Thought For A Day Are You A Professional Trader?

Thought For A Day

Are You A Professional Trader?

Going Pro, means leaving the amateur life behind. It means showing up on time and doing the work. No excuses. No calling in sick. No blue flu.

In fact, Pressfield has a list of 20 things that a professional life entails. Here they are…

1. The professional shows up every day
2. The professional stays on the job all day
3. The professional is committed over the long haul
4. For the professional, the stakes are high and real
5. The professional is patient
6. The professional seeks order
7. The professional demystifies
8. The professional acts in the face of fear
9. The professional accepts no excuses
10. The professional plays it as it lays
11. The professional is prepared
12. The professional does not show off
13. The professional dedicates himself to mastering technique
14. The professional does not hesitate to ask for help
15. The professional does not take failure or success personally
16. The professional does not identify with his or her instrument
17. The professional endures adversity
18. The professional self-validates
19. The professional reinvents herself
20. The professional is recognized by other professionals

While 20 things is too many to remember on a regular basis, I can visualize going pro by picturing it as a regular job. For me this means, showing up, doing the work, and shipping the product.

Now that I’m out on my own, I need to make a commitment to myself, and create my own manifesto of sorts. Something I believe in and recognize.

This requires a new mindset and a different set of rules.

It requires radical action.

I need to Go Pro.

Now…

The C=L U=M Principle

Most people like to stay within a range of relative comfort; a range that is self imposed. This is known as your comfort zone. For most of us, the grand majority of our experiences and daily life’s routines are within the limits of what we already know; the boundaries that we set, the fence that we build around us to feel safe.

We tend to ignore the outer limits of this circle of comfort almost all of the time. The unknown is a scary proposition for most. The CLUM principle simply states that COMFORTABLE = LESS OPPORTUNITY ANDUNCOMFORTABLE = MORE OPPORTUNITY; C=L U=M

The simple fact is: opportunity is in the areas that few are willing to venture. In the circle of humanity, you’re part of the circle. And, in order for you to take advantage of inefficiencies in the so-called system, you must go outside the system. You must, at some point, be a lone wolf. This requires you to be a little different than the “norm.”

You will need to go beyond what you know the outcome is going to be. That’s right; you need take some risks and go outside your comfort zone. It won’t be easy, because most people will tell you you’re crazy or it can’t be done. However, you will likely notice that most of the people who try to discourage you are usually not very successful and the ones that encourage you are generally the more successful people.

Now if you want to be successful and achieve your dreams, this will require a new way of thinking that entertains the idea that we have a much greater capacity for living, for accomplishment and enjoyment; that we can enjoy things that may seem unenjoyable at first glance. And, that we have the capacity to stretch our comfort zone to new limits and dimensions.

When you stretch your comfort zone to a new limit, it never returns back to its old dimension; it becomes your new comfort zone, ready to challenge you to go beyond its limits or walls once again.

Like a game of golf; you’ll never shoot a perfect game of eighteen holes in one. However, you keep trying to improve and stretch your game to new limits and the game is always challenging.

Whenever you hit a limit, whenever you hit a wall or you feel nervous or scared in the face of a challenge or a new idea, view these situations or experiences in life as the chances that you’re given to succeed and reach your true potential. These are the times that you could look back on and say “that was my big break” or “that was when I should have done x”. It’s your choice.

These moments happen all through your life and give you a multitude of great opportunities to accomplish and to achieve your desires if you’re willing to take the risk of going beyond what you already know and try new things. It’s at those specific moments that you are asked to go beyond your limits and stretch your thinking that will, in the long run, define your success.

So, next time you’re faced with a tough decision or a challenge, look at it from a new perspective; tell yourself that this is one of those great moments that life is offering me; a chance to be all that I can be. This is one of the great gifts of life; the natural call to arms. It may not always work out, but these are the moments that offer you the opportunity to be different than most; to be a winner.

My Time at Lehman

I started at Lehman Brothers on June 1st, 2007 as a first year analyst. It was my first job out of college. Dick Fuld, the CEO at the time, publicly discussed “the road to two-hundred,” in which he would not retire until the stock reached $200 per share, almost three times the price when I arrived. Everyone at the firm believed this as though it were a fact – that there was something special about Lehman Brothers stock – it always went up.

