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Memoirs of a Minyan: Whaddya Say Y2K?

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The purpose of the journey is the journey itself.

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We treated people the way I wanted to be treated when I was on the other end of the phone. We always told them why we traded and rarely hurt them with our flow. If we ran over them with one of our orders, we adjusted prices as a matter of course.

My grandfather taught me that all we have is our name and our word. The trading operation at Cramer Berkowitz evolved into a direct extension of that.

Wild Pitches

Feeling emboldened in the spring of 2000, I swung at a pitch outside of my strike zone. One of my brokers alerted me to a special situation, a stock called Focus Enhancements (FCSE) that he believed was ready to run.

We were making money hand over fist and as I was trading particularly well, Jim and Jeff were happy to indulge me. After we weighed the opportunity, we established a six-figure position as it traded between $6 and $8.

We were in a groove and our confidence was matched only by our growing reputation. With the market swinging wildly-10 to 15% at a clip-we seemingly had the script in our hands before it hit the tape.

By the middle of the first quarter, we established a sizable lead on the averages and a boldness that bespoke our performance. In hindsight, that was the first warning.

"Focus Enhancements on the tape!" screamed Matt Jacobs as we all trained our eyes on the headline. The news was negative and the stock dropped 30% before we took our next breath.

Nobody said a word as phones rang unanswered and Maria Bartiromo chattered away in the background. I was frozen-we all were-despite the fact that the loss, while substantial, was a pimple in the much broader complexion of our $400 million portfolio.

I sat across from Jim and watched his face turn from white to pink to a sullen shade of red. And then the twitching started, a facial tick that would become all too familiar with time. He pushed back from his turret and walked into his office. Instinctively, we followed and shut the door behind us.

I've always been my harshest critic and hold myself to the highest standards. Nobody needed to tell me I screwed up. They knew it, I knew it; we all knew it.

But this was one trade-a big trade but one trade-in the context of a series of profitable decisions that netted our firm millions of dollars. I braced for some backlash but wasn't prepared for the realities that came to bear.

Jim was relatively calm at first-relative to him, as it turned out. What began as a discussion regarding our alternatives to either mitigate risk or seize an opportunity quickly devolved into a soapbox rant.

It stopped being a dialogue between partners; Jim unloaded on me in a way I hadn't seen in my entire working life. All he could do was detail how horrible and unacceptable the situation was, over and over and over again.

Jim screamed. He swore. Here's the odd part-I may have even seen a tear by the time he was done. It was the strangest display of emotion I ever witnessed in a professional setting or otherwise.

By the time I left his office, I wasn't thinking about Focus Enhancements. All I could think was, "Who is this guy and what the heck just happened?"

I've worked with some serious personalities over the years but what I witnessed that day set a new standard and produced a valuable lesson.

Just as bad seasons define good fans and bad times define good friends, bad trades define the true colors of your partners in the pits.

R.P.

Click here for the next chapter of memoirs, "Battle Lines Are Drawn"

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No positions in stocks mentioned.
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