From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Mon, Dec 26, 2011 at 12:43 PM
Subject: Re: Re: Introduction: Liam - Day Nineteen
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
Now that the holidays have wrapped up, let’s get back to business, shall we? I generally need only about 24 hours of unbridled vacation time before I experience a full recovery and begin chomping at the bit to throw myself back into the fray. Beyond that brief recovery period, idle time represents only opportunities lost and self-improvement delayed. Therefore, it was with great enthusiasm that I came across the attached article authored by Lingling Wei and Bob Davis from this morning’s Wall Street Journal. It doesn’t take George Soros, that puppet master of foreign exchange, to deduce that China’s heretofore iron grip on its currency, the renminbi (or, more familiarly, the “yuan”) is slowly loosening, which will likely spawn an entirely new market in the yuan in the near future. For all the jaundiced hand-wringing over the relative value of the yuan to the U.S. dollar and its concurrent impact upon the Chinese and American economies, there is nothing that seems more like a win-win for market participants like us than the prospect of placing this bloated instrument under the microscope of the financial markets. Given the opportunity, keen market observers will profit, and the relative price of the yuan will be pushed down to normal levels. While surely this transition will take time (far longer than it ought to, in this observer’s casual opinion), it provides financial gurus like you and I to begin “sharpening the axe” so to speak (to recall a recent analogy) in order to prepare ourselves for one of the major economic events of our generation.
You see, Adam, the opening up of this market will quickly give rise to an explosion of financial instruments seeking to better accommodate the role of an ascendant China in the world economy. Look no further than the similar proliferation of financial instruments that accompanied the introduction (and destruction?) of the Euro. Sharp minds will draw the parallel almost subconsciously, conjuring images of the market’s bright future like so many sugar plums dancing in childrens’ heads on Christmas Eve. While this market is still in its infancy, I offer to you the following modest proposition. Hire me at ——- Financial LLC to work alongside you trading currency instruments as this market develops. In time, we can both take advantage of the rise of this new markets, and perhaps I can find a permanent place in the yuan pit (as I imagine it shall likely be called). This will provide both of us with outsized value both in the short-term and the long-term, as we form a similar pact trading the world’s alternative currencies. What say you to my bold proposal? After eighteen days of writing to you, I have surely proposed a course of action that should be recognized as a clear expression of value. While I have no doubt that you have had similar visions of our future together, I am sure that the unrealized reality described above paints the clearest picture. Let’s get together at some point this week to begin plotting a course towards this promising future.
Warm regards,
Liam
http://online.wsj.com/article/SB10001424052970203391104577121983605242196.html?mod=WSJ
From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Sun, Dec 25, 2011 at 1:54 PM
Subject: Re: Re: Introduction: Liam - Day Eighteen
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
In the diverse melting pot that is America, Christmas should no longer be considered to be a sectarian holiday. It is now a shared tradition that unites the masses in a secular manner, more akin to the Fourth of July or Thanksgiving than its actual meaning as the celebration of the birth of Jesus Christ. With that, I heartily wish you and yours a very Merry Christmas! Among we Christians, every family has a Christmas tradition. In my family, we attend midnight mass on Christmas Eve, open one present before bed, and then wake up early to have a hearty breakfast of pancakes and ham. More peculiarly, we have a tradition of watching the movie adaptation of Charles Dickens’ Christmas Story where the protagonist Ebenezer Scrooge is visited in sequence by the ghosts of Christmas Past, Present and Future. As a result of these encounters, the protagonist has an epiphany regarding the state of their life and resolves to make changes to their current course. As should of no surprise to you, I immediately recognized the applicability of this tri-partite concept to the financial markets.
