Someone recently sent me this comment;
“How can you even write about trading, since you admit that you’ve blown up on trades. You’re not a real trader, you’re a douchebag!”
A couple of things came to mind when I read this. First off, I resent being called a douchebag. I am really more of an asshole than a douchebag. Second, doesn’t my grandmother have better things to do with her time?
The question of what a “real trader” is and who deserves that title probably warrants a blog post of its own, but it did get me thinking about the larger meaning of the word “trade.”
The mechanics of a trade involve buying and selling a commodity, but the thought process behind a trade is a broader concept, one that transcends the markets.
I don’t mean this in some mystical, shamanic, Val Kilmer in Thunderheart type of way, but in the way in which – for traders – the decision-making process in the market mirrors that of life.
The way we evaluate risk and reward, time our entries and exits, battle our fear, our greed, our ego, and ultimately live with the consequences, be they good or bad.
With that in mind, I have five monster “trades” that stand out in my life.
1. “The Perfect Entry”
My father worked for one company, Campbell Soup, for over 20 years. If my mother had her way, I would have followed his path.
After high school, I would go to a good, but reasonably priced, four-year college, then just as they handed me my diploma, a pneumatic tube would have sucked me up and inserted me directly into a cubicle at a Fortune 500 company.
My closet would be stocked with a supply of blue suits, white shirts, and black wing tips. In at nine, out at five, lather, rinse, repeat for 40 years until they hucked a gold watch at me as I was shown the door.
Post high school graduation there was a lot of pressure for me to choose a path – one which would decide the direction of the rest of my life – and I was feeling that pressure in spades. Worse yet, it felt as if the window to make that decision was closing rapidly.
I almost took the “safe” route, but I knew in my bones that college was not for me, so instead, I took a side job that I had after school and made it into a full-time business.
This early entry into entrepreneurship allowed me to be my own boss and rise or fall on my own merits, instead of punching a clock and kissing ass to try and rise up the corporate ladder.
It might not have been the right choice for some, but it was the right choice for me.
2. “Cutting My Losses”
My first serious relationship was with a beautiful Peruvian girl named Maria whom I fell head over heals for. It was a passionate and volatile relationship that is often common with young people.
The first hint that there might be problems going forward surfaced when we were out one night having diner at a Mexican restaurant.
After the waitress took our order and left the table, this is how the conversation went;
Maria: I can’t believe the way you were looking at her.
Me: [honestly puzled] What are you talking about?
Maria: Oh my God, you looked at her like you wanted to jump all over her.
Me: [heavy sarcasm] Yeah, in fact when you go to the restroom I am going to ask her for a date.
Fortunately, I have good reflexes and the salsa bowl hit the wall behind me.
I loved her as much as I could have loved someone at that time and early on I thought there was a future for us. But if Katy Perry has taught us anything, it’s that love can take unexpected turns and often goes bad.
A year into our relationship I found myself going to weekly counseling sessions to try and work through the myriad of issues that made us incompatible.
Then one night, as we were waiting to go into our session, it hit me harder than when Spade cracked Farley with that 2×4 in Tommy Boy.
If we are only dating and are already in counseling, where the fuck is this relationship going to go from here?
I hit the eject button right there, joined my friends at a local bar, and “got it in” as fast as I could. Unfortunately, the brewzooka wasn’t yet invented.
“My shoulder doesn’t hurt very much, but my face does. Right here. Not here or here so much, but right here.”
3. “Rolling A Position Forward”
As a young man I had one mantra that I repeated ad nausem to every girl I dated;
“I am never getting married, but if I do, I am NEVER having kids.”
Boy, what a catch I must have seemed like?
After dating my current wife for almost six years, our relationship was getting to the point where it was time to fish or cut bait. She comes from a large Catholic family and having children was a concept embedded deep in her DNA.
Of course, that didn’t faze me and I figured I would just lay it on the line; the wonderful me or kids. I’d make her an offer she couldn’t refuse.
I asked a friend of mine help me practice my spiel, just to make sure I had it down pat. She pretended she was my future wife and threw every argument she could at me, trying to change my mind, but I was solid.
I decided it was time to have “the talk,” so we met at an international food court near my office during lunch hour. It was a good place to news to give bad news as it was always crowded, making the chances of ugly scene less likely, plus the Italian joint had a great calzone.
