Oct

18

 I am asked, "what were you doing 30 years ago Oct 19th, 1987".

I got very long bonds and stocks at the close. And had a huge profit in bonds at 5 pm. But then I hedged it in the cash market. I walked home with the palindrome that afternoon and asked him if he wanted to borrow some money from me. He sold all his stocks Thursday at the opening and made fortunes for all the guys who took the other side. We played tennis on Saturday at the columbus racket club with the head bond guy at Morgan Stanley. He had a good overhead. And Susan said, "at least we won't have to truncate the prices when we put them in the trs 80 again. The German market rallied Thursday at noon, when everything was down the limit, and that fixed things. A big options trader bought 2 S&P futures and held them for 10 years, and made a million bucks on it. Jim Lorie had been short from 200 pts lower in SPU and covered at breakeven on the limit down open. My broker on the floor was filling orders for a fee for others during the crash and I fired her because she could have been hit with an out and bankrupted us. I did not get much sleep that week as I often don't now, 30 years later. I didn't realize that prices were locked limit in the morning with a big overhang to sell at the limit. And I bought at the limit when it reopened around noon, to find myself holding a huge immediate loss as the real price was much lower. Baker did it by saying we had to weaken the dollar which caused bond prices to fall. I met his daughter and showed her an article about King Canute realizing he couldn't control the waves, and told her that's what her father should have done. She kept calling him Daddy and she called me up afterwards to chat but I hung up on her because I thought she was a salesman.


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  1. Joe DiLeo on October 31, 2017 2:00 pm

    I’ve never opened a brokerage account or made a single trade, yet the con of the subprime meltdown created for me a wipe-out margin call just the same.

    I’m the son of poor, uneducated and often deleterious parents. My earliest memories are centered upon living in the future as a means to survive my present. It is extraordinarily difficult to train ones young mind to achieve abundance while all evidence suggests that failure is the parental DNA inheritance that runs through your veins. I learned to sell early on by first having to sell myself on the possibility of a future worth living.

    I had my first million dollars in the bank while still in my twenties, and went on to found a company that employed nearly 100 wonderful people. For over a decade I worked 80+ hour weeks, plowed profits into growth and established a 7-figure income for my family. By any definition the rags-to-riches story all children of poverty are taught to aspire.

    2007 started out great, and I had just signed a mid 8-figure LOI to sell the company. By WS and trading standards these are trivial amounts, but it was everything to me and my family. The week Lehman collapsed the LOI was pulled, and owing to spending the next 12 months taking personal funds–that I’d already distributed & payed tax–back into the business to make payroll, I was at zero.

    The first time I’d ever heard the name Victor Niederhoffer was last week via his interview w/ Barry Ritholtz. I’ve since read all I can find on Mr. Niederhoffer and ordered his books; it’s fair to say his story of multiple come-backs is a welcome respite from the continued failure the decade since the collapse has been.

    Perhaps more damaging than losing our home, savings, kids college accounts and purported friends is that I no longer possessed the elements needed to comeback; failed, maligned, without reputation or the capital & credit needed to rebuild. I’ve re-started over and over again, never with enough capital to provide for a family of six and get over the hump.
    There are past customers who think I a thief and a terrible person. In the U.S. tobacco companies can conspire to kill and the largest banks can scam in any manner they invent….but when a founder fails to deliver he is assumed to be unscrupulous. If I do not again triumph my children will never know the father they were supposed to have, and worse perhaps disregard my counsel as ballyhoo from a dubious source.

    Victor once turned $50K into $20M, and there is also the story of Fred Smith taking $5K to a Las Vegas blackjack table to win the money needed for FedEx to pay their fuel bill and thus stay alive. Upon his return to the office his lieutenant asked “….you took our last $5,000–how could you do that?” to which Smith replied “What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway”.

    I need identify within the market an improbable trade that possesses the highest chance of proving otherwise. If it fails, what difference does it make anyway? What do I do?

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