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A Celebration of Life


Times have changed so much since then and fundamentally, we have, too.


"Those who won our independence believed liberty to be the secret of happiness -- and courage to be the secret of liberty." -- Abraham Lincoln

I'm still a frequent flyer, but like many of you, I have raised the bar for business events that require my presence in person rather than by teleconference or Web conferences. I am certain that you, too, have gravitated toward relying more on the Internet not just for convenience but also safety reasons, and that's why we at ChangeWave are looking to bring our trading wisdom directly to you.

Earlier this week we observed the five-year anniversary of 9/11. I doubt any of you need me to cite the catalyst, but as I write this week's column I thought it important to look back and remember. Times have changed so much since then and fundamentally, we have, too.

On that terrible day, I was broadcasting on the radio and telling my friend Jonathan Hoenig that I couldn't believe the damage done to the first tower was done by a private plane, as early reports widely claimed about the first strike in Manhattan. Silently, I said a prayer for those on the plane and those at the point of impact, but my gut told me this was more than a private plane flying into the World Trade Center towers.

I've flown Cessna 172s, and there was no way the damage we were looking at was done by anything short of a commercial airliner. Some of those being interviewed on the streets said just that, but as usual, the reporters were running with the story they wanted to report. That was until the second plane, United 175, hit the second tower. Thanks (and I use that word lightly) to the news media, we got to see that impact over and over again, and that erased any notion that the first plane -- which we later learned was American Airlines 11 -- a private aircraft.

Just as I was finishing my radio broadcast, the first of the two towers imploded. I said another prayer. Jonathan and I were both speechless. We both knew people in each tower and wondered aloud how many made it out prior to the collapse. If there was anything resembling a silver lining that day, it was that the timing of the attacks was such that the total killed by the 19 al-Qaida hijackers ended up being a fraction of the original estimates.

Unfortunately, one of my friends was one of the 2,749 victims in New York that morning.

Stephen Louis Roach was a vice president for Cantor Fitzgerald and he worked on the 105th floor. I made frequent trips to New York, and one of my first stops was almost always to my friends at Cantor Fitz and Stephen Roach.

Because of the first WTC bombing in 1994, the towers had the sort of security in place that was rather unique before 2001 -- but is commonplace today. Despite the hassle of security checks prior to the two elevator rides up to Cantor on 105, the view of the city and seeing Stephen was worth it. He was always so upbeat and enthusiastic. Like my friend Tobin Smith, "Roachie" had a taste for red wines and was delighted to share them with you, just like everything else in his life. I was lucky to call Stephen and his wife Isabel my friends.

When he was trapped in that burning building on Sept. 11, 2001, he called Isabel's cell phone and on her voice mail he left his goodbyes to her and his children, Stephen Jr., Eileen and Mackenzie. He said he loved her and his kids, and he asked that she "Save this message forever." Even now, writing this five years later, it still chokes me up to remember Roachie leaving that message. You can bet I'll save that message forever in my memory.

There's more about Mr. Roach and 9/11 that I'd like to share with you, but that will have to wait for another article. I will tie in our HeatSeeker with that fateful September day by saying that the early iterations of our scanner for usual activity did pick up unusual buying of puts back on Sept. 11, 2001. As you know, puts give the owner the right to sell a security at a given price and, as such, are viewed as either a protective measure, like an insurance policy or as a way for an investor with a bearish outlook to take a leveraged bet to the downside.

What would you say if I told you that of all the airline stocks, only United Airlines (UAUA) and American Airlines had unusual put trading activity ahead of 9/11? And it was 20–40 times normal buying of puts in those two stocks! Someone looking to protect an airline portfolio would probably have picked those two stocks, but wouldn't they have also picked Southwest (LUV), Northwest, Continental (CAL) or Delta?

Why did these eerily accurate put buyers focus only on United and American? Did someone know that those particular planes were going to be used as incendiary guided missiles? You bet they did, but again, that's for another article.
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