Friday, July 18, 2014

Life in the Pits (1981 tv news program)



Thanks to G.D. for pointing out this multi part, evening news story entitled "Life in the Pits" as it is an interesting snapshot of trading at the CME in 1981.  The uploader of the 19 minute vid was the main subject profiled and I thought the whole vid was great, not just for the look back at the trading floor 33 years ago, but also for some parts which would be considered politically incorrect now. 

To set the scene a bit, one year T-bill rates in 1981 were around 14% and because of raging inflation, all commodity markets traded w/extreme volatility.  Must've been one hell of a time to be a trader (right Hillary Clinton?) and this golden era was also profiled in the 1985 book The New Gatsbys which I highly recommend reading.  The newscaster mentions that at the time of taping, volumes had doubled from a few years prior so the trading industry easily captured the nation's attention.

The video intro is certainly an attention grabber:  before dawn, a trader wearing a fur coat gets into his Cadillac, vanity plate UP TICK, and speeds off to the Merc.  The ensuing stories relate the velocity which money was made/lost trading, likely due to pyramiding positions as that was a popular, yet often financially fatal, strategy back then. 

One of the funnier segments was dedicated entirely to how life is lived after hours to showcase the trader's lifestyle including his condo (Lakepoint Towers?), blonde European wife, sipping Champagne at a club w/a toast "to free enterprise" and then grooving on the tiles.  His wife says the following in the third segment, "He always call me and say I'm gonna play racquetball tonight, and oh I say Thank God.  He's gonna beat the ball instead of me."  LOL WUT

Another politically incorrect thing which stood out was the newscaster mentioning that most of the Merc "successes are white, Jewish, and male" which was generally true and somewhat obvious.  To contrast that perception while simultaneously doubling down on political incorrectness, the last segment is on a black, female broker from Detroit and they profile her arriving in a Mercedes with 14k gold rims.

Tuesday, July 8, 2014

Smug Trader

(click for bigger detail and sorry about the fatty watermark on it)

Behold the greatest piece of trading art ever created.  The piece is untitled, undated (likely from early 1970s) and by an unknown artist (Alfred Marshall), yet like the Mona Lisa it can be admired for it's simplicity, intriguing facial expression and style which reflects upon it's subject.  I hereby entitle it Smug Trader.

I can admit to being at a total loss when it comes to highbrow art conversations but this piece speaks to me like no other piece of art ever created, and I've been to most of the top art museums around the world.  The artist's style and text is very crude like futures industry always has been so Smug Trader is a very appropriate mirror not just of the public perception but even of the industry upon itself.  In 2014 it remains a bit of an eccentric occupation to be a commodities futures trader but it was significantly more unconventional when this piece was likely created around 1970.

The most fascinating aspect of the piece is his smirk combined with the beer chalice which has runneth over.  I've traded millions of futures contracts in my career and never felt anywhere near that good at the end of a trading session so it's very intriguing as to why he feels so good about himself.  My theories behind Smug Trader's emotion are widely divergent in that he's either a drunk in between trading blowups or is actually that good.  His scruff is also a nice touch because I used to say that the easiest way to identify a trader in Chicago was simply to see a guy on Thursday who hasn't shaved in a few days.

Trading has a large culture based around alcohol and it was never a surprise to see various drunks trade the open and then head to the exchange club for drinks around 9 or 10am.  When I look at this piece, I do observe some of that devil-may-care attitude which I'd see others celebrate a short term victory whilst succumbing to long term attrition.  There were always traders who'd blow up and then find a backer to stake them for another chance and more than anything, this is the type of person who would exhibit such a (temporarily) smug look in a highly volatile industry like futures trading where the odds eventually even out.  In the NHL playoffs, the boilerplate saying is "don't get too high, don't get too low" and amongst the great traders I've been around, that's how they carry themselves as the anthesis of Smug Trader.  Coupled w/a gin blossom on his nose, what looks like an OTB ticket behind the newspaper quotation sheet also leads me to see him as a degenerate. 

Before moving to the other extreme, it is noted "Commodity Brokers - Chicago Mercantile Exchange" at the top of the piece so perhaps this gentleman isn't a trader and is a broker.  Because the sweat factor isn't anywhere near as high for a broker as it is a trader (unless IMHO they operate a clearing firm), this could be a pretty standard look for a broker.  In terms of sloppy drunks my observation from worst to best were:  pit brokers, desk/upstairs brokers, scalper style locals, position carrying locals and then prop firm locals....not hating on any group, just one man's observations largely based upon oversight and accountability.

