Perfect Nordic Trading Enclave

Independent traders beware, leverage can kill. Some commentary on the story of Einar Aas.

I clipped this wonderful NYTimes story back in May of 2019 when it came out. I highly suggest a read: How a Lone Norwegian Trader Shook the World’s Financial System.

There are a lot of possible takeaways from this story. I’ll explore a few fun ones below.

The header above is a picture of the trader’s — Mr. Einar Aas’ — house. This photo is incredibly perfect for this story. Can’t you imagine enjoying a long, lucrative career and retiring to a place like this to day-trade the markets you learned so well?

From the article:

He set up shop in his hometown, Grimstad, in a hilltop villa overlooking a bay. In recent years, residents said, he bought all the neighboring plots and houses to ensure his family’s privacy. By 2016, Mr. Aas had become the largest taxpayer in Norway, where tax returns are public information. He reported income of 833 million Norwegian kroner that year, or $97 million.
Grimstad, with a population of about 20,000, collected a tax windfall, using the money to improve schools and the library, and to cut the cost of public kindergarten, said Monica Helland, Grimstad’s highest-ranking civil servant.
Mr. Aas became so wealthy that in 2007, Nasdaq Clearing allowed him to become a member, a privilege normally reserved for banks and investment funds. That status permitted him to clear his trades without going through a bank, and was highly unusual.

So incredibly wealthy & successful as a trader that his local tax payments alone changed the physical architecture of his town.

Anyhow, spoiler alert: he effed up. Icarus flew too close to the sun.

Some thoughts:

  • How many investors, given the chance, would allocate to this guy based on his resume & track record? Could likely have raised tens, if not hundreds of billions. Smart institutional guys too. He only lost ~$120MM on his own.
  • I wonder what his trading setup looked like. (The computers, monitors, desk, office, etc.) Mahogany, teak? Do you think he had adequate cable management? What monitors did he use, and God almighty, how many? Did he use a VPN? Did he store $100MM+ passwords in “passwords.doc” on his desktop?
  • His final “blow-up” trade was probably preceded by dozens of trades that didn’t go against him, but easily could have. I have no evidence for this, but this is basically a gossip column, so I’ll go for it.
  • Can you imagine his hubris? He had so. much. money. Yet he was still taking insane leveraged bets in esoteric futures markets, because what else would you spend your time doing? (Hint: anything)
  • Leverage can kill anybody. Don’t care how rich you are.
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Robinson Crawford, CFP®

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