Bill Gates best trade since retiring has been shorting Ballmer!

After giving away $28 billion, Bill Gates is no longer the third-richest man in the world. He’s the second-richest.

You read that right. Despite his considerable, praiseworthy charity work, the Microsoft cofounder is getting wealthier. In 2012, he wound up $7 billion ahead with a net worth of $63.4 billion, according to Bloomberg’s Billionaires Index…

Bill Gates has been aggressively selling down his Microsoft position for over a decade. Early on, this looked like a smart idea just on the basic tenets of diversification alone. But when he didn’t stop at 50% of his net worth, and went all the way down to the point where Microsoft was only a piddling 20% of his net worth, you could argue that this was more than just diversification.

Somewhere along the line, this massive and ongoing liquidation became a short-sale of his old friend (and current Microsoft CEO) Steve Ballmer. And it looks to have been a smart “trade”.

What triggered it? Was it the borderline breakeven profitability of the XBox after so many years of investment? How about the flaming wreckage of Microsoft’s internet properties and search game? Maybe it was the launch of the Zune ecosystem that wasn’t? Or perhaps he decided to sell more aggressively the day when Ballmer mocked the iPhone and mentioned that his kids were forbidden to own one.

Maybe it was just the cumulative effect of these embarrassments or missed opportunities – one after another. Either way, Gates’s sales have gone far beyond any kind of diversification that we’ve seen with the Google whiz kids or Larry Ellison over at Oracle. While the billionaire has remained almost completely silent on Microsoft’s loss of luster and standing, his trading activities have spoken volumes…

Joshua Brown ends his piece with an admonition to diversify. The body of the article says a lot more.

Steve Ballmer hasn’t a clue!

What’s the only commodity banned from futures trading?

Onions. No, really.

The Onion Futures Act (7 U.S.C Chapter 1 § 13-1) is a United States law banning the trading of futures contracts on onions. In 1955 two onion traders, Sam Seigel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on August 28, 1958. It remains in effect as of 2012…

In the fall of 1955, Seigel and Kosuga bought enough onions and onion futures so that they controlled 98 percent of the available onions in Chicago. Millions of pounds of onions were shipped to Chicago to cover their purchases. By late 1955, they had stored 30,000,000 pounds of onions in Chicago. They soon changed course and convinced onion growers to begin purchasing their inventory by threatening to flood the market with onions if they did not. Seigel and Kosuga told the growers that they would hold the rest of their inventory in order to support the price of onions.

As the growers began buying onions, Seigel and Kosuga purchased short positions on a large amount of onion contracts. They also arranged to have their stores of onions reconditioned because they had started to spoil. They shipped them outside of Chicago to have them cleaned and then repackaged and re-shipped back to Chicago. The new shipments of onions caused many futures traders to think that there was an excess of onions and further drove down onion prices in Chicago. By the end of the onion season in March 1956, Seigel and Kosuga had flooded the markets with their onions and driven the price of 50 pounds of onions down to 10 cents a bag. In August 1955, the same quantity of onions had been priced at $2.75 a bag. So many onions were shipped to Chicago in order to depress prices that there were onion shortages in other parts of the United States.

Seigel and Kosuga made millions of dollars on the transaction due to their short position on onion futures. At one point, however, 50 pounds of onions were selling in Chicago for less than the bags that held them. This drove many onion farmers into bankruptcy. A public outcry ensued among onion farmers who were left with large amounts of worthless inventory. Many of the farmers had to pay to dispose of the large amounts of onions that they had purchased and grown.

Thanks, Eddie Elfenbein

The comment below is mine:

There is a sleazy speculator somewhere who will always figure out how to screw millions of people to make a crooked buck. This is the whole point of responsible oversight.

If the “innocent” good guys who whine the most about regulation would point fingers when they see something illicit taking place, help to nip it in the bud – the regulations would never be needed. But – in practice – the “good guys” usually just try to get in on the profits. And say nothing.

French criminals and the short arm of the law


Certainly works OK left of the Channel

France has ended restrictions barring people under 1.6 meters (5’3″) from joining the police force.

The country of Napoleon imposed minimum height requirements for police centuries ago, raising them over the decades as the average size of Frenchmen rose, but the rules have come to be seen as discriminatory.

“Entry into all active categories of the national police is no longer reserved for candidates whose height exceeds 1.60m,” the French Labor Ministry said in a statement.

“From now on the conditions of entry will be linked exclusively to the ability to carry out the relevant duties…”

French President Nicolas Sarkozy’s height is estimated at around 1.65 meters, roughly the same size as French Emperor Napoleon Bonaparte.

Police union Alliance Police Nationale welcomed the move, saying the previous requirements had prevented candidates who were “morally, physically and intellectually” capable of working as police.

France has decided not to change the minimum height restriction for the military – though I can think of circumstances where it might be an advantage to be a smaller target.