The stock market is probably one of the weirder parts of the origin story, but a big part nonetheless. My grandfather was a stock broker, my dad was a stockbroker. I was a stockbroker for maybe 2 or 3 months. I studied one summer and got my series 7 and series 63 license if those are even still things anymore. Learned about blue sky laws and fiduciary responsibilities. I made my own flash cards and studied them on vacation.
The first day I ever went to my dads office on a Monday was a special one, because I got dressed up and wore this beautiful red tie with a white flamingo. I can remember my dad making jokes about scoring peoples “dives” like they would in the Olympics. Except in this joke, he was scoring peoples dives as they jumped out of the window, which was a hard thing for a 10 year old to contemplate. It was only much later that I realized that I had visited my dads office for the first time on October 19th, 1987 which was more commonly referred to as Black Monday: a day in which the stock market plummeted something like 25% in a day. This “first day phenom” timing is something that would end up repeating itself several times in my life in many areas.
But rather than having those swan dives scare me off, I just got more and more interested in the market. It was probably half genetics and half environment. Mom always tried to get me into investing because her father had been a broker and an investment banker and the owner of many companies. By 13 or 14 I had made my first pick, Blockbuster Video. After all that’s where we went for fun to rent VCR tapes on Friday nights. It was only later that I would read about Peter Lynch’s wisdom of “investing in what you know.”
My Blockbuster investment was based on hours of studying the 10-K’s and 10-Q’s of the company and analyzing their future profit opportunities. No just kidding, that’s not true at all. I bought blockbuster because A) I liked going there B) They just started renting video games which I thought would be lucrative. That was about the size of it. A few years later they got bought by Viacom so I ended up with shares of them instead. But the die was cast and I was hooked. I would read the stock quotes in the paper and loved going by my dads office and looking through the “pink sheets” lists of mostly dog crap stocks that were too risky or sucky to actually make it to the main exchanges.
Once I got into college my interest in stocks only got bigger. I remember the Motley Fools guide to Investing being a very important book that I read that led me to own Coca Cola for about 20 years until I sold it recently. They should assign that book to kids in school.
In college the online brokers like E-trade took off, so trading became much easier to access with the internet. I would wake up before class and go look at the stock ticker in the computer lab, even though there was that pesky 20 minute delay.
I can remember that Yahoo Finance had a very small differentiation, in that you could just type a string of stock symbols and it would spit them all out for you in quotes instead of just one quote at a time. 20 years later I wonder sometimes how much that very small difference made as I served up impression after impression for ads on their platform. How many more users like me existed and juiced their numbers just because of that one small “tiny hinge” in how you could use their system.
The late 90’s were kind of ridiculous, in that basically every stock was just going up all the time. A portfolio that I helped my mom with (that included AMZN and MSFT) would go up. The new companies like AOL and Dell and Ebay would go up, and of course the rando new companies like infoseek and inktomi and the online brokerages would go up. Basically everything went up, almost every day. And then once and a while some random tiny company that I had followed (through yahoo finance) for years would also explode like paradigm technologies. I can remember once day trading Paradigm while being abroad in Denmark (another part of the origin story) and making thousands of dollars. It was one of the few times I can remember Dad being genuinely impressed. For whatever reason it went from like 50 cents to 4 bucks in like 5 days. After that tip, Dad would have bought a horse and buggy stock if I told him to. I even once bought the famous Iomega, put in a sell order for 3 points higher as soon as I bought it, and then went on a train trip for a week. The sell order filled the next day while I was on a train. That’s the kind of market it was. I even managed a few accounts since I had just gotten my brokerage license, telling an old lady to buy AOL and a friend to buy Etrade. Both were probably mistakes based on the impending doom that was coming in 2001.
Needless to say I never got my brokerage licenses renewed. Managing other peoples money was always too stressful. I enjoyed giving out stock tips, but as I got older I stopped doing that too. Or it might have had something to do with the fact that the first day I went to work at my dads brokerages firm as a “cold caller,” there was a man standing at my desk when I came back from the bathroom asking if he could have the paperwork on my desk. Apparently he worked for the state of Connecticut and they had just conducted an unannounced raid of my dads office. I had been working there for an hour and a half. Again … on a Monday, that first day phenom seemed to always keep showing up.
