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Rantings of a Sandmonkey

Be forewarned: The writer of this blog is an extremely cynical, snarky, pro-US, secular, libertarian, disgruntled sandmonkey. If this is your cup of tea, please enjoy your stay here. If not, please sod off

Monday, March 13, 2006

My poor IT guy

Of all the people in my company, my favorite has to be W. the IT guy. He is smart, funny and self-educated, and I am one of the few people who he can converse with on everything, from life to politics to IT issues. We are good work friends, and our friendship prevails despite my company's inner politics. You see, my company is divided into 2 sections: 1) The investment department, and that's where I work alongside with other US & UK graduated people, and 2) The operations department, which includes the accounting, HR , treasury and IT people, all of which are educated in egyptian universities. It's weird, but there is some kind of caste system here, because the 2 departments are not supposed to mix and mingle. My friendship with many of the operations department people have incurred me the wrath of our general manager, who doesn't like "his people" mingeling with "those people". Whatever. I let him say what he wanted and went ahead and did what I wanted anyway. He can't fire me for being friendly. Anyway.. This division, however, led to some unintended financial consequences amongst our operations department people, the most heavily hit of which was W. You see, they all invest in the Egyptian stock market, and they consult the accounting people for their investment decisions, instead of asking, well, us. As anyone who is familiar with the business world knows, the mindsets between the Finance and accounting people couldn't be more different. I would never take financial advice from an accountant, then I would take accounting advice from a financial analyst. Those are 2 different professions for a reason, and the difference between them is the same as that of between a Policeman and a Lawyer. Most people don't really realize that. W. is one of those people. Based on the advice of his buddies in accounting, he went ahead and bought an undisclosed sum of shares at 250 egyptian pounds, because they told him that the share will hit 300 pounds easily, if not 500 pounds (such is the egyptian stock market). So he went ahead and borrowed 50,000 pounds on top of his 0wn 50,000 pounds and bought that specific share. The Bank he borrowed the money from gave him 2 repayment options: 1) to pay a monthly amount that includes the interest and the principle or 2) to just pay the monthly interest without paying off the principle. The idiot, spurred by the other "experts" in the accounting department, chose option #2, because 1) It's naturally offerd cheaper monthly payments and 2) He was going to double his money in this investment within the month anyway, so it really won't make any sense for him to pay a higher monthly payment when he will pay off everything at once. This was the advice the people at accounting gave him. You can see where this is going, right? Yeah! Needless to say the share never went anywhere but down, and kept declining over the past 2 weeks till it hit 120 pounds today. He lost more than 50% of his investment capital, and is now screwed with paying monthly interest payments that do not reduce the principle at all. And he is not alone in this; everyone in the operations side of the company have lost major amounts of Moolah. But none was screwed as much as that guy. And it kills me, cause had he came to me i would've told him not to invest in that share, as I told everyone I knew. But, oh well, that was the way that cookie crumbled, and that's what you get when you invest your money based on hearsay and unsubstantiated claims and rumors. And the sad part is, that's how the supreme majority of egyptians who put money in the stock market do their investing. And then they wonder why they lose their money. The Poor guy though, you know?


At 3/13/2006 07:01:00 AM, Blogger Apesnake said...

I'm shocked that even an accountant would give investment advice without including the qualification of "Diversify".

I guess people are the same wherever you go. Now I just need to find a way to change that.

At 3/13/2006 08:09:00 AM, Blogger elengil said...

this is why I don't plat the narket.

At 3/13/2006 08:09:00 AM, Blogger elengil said...

oh bother, I should never try to type with one hand.. lets try this again..

This is why I don't play the market!

At 3/13/2006 08:10:00 AM, Anonymous Anonymous said...

I'm curious, Sam; how much do people in your company, like this IT guy, make?


At 3/13/2006 08:24:00 AM, Anonymous Mike said...

I thought interest was forbidden. Maybe he could grab the local Iman and go to the bank and they could give them a lecture about being a muslim.

At 3/13/2006 08:54:00 AM, Anonymous Einherjar said...

Like Apesnake says, who gives advice to invest all your money in one company?

Yeah, poor guy, but he can't really blame anyone but himself either. After all, the desicion was his to make.

I hope you've set up an emergency hotline for people in accounting to call whenever they feel like going out on a limb though. Sounds like they could need it.

At 3/13/2006 11:54:00 AM, Blogger hummbumm said...

Just out of curiosity, what do you cover? Emerging markets? or US-Euro stocks?
I follow financials and diversified industrials, but US domestic equities largely.
Love your blog.

At 3/13/2006 12:46:00 PM, Blogger Crazy Girl said...

Yes some morons say intrest is forbidden because you don know whare that money is being invested. My sis said what if that money is being inveseted in a bar? People are dumb like that.

Egyptians do everything by word of mouth which is something I don't get. When I want to invest my money I would see a financial advisor when I want to do my taxes I do them myself or see an accountant.

Makes sense right? not in Egypt. You always have to go by the guy that knows the guy that knows some guy..says!

At 3/13/2006 02:59:00 PM, Anonymous CanadianPharaoh said...

It's called greed...If it's too good to be true it usually is! Any logical person knows that diversification is the key to a succesful investment strategy. Individual stocks are rarely the solution, personnaly I believe in a combination of investment funds and bonds. I do own some individual stocks but they never surpass more then 30% of my investment portfolio.

There's always a risk involved in any type of investment and determining a person's tolerance to risk is the best way to determine what investment strategy is best for him. The cycle of life and timeframe of an individual is also important. What is his age? What are his goals? Why is he investing? Does he have knowledge of the market and what are his objectives?????

That's why he lost, he did not have a plan. He had to consult an expert to determine all of these things.

At 3/13/2006 04:24:00 PM, Blogger Hershblogger said...

In the United States, he'd probably be suing the Accounting Department. He'd probably win.

At 3/13/2006 07:59:00 PM, Anonymous Liz said...

Very sad tale.

what sort of bank lent him enough to double his punt on the stock market in the first place?

I thought it was just petrol dollars behind the rise in ME indices - if 'ordinary' people are playing the market.. on margin.. are the taxi drivers giving stock tips yet?


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