We sat down and I told her straight out that I loved her and wanted to marry her, but under no circumstances would I be having children. She didn’t bat an eye and simply responded to me in a calm straightforward way;
“Well, then I guess this is the end for us because I want to have kids.”
I stared right back at her – having been well prepared for this moment – and said;
“Well baby, if that’s the case…..then……well, uh……I guess I am okay with having kids too.”
I am not a religious guy, but every night, just to cover my bases I say a prayer to:
- Jimmy Page
- Mark Zuckerberg
- That guy who keeps predicting the Armageddon
I thank them for letting me put my ego aside, which allowed me to move my position from a losing one to a winning one.
Eerily similar to how fast I folded.
4. “Learning Not To Chase”
In Southern California, when a baby is born they give it a bottle and a subscription to the local MLS service. That’s where I grew up and for as long as I could remember, buying real estate was a simple concept.
All you had to do was buy a house and it went up in value.
Beginning in 2002, housing prices in SoCal and started steadily moving upwards. By 2004 the home buying mania was in full swing and my wife and I considered taking the plunge, but we could not agree on what we wanted and decided to “wait.”
By 2005, you literally could not turn around without someone you knew buying a new house. We went to cocktail parties where people would talk about the five or six properties that they were in the process of flipping.
The pressure to buy a house was incredible and having a decent slug of cash in the bank I was tempted. My wife wanted a place of our own to raise a family, my friend’s homes were increasing in value 3% to 5% monthly, and everybody was getting rich in the real estate market.
I decided to do it.
I checked interest rates and talked to my friend who was a mortgage broker. He assured that I would have no problem qualifying for the house of my dreams.
Before going down to his office to start the paperwork, I drove through a nearby housing track and came across a newly listed property.
I pulled the car over and grabbed one of the spec sheets hanging from the yard sign. It was a 40-year-old house with five bedrooms, 2500 hundred square feet, in a decent but not particularly remarkable neighborhood. The listing price was $1,495,000!
I knew at that moment that the market had gotten away from us and canceled my appointment.
The next year was even harder to stand by and watch as prices went to never before imagined heights, but in the end my discipline in not chasing kept me from a financial catastrophe that so many others did not avoid.
5. “The Perfect Exit”
After twenty years, the business that had given me that initial inspiration and defined me for so long had become my personal hell on earth.
I could no longer deal with employees, customers, and sixteen hour, six-day weeks. More than that I had long ago realized that there was nothing even remotely related to my business that I was passionate about.
The money was good and I could have continued on in my semi-catatonic state for five or maybe ten more years, but I knew it would be no good for me or the people around me.
My wife and I were talking about having kids, a thought which terrified me – not because of my long ago discarded “no kid policy’- but because it left me with two equally scary choices.
- Take a financial risk and leave the only real job I’d ever known.
- Keep my business and be an absentee parent who – when I did show up – was tired, irritable, and not ever really there.
Something had to give.
I remember the day I made the decision to sell my company like it was yesterday.
Unannounced, an inspector from the Southern California Air Quality Management District walked into my office. He informed me that some of the air quality readings in the area showed high levels of metallic substances.
He was spot checking businesses and mine was in his sights. Apparently, it did not matter to him that we warehoused furniture, art, and accessories for interior design firms.
As I walked him through our warehouse showing him all the furniture, art, and accessories, he kept asking increasingly more annoying questions. Did we use any metallic substances? Did we have any open flames? Was there any high-powered industrial machinery in use?
“Jesus fucking Christ, we store furniture, and art, and accessories you idiot, how many times do I have to say it?” I said to myself.
Then a thought crossed my mind and I asked him to walk out to the front of my building with me. Our building was at the end of a cul-de-sac, on a street not even half the length of a football field. I looked at him, pointed to the beginning of the street, and asked;
“Have you checked out the foundry down there on the corner. You know, the one with flat beds full of aluminum being fed into a furnace 24/7?”
When he responded that he hadn’t, I literally pushed him into the street. I went back into my office and immediately called a broker who had cold called me six months earlier.
One year later my business was sold.
Life happens in real-time and I have always approached it with that trader’s spirit, even if I wasn’t consciously aware of it at all times. I’ve had some good outcomes and some bad ones.
These were five of the good ones.