The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders Read Online Free PDF Page B

commodities circles. He, in turn, became one of her mentors at the firm.
    On that day in Paris, Andurand jelled with Ealet. About a month later, after many more interviews and what felt to him like an agonizing wait, Goldman offered him an entry-level trading job in Singapore, its hub for trading energy contracts in Asia.
    Singapore was a big oil processing center, where large ships brought raw crude to ports and, using sophisticated refining techniques, altered its chemical composition to churn out more readily usable products, like auto fuel and diesel. The refined oilswould then be sold to gas distributors, airlines, logistics companies, and other bulk buyers around the region.
    Andurand worked for a team that helped companies who bought or sold either crude oil or refined products in large quantities in order to hedge, or curb, their exposure to significant moves in their price. If a chain of gas stations, for instance, was concerned about a potential spike in the price of unleaded auto fuel, it might hire Goldman to reduce its vulnerability to higher prices by using gasoline contracts that locked in lower future prices in the market. The client would pay Goldman a small fee for arranging the contract trades, and Goldman was also free to use its own money to become directly involved in them, perhaps becoming the seller to a client buyer rather than simply matching that client up with another seller in the market, or using the information gleaned from the client’s market position to trade for itself elsewhere in the gasoline markets.
    Goldman’s commodities business at the time was generating about a half billion dollars in revenue each year. Corporate commodity hedging, the term used to describe the sort of trades Andurand’s team was arranging for clients, was becoming more popular. Other market participants were using commodity contracts simply to speculate on where markets would go. That meant there was plenty of room in the markets for Goldman to do a little house trading, known as proprietary, or “prop,” trading, as well as whatever it was hired to do by clients.
    Once a client trade was completed, Andurand would sometimes end up with leftover market exposure that he couldn’t offload right away. He could hang on to those contracts until a buyer arrived, or he could trade them on a speculative basis and try to make a little profit. He liked doing the latter, and was makingmoney at it. But he felt stymied by Goldman, which had strict risk controls that prevented him from making larger bets, and made him share a pool of capital with two other traders, which he regarded as a handicap.

    After a year and a half, Andurand took a job at Bank of America. The old-fashioned depositor, headquartered in Charlotte, North Carolina, lacked Goldman’s track record in the commodities business, but it was willing to give Andurand his own kitty to trade. He thought the opportunity was worth the sacrifice in prestige.
    In his first nine months there, he was given a relatively small purse and told he could lose no more than a few million dollars on any given day (a sum that, outside of commodities, was large enough that it could be grounds for firing a young trader in stocks or other products). He managed to turn that capital into gains of $50 million—the single best performance in his department and easily half of the bank’s entire commodities profits for that year.
    Armed with a $3 million bonus check, Andurand took a triumphant trip home to France. He was learning how the game was played on bank commodities desks, and gaining valuable insight on an important regional energy market in Asia. His confidence was high. He was only twenty-five.
    Still, Andurand lived a relatively modest lifestyle at home in Singapore. Now in a much happier head space than he had been after quitting the swim team, he was again working out and eating carefully. He still avoided the party scene. Instead of going out and getting bombed, as many