Recently someone wrote this comment on my blog…
“….how can you even write about trading, since you admit that you blew up on a trade. You’re not a real trader, you’re a douchebag!”
A couple 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. Secondly, doesn’t my grandmother have better things to do with her time?
The question of what a “real trader” is and if I deserve that title is probably a blog post of its own, but it did get me to thinking about what it means to do a “trade”.
The mechanics of a trade involve the buying and selling of a commodity, but the process of making a trade is a much 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 markets mirrors that of life. The way we weigh 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 “trades” that standout 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, after high school I would have gone to a good but reasonably priced four-year college, then just as I was being handed 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 have been stocked with an anti-Jobs wardrobe of blue suits, white shirts, and black wing tips. In at nine, out at five, lather, rinse, repeat for 40 years until a gold watch was hucked at me as I was shown the door.
The post high school graduation period is critical in a young man’s life. There is a lot of pressure to enter into a choice that will often determine the direction of the rest of your life, and I was feeling that pressure in spades. Worse yet it felt as if the window to make that decision was closing.
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 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 to rise up the corporate ladder.
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 lovers. My first hint that there might be problems going forward came up one night when were out having dinner at a Mexican restaurant.
After the waitress took our order and left the table Maria said to me, “I can’t believe the way you were looking at her.” “What are you talking about,” I said, honestly puzzled. “Oh my God you looked at her like you wanted to jump all over her”. Being the sarcastic asshole I was (okay, I am), I looked her straight in the eyes and said, “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 Kim Kardashian has taught us anything, it is 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 counselling, 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.
3. “Rolling A Position Forward”
I had one mantra that I repeated to every girl I went out with, “I am never getting married, but if I do, I am NEVER having kids.” Boy what a catch I must have seemed like huh?
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 was making her an offer she couldn’t refuse.
I conferred with a good friend of mine just to make sure I had my position down pat. I had her pretend she was my future wife, throwing everything she could at me to try to change my mind, but I held fast.
I decided to have “the talk” at an international food court near my office. It was my favored spot to break bad news to my girlfriends as it was crowded with office workers during lunch making the likelihood of an ugly scene less likely, and 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 and said, “Well, then I guess this is the end for us, because I want to have kids.”
Staring right back at her, and having prepared for this moment I said, “Well babe, 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 be sure I say a prayer to God, Jesus, Mohammed, Buddha, Jimmy Page, Shiva, Vishnu, Mark Zukerberg/Satan, and that guy who keeps predicting the Armageddon, and thank them for letting me put my ego aside, allowing 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 where I grew up, when a baby is born they give it a bottle and a subscription to the local MLS service. For as long as I could remember it was a simple concept, all you had to do was buy a house and it went up in value.
I watched as prices got to new highs in 2002 and continued to steadily move up over the next two years. 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 the time I sold my business in 2005 you literally could not turn around without someone you know buying a new house. I 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 friends homes were increasing in value by 3% to 5% monthly, and everybody was getting rich in the real estate market. I decided to do it.
I checked the interest rates and talked to my friend who owned a mortgage broker and was 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 was driving through a nearby housing track, trying to keep my eyes on the pulse of the now parabolic market when I 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 me and I cancelled my appointment. The next year was even harder to stand by and watch as price 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. I am still renting.
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. Leave the only real job I had ever known, and take the financial risk that went with that decision, or 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 came to me. I asked him to walk out to the front of my building with me.
Our building was at the end of a short cul-de-sac, not even then length of a football field. I looked at him, pointed to the beginning of the street, and asked him, “have you checked out the foundry down there on the corner. You know, the one with flat beds full of aluminum being fed into the furnaces that runs 24/7?” When he responded that he hadn’t, I literally pushed him into the street. I went in to my office and called a broker whom had cold called me six months earlier and 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.