Indeed, we in the financial world all must reckon with the specters of the immediate past, present, and future in any investment decision that we undertake (only we lack the benefit of a contemporaneous conversation with an omniscient ghost of the markets to point us in the right direction). Indeed, we are still haunted by the ghosts of the financial markets past (played here by former Lehman CEO Dick Fuld), which has lamentably convinced the overzealous regulators in Washington that the financial markets are inherently destructive influence rather than an enabler of American innovation (they would do well to read up on Schumpeter’s theory of creative destruction). The ghost of financial markets present (Mario Draghi, President of the ECB) who tells a tale of the struggle to preserve Europe’s fragile monetary union in the face of self-interested and parochial nations. Finally, the ghost of financial markets future (represented by the personification of the futures market itself!), which tells of a world rocked by continued uncertainty and volatility unless we collectively decide to return to the days when the financial sector was an ally of progress, not its. As you can readily see, in our business the past, present, and future are all highly interrelated, both in underlying fundamentals and market psychology. The lessons are no doubt clear: to understand the markets you must be steeped in its history and yet be able to divorce from the subjective draw of prosaic explanations; to immerse oneself in the market and yet be able to swim against the current. For in truth, only the true contrarians shall be able to harness the energy of the markets to generate outsized alpha profits without being snookered by the conventional wisdom on the Street which rarely consists of more than mere “infotainment”.
It is my Christmas wish that the ghosts of financial markets future are so generous as to see me trading beside you at ——- Financial LLC. Hopefully, you can see how such a future would be financially superior to your current course. I hope that we will be able to discuss soon.
Happy holidays and warm regards,
Liam
From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Sat, Dec 24, 2011 at 10:54 AM
Subject: Re: Re: Introduction: Liam - Day Seventeen
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
Christmas Eve is a time for reflection upon tradition and upon the gifts passed down from earlier generations. A particular favorite in my family is the construction of a traditional nativity crèche (or nativity scene), complete with farmland hay and the traditional inhabitants of the manger scene, the baby Jesus, the Virgin Mary, Joseph (Jesus’ other father), and the three wise men. This year the biblical magi got me to thinking about the nature of fiat currency. As you will recall, in the time of King Herod, after Jesus was born in Bethlehem, three wise men from the East came to Jerusalem, bearing gifts of gold, frankincense, and myrrh. It is worth noting that the wise men did not bring currency of any kind, even though the Roman denarii was the legal tender of Judea as a part of the expansive Roman Empire at the time. The gold, frankincense, and myrrh were of value in any of the cultures that the three kings hailed from. I need not draw the obvious parallel to our modern times, where the world’s currencies appear in a race towards devaluation. Gazing out upon the family crèche, I resolved to limit my currency exposure and into value-retaining commodities such as gold (perhaps for the sake of tradition, we could launch an exchange-traded fund (“ETF”) focused upon frankincense and myrrh as well!). A quick side note: even two thousand years ago the wise knew enough to diversify their holdings (a lesson indeed to all those gold bugs out there) with a literal basket of alternative investments, a wealth-building thesis fit for a king!
I hope that this vacation has allowed you to obtain some much-needed rest from the vigors of the 2011 market. I hope that your efforts are recognized with a deservedly large bonus. I hope that I might be so fortunate in 2012, if you are willing, in the spirit of the season, to spend fifteen short minutes with me evaluating the contributions I could offer your prestigious organization. As you can see, I offer unique perspectives on seemingly ordinary topics such as nativity scenes and biblical passages. Please allow yourself to imagine the value of applying an inquiring mind to some of your more difficult investment quandaries. I hope that you, like the three wise men of old, will recognize a sound investment when you see it.
Happy holidays and warm regards.
Your friend,
Liam
From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Sat, Dec 24, 2011 at 10:54 AM
Subject: Re: Re: Introduction: Liam - Day Seventeen
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
Christmas Eve is a time for reflection upon tradition and upon the gifts passed down from earlier generations. A particular favorite in my family is the construction of a traditional nativity crèche (or nativity scene), complete with farmland hay and the traditional inhabitants of the manger scene, the baby Jesus, the Virgin Mary, Joseph (Jesus’ other father), and the three wise men. This year the biblical magi got me to thinking about the nature of fiat currency. As you will recall, in the time of King Herod, after Jesus was born in Bethlehem, three wise men from the East came to Jerusalem, bearing gifts of gold, frankincense, and myrrh. It is worth noting that the wise men did not bring currency of any kind, even though the Roman denarii was the legal tender of Judea as a part of the expansive Roman Empire at the time. The gold, frankincense, and myrrh were of value in any of the cultures that the three kings hailed from. I need not draw the obvious parallel to our modern times, where the world’s currencies appear in a race towards devaluation. Gazing out upon the family crèche, I resolved to limit my currency exposure and into value-retaining commodities such as gold (perhaps for the sake of tradition, we could launch an exchange-traded fund (“ETF”) focused upon frankincense and myrrh as well!). A quick side note: even two thousand years ago the wise knew enough to diversify their holdings (a lesson indeed to all those gold bugs out there) with a literal basket of alternative investments, a wealth-building thesis fit for a king!
