Memoirs of a Minyan: Behind Closed Doors
The purpose of the journey is the journey itself.
Editor's Note: “Memoirs of a Minyan” is a first-person account that follows Minyanville founder Todd Harrison as he weaves his way through Wall Street and beyond. This e-Book will publish each Wednesday over 18 weeks. Click here to read previous Memoirs chapters.
Chapter 11: Behind Closed Doors
Nobody knows what was discussed during the hour Jim Cramer and Jeff Berkowitz huddled in Jim’s office but time stood still as I watched them from the other side of the glass wall.
I had a serious heart-to-heart with Jeff the night after the Brocade (BRCD) tirade when Jim destroyed keyboards and threw an object at the door after I walked out. I told Jeff that I wasn’t going to return the following year if Jim was there.
He wasn’t surprised—the writing was on the wall since the end of the third quarter -- but that was the first time I put it out there. “I’ll talk to him,” he said at the time, “just relax and bring your A-game tomorrow.”
Jeff is a good man who lives his life by example. He had more on the line than the rest of us combined, nine hard years of channeling information to Jim and quietly feeding his stardom.
Loyalty is a rare quality on Wall Street. Jeff lived it and I knew it. I suppose that, as much as anything, sat in the back of my mind as I waited for them to emerge from Jim’s office.
The door flew open and Jim bound into the trading room at a quickened pace. At first, I couldn’t tell if he was angry or ecstatic, apropos given the fine line that separate the two emotions in the man. He stepped up to the trading desk as a hush fell over the firm.
This was it, I thought, the moment of truth; the secret to our fortunes.
“I’ve made a decision,” he said as the corners of his lips folded higher, “At the end of this year, I’m going to announce my retirement and hand the firm to Jeff.”
My eyes connected with Berko as the pieces fit together in my head. Smart man, I thought to myself, but that I knew; he was the one that taught me the car crash analogy.
I assumed Jeff communicated his desire to step out from behind Jim’s shadow and take his shot as the man in charge. I’m unsure of how large a role I played in Jeff’s decision to have that discussion -- or in Jim’s reaction -- but it didn’t really matter.
Much like trading, all that counted was the bottom line.
Perception and Reality
As we discussed the dynamic internally, there was an underlying sense of relief. The mood was positive all around as we joked about Jim’s place in history.
Gretzky, Elway, Jordan—Cramer.
He was a savvy spinner and knew he could leverage his track record into a successful media career. He publicly offered that he wanted to spend more time with his family and it seemed like the best possible scenario. He was happy. We were happy. It was perfect.
The initial euphoria morphed into a more pressing question. If Jim left the business, what would he claim when we whacked up the bonus pool? I was guaranteed a set percentage of the returns but given my relative contribution, I believed I was entitled to a larger slice of the profit pie.
After a string of lean years, I hit the lottery. It couldn’t be happening again.
We stopped trading for the final month of the year, sitting on a 36% gain while the rest of the Street swallowed sizable losses, and spent the majority of our time chewing through the legalities of transferring ownership of the firm to Jeff.
It happened fast but it couldn’t happen fast enough.
I was excited for Jeff as he earned the right to helm his own operation. And I was excited for myself as I prepared to assume the role of President, a title previously held by Jim.
That, and a hefty guaranteed salary for two years, put me in a positive place as I sat with Jeff to discuss compensation for 2000. He assured me that I would be taken care of and true to his word, I was.
While Jim secured a chunk of change as his final payday on Wall Street, I netted close to $5 million, considerably more than I was contractually due.
A new era began at Cramer Berkowitz and I finally shook the monkey off my back.
I was finally on the other side of the cash register.
The Age of the Innocence
It's a rare occurrence on Wall Street when you can exhale, relax and enjoy your good fortune.
Such was a time as we entered 2001 with fresh energy and newfound zest. We earned a reputation as a shrewd and honest fund and we knew all the right people in all the right places. And I had coin in the bank, tangible validation for a hard fought career.
I still wrote my column for TheStreet.com (TSCM) and enjoyed the platform. There were a collection of intelligent thinkers on the site and friendships were forged as a function of respect.
During the early months of 2001, my grandfather Ruby, my best friend and moral mentor, spent much of his time in intensive care. I traveled to Florida on weekends to hold his hand and absorb his energy. It was a tough time for our family as we said goodbye to our patriarch, a dose of reality in an otherwise euphoric time.
It was life. And it was death.
As I chewed through the market with a faceless audience of millions, I told the tale of Ruby. It was then I realized the power of the Internet and the catharsis of writing. We received thousands of emails that we read to him on his deathbed. Each was a story of love and loss, be it a son, father, mother or sibling.
That was the genesis of loyalty to my readers, a connection that remains to this day. If people I’ve never met could help my family through such a tough transition, I would certainly find time to return the favor.
I settled into my dual role of “trader who writes” but the irony wasn’t lost on me. I was the president of Cramer Berkowitz and wrote the lead trading diary on TheStreet.com, both of which were positions that Jim previously held.
Ours was a delicate relationship, buffered on both sides by business and money. Jim had influence on our investors because he kept a large portion of his money with us while I managed the fund with Jeff and Matt and generated views on TheStreet.com. We had a vested interest in keeping each other happy and despite a persistent, underlying tension, we balanced the act and played the game.
In March of 2001, United Cerebral Palsy honored me for outstanding achievement. I wasn’t sure why I was chosen but I was happy to drive attendance to such a worthy cause. With the help of some friends, we secured Run-DMC to perform. I reached out to our coverage on Wall Street, those we paid commission to, and we sold out the event.
