MotherRock Loses the Mother Load

Jim Cramer is one of the most ubiquitous experts in the field of money. His face is plastered all over the stock market website The Street and it turns out that he actually has an interesting appeal to more “average” folk. Well, in the book which he authored (Jim Cramer’s Real Money), he describes his trials as the manager of a hedge fund and investor’s increasingly near-term-view with regard to profits. He also details the reasons that managing a mutual fund or hedge fund is so difficult. But at the bottom line, for MotherRock, it was as simple as a missed bet.

MotherRock lost the mother load. Its that simple. They bet the wrong way on natural gas. There’s no fancy explanation, no waving of hands that you can do. They bet wrong and lost. Lost it all. According to the article, the manager of MotherRock, was ultimately responsible for 400 million dollars of assets under management. Not anymore. It has all been lost, on one bet.

Bo Collins, the big cheese over at MotherRock, apparently did not read Jim’s book; if he had, he would have followed the rule about Diversification. The reason I am writing about this is that the lesson is so important. Diversification is the key to anybody growing their assets through the ups and downs that happen in life.

I bought the Jim Cramer book for about 20 bucks. It took me some time to read it. And I read it twice. But after reading the article on msn I was thinking: ‘Man, if I were managing 400 million bucks, I would hope that I wouldn’t have been “outsmarted” by a book that someone bought for 20 bucks.’ Whats more surprising is that I am sure Bo Collins is no dummy. He was the past president of the New York Mercantile Exchange. One would have thought that he would be a good person to have some insight into the futures of natural gas, therefore. But, as Jim Cramer so aptly describes in his book, there is no insider advantage anymore. And if there is, it is illegal. So, in this case, Bo apparently played by the rules, and lost.

It makes my buy of Jim Cramer’s book for 20 bucks seem like a great deal though. Its not strictly-speaking a personal finance book, but for someone who doesn’t know much about the real ins and outs of the stock market, I would consider picking it up.

source: How Do You Lose 5 Billion in One Week?

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