I hope that this vacation has allowed you to obtain some much-needed rest from the vigors of the 2011 market. I hope that your efforts are recognized with a deservedly large bonus. I hope that I might be so fortunate in 2012, if you are willing, in the spirit of the season, to spend fifteen short minutes with me evaluating the contributions I could offer your prestigious organization. As you can see, I offer unique perspectives on seemingly ordinary topics such as nativity scenes and biblical passages. Please allow yourself to imagine the value of applying an inquiring mind to some of your more difficult investment quandaries. I hope that you, like the three wise men of old, will recognize a sound investment when you see it.
Happy holidays and warm regards.
Your friend,
Liam
From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Fri, Dec 23, 2011 at 5:20 PM
Subject: Re: Re: Introduction: Liam - Day Sixteen
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
A happy holidays to you from Dixie! I must say, the only drawback to coming down to Charleston is the necessity to switch planes in Philadelphia. For the birthplace of the Republic, that airport and city in general have truly fallen from grace. That said, I was seated next to a particularly attractive girl who happened to have gone to Dartmouth. Small world, isn’t it? She did not happen to know you (being a graduate of the Class of 2008), but she said she may have known some of your teammates on the lacrosse team. I was a little disappointed when she revealed that she was currently in Teach for America and had little good to say about the financial world. I would have thought that someone with her pedigree would have been a little more open-minded, but I could have swapped her out with any of the talking heads on MSNBC without noticing a difference. It only reminded me that minds like yours and mine are rare. It would be a true shame if we were not able to connect at some point to exchange ideas and insights in a mutually beneficial manner.
I realize that I am now at the halfway mark of my month-long journey to convince you that I will provide sufficient value as to merit an interview with ——- Financial LLC. I imagine that my messages have become something like an advent calendar. In the Christian tradition, an advent calendar is a calendar in which each day in December up until Christmas is represented by a small container. Every morning until Christmas Day the corresponding day is opened, revealing a candy, chocolate, or a trinket such as a Christmas ornament that can be used to be hung on a Christmas tree. The opening of each day’s miniature present brings delight and joy to the children or family opening it. We are now on day 15 and already you have opened 15 days worth of valuable insights, hilarious anecdotes, and thought-provoking original dialogue. Just imagine what an ongoing work relationship could bring. Every day would bring value like this. I hope that you are enjoying reading these emails as much as I enjoy composing them. I often find myself having to cut myself off, rather than overburden you with prose. I hope a conversation would allow us to delve into these topics deeper. Let’s meet for a drink following Christmas to discuss.
Warm regards,
Liam
From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Thu, Dec 22, 2011 at 3:46 PM
Subject: Re: Re: Introduction: Liam - Day Fifteen
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
I imagine that you are having a lovely holiday break. Hopefully you have already (or are soon to) escaped Chicago for warmer climes. I count myself among the lucky ones, heading down to South Carolina to visit my parents at our river house near Charlestown. If it weren’t for my passion for the financial markets it would be all too easy to see myself spending much more time down there, golfing, playing tennis, and chasing Southern belles! Alas, living among the masses in the colder cities of the Northeast and Midwest is simply the price we must pay in order to play in the rough-and-tumble world of high finance.