Probably the biggest investing period of my life was around the saddest time in my life, when my mom became sick again and passed away. I had been investing and also trading through most of the 2000’s, learning more about options and shorting for better or for worse. But around 2008 my mom got sick for the last time right around the time the market really started to dive. It was a nice escape when she was sleeping in hospital rooms or just sleeping at all. Instead of thinking about her I would just fire up the stock ticker on the trusty laptop and maybe make a few trades. The crazy part was that I made money on almost every one. It wasn’t a very complicated strategy, I would just wait for the market to get smashed and then buy good companies like Google or MSFT right before their earnings, and then they would bounce back, at least for a few days, but I was out just that quick. I remember once google went up 80 points on 50 shares after hours that I bought on margin. I left a conversation with a lady about my mom getting home hospice care to go sell the shares in the aftermarket. Then I came back to talk more about hospice. I think by the next morning it was down again.
Like any great moment that seemed to good to be true, it was great, until it wasn’t. I kept trading on huge amounts of margin with money I didn’t have after my mom passed in September of 2008. Once particular week I started to go long and the market kept diving and diving. I just kept buying. I would literally go into work, buy a couple of red bulls, and sit there and watch the stocks all day long pretending to work. That Friday I swore whatever happened I would get out of my positions by the weekend. I was just too stressed out and anxious about the whole thing. The ironic part was that about an hour before the Friday close, when I was still stuck in all of these terrible positions, it was announced that Tim Geithner would be treasury Secretary and the market exploded. I sold most of my positions and tried to relax and swore I was done with the market for a while. Not because I wasn’t successful, but because I was becoming something different. I was assuming some alter ego of a day trader, when I was always a turtle, a slow entrepreneur who loved business. But rather deal with my mom passing, I assumed the identity of the margin trader. It was way sexier, and an exciting escape from reality.
I kept to my word and stayed away from stocks for quite a while. The Geithner day was a short term bottom and stocks went up all the way through the end of 2008. Then in 2009 they took another nose dive, but for whatever reason I stayed away until March when my head started clearing up and I started watching CNBC again. At this point the S+P was in the 600’s and everyone thought the world was over so I of course started buying stocks. As it turned out I was trading right into the almost exact bottom in March 2009. In one week I probably made more money then I ever did in my life, mostly off of buying puts on triple short financial ETF’s that were way out of the money. Just like paradigm technologies those 25 cent puts turned into 4 and 5 dollars, right around the time citibank announced some mediocre earnings. It was an amazing week. But of course again it wasn’t about the money, it was about escaping my mom.
I would end up squandering most if not all the money I made that one magical week shorting the market into 2009. In some cases it was hard to imagine that the bottom was actually in for where we were as a country in 2009. In other cases it was impossible for me to be positive. I wanted to be negative, for stocks to fall, and for everything to break. I consumed all of the most negative blogs and articles not because I was some kind of economist, but because of what a dark place I was in after my mom passed. Maybe it was a blessing, that I got away from shorting and options and got humbled by the market in 2009, lest I thought I was some kind of genius after that magical week in March.
After that time period I turned much more into an investor than a trader. Sure there were still some great stories like the “flash crash” day where I made 13 points on Monster energy in a hour and sold it the same day. But like any of those great stories, be it day trading google or monster, the greater story existed in just hanging on to those stocks for the long haul, which I seldom did. I got much better at buying and holding once my daughter was born and I started up a couple of accounts for her. Not surprisingly, her largest winner over the last 7 years is …. Monster Energy.
I do enjoy now finding beat up companies with great brands that have gotten the crap kicked out of them. Starbucks, Whole Foods, Netflix. I bought Alaska Airlines for myself the day that the Ebola scare was blaring across the Tv Screens. Both Whole Foods and Buffalo Wild Wings were bought out in the last year.
Maybe I will finally start posting trades that I make on this blog with the SDM Turtle Stock Strategy:
Find a great company with a great brand where the existing Market Cap of the company is trading below its yearly sales revenue. Then buy it and wait.
I did this Whole Foods and with Nordstrom recently. So far so good.
In reality, the stock market has always been like a small puzzle of life. Even if you are good at it, why are you doing it? To be right? To impress mom or dad? To lead a shadow life and escape?
Hopefully after all of these years I have finally realized that the market is not a shortcut, or a Willy Wonka golden ticket. But maybe its a nice way to set up my daughter for college, or have fun with the boring stocks that are in my IRA. I recently read a “Man for all Markets” by Thorp. Now that’s a guy that should be in the market. Because he was never just guessing or going off his gut like I always was. He actually had a real system.
There are no paradigm technologies in the IRA now, but if one sneaks in, it will be OK. I have found my peace with the market after all of these years, and I am thankful for the many lessons it taught me.
Now please don’t ask me for any stock tips….
SDM – 1.21.2018
Simpletition - Shawn D. Madden 