The stars were smiling on The Wall Street Journal last week when hedge fund Amaranth Advisors LLC fessed up to losing more than $3 billion on bets gone bad in the natural gas markets. On Sept. 19, the day after the news broke (CNBC's David Faber apparently reported it first the morning of Sept. 18), the Journal featured a lengthy, front-page profile of Brian Hunter, the 32-year-old Canadian trader who ran Amaranth's energy desk and ultimately racked up the whopping losses. The piece was filled not only with direct quotes from the man himself, but with details of his career path, tidbits from his personal life — he tools around Calgary, Alberta, in a Ferrari and a Bentley — and a discussion of his trading philosophy. "Every time you think you know what these markets can do, something else happens," Hunter told the paper. How true.
In any case, the story gave the Journal a significant, early lead in the Amaranth coverage wars. Indeed, the only info most papers were able to scare up about Hunter for their stories that day was that he pulled in $75 million to $100 million in 2005 — a figure they lifted from the glitzy Trader Monthly magazine, which got it from who knows where. The New York Times, for one, filled its initial piece on Amaranth with lots of heavy breathing about the dangers of hedge funds. "Enormous losses at one of the nation's largest hedge funds resurrected worries yesterday that major bets by these secretive, unregulated investment partnerships could create widespread financial disruptions," its story began. Funny how the Times never misses an opportunity to refer to hedge funds as "secretive" and "unregulated," which in Timespeak is really code for "evil" and "illegal."
So how did the Journal score an Amaranth coup? It was partly luck, but not necessarily of the dumb variety. Read the story closely and you realize the interviews with Hunter actually took place in July and August, when the trader was still flying high — which lends his utterances plenty of irony. The paper even visited Hunter's Calgary trading floor. The story was billed as the fifth in the Journal's series entitled "Private Money: The New Financial Order," which just three days earlier featured a lengthy profile based on interviews with famously media-shy Steve Cohen of SAC Capital Advisors LLC. Perhaps the hedgies are getting tired of the "secretive" label. (Why the Journal chose to run that story in its Saturday edition, which arguably has fewer readers than its weekday papers, is a question for another day.)
When the Hunter profile was officially slated to run, we can't say, but clearly, the piece was well on track when news of Amaranth's losses came, which put the Journal in the catbird seat last Monday. Of course, it could have gone another way; what if the Journal had run the Hunter story on Saturday instead of the Cohen piece? It would have looked really foolish when news of Amaranth's losses hit on Monday. But as luck would have it, the paper still had Hunter in the can. So by zeroing in on the next big thing in finance, and systematically meeting with and covering its biggest players, the Journal found itself at the right place at the right time to cover one of the hedge fund industry's biggest blow-ups in ways rivals could not. In that way at least, it made its own luck.
Another missive from the retirement journalism front, where readers are regularly made to feel that if they haven't aggressively been saving for their golden years from the minute they entered the work force, they might as well start packing for the poor house right now (or at least give up lattes). The latest admonishment comes from Money magazine, whose October cover urges us, in large letters, to Retire Rich. OK, sounds like a plan, until we realize the mag isn't really going to tell us how to do that. Instead, it's mostly going to inform us how to make the nice little nest egg we allegedly have already saved last us until we pass on, which isn't really the same thing at all.
Once we recovered from that little bait-and-switch, we looked inside for more, and were confronted with the notion that we'll need 70% to 75% of our preretirement income to maintain our standard of living when we stop working. Yikes! Money quickly dismisses this idea as "conventional wisdom," but, inexplicably, does little to debunk it. Instead, it provides us with a game board designed to help us come up with ways we can cut our retirement spending target, including "mooch off the kids" and "live cheaply." No, we are not making this up. The game also includes reasons we might have to up our number, such as we're a "genetic lottery loser." Great.
Though the exercise is designed to make us feel better — if we can actually get through it — it will likely make most people feel worse. It seems to reinforce that big and scary 75% number rather than disprove it, which, in turn, may well convince some folks to make some crazy bets to ensure their retirements. For example, elsewhere in the same issue, we meet a couple in their 30s who aggressively invest in "volatile initial public offerings" and real estate to meet their retirement numbers. Is that really the best way to Retire Rich? Or is that the only way possible to hit that magic 75% number? Anyone for natural gas? —Yvette Kantrow
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