The Secret Club That Runs the World: Inside the Fraternity of Commodities Traders

by Kate Kelly

Nestled deep in the towers of banking and finance are the commodities traders who spend their days gambling with oil, gold, and corn contracts. They’re highly-educated world travelers with a penchant for risk, and they’re here to bet big on the future of the raw materials that make our economies hum. They’re very wealthy, barely regulated, and can be a force for tremendous good—or ill.

Now Kate Kelly, the bestselling author of Street Fighters, shines light not just on the commodities market, but also on some of its key figures. Her characters include Pierre Andurand, a hedge-fund manager who generated the winningest annual performance ever for an oil trader in 2008, and Ivan Glasenberg, whose secretive Swiss commodities giant, Glencore, has been thrown into the spotlight.

Kelly paints a dramatic narrative of immense power in the hands of a few, and the so-far hapless efforts by the Obama Administration to rein in the cowboys.

Genres: Business, Finance, Nonfiction, Economics

288 pages, Hardcover

First published January 2, 2014

About the author

Kate Kelly is a reporter for the New York Times who covers Wall Street. She is also an experienced television broadcaster and the author of Street Fighters, the bestselling account of the bank failure that touched off the financial crisis. Her reporting focuses on big banks, the worlds of trading and lending, and the crucial players setting financial policy both in business and in politics. Prior to the Times, she worked at the New York Observer, the Wall Street Journal, and CNBC. She attended the National Cathedral School in Washington and graduated from Columbia College in 1997.

source: Amazon

Librarian Note: There is more than one author in the GoodReads database with this name.

Kelly, Kate, 1975- (from Library of Congress)

Reviews

[Tim O'Hearn · Rating 2 out of 5]

Anticlimactic and divergent from the implication of the title which is that commodities traders closely collaborate [to fix prices and harm society?]. Kate Kelly is a talented investigative reporter but I fail to understand where she is coming from with the tone of this book, which struck me as unnecessarily harsh.

What you will find interesting about commodities trading is that the "fundamentals" make the analysis of companies for equities trading look boring. Yes, it is true that higher grains prices can directly result in starvation in the most vulnerable parts of the world.

The stories here are disjointed and mainly go to show how many experts have no idea what they are doing and that they are often incentivized to take massive positions because being they rarely feel equivalent consequences of being wrong. If you're really into this kind of stuff and need new material because your friends won't find you interesting otherwise, it's worth a look.

[Amy · Rating 3 out of 5]

Overall, a decent introduction. I wish it was heavier on the history, the mechanics and logistics, and the "meat" of what commodities trading actually is. As usual with more mass-marketed nonfiction these days, however, it focused on the squishy biographical quirks of the main players in the book. I don't care that so-and-so dated a model, I wanted to know how he was making his fortune and how the contracts worked and why he made such and such decision... And while there was definitely that, there was much that could've been left out, in my opinion. Also, there wasn't as much follow-through on what happens to the physical assets themselves, as they are traded, etc.

Like many journalists, the author takes a rather Pollyanna view towards government regulation, and glosses over counterarguments, even though most of the characters in the book opposed them (save for her interviews with a couple of guys on the CFTC). This was irksome, and again, I'd rather know more about how the sausage is getting made and what the issues would be than the fact that other guys on the CFTC were put out that someone spent more time on CNN than they did.

It piqued my interest enough that I will go seek out more informative works about commodities trading and hedging.

[Emily · Rating 2 out of 5]

Ok descriptions, very light on the insight, and tries way too hard to focus on people involved and sensationalize their interconnections. Would not recommend to anybody that knows anything about commodities trading.