So that brings me to the other extreme, perhaps he is as good to justify that look.  Because this art is CME centric and from the early 1970's, it must've been some meat contract he was operating in (a zoom on the quote sheet shows Hogs and 'Bellies as the only CME products on it).  Again, having never been around a legitimate trader w/that look on his face makes me recall stories from the '60s and '70s I read of large operators, such as REFCO, who'd move their livestock across the Rio Grande to Mexico so the USDA reports like cattle on feed would be manipulated in their favor.  Smug Trader looks like just the type of guy who'd be raising a frothy glass after a report came in just as he helped to arrange.

Later in the '70's, the CME would use the Friedmanesque saying "Free Markets for Free Men" and in the meat pits, it would jokingly be changed to "Wide Markets for Wide Men" so it's not too far a stretch to imagine Smug Trader easily amongst those wide men quoting wide bid/ask spreads.

I purchased Smug Trader quite randomly many years ago and had it recently undergo scanning and light revitalization at Chicago's finest art restoration service.  There are prints I made of it but I'm reserving them as a type of diplomatic gift to contributors of the historical project, like Cohibas once were. 

Friday, June 27, 2014

Big dogs


Some of you might recall Big Dogs shirts from the '80s and '90s, it was very much the leisurewear of suburban middle aged men then and still continues to churn out t-shirts with attitude.  Above is one such shirt from the late '90s that a reader submitted and although the vintage isn't exact, it would likely be from around 1997 when Big Dogs, Inc. had an IPO and the entire US was enraptured with stock trading.  Everything about this shirt is hilarious because it captures so many public stereotypes about traders:  pushing wimps around, loud gold watch, the Jim Cramer-ese sleeves rolled up, etc...  I could certainly see a retiree in suburban Virginia wearing it as his lucky shirt when buying Iomega options, calls natch, at the tail end of the millennium

Monday, June 16, 2014

Book notes


Been meaning to do it for a long time but finally got around to listing some additional book notes for Trading Pit Hand Signals.  Below is my first pass at it and I'll continue to add as much detail as possible going forward. The direct link at Scribd is here just incase the embed below has any issues.

The hardcover book is available from Amazon by clicking here and the e-book is available on Apple's Ibooks via the Itunes store by clicking here

If there are any additional questions which readers have about the book or any of the 400+ hand signals, send word and I'll add it to the notes.




Wednesday, May 28, 2014

Sydney Futures Exchange documentary Bulls and Bears - full length video now available

It was brought to my attention yesterday by an amigo of the blog, M.G., that the full length version of the 1999 era Sydney Futures Exchange based film, Bulls and Bears, is now up on youtube since someone uploaded it a few months ago.  The final minutes are missing of it but the vast majority of the hour long film can finally be seen.  I corresponded w/the producer of it to try to get a copy and have looked for years but have never been able to obtain a full look til now. 

The film spectacularly captures the true essence of a trading floor and how loose it used to be.  What makes me nostalgic isn't necessarily the floor but the market volatility which the film captures!  In the next few days I'll post an over-analysis of what I saw in the film.





Tuesday, May 20, 2014

Charlie D speech *now with enhanced audio*



It was 23 years ago this week that Charlie DiFrancesca ("Charlie D") passed away, but when someone does something great, their legacy lives on in many different ways forever.  His obituary at the Chicago Tribune is a great intro for those not aware of the high regard he was held in by fellow traders at the time and I highly suggest the book Charlie D. The Story of the Legendary Bond Trader by William Falloon for a more in depth look at his life.

The two hour video has been up on youtube since 2009 when I obtained it, after years of focused effort, but the audio has been low and due to youtube upload limits back then, I had to break it into a dozen clips.  It was a big hassle to get it uploaded in the first place that I never circled back around to have the audio enhanced but now I'm happy that the above video is shown in it's entirety and also with enhanced audio.  As a bonus, the speech can now also be heard via mp3 on soundcloud either via the embed below, on the free soundcloud mobile app, and directly at the link http://www.soundcloud.com/tradingpithistory/charlied  It was frustrating to get it all done that I sought out a freelance guy to do it and he did an excellent job on it all. 



Sunday, May 18, 2014

Front page of the FT during first days of 1995 Barings collapse

click photo to enlarge

Pictured above is the front pages of the FT on Monday February 27, 1995 and Tuesday February 28, 1995 as news broke of the Barings collapse.  You'll need to definitely click on the photo for this one to properly read the headlines.  It's quite interesting to read, w/proper hindsight after the facts have been established, of a news story as it developed and the wide ranging confusion at the time. 

There are many places to buy copies of old newspapers but I purchased mine at www.historic-newspapers.co.uk to obtain these and they probably have more if others are interested. 

To really bring the story full circle, BBC radio did a reunion a few years ago between Nick and his former colleagues at Barings.  You can listen to the radio program (45 minutes) by clicking here.

Home | History | About |
Blog
| Shop | Basics | Prices/Quantities | Months | Years | Functions | Participants
Debrouillard Group, tradingpithistory.com