I joined Lehman for a few reasons. The first was personal. My mother worked on Wall Street and passed away when I was a teenager. I felt, somewhat misguidedly, as though following in her footsteps would bring me closer to her. The other reasons were simpler. I had been interested in the stock market as a kid (though I went to work trading bonds and credit derivatives), I wanted to make good money, and I thought maybe, just maybe, it would be a bit of fun.

Investment banking was a default career of sorts in 2007, something for the kids who didn’t quite know what they hell they wanted to do, and there were plenty of jobs being given out back then. The startup community in NYC was nascent, and entrepreneurship as a career (which I still don’t quite understand) was not something I had ever been exposed to. I vividly remember walking into the career services office my junior year in college and being prompted with, “Well, which bank would you like to work for?” I was later told that of my class of 1400 graduates from Yale, forty percent took jobs in finance. No joke. I remember thinking even then (as many probably were), that while rising global powers such as China were positioning themselves to be the largest coal and energy producers in the world, the United States was seemingly intent on producing the largest number of hedge fund managers. Fortunately, from my viewpoint at betaworks today, and after living in China for a year, I believe that innovation is alive and well in the United States of America, although much still has to be done to ensure that we’re competitive in the decades to come.

To make a long story much shorter, and I’ll probably write additional blog posts about some incredible things I witnessed at Lehman during my time there, my experience was not what I had hoped it would be.

Once I had started, It took me several months to figure out what the traders around me were actually doing, or even simpler, what I was supposed to be doing. We were tasked with both providing liquidity for our clients and trading the firm’s own book (money) in the corporate bond (and structured derivatives) markets. I worked alongside a number of PhD’s and rocket scientists. These were highly intelligent people moving around unthinkable sums of money and financial products, and making huge gambles to boot.

In the early days, I learned important lessons on markets, liquidity, and how to value impossibly complex financial products. I would spend days attempting to understand the intrinsic value on structured bonds collateralized with physical jet engines or commercial real-estate scattered across various regions of the country. The reach of these products was real and the analysis could mean millions won or lost for the firm. The purely cerebral slice of the industry, and I’ll stand by this today, was fascinating (to me).

Unfortunately, what I eventually came to learn, and this took time, was that what was really happening was a simple transfer of wealth, more often than not from the less intelligent and informed to the more so. I worked in a highly opaque market. There was no price ticker scrolling across our screens telling us what these bonds and derivatives we traded were worth. In fact, no one really knew what any of this stuff was worth. Which, it turns out, is a trader’s field day. What this meant, in its simplest form, is that these traders (or salespeople) could buy bonds at the “market” price from intelligent hedge fund managers in NYC and sell this same crap at much higher levels to unsophisticated (but legally considered “sophisticated”) pension funds and insurance companies in middle America. What I discovered, quite starkly, is that the part of Wall Street that I worked in was simply transferring wealth from the less sophisticated investors, often teachers’ pension funds and factory workers’ retirement accounts, to the more sophisticated investors that call themselves proprietary trading desks and hedge funds. Of course, the traders had all sorts of excuses and jargon to deal with this truth. “Oh no,” they would say, “We are important providers of liquidity that create stable financial markets. We’re a crucial part of a system. And besides, if we don’t do it, someone else will.” These are the lies that people tell themselves so that they can buy larger homes.

Although it took some time, many months, the moment I realized this truth, I was done. To do that sort of work, you have to either really love it or convince yourself that it somehow has worth. Otherwise the hours, stress, and bullying will eat you alive. I remember taking the subway home each night asking myself “What have I done today? What have I created?” And it meant that I couldn’t sleep well, I was embarrassed to tell people what I did, and I felt as though I personally owed every single person that I mucked over in the markets each day. The experience reminded me of one as a child when I unfairly sold some worthless items to neighbors at a stoop sale in front of our house in Brooklyn. When my parents found out that night, they made me go from home to home on our block returning the money.

