Wednesday, February 18, 2009
Xcelera Anybody?
Behind each flash of red and green on a stock trader's screen there is a story to tell.
Back in 1999, many of those flashes were created by "regular" people who had just opened Ameritrade accounts. They were driven to the market by the "tech bubble" and their newly acquired access to real-time quotes. They abused the letter "e," which quickly became the world's most overused prefix, and buzzed about initial public offerings.
Seemingly sane analysts were on CNBC plastering ridiculous price targets on companies that were nothing more than a vague idea and a ticker symbol. Surely there were some who protested, but the vast majority in the media claimed that things were "different this time" and that the economy had fundamentally changed. The bulls were released through the TVs that hung from the heavy steel brackets over our trading desks. As professional proprietary traders, we were like sharks swarming to devour the chum they tossed to us.
Unfortunately, the bulls also found their way into the living rooms of unsuspecting Americans who had a friend that "cleaned up" in AOL.
CNBC hit us all with an intoxicating combination of cold analysis, sex and humor. The men in pinstripe suits with gelled hair spoke of fundamentals while a young Maria Bartiromo bumped and grinded with the traders on the floor. Joe Kiernan and David Faber acted like they were fraternity brothers, Mark Haines was your cranky uncle, and during commercial breaks, humorous online trading commercials sold the stock market to a new generation of investors.
The overriding message was, "Hey you! Why are you letting the rich guys make all the money? Any monkey can figure this shit out! TRADE! LAUGH! CHECK OUT MARIA'S TITS!"
Since we're so far removed from those times, let me give you a quick reminder of what things were like. The case of the Linux IPO was not uncommon. The stock was initially priced between $11 and $13 a share. A week or so before the IPO, the price had doubled to $22. When it opened for trade, the first open market transaction was for over $300 a share! But the lunacy wasn't reserved solely for the NASDAQ stocks. Corning, the glass company traded on the NYSE, gave us our fair share of excitement. You can find their bowls in your mother's cabinets. In 1999 though, all anyone cared about was fiber optics, made from GLASS, and we watched as this tame company went from $15, to $115 and back to $15 in about a year.
In 1999 if anyone suffered from an anxiety disorder, it wasn't brought on by Osama Bin Laden or by their mountain of mortgage debt... Instead, people were afraid of missing the next big thing. But because no one knew anything about the companies being promoted, the common reaction was to buy first, just in case, and ask questions later. Xcelera anybody?
Indeed, this was the free-money era for investment bankers; the regular guy was in the market buying and the professionals were selling to him.
Weird stuff was happening every day, but to a new trader like myself, it didn't seem weird at all. This was the environment in which I was learning. It was sort of like growing up in a household where your Dad was a lion tamer and you didn't realize that this was odd until you were older.
The bustle and the energy from the exchange lifted out of our screens in those red and green flashes and drew us in. This was way before the anonymous hum of the hybrid market. The energy then was more visceral and personal. It was as if you could feel the pain and greed in the quotes. A big offer was lifted and you felt the flood of elation. A huge bid got smacked and you could almost see the bulls hang their heads.
And I was there, creating my own red and green splashes on the screens.
Early on, I remember focusing on three stocks: RDN, AVY and MUR. No one pulled me aside and told me to watch these stocks... in fact, no one told me anything. The only guidance I received was to watch the broad market, as 3 of 4 stocks move with it, and take my cues from there. I learned to search out stocks that had at least a one-point daily range, were priced between 10 and 100 dollars a share, and traded upwards of 200k shares daily.
I had good days and bad. At the end of my first 8 months, I came away with a respectable $40k. Looking back, I was being way too conservative. If anything had to fundamentally change it wasn't the media coverage, it was the way I viewed money. Surely, given the huge price advances on display one was almost encouraged to think that money wasn't real.
This was also spurred on by some of the traders surrounding me and how they dealt with huge gains and losses.
Tuesday, February 17, 2009
The RO Report, "Vacation" Edition
I need to take a break from this market. For now, I will also be taking a break from posting the RO. I've just never had such a struggle and need to go into my own world for awhile.
Could be to the end of this week, could be longer. I'm just gonna feel things out and do what seems right.
I'll continue to post the Tuesday through Friday posts.
Paul Tudor Jones: Market Wizard
Now, let's get one thing out on the table right away... Any dude who throws "Tudor" into his name, if he isn't an asshole, just sounds like one.
If you throw Tudor into your name and you play golf, YOU ARE AN ASSHOLE. It's a law stronger than Newton's Law of Gravity.
I dare any of you to prove me wrong on this. (Note: I don't know if PTJ plays golf, so he may not be an asshole at all.)
