The Legend of Bond Trader & Pop Artist Eddie Rincon

Displayed below are three pictures of the same velvet painting entitled Ride The Storm.

The first photo of the painting was taken on August 11, 2007 when massive market storms took root. The second photo was taken August 3, 2008. The third photo was taken last weekend: April 17, 2010. The obvious physical change in the painting’s appearance over these years epitomizes what market participants have felt during this period.

The painting was done in 1986 by a bond trader from the legendary Salomon Brothers team that had just created the first mortgage backed securities but was already falling from grace. Not willing to be artistically recognized back then, the trader signed Ride The Storm with the pseudonym Eddie Rincon.

Not long before, ‘Rincon’ had moved to artist hotbed neighborhood SoHo to quietly build his art portfolio and one day escape the market tumult. His trader buddies didn’t hesitate to rip the irony: by paying $450-per-square for his loft, he was pricing the “real artists” out of the market.

As Salomon imploded and Rincon’s SoHo loft was sold at a loss, he went West to LA with some fleeing Salomon and Drexel Burnham colleagues to check out what they heard was the smartest ‘new’ bond shop. Turns out they’d been quietly building bond portfolios since 1971. Studying as New York coughed up new bond products daily.

Some landed there but Rincon went his own way. His painting was thought lost until it was salvaged December 2006 from a La Jolla gallery by a retired money manager. A man who owns up to its awful kitsch but says the painting struck him back then when home prices scared him and he thought brewing mortgage securities storms might sink even the noblest ships.

So he bought Ride the Storm and hung it on a garden shed in the back of his Laguna home. There, he said, nature would help the painting “live by its name.”

In April 2007, four months after the painting took its place on the shed, subprime mortgage king New Century failed. High profile Bear Stearns and UBS hedge funds followed suit in June and July 2007. Mortgage securities were the culprit. Then when American Home Mortgage failed in August 2007, the storm became a global market monsoon some argue is still raging today.

The current owner of the painting says someone called the work a prophecy when it debuted at a 1986 emerging artists exhibition in NYC (sponsored by Salomon, naturally). Others say the oil on velvet was merely a joke.

But it’s hard to disagree that Ride the Storm perfectly tells the market story since 2007: Hundreds of firms failed, millions lost jobs, governments re-wrote all their own rules and committed trillions to help. Yet we’re all still riding the storm, our velvet exteriors roughened and perhaps torn, but our true colors no less bold.

Because Ride The Storm was created when mortgage securitization exploded then re-emerged as mortgage securities caused markets to implode, we’ve argued that a kitschy market joke might instead be masterpiece and should be inside, protected from the elements. But the painting’s owner won’t have it.

“Not until this full market story is told,” says this oracle of Laguna, “and let’s hope the painting finds port soon.”

And that’s the story until the next photo session.

Ride The Storm, By Eddie Rincon, Picture 1: Taken August 11, 2007