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Memoirs of a Minyan: Brokedown Palace


The purpose of the journey is the journey itself.

I arrived at the studio mentally prepared to communicate a coherent stream of thoughts. I'd been on television a few times before but I was noticeably nervous, not because of the national audience but because of what my mind and spirit tried to digest. I kept telling myself that September 11th was just another day. Deep within, I knew it wasn't true.

I sat in the green room talking to Senator Chuck Schumer before my segment, impressed by his poise and humility. He was a kind man with gentle eyes, a ray of hope in a seemingly hopeless situation. It was something. Anything.

A producer ushered me to the roof where they were filming so downtown Manhattan could provide the backdrop. Smoke billowed from ground zero and the putrid smell of burnt flesh and melted steel continued to haunt me.

They put a microphone on my lapel and began the countdown. At the last second, they told me they had to cut away to an emergency message from Donald Rumsfeld.

"Hey, if I'm getting bumped, at least it was for the Secretary of Defense," I said forcing a smile at the producer, hoping that some levity would ease our obvious stress. There were no words in return, no acknowledgment, no eye contact. Everyone was in a state of shock, going through the motions but void of tangible presence.

I walked home across town as volunteers raced towards the still smoldering remains of the World Trade Center. Many of my friends gave blood or assisted the fire department with moral support and words of encouragement. I never found my way downtown, perhaps a subconscious admission that I wasn't ready to face the new paradigm.

Instead, I focused on familiar escapes: the markets, our hedge fund and my writing.

Someone once said that something good comes from all things bad. While there was no way I could tell at the time, that one thing for me was perspective. It would be a long, painful, and expensive lesson; one that almost left me littered on the side of the road.

Focusing Anew

The markets were closed for a week following September 11th and that gave Jeff, Matt and I an opportunity to map our strategy. We knew there would be a process of price discovery as there was no historical context to lean against and existing paradigms no longer applied.

"The market was very oversold heading into this event," I told my partners as I pointed to numerous technical indicators. "The selling panic will provide an opportunity to make some savvy purchases."

I took comfort in the familiarity of my trading acumen, a lucidity and instinct I learned to trust. We were looking at large losses when the markets reopened and I knew the first snapshot of our P&L would be ugly.

To make matters worse, our office telephone was severed during the attack and we had no command center to execute our protocol. Jeff found a space in Rye Brook, an hour north of the city-up to three hours, during traffic-and we set up shop.

Instead of eight screens and a telephone turret with direct lines to our brokers, we planned to take on the world with makeshift equipment. It wasn't optimal but it could have been worse -- it could have been a lot worse.

We discussed swallowing a bitter pill once the markets opened and flattening our portfolio, which would have still been up close to 10% for the year. "Ten percent isn't shabby," one of us opined, "Our investors will understand that given what we've been through, we need to retrench before assuming new and different risk."

The decision was finally made. "We'll be ready." I grabbed my rifle, dove into the foxhole and readied to shoot on sight.

The market opened the following week and quickly chopped 4% from our hard earned gains. Four percent, just like that, before our first trade was executed.

We were battered and bruised but took every punch the market threw. Each jab was painful. Each hook cost seven figures. We fought with everything we had and left it all in the ring before returning to our respective corners at night.

I didn't want to sleep -- every time I closed my eyes, the nightmares jolted me back to a reality I didn't want to accept. The feelings of guilt began to build.

How could I be so upset when others lost so much more?

Why did I cry each night after putting on a brave face, internally for my staff and externally on

How long would I be able to shoulder this load when I was melting from the inside out?

I wrote columns expressing my opinion that equities would rebound sharply after the initial plunge. We operated with the same plan at Cramer Berkowitz, carefully picking our spots and adding layers of exposure as a function of price.

History validated my view but it took much longer -- and the market fell much farther -- than I thought they would. Our performance slid into the mid-single digits and I twisted the knife into myself, wanting to suffer, somehow feeling I deserved to. As consuming as our losses were, they paled in comparison to the gaping wound that opened in my soul.

Someone once told me that energy isn't created or destroyed, it simply transfers from one form to another.

Unbeknownst to me at the time, that process was already in motion.


Keep an eye out for next week's chapter of Memoirs of a Minyan.

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