Okay, now let's get to the interview.
No... you know what? Forget it. I can't do it. And since my eyeballs have practically been bleeding all weekend due to some ancient virus that my daughter brought home from her filthy nursery school, I can't stand to sit and stare at the screens now and write much about this dude. It's a weakness, but I can't get over the name.
I'll leave you with what struck me the hardest...
PTJ traded through the 1987 crash and Schwager asks him if he believes the crash was "an early warning signal of more negative times ahead." Here is part of Tudor's response...
Everything gets destroyed a hundred times faster than it is built up. It takes one day to tear down something that might have taken ten years to build. If the economy starts to go with the kind of leverage that is in it, it will deteriorate so fast that people's heads will spin. I hate to believe it, but in my gut that is what I think is going to happen.So let me ask you... Has it taken 22 years for our chickens to come home to roost?
I know from studying history that credit eventually kills all great societies. We have essentially taken out our American Express card and said we are going to have a great time. Reagan made sure that the economy would be great during his term in office by borrowing our way into prosperity. We borrowed against the future, and soon we will have to pay.
Bernie Madoff Doll
File this under the always growing "Why Didn't I Think Of This?" category.
Click here to order your own miniature Bernie Madoff doll that you could clobber with a little hammer.
Sounds good... however, since we're now in the Greatest Depression, (thanks in part to fuckaloons like Madoff) I'd suggest that instead of shelling out $100 for this thing, build your own out of toothpicks or something and just use a hammer you already have.
Monday, February 16, 2009
Sore Eyeball Disease & Roy Longstreet
I was taken down this weekend by a very odd virus that ferociously attacked my eyeballs. It sounds funny now, but it was very painful. This isn't a very medical way of looking at things, but it was almost as if my brain was on overdrive, and the heat from it was basically cooking my eyeballs like two eggs, which felt as if they were about to burst, and ooze from their sockets down my cheeks.
So as I was laying in bed with a fever and sore eyeballs, I decided to pick up a book that "Trader P" purchased for me called "Viewpoints of a Commodity Trader" by Roy W. Longstreet. Now, I know some of you closer readers out there are like, "Duh, why read if your eyes hurt" but I couldn't sleep, and I needed a diversion, so stop being a dick.
The chapters are short, and I am going to type out an excerpt from the chapter entitled "A Time To Rest" for you here, because it, in conjunction with my sore eyeballs, told me it's time to take my foot off the gas a bit. Here goes:
"A Time To Rest" by Roy W. Longstreet
I have known very successful traders who, afraid to take a vacation for fear something important would happen, eventually lost their "touch." One such individual is reported to have lost more than $4,000,000 over the past five years.
When faced with such a situation, it's time to ask yourself two fundamental questions. First, is this the only opportunity that will ever come my way? Second, if this is such a great opportunity, am I mentally, physically, and financially prepared to take full advantage of it?
If the answer to either is, No, it's time to stop and rest. It's time to let the soul catch up with the body, to give yourself the chance to think a little clearer, to plan a little better.
Going forward, I'll be taking more days off. I'm pushing too hard from a mentally exhausted state, and it's driving me backwards.
Acknowledging this has made me feel better already.
Sunday, February 15, 2009
Sunday Space
The whole aim of Newspeak is to narrow the range of thought. In the end we shall make thought-crime literally impossible because there will be no words in which to express it... Every year fewer and fewer words, and the range of consciousness always a little smaller.
-George Orwell (1903-1950), Nineteen Eighty-Four, 1.5, 1949
Friday, February 13, 2009
The RO Report, "Simulator" Edition
I almost took today off. After the carnage yesterday, I had all those Market Wizards in my head telling me to take my foot off the gas.
Instead, I found a compromise. I went surfing early and realized, as I was out there bobbing in the water that I was doing far more good for myself surfing, than trying to force trades. I had the best session of my life. It was amazing. Immediately afterwards I wrote about the experience which I'll probably post in a couple of weeks.
After I came back, I traded on the simulator. I lost $17,490 on the simulator. So, in a way, I actually made that money since I would have lost it had I been trading live... get it? DT Wins Again!
Anyway, the office did okay. Out of 28 traders, 18 were gross positive or 64%. 4 traders made over $1,000 gross, and 1 trader lost over $1,000.
Enjoy the long weekend. I have a full week of posts ready to fire next week, including a history and an around the house.
"Lucky Pierre" - Trader A, $5,984 on 76,124 shares traded.
2. Trader 9*, $2,854 on 2100 shares traded.
3. Trader 10*, $2,513 on 0 shares traded.
4. Trader K, $1,135 on 32,400 shares traded.
5. Trader F, $690 on 18,600 shares traded.
"Chambermaid" - Trader H*, -$1,655 on 7,300 shares traded.
