Memoirs of a Minyan: Let the Games Begin!
The purpose of the journey is the journey itself.
The line went dead while I the receiver was still nestled against my ear. I'll never forget the tension I felt as the markets opened. I had skin in the game-not money, but my reputation.
One of the first things my grandfather Ruby taught me was that all you have is my name and my word and both were on the line. After meandering on both sides of the flat line, the markets rallied hard into the close and finished on their highs.
I was hooked.
Holiday season approached after I had been there eight months and it was bonus time at Morgan Stanley. As other traders received word on their multiple six or seven figure bonuses, I nervously awaited my turn. When nobody was left on the desk, Jack called me into the back offices.
When I started, I was given a base salary of $28,000. Wall Street professionals earn the bulk of their compensation through bonuses so I wasn't all that worried.
"You need to step it up," he told me as the color drained from my face. "If you want to be around next year, you have to find a way to contribute to the bottom line."
I nodded my head in agreement. I knew he was right but somewhere deep within me, I secretly hoped they would throw me a bone. I quickly discovered nothing would come for free. Wall Street was notorious for fat payouts but there wouldn't be one year throughout the rest of my career when I felt I was paid enough for the blood, sweat and tears left behind.
I committed myself to earn my keep the next twelve months. I wanted to be in that room again and walk out with the big bucks. I continued to be the first person to arrive each day and the last to leave. I studied books on option pricing. I read The Wall Street Journal religiously. I established a dialogue with traders on the desk, waiting for lulls in their day to lob an occasional question.
I had the shot of a lifetime and the clock was ticking. I grew more comfortable in my ability to relay markets to the sales force and take reports.
"General Motors, symbol GM, October 40 calls. 1 ¼- ½, 500 up!"
"International Business, symbol IBM, January 20 puts, 2 ½- ¾, 250 up!"
"Citigroup, you bought 1000 calls at 2 even. ¾- ¼ 250 up coming out!"
I hadn't made the team but I was clearly on the field. I knew, however, that spring training would soon come to an end.
When Chuck tossed an odd-lot 1000 share order of Pet Industries on the desk of Harry Silver, a trader on the desk, he passed it to me. "Go sell this," he said quietly so nobody could hear. It was my first order on Wall Street and I wasn't going to just hit a bid. I played trader and offered the shares higher than the market.
I picked up the phone and cleared my voice. "Pet Industries, ticker P-E-T. Offer 500 shares at ¾."
The stock immediately began to drop. The entire world stopped with the exception of the red, flickering symbol as sweat began to form on my brow. I never sold a share and the stock was down a dollar. A few hours later, Chuck screamed to Harry "Did I sell my Pet?" Harry knew I hadn't as soon as he saw the look of pure horror on my face. "Just tell him you sold it-I'll take care of it."
The Morgan Stanley derivative desk had hundreds of millions of dollars in exposure at any given time. 1000 shares of Pet was a pimple on an elephant's ass. It didn't matter and nobody would have known. For me, it was the single biggest moment of my professional life.
My grandfather's advice rang loudly in my ear. I dropped the ball but I wasn't about to lie. "No," I said carefully,"I didn't sell it." Harry closed his eyes.
"WHAT THE F**K! JACK, FIRE THE F**KING KID!" He threw down his pen, kicked his chair from under him and stormed off the desk shaking his head.
After the close, Tommy asked me what happened. "I didn't sell it. Harry told me to tell Chuck that I did but I don't lie."
That was a mistake-and it was a lesson I would never, ever forget. When you're in a war, you never give up the man watching your flank. I committed the cardinal sin, biting one of the only hands that tried to feed me.
It would be two years before Harry said another word to me.
The Great Lawn
While spending a day Central Park that summer, I ran into a friend who was sitting with a group of people, most of whom I didn't recognize. She asked me to join them so I sat down on the grass and introduced myself to her friends.
One of them was Jeff Berkowitz, who was an analyst at Jim Cramer's hedge fund. Jeff and I quickly connected, not because of where he worked but because of who he was. We related to each other on a variety of topics, from the markets to sports to women. We were both die-hard Yankee fans and would enjoy many games and many beers.
We spoke throughout the trading day, sharing information and swapping insights. He was a sharp guy who looked at the markets through an entirely different lens. It was a different approach than what I practiced and I began to absorb a new skill-set.
Jeff was a brilliant fundamental analyst, breaking down the balance sheets and business prospects of a company. I leaned towards technical analysis and studied chart patterns and historical price data. I studied structural influences; the underlying dynamics that moved asset classes as a whole. And I became in tune with market psychology, the perception that dictated reality when pricing financial assets.
I began to assimilate those four metrics as legs under the trading table. When they were sturdy, the odds of profitability skewed heavily in my favor. It was an approach that defined my career until the government changed the rules of engagement and altered the capital market construct.
Click here for the next chapter of Memoirs, "War Stories."
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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