Blood Money by Julian Page Read Free Book Online Page A

short timescale. Hence ‘short selling’.
    The name ‘Hedge Fund’ comes from the practice of balancing risk. If the market rises, you can make money on your longs and lose on some of your shorts, if the market falls, you make money on your shorts but you may lose some on your longs. It is known as ‘hedging’, like ‘hedging your bets’.”
    â€œIt’s a fact of life that because of the way the City is set up, there are dozens of reasons and influences for analysts, company CEO’s and brokers to overstate the value of a company’s share value. Share values are a bit like house prices. Most people think it is healthy to see these values continually rising, it makes everyone feel good and there are elements of inbuilt positive feedback to keep this happening. However in the City (just as in the housing market) such a state of affairs cannot go on forever. There has to be a ‘market correction’ at some point. After a sustained period of booming share value there will inevitably be a short period of bust. In relatively small periods of time, hedge fund managers who can predict these sudden falls can make a windfall for people who have invested their money with them and at the same time balance or ‘hedge’ these high-risk gambles with sensible longs on less volatile and hopefully rising sectors.”
    â€œBut additionally, the short-selling idea has another twist. By using borrowed money (from banks) as well as money from investors, the hedge fund manager can take a greatly leveraged position, making the size of the risk much greater but at the same time enabling the possibility that the fund can generate far greater profits. But here’s the key problem. -Hedge funds are very lightly regulated as they are often registered (like Kronos) in places like the Cayman Islands, so in the UK all the FSA can really do is to limit the type of people who can invest in them, limiting the number of vulnerable investors who can expose themselves to the very great risks. With hedge funds, the only thing we can do is ensure only the very rich (who can afford to lose money) are allowed to invest.”
    â€œHedge fund managers now have quite a tarnished image as being reckless speculators. In times gone by, stockbrokers used to be genuinely concerned about the health of the companies that they invested in. Now it’s often said that today’s shareholders are only interested in short-term profit and nobody in the City gives a fig for the long-term health of the companies they invest in. Hedge fund managers epitomise that recent public perception. Oh…and as the hedge funds become larger and more powerful, there’s a new concern that the amounts of borrowed money (from banks) that could be lost by the hedge-funds losing their gambles could collapse the banks themselves. When banks collapse, the economy of the entire nation is de-stabilised.”
    The more she thinks about John seeing Alexis tomorrow the more she starts to worry. “Listen John, this Alexis Vasilakos…. you need to watch yourself with that one. Though he looks like just another fat cat banker I’ve heard he’s got a shitty temper and everyone’s properly scared of him. I know you can look after yourself, but I’ve been told that people only cross Alexis once. He’s a really nasty piece of work and I’ve lost many a night’s sleep concerned about what could happen to me if I ever did manage to nail his ass for insider dealing.”

4
    Tuesday 26th April

    As soon as he gets into the station the following day John simply can’t get together with his partner fast enough.
    Detective Inspector Bill Warren has 22 years more experience on ‘the force’ than his whipper-snapper of a partner. He’s mellowed with age like a fine wine, with more complexity, more character and more structure than his idealistic young colleague. Having taken Monday off to