2. Trader D, -$558 on 114k shares traded.
3. Trader L, -$428 on 31,400 shares traded.
4. Trader G, -$397 on 59,200 shares traded.
5. Trader V, -$264 on 14,200 shares traded.
The Week In Review
Lucid Films Presents - The Stimulus Package
(Irreverent and NSFW)I say pay the Somali pirates to heckle the illegal Japanese whaling ships.
The more that comes out about the salmonella peanuts, the more it stinks. It also highlights how insecure our food supply is.
Note: 123456 is not a good password...
Amazing passive solar house in Iceland. I find things like this inspiring.
Prospectus is blogging again and he's spilling the beans on Richard's sex life!
Take back those bonuses!
I still don't Twitter. Soon I'll be in the minority.
Hilarious new blog about Digg. Zen and the Art of Digg. Dude, "friend" me.
Great Moments In Willful Ignorance. The Reformed Broker runs a very funny and consistent site. It has become a daily read for me.
It's been a tough week. Here's some inspiration in the form of a squirrel.
Enjoy the day off on Monday. I know I need it!
Thursday, February 12, 2009
Radiohead, "You And Whose Army?"
When you're losing in this job, it feels like you're fighting a war.
The RO Report, "Fuck The PPT" Edition
Whether or not you believe any of the conspiracy theories regarding the "PPT," or the Plunge Protection Team, you have to admit that the way news stories suspiciously drop at important market levels is very coincidental to say the least.
The RO got completely fried this afternoon when some news dropped at 3:05, just as we were breaking the lows of the morning.
Anyway, I have a sick family and this market is trying its hardest to make me sick too.
Here's the numbers.
Out of 29 traders today, 8 traders were gross positive, or 28%. 3 traders made over $1,000 and 14 traders lost over $1,000 gross. Many lost a large multiple of $1,000. I was #21 of 29 adding a lot to my worst streak of my career.
"Chambermaid" - Trader Z, -$32,481 on 89,000 shares traded.
2. Trader C, -$31,486 on 290k shares traded.
3. Trader N, -$26,680 on 109k shares traded.
4. Trader F, -$11,642 on 137k shares traded.
5. Trader A, -$8,162 on 216k shares traded.
"Lucky Pierre" - Trader 10*, $1,627 on 2,800 shares traded.
2. Trader R, $1,107 on 24,806 shares traded.
3. Trader M*, $1,068 on 0 shares traded.
4. Trader X, $187 on 4,200 shares traded.
5. Trader G, $155 on 26,000 shares traded.
What a disaster.
An Odd Interview
Pointed out to me by "Trader X" from the RO, not the more famous Trader X.
This dude has a nice beard.
The Gods Have Conspired Again
To put off publication of my new history post, "Sympathy For The Maria."
No doubt it is due to the controversial nature of this post.
Anyway, Judy fell a bit ill last evening preventing me from having the time to edit it down. Been a tough week for blogging over here.
Wednesday, February 11, 2009
Barry Manilow, "Copacabana"
Awful. Worse, I'm not even sure if I'll get that history post up tomorrow. Time has been short.
The RO Report, "Surfing" Edition
When I surf, I generally use my longboard. And waves that are good for longboarding tend to be more forgiving than a good shortboarding wave which is typically steeper and faster.
Due to some utter stupidity during my last hour of trade, I nearly "manservanted" myself on a day I knew wasn't good for trading. As punishment, I took my shortboard out and head to the shore. I'm an awful shortboarder and I took some nasty wipeouts...
Anyway, the RO managed to have a solid day. The early morning run in gold and commodities was played well by a number of traders.
Out of 28 traders today, 17 were gross positive or 68%. 6 traders made over $1,000 gross and 4 traders lost over $1,000 gross. I was #23 of 28. Disgraceful.
"Lucky Pierre" - Trader A, $12,907 on 75,800 shares traded.
2. Trader D, $7,245 on 123k shares traded.
3. Trader B, $6,164 on 129k shares traded.
4. Trader C, $2,813 on 74,400 shares traded.
5. Trader E, $2,508 on 20,100 shares traded.
"Chambermaid" - Trader Z, -$2,720 on 49,300 shares traded.
2. Trader P, -$2,319 on 24,200 shares traded.
3. Trader 10*, -$1,811 on 2000 shares traded.
4. Trader V, -$1,671 on 59,200 shares traded.
5. Trader R, -$694 on 37,500 shares traded.
Click here for the heatmap.
And here for Brian's take.
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