Although I am sure you have seen it, I thought I would bring to your attention something particularly laughable (though simultaneously regrettable) issued by our daddy-knows-best administration. The SEC outrageously just amended its rules to exclude the value of a person’s home from net worth calculations used to determine whether an individual may invest in unregistered securities offerings. Consider that this entire rule rests upon the ill-conceived assumption that those with a high net worth (here, $1,000,000) are better equipped than others to evaluate the risks of a given investment. While I would certainly agree that those with more money are generally more intelligent than those with lesser financial resources when it comes to investing, there is no good reason to apply an across- the board limitation to the availability of the most promising investments to those with only a certain level of net worth with which to invest. I, for example, would love to invest in biotechnology or social media startups that seem promising, yet would be precluded because I was not an “accredited investor”. This keeps financial mavericks like you and I from participating in the funding of new enterprise and raises the cost of capital associated with early stage investment. This rule only ensures that even less funding will be available for the true entrepreneurs of our economy who turn ideas into jobs. Consider the double-whammy of the implosion of housing prices and you can see that fewer and fewer individuals will be able to fuel the engines of the American economic recovery. So, while the Obama administration may rant and rave about the ability of a meager payroll tax cut extension to spur job creation, they cannot honestly be said to be taking steps to grow our economy. I suppose that most will ignore this act of aggression upon the markets (especially given its proximity to the impending holiday season), but I assure you that measures like these do not escape my attention. The net benefit to you is that I not only keep myself aware of actions by the government that may affect returns, but their implications upon various investment strategies. Perhaps we could convene following the holiday to discuss how other government actions might distort market forces in a manner that we may capitalize upon as part of a trading team at ——- Financial LLC. Please let me know when you would like to discuss these matters, and more, in person.
I look forward to your response when you come across a spare moment.
Warm regards,
Liam
From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Wed, Dec 21, 2011 at 12:07 PM
Subject: Re: Re: Introduction: Liam - Day Fourteen - Happy Hannukah
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
I hope the first night of Hannukah was a pleasant one. While I, personally, am not Jewish, I sincerely respect those who are. Indeed, some of my brightest colleagues at The Ohio State University were in fact Jewish. Not only that, but I count myself as a staunch supporter of the State of Israel, one of our proudest and truest allies. As a nation, we are indisputably better for our commitment to diversity. By openly embracing tolerance, the best and brightest compete on an even playing field, thus propelling all forward at greater speeds much like a team of Olympic rowers sculling towards a better future. Few other countries could make a similar claim with a straight face. Here in America, the promise of social mobility is unimpeded by artificial barriers such as race and religion. I think we all can, and should, be thankful for that.
I know that this is historically a slow week in the markets. However, I expect that the absence of high volatility due to the holiday season is a good time to strategize for the coming year. For example, what will be the driving factors of volatility in 2012? Can we recognize opportunities before they materialize and, thus, be in a position to reap the rewards of a first-mover? I say that we can. As Abraham Lincoln famously said, “If I had 5 hours to cut down a tree, I would spend the first 4 hours sharpening the axe.” That saying applies equally to the financial markets as it does to felling timber. Major market movers I see in 2012 are, in no particular order, the consideration and acceptance of the fabled QE3, the fallout from a disappointing post-holiday season sales report, the final negotiations that either save or doom the Euro, and the obvious implications of the 2012 Congressional and Presidential elections. As you can see, I stand ready, sharpened axe in hand, to exploit movements in the market as they happen, rather than in a reactive posture. A man of your position can surely appreciate this level of effort. Indeed, having a trading team that accounts for these contingencies is a value in and of itself. If you are so kind as to grant me fifteen minutes of your time perhaps you would realize the value that I may bring to you and your team at ——- Financial LLC. I hope that these slower times in the market will allow you to consider my modest request. As I have said more artfully elsewhere, what do you really have to lose? Fifteen short minutes could very well change the course of the rest of our lives.
I hope all is well with you and I look forward to your response.
Warm regards,
Liam
From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Tue, Dec 20, 2011 at 2:01 PM
Subject: Re: Re: Introduction: Liam - Day Thirteen
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
I trust that you are well. Apologies for being a bit long-winded yesterday. I was simply floored by the government’s continued efforts to unduly interfere with the free operation of the markets. I did feel a bit vindicated when I saw that, in the Wall Street Journal this morning, AT&T Chief Executive Randall Stephenson expressed his belief that the government “should allow the free markets to work.” While I share his disappointment in the failure of the potentially lucrative deal, and about the general direction of financial engineering exhibited by the government generally, I feel some satisfaction that my independently-derived thoughts and theories are shared by elite executives such as Mr. Stephenson. I am sure similar thoughts crossed your mind. Perhaps the rational elite will finally succeed at turning back the tide of over-regulation that has been pervasive in the Obama Administration. We all have our dreams, don’t we?
I hope that we can discuss these topics and more over coffee in the near future.
