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  Four Faces of Speculation : The Farmer, the Baker, the Banker and the Hedge Fund Manager

Four Faces of Speculation The Farmer, the Baker, the Banker and the Hedge Fund Manager

Part 4: The Hedge Fund Manager

Stefan Müller nervously brushes his gelled brown hair from his forehead and points at one of the six computer monitors in front of him.

"At the moment, oil futures are the measuring stick for everything," he says with a great deal of respect in his voice, looking at the red curve on the screen. With its many peaks and jagged turns, it represents the split-second updated market rate for 1,000 barrels of light crude oil, to be delivered in July.

When people like Müller wake up in the morning or can’t sleep at night, they stare at the ever-changing oil futures prices, which in their world divide winners from losers.

Müller, a hedge fund manager with Germany's Proprietary Partners AG, long ago gave up trying to explain future oil prices with logic. "It's pure speculation," says the speculator, and the markets have tended toward exaggeration. Müller, 37, abandoned the commodities markets at the beginning of the year -- but he still can't afford to ignore oil prices. He's betting €50 million in total on future market prices, primarily on German and Swiss stocks. And if oil grows yet more expensive, the stocks will inevitably fall.

But even that wouldn't be enough to push his hedge fund, which grew by 21 percent last year, off track. Because with his fund, registered in the British Virgin Islands, he also likes to hedge his bets by speculating on falling prices.

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