bloke who plays for his pub team is not in the same league (pardon the pun) as a professional player like Wayne Rooney, there’s a world of difference between someone who occasionally buys or sells a few thousand pounds worth of shares in their stocks’n’shares ISA, and a professional trader who makes real money on an ongoing basis by trading in the market.
So, I Google the guy and the first thing I find is his personal website, where he claims to be “an experienced stock market and forex trader and professional speaker”.
Now, those last two words a particularly informative. The adage “Those who can, do. Those who can’t, talk about it.” applies to trading just as much as it does in any other sector.
Rastani’s website is little more than a blog, where he posts about the markets, invites visitors to try his “trading alerts” service for free and promotes himself as a public speaker who will “speak at seminars and teach people how to trade the markets.”
Here’s the question you should always to ask when you see someone who’s offering to teach you how to make money from trading (or, that other old chestnut, from the property market): If you’re such a good trader, why aren’t you using your skills to make money from trading, instead of teaching it?
Needless to say, at this point in my research, I reached my conclusion – Rastani is nothing more than a snakeoil salesman, seeking to convince people that he’s some kind of expert and that they should pay him to teach them how to trade. Somehow, he managed to con the BBC into thinking that he was a professional trader whose commentary on the state of the financial markets is worth broadcasting.
Why do such a thing? Well, a theory emerged earlier today that Rastani is a member of a group of hoaxers called the Yes Men, apparently based on a superficial resemblance between him and a photo of one of the Yes Men from several years ago. However, more recent photos of the Yes Man in question make it clear that he and Rastani are not the same person. The BBC were quick to release a statement in response to this rumour, in which they said that they had “carried out detailed investigations and can’t find any evidence to suggest that the interview with Alessio Rastani was a hoax” and confirming that Rastani “is an independent market trader.”
Forbes decided to get to the bottom of the matter by calling Rastani up directly and interviewing him. The impression I get from reading the transcript of that interview is that Rastani was waffling and stalling for time while he Googled the answers of questions like “What’s the tick size in the Dow?”
Maybe he’s bought and sold a few financial instruments in his time but I’m confident that Rastani doesn’t make his living as a trader. Perhaps he believe that an appearance on the BBC would lead to more people coming to him looking for training, or more public speaking engagements.Or he might just be a wannabe celebrity (Lord knows there’s plenty of them about these days).
Either way, the BBC ought to apologise for giving both a platform and credence to this sort of person, and review the methods by which they both select pundits or commentators and verify their bona fides.