Shame Shame Shame MahiFX

MahiFX is getting rave reviews for the quality of their web design. That’s nice, and good that a local NZ company did to this sort of quality, but while the design is nice, the content is disgusting.

Here’s the home page. You enter your salary and wonder who John Paulson is. No – it’s not Hank Paulson – he’s the ex-CEO of Goldman Sachs who was the Secretary of the Treasury in the last years of the George W Bush administration and who lobbied for and later supported the sort of stuff that got us into the global financial mess we are in.

That phrase super trader is a little disingenuous, as John Paulson is not a trader, but a operates a hedge fund. Traders get in and out of positions rapidly, but Paulson spends a lot of time in analysis before making large bets on things like the mortgage backed securties market. He has traders who actually do the buying and selling to his instructions. Calling him a trader is a bit like calling Zuckerberg a coder.

I entered $100,000 and got to this screen.

Apparently I should feel bad about this. Actually I feel pretty disgusted at this. The site is trying to glorify the earning of money through trading. Any glimpse of the Occupy Wall St movement would tell you that this is anathema to a huge number of people – about 99% of them. What an absurd way to promote a business.

The statement is also just wrong, as John Paulson has not made any money this year at all – more below.

Scrolling down, and this is where the cool web design kicks in, I find out that a few billion dollars buys Demi Moore, whom I didn’t know had entered the prostitution racket. Perhaps if they had mentioned the character’s name in the Indecent Exposure movie, rather than the actor. Also – Fiji, no matter how much you offer, is actually not for sale. Their GDP is about $3 billion, but you cannot buy countries by paying a bit over one year of their GDP. That’s like saying you’d buy Apple (worth $362 billion) for one year’s revenue (about $105 billion). Good luck either way.

And now for the pitch. Apparently we need to start trading currency to be like John Paulson. The funny thing is – John Paulson lost a few billion this year for his clients.

He’s ok of course, still up a few billion no doubt, but his clients were not so lucky.

I give him full credit for shorting the dodgy US mortgage business cumulating in 2007, and he made some sharp bets for 2010. His research into the fundamentals and the individual securities he bought or sold in 2007 was absolutely exhaustive, and he has been doing this sort of thing for years and years.

So do you think that you can match this guy, who is a NYU Stern, Harvard MBA graduate, started out at BCG then spent years on Wall street and started his own fund in 1994? He works at this full time, probably that’s about all he thinks about and does. If you think you can match this sort of record by trading currencies, then you’ve clearly got Billy Joel’s Easy Money resonating in your head and disturbing your sense of logic or reasoning.

MahiFX will make money out of you whether you buy or sell. You will be trading against professional full time investors who have essentially infinite resources behind them, a desk of smart traders around them and computers that can nail a trend and make a trade in millliseconds. You might win, you might even win big, but realise that without serious consideration you are gambling, and the odds are stacked well against you. You might be tempted to trade on extreme margin – where you can multiply your gains, but also your losses, by huge amounts.

So please don’t trade currencies, unless you are doing it as part of a global macro strategy, and have a net worth above $50 million. Do hedge your currencies if you are in business or investing across multiple jurisdictions, but think of it as risk management rather than betting.

And MahiFX – you should be ashamed at that display of disgusting deification of dollars. If you are offering an easy way to trade FX then that’s a great gap in the market, but aiming at people who want to make wildly inappropriate bets is going to destroy lives. Aim instead at businesses who need to hedge their currency risk for items they buy and sell. That’s a smart move in these volatile times.

Published by Lance Wiggs