[RJ Maldonado · Rating 4 out of 5]

Naturally this book was given to me by my thoughtful coworker to help me understand the history behind the job I’ll be doing for the foreseeable future. Really eye-opening read; one of things I’ve been forced to grapple with is the fact that commodities do well during times of volatility in the world, which unfortunately is when terrible things are happening. Whether it was with the Arab Spring stemming from rising wheat prices and general discontent for the people of the middle east or the potential for oil prices to spike in 2012 following the threatened closure of the Strait of Hormuz (sound familiar?), the world’s geopolitical risk can be directly seen in commodity prices. Further, the manipulation of these markets due to their unregulated nature was far too common because it was far too easy - it’s really incredible to see what firms and people could get away with and the ensuing efforts to prevent things like that in the future. Highly recommend even for those not in finance or commods because the book simplifies everything and the overarching concepts are easy to follow (ie prices are influenced by events that go on in the world and the effects aren’t hard to follow). First book I’ve finished in a few months, so happy to get back in the game!

[Julian Douglass · Rating 3 out of 5]

To say I was disappointed with this book would be an understatement. This is not so much a book on what is Commodity Trading and how does it work, and more of a here are the main players in commodity trading and this is what they done. This is a good concept of a book, but it only satisfies the people who know what commodity trading is and how it works. The book offers a very minor description of what it is and how it works, plus the language and the stories go in to so much detail that those who don't have an MBA will not be able to get it. The stories of some of the people she highlighted were interesting, but it was too heavy in business lingo for a common person to understand or get too angry at what they do. Big disappointment for me.

[Angus (Just Angus) · Rating 3 out of 5]

Took me more than a year to come back to it because it was so dense but pretty interesting.

[Ken Waddell · Rating 2 out of 5]

Some might say it’s cheeks. Some might say it’s anticlimactic. I think it might be both.

[Chris Langdon · Rating 4 out of 5]

I found this to be a very readable book that gives you access to the world of commodities and a basic overview on how it works. It is filled with antidotical stories to illustrate points made in the book and not so much technical information that bog some business periodicals down and make you feel like you need to graduate The Wharton School of Business to understand it all. If you are interested in learning a little about the commodities market and it's place in the world at large this is a nice first book to cut your teeth on.

[Hal · Rating 2 out of 5]

Not to much to say about this book. Aside from the catchy title that makes one pick up the book in curiosity it was a bit of a yawner. The main theme as in so many of these business/financial books that gives a glimpse behind the scenes and of the players calling the shots that dictate the movement of huge resources of assets, money, and power. The lesson as again in most if not all of these books is as long as a market exists there will be those who will attempt in cases succeed to manipulate or position to reap enormous profit, sometimes with legal means, sometimes not.

[Iyad Atuan · Rating 5 out of 5]

Well written! Some people (me included) thought that the market of commodities was too big to be manipulated by a few. But thanks to all these new derivatives that can leverage positions, some traders have the gun powder to after the comodities market, some like Goldman just by warehouses and manipulate supply.

Net/net well written and great story telling. Must read!

[Jeremy · Rating 2 out of 5]

To heavy on the biographical details and not enough info on how commodities trading came to be what it is. The book could have used a heavy organizational edit as it skipped around decades, people and places without any apparent overarching structure.

[Llewellyn · Rating 4 out of 5]

A good view on the world of commodities traders through a handful of big names and major events in the last 20 years.

Well-written and even-handed although I'm not sure the book really portrays it as a fraternity or a secret club. But it does a good job of portraying the debate over whether these large-scale trades are manipulating markets or not (of course they are), as well as seeing the flip side, like Delta's catastrophic bets on oil prices.

I was surprised at how frank the section is on the Goldman Sachs aluminum arbitrage scheme. She even thanks Gary Cohn, the scheme's architect, in the credits. In contrast, I'm reading another book on independent film distribution industry and it sounds like that is much more tight-lipped even though the stakes are so much lower.

It drags in a few places when it follows the ups and downs of market movements, but the benign personal details of individual traders are oddly compelling. And the section on MF Global seemed like it was missing the crux of what happened there—where did all the money go?

[Topher · Rating 4 out of 5]

I'm trying to read a little more non-fiction this year, and something potentially relevant seemed like a good idea. The book is well-written and engaging. I was amused at the number of intersections between people in this book, LTCM, 2008, etc - it seems high finance is a relatively small world.