I could feel that Ruby was close to passing and almost skipped the ceremony to be with him. At the request of my family, I stayed and accepted the award. Jim stepped to the podium and lauded me as the best trader on Wall Street and the best writer at TheStreet.com.
That was Jim -- all or nothing. I didn’t agree with his assessment but the words were humbling to hear. I smiled at him in a knowing way; while our professional relationship was untenable, I genuinely cared for the man.
As it would turn out, that speech was the apex of our personal relationship..
Saying Goodbye and Opening Up
Ruby Peck passed away on April 21st, 2001 and it was a punch to the gut. Our performance picked up where we left off the previous year but as anyone who’s lost someone can tell you, perspective arrives quickly when you say goodbye to someone you love.
It was a soulful time in my life, a period of growth and maturity. My grandfather’s final words, played in a video that aired at the UCP benefit, were, “I don’t know if I taught him a lot, but I sure hoped he learned a lot.”
He did and, by extension, so did I.
My grieving process threaded into my column on TheStreet.com; my editors were empathetic and allowed for some latitude during a difficult stretch. Still, it was clear they wanted nuts and guts financial stuff and would put up with only so much human interest. An underlying tension began to emerge as the editorial staff carved up my columns before they posted.
I never claimed to be a good writer but I spoke from the heart and told the truth. Sometimes, a word here or shift there can change the entire complexion of the content. I held my ground as they explained proper grammatical execution to me.
My style was simple -- communicate complex information nestled within pop-culture references like Young Frankenstein or Animal House and introduce topics with musical lyrics, be it the Grateful Dead, Led Zeppelin or Tom Petty.
My inbox filled daily with hundreds of emails. Many of them were about the markets but a surprising number of them had nothing to do with the tape. It amazed me how diverse my audience was but upon reflection, it made complete sense.
They weren’t traders that happened to be humans. They were humans that happened to be traders.
The Critters Cometh
I began using metaphorical representations of the stock market—Hoofy the Bull and Boo the Bear -- to represent both sides of the trading story. There’s always a bull case and a bear case and the residual grist is what you read about the following morning. It made sense to write through that lens as the friction between opinions is where true education lies.
In time, my readers asked what Hoofy was doing or what Boo was thinking and they assumed personalities and unique perspectives. They resonated; people liked them. It occurred to me that nobody ever branded the Wall Street bull and bear.
TheStreet.com paid me a salary but it paled in comparison to the money I made trading. Writing wasn’t about the compensation as much as it was a catharsis; we never signed a contract because I didn’t believe they should own the words “Hoofy” or “Boo.” As it turned out, it was one of the best business decisions I ever made.
They didn’t press the issue. To them, I was a cash cow, the man in the trenches who was a source of content that generated page views. I wrote incessantly as I navigated the other side of the technology bubble, chronicling my trades for the world to see. If the market was a casino, it felt like we had the dice in our hands for an incredibly long roll.
TheStreet.com was happy, our investors were happy as we edged towards fresh double-digit gains and I was happy, albeit a bit hollow. Profitability was a wonderful distraction from the pain of losing my grandfather but it didn’t fill the void.
The dynamic continued as the overcapacity of greed gone awry dripped from wayward technology stocks.
Life was good, or so I thought, as I had the toys society bestows on those with money. Forget all the time that elapsed while I sat in front of my screens. There would be more dinners with friends, plenty of time to find a bride and countless hours to relax.
They say to be careful for what you wish. I never quite understood how profound that was until I got to where I wanted to be.
As I’ve grown older, I realized the difference between having fun and being happy. Entering the summer of 2001, I knew of no such distinction.
Ruby aside, life had never been better. While others struggled with the fire sale on Wall Street, we were making serious money and I lived the lifestyle to prove it. I never thought I was that guy, the player who bankrolled limos, tables at nightclubs and big, expensive dinner checks.
I suppose, in hindsight, I was.
I was still grieving my grandfather when my buddy Lionel and I ventured to the Hamptons to look for a summer rental. I bought a BMW without so much as looking at the sticker price; U2 played loudly as we sped to the East End.
After seeing several houses, we were about to head back to the city empty-handed when a broker called to tell us of a place in Sag Harbor that had to be seen. We turned around and took one, final shot. The moment I drove into the compound I knew it was home. “We’ll call it Ruby Ridge,” I said to Lionel before we got out of the car to explore the grounds.
It was sensational. The Philip Stark designed house was flush with Lichtenstein’s, a meditation tower, media room and a wraparound terrace over looking Sag Harbor. There were immaculate rolling grounds with an eight-car garage, an adjacent two-bedroom casita and an outdoor dining pavilion with a fireplace and kitchen surrounding a black gummite pool. A croquet court sat between the compound and a two hundred square foot beach, all within walking distance from town.
We had to have it. “Seven bedrooms,” one of us said, “there’s a lot of space here.” The broker told us the house was listed for the summer at $150,000. Before we got back in the car, it was ours. We pulled in five or six friends, turned our garage into a nightclub called “Shagababy” and smiled when we overheard others talking about the new, private club somewhere in Sag Harbor.
There were a hundred people at Ruby Ridge at any given time. When we had parties, on my birthday and at the end of summer, 400 people attended soirees that are still being talked about. It was a summer of debauchery straight out of a movie, a twisted tale of revelry that could have been called “The Top of the Market.”
As a trader with my pulse on trends and turns, I should have seen it coming. I left for Hawaii on Labor Day weekend to fulfill my promise to my father.
It would be the last time New York ever looked the same.
Click here for the next chapter of Memoirs, "Brokedown Palace."
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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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