What a loss...

A trade properly executed is worth in bullion,

But a trade not properly learned is an enemy,

Put in charge of his own Morgan Stanley hedge fund,

Howie Hubler was nothing less of a stalwart at mortgages trading,

But destiny chose him to be remembered in a different sort of way,

He suffers the ignominy of causing a deep hole of $ 9 billion in losses for his firm,

A dubious distinction of it (the loss) being more than any single trader has ever lost in the history of Wall Street.

The year was 2007 and the challenge was how to trade the subprime mortgage bonds,

Howie Hubler held the view that the subprime mortgage was overheated and needed to be shorted,

In retrospect that indeed was one completely correct prediction of the subprime downfall,

A pinch of irony and dab of misplaced faith made this trader top the losers’ league tables,

His crown jewel was a $ 2 billion short position in mortgages that he had built using long bespoke credit default swaps,

So far so good – what he did next betrayed his consummate understanding of mortgage debt instruments and his professed philosophy of mortgages being bearish,   

Hubler decided to go long on supposedly solid AAA mortgage debt by selling credit default swaps worth $ 11 billion,

All the while forgetting that the pedigree of the debt he was insuring against a down-slide was only a shade better than the one he was selling to make a profit and hoping for a down-slide,

When the great credit meltdown came, everything slid down the hill; he ended up losing vastly more on long side $ 11 billion than he could possibly make on the short side $ 2 billion portfolio,

This turned out, by the time the dust settled, to be without a doubt the single worst trade that any investment bank has ever entered into in the history of the world; for it ended up losing Morgan Stanley $ 9 billion in cash.