I will be curious to see if commodities trading is something I ever do, either for someone else or for myself. I'm at least trying to learn more on the topic.

[Monzenn · Rating 5 out of 5]

Like most great books on traders, this one made me feel both admiration and disgust for its main players. All the more that the market was commodities, which included staples like oil, metals and foodstuffs. I had to admire the tenacity of the traders featured and at how they were able to carve their niches, but at the same time I felt like the outgoing CFTC chairman in the book - despite regulatory gains, the market kept on chugging on.

[Eddie · Rating 3 out of 5]

2.5 Stars. OK book on commodities asset class and some of the big players in the market. Not a how to trade or strategy book (doesn't have to be) but a fair introduction to commodities. Book presents how industries (namely airlines) have to protect themselves as best as possible against adverse price swings in oil and how they go about doing that.

[Anzig · Rating 2 out of 5]

I thought the drop of oil price in 2020 will motivate me and encourage me to finish this book.

But it's not. Why? Because there is no clear explanation how the trade was shown in this book. No explanation how the market worked either.

Most of the book talked about how the successful trader life their life. Whats in it for me then?

[DeanJean · Rating 3 out of 5]

Started off great, but unnecessary deviations interrupt the plot. What part does Andurrand's wife's expensively priced wedding play in the story?? Other than that little niggle, it's a decent introduction to the world of commodities.

[Rebecca · Rating 3 out of 5]

2.5 rounded to 3. It's a decent introduction, but I am not the target audience (anymore). There's also no real resolution, which isn't solely the fault of the author. Maybe a longer period of reporting? To create something that feels more complete? Or a follow-up?

[Nida Khan · Rating 3 out of 5]

With a catchy title and a good introduction, it was not written in a way that one would expect it to be . Jam packed with unnecessary details with no coherence!

[Stacey Schmeidel · Rating 3 out of 5]

Well written, but not my style.

[Jack · Rating 5 out of 5]

Great accompaniment to Kleptopia or Nicholas Shaxson's work. There is club, and you aren't in it.

[Anna Tan · Rating 4 out of 5]

An intriguing investigative piece but might be too heavy for the non-technical trader.

[David · Rating 5 out of 5]

Again, the Queen, the Club of 13, 13 Families RUN the WORLD...

[Ryan_hg · Rating 4 out of 5]

You can't win the game that you didn't even know you are playing. And yes, we are all in it. This book tells you why

[Pensioner · Rating 3 out of 5]

Insights... I fail to tie the knots together at the end of the book. Insightful book on commodities trading.

[Ruchira Datta · Rating 5 out of 5]

Despite the title, the book was quite balanced, yet nevertheless gripping.

[Navdeep Pundhir · Rating 2 out of 5]

A very good start and a pretty bad crawl to the finish!

[Cassie Fenske · Rating 4 out of 5]

Legal trading: good
Illegal trading: bad

[Jane · Rating 3 out of 5]

I stumbled upon this in my libraries new non-fiction shelves. Since I was actually once a commodities trader, back in the dark ages, the industry lingo and history was familiar. But the market I worked in was extremely different from the super-charged one that Kelly very patiently explains; especially before the Volcker Rule. She does a good job with a tricky subject. I might complain that sometimes the price of houses, vacations and clothing smacks of ""...the Rich and Famous"", it does substantiate the value of these traders' impact.
Kelly illuminates this piece of the financial services industry that caused so much pain. I recommend it, if you really are interested in some of the pre-crash shenanigans.
Would bet the Volcker Rule and the Commodities Futures Trading Commission are two of the roll-back actions we'll see early in January!

[Ed Maher · Rating 3 out of 5]

If you're looking for insight into how commodity trading works, you might be disappointed in this book. It does, however, do a good job of portraying key players and cuing some of the major headlines that commodities trading invoked over the last 10 years. It won't overwhelm you with details, but I was hoping for a more teachable moment that never really came. The book's conclusion seems to be that commodities was just another bubble, like real estate and high tech. Maybe so. I just feel that the capacity for evil within this realm can't be so easily dismissed.