Following the money

Tweet

When I read in the Sunday Times that the Brexit campaign was largely funded by the wealthiest people in the UK but that the fifth largest financial backer of the Brexit campaign was a hedge fund manager whose fund had lost half its value during 2016 following Brexit, my first reaction was that there is such a thing as karma after all.  But then I looked at the detail…

According to the story, one of the reasons that the fund lost half its value was that it took excessively gloomy positions about the immediate impact of Brexit on the UK economy.  This story from the Independent provides more details of the way in which the fund concerned bet on Brexit being a bad thing for the UK economy.  The hedge fund manager predicted that UK stocks would lose up to 80 per cent of their value amid a recession and higher inflation following Brexit, and bet heavily on that outcome. 

Had he been right in his prediction, he would have made a lot of money for his fund as the UK economy tanked.  Unfortunately for him (although, perhaps, fortunately for the rest of us), the Brexit vote itself did not have as serious an effect as he predicted (although whether actual Brexit, if or when it happens, will let us off so lightly has yet to be seen), and the result was that the fund gained heavily in the first few days when it appeared that the predictions might be right, but then went on to lose a great deal of money.

So, to summarise, a billionaire who believed that Brexit would be extremely damaging to the UK economy nevertheless donated more than £870,000 to achieving precisely that outcome; an outcome from which, had he been right, he stood to earn a very large profit.  Am I the only one who wonders whether there might just be something wrong with a political system under which this can happen?