Apart from the actual work, I also came to realize over the course of the year that I was at Lehman (and Barclays), that a perverse and at times terrifying culture existed at the firm (and from conversations with friends most likely throughout Wall Street). The people around me measured themselves by one metric: The amount of money he or she made for the firm. Their bonus determined the respect they received. And yet, every last person felt poor. I remember during the first bonus season hearing that one reasonably successful trader was thinking about leaving the firm. I asked one of my colleagues why that was and he responded, “He made just under a million. They fucked him.” I was astonished. I had the incredibly good fortune to live a comfortable childhood. I received a wonderful education at a top public high-school in NYC and never really needed anything. But the lens through which the people around me at Lehman looked at the world was so distorted that I couldn’t figure out where they came from. In what possible reality can someone receive a million dollars and feel as though they got fucked?

What this bizarre reality really meant is that I couldn’t be myself. In Chris Sacca’s widely viewed commencement speech, he encourages graduates to go on and be their weird selves. When I heard this for the first time, it resonated deeply with me, as I know well a time in my life when I couldn’t do it. I’m a mess in a million different ways, and I’ll be the first to point it out. But I also know that I am kind, that I am intellectually curious, and that in my heart I’ve always been a builder. In the latter months of my time at Lehman, a dark time for me, I found much solace in reading literature and novels that had nothing to do with my job. I read on the morning subway before sunrise and it calmed me. One day when I got to work, I left my book on my desk, The Corrections by Jonathan Franzen. My boss saw it and asked “What the fuck is this?” I told him that it was a book I was reading. He replied, “Well get it the fuck out of here. We’re here to make markets and money. And nothing else.” And he was right. There was no place for that book there. There was no place for my weird self.

Around this same time in late 2008, I was living with five other guys from college, four of whom were in similar roles as myself. We created a running joke: “Would you rather have someone shit on your face, but then be able to spend the day however you please, or would you rather go to work today?” Eventually the answer for all of us was unequivocally, “Shit on the face.” So something I know now: When you’d rather have someone shit on your face than go to work, it’s probably time to leave.

And so a year after I started, after the largest bankruptcy in American history, after surviving six rounds of layoffs, I left Lehman (at that time Barcap) during the worst recession our nation had seen in decades. I had little idea of what I might do, of how I might earn the next paycheck, or of how I might eventually find a place to create real value in the world. And it turned out to be one of the happiest and most creative times of my life.

Psychopaths

Every once in awhile the wrong person ends up working at a Wall Street firm and lives to tell their story upon exiting.

Ben Younger, the auteur behind the 2000 film ‘Boiler Room’ had, in fact, trained at one – the film is more autobiographical than you might have thought. he was an outsider and it didn’t take him long to realize what was going on around him. My own experiences have been chronicled here and in my book – it had taken me too long to realize that I couldn’t be a “good broker” no matter how hard I tried because the entire business model is set up to reward conflicted action and avarice – he with the least scruples and fear of regulators wins.

This weekend we hear from former Lehman Brothers trader Nicholas Chirls. Nichols worked at the epicenter of credit bubble psychosis in the 2007-2008 period and was every bit as out of place as I was, mainly owing to his possession of a soul and priorities other than compensation…

From Thoughts from Brooklyn, NY:


In the latter months of my time at Lehman, a dark time for me, I found much solace in reading literature and novels that had nothing to do with my job. I read on the morning subway before sunrise and it calmed me. One day when I got to work, I left my book on my desk, The Corrections by Jonathan Franzen. My boss saw it and asked “What the fuck is this?” I told him that it was a book I was reading. He replied, “Well get it the fuck out of here. We’re here to make markets and money. And nothing else.” And he was right. There was no place for that book there.

Please head over to read his story, it’s either shocking to you or confirmation of your worst assumptions.

Source:

My Time at Lehman (Thoughts from Brooklyn, NY)

The market is the calculator

 

If you are attempting to reach 10 via the calculator, there are many and various ways of getting there:  5+5, 2+8, 15-5, 25 –15, or even  2 + 2 –1 –1 –2 –2 +3 +3 +3 + 3.  When it comes to making money in the market our calculator may want to make it to 10 much quicker than the market does and we may want to add 5 + 5 to get there but be prepared for the market to take its own sweet time adding things up.  If all that matters is getting to 10, then make sure the road you take is paved with minuses along with pluses along the way or all your money will be going to the 5508 (punch this number into your calculator and turn it upside down to see what it spells), which will make the employee a very unhappy and broke individual.

Stock trading is easy as long as we understand how to do the math