Happy holidays,
Liam
From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Mon, Dec 19, 2011 at 4:44 PM
Subject: Re: Re: Introduction: Liam - Day Twelve
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
Well, they finally did it. The AT&T - T-Mobile merger is officially dead. Let the word go out to friend and foe alike, that if you are in need of scale economies in order to remain competitive in a national market don’t go hoping the government is going to assist you in your efforts. It is one thing for the government to distort markets through ham-handed regulation, but quite another to actively destroy a private entity’s ability to compete by denying them the right to build a sufficient economic rationale for additional infrastructure deployment and competition. While I am AT&T partisan (just try viewing your stock portfolio on an iPhone while in the Loop), the federal government’s intrusion into the markets in this manner is nothing short of outrageous. Where are the self-righteous protestors now? Do they not realize that their own access to services will suffer? Do they not oppose the use of the government veto to infringe on a private transaction? Alas, I suppose the government knows better than two of the largest and most successful market participants, and all else be eternally damned. Obamageddon, indeed.
Lest you be mistaken, I am not a political animal. I don’t think anyone who wants to truly understand markets can adhere to any particular political dogma. It clouds the mind from seeing the true underlying dynamic, making it more difficult to act quickly and decisively upon a particular strategy. The successful trader must have only one value in mind: profit. Nothing else matters. The famous line from Wall Street, uttered by Gordon Gekko that “Greed is good” is often disparaged as epitomizing the worst of the financial profession. Sure, standing alone, that line sounds objectionable. But how about a little context (as the people generally quoting this line in derision incessantly whine for when their ideas are mocked)? What the simple-minded fail to recognize is the rest of the line:
Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA.
Do you see anything wrong with that idea? For the life of me, I cannot. Why even argue that pursuing a given goal for financial reasons is a bad thing when it creates value for all along the way? Economic efficiency is the answer and we must be its prophets. As you can see, values like these would be very valuable to any potential employer. I trust that you can see that my motivations can be put to good use at ——- Financial LLC and I ask simply that you give me 15 minutes to meet in order to prove to you that it would be in your interests to bring me on to your team. I still await your response.
Warm regards,
Liam
From: Liam Prescott <liam.j.prescott88@gmail.com>
Date: Sun, Dec 18, 2011 at 4:44 PM
Subject: Re: Re: Introduction: Liam - Day Eleven
To: xxxxx@gmail.com, acohen@——-.com
Mr. Cohen,
Thus closes the first ten days of my quest to obtain a meeting with you. As you can see, I am dedicated to this cause. If, as expected, you consider my approach genuinely unorthodox then I believe I have accomplished at least some portion of my objective. However, I will continue to make good on my initial promise to you that I will objectively demonstrate my worth through the use of regular and insightful communications.
While jogging along the lakefront earlier this afternoon, I found myself musing on the efficient market hypothesis that we have all been taught is the bedrock of the academic understanding of financial markets. Obviously I need not tell a successful and experienced trader such as yourself that such a theory is laughable on its face. Efficiency is not magically created by some mythical efficiency fairy, it is manufactured by entrepreneurial individuals like you and I, who risk capital to profit upon the divergent values various parties assign to the same underlying instrument. That much, I believe, is fairly obvious. What I find especially interesting (and potentially lucrative to traders like us) is the fact that much of the world still subscribes to this primitive worldview, thereby creating opportunities for practitioners to profit from a better understanding of the markets’ true dynamics. Perhaps it is the tidiness of the theory that makes it so facially appealing to those possessing a gullible intellect. Alternatively, perhaps it is the orthodoxy itself that garners adherents among the sheepish. That is, because it enjoys a position as the dominant expression of market theory, ignorant participants welcomingly accept the party line as incontrovertible truth. Either way, it exposes an intellectual laziness that would be troubling if not for the fact that sharper wits like us might use a little intellectual jiu-jitsu to allow their assumptions to create profitable opportunities for the so-called “non-believers”.
As you can see, I am always thinking. And like Steve Jobs once said, if you are going to be thinking anyways, why not think big. And what could be bigger than thinking about which sacred cows appear ripest for the slaughter? It is my firm belief that questioning existing assumptions leads to the development of profitable trading strategies. I fully expect that you share my belief. As a result, I think it would be mutually beneficial to have a conversation where we can further develop these concepts into alpha-producing strategies at ——- Financial LLC. What do you think of these ideas? Does this outlook align with your worldview? We can discuss these questions and more over coffee this week if you have availability.
I look forward to your response.
Warm regards,
Liam