Yeah, I've always been more of a deep-value kind of guy. Something about being asked to read all that Graham and Buffett stuff when I was far too young to even be thinking about what I wanted to do with my life. I was too young to even be thinking about things in the context of a life, frankly. I stepped foot on the floor of the Chicago Board of Trade for the first time when I was sixteen and my future narrowed dramatically. I have absolutely no idea what I would do if I wasn't doing this; one of those moments where you realize the real currency of serendipity. Not serendipity as an explanation for randomness but serendipity as an explanation for natural order. If I was born five years earlier there would have been no such thing as the hedge fund industry (in any accessible sense) when I needed to be cutting my teeth. I would have absolutely tanked as a mutual fund guy. The concept of doing stock research for a wealth management firm makes me want to opt instead for a Ph.D. in arcane Russian literature just so that when I ended up miserable, I wouldn't have to explain it to people. I've got the golf game of a commercial banker but that's about where the commonalities end. You might as well put me on a desk at a sell-side firm and ask me if that small cap stock is going to make $57.2 cents in Q4 or 52.7 cents. Now that's a really depressing thought. That kind of timing is too lucky to be luck. At least that's the way it feels to me.
Four years in, Mr. Market decided to make Black Monday in '87 look mauve. I can say this without the usual false-bravado of a kid who wasn't there because the guys I worked for had been. Oh, and they weren't wealth management guys telling their clients to get long Coca Cola and short IBM, they were floor brokers, locals and market makers in the pits at the CBOE -- you know, the markets that run on theta, delta, vega, gamma not this buy/sell/accumulate/underwight/overweight/market perform/underperform bullshit... enough. They told me it was worse, down to a man. This wasn't paper loses and failures of fly-by-night over-margined brokerage firms. This was the decapitation of entire bell-weathers. Bear who? This was the failure of fundamental transaction systems. What do you mean my T-Bills didn't settle? This will be the failure of sovereigns that have never failed before and the end of a number of economic cultures. You won't have to learn the terms default and cram-down in just Spanish. Just try to even fathom how you saw "shoot the equity holders" in Icelandic. I didn't bring enough consonants for that. Who ever thought the day would come when it wasn't just the habitually corrupt, impossibly backward, meaninglessly educated South American's that you'd have to look out for? Here I thought the only death-nail to the basic understanding of sovereign debt service was having been settled by Spain.
That's how the guys that let me run their tickets for them at the CBOT knew I'd hack it. I cherished their morbid sense of humor.
There is more death imagery in this industry than Italian literature:
Make sure you don't try to catch that falling knife with your bare hands, because you know that even a dead-cat bounces. Don't put on that widow-maker fighting the contango in the nat. gas unless you're OK to get carried out on a stretcher. Don't blow yourself up getting squeezed on that short, cut your losses quickly, don't bleed the position to death. It's tough to suffer losses but it is important not to go nuclear. The stock isn't down, it's getting hammered, crushed, destroyed or killed. Even M&A bankers can't escape the reality with all of their WASP gentleness. That company wasn't purchased, acquired, sold or bought. It was "taken out".
But you know what? I'm still here. Those same guys who told me how bad it was told me how lucky I was. Lucky to be going through something 40-year old investment bankers with two kids, a wife and a girlfriend to support were also just understanding for the first time. I was an all cash balance sheet with a cash-flow issue not a currently cash-flowing CDO^3 with a write-down issue. Three years on, I think they were right.
I don't know when it happened but lately I feel a lot older. Happier with and more confident in myself. Knowing that with all the advantages I took to get here, the last three years have been my own. They've been my own failures and my own successes. I am more able than I had hoped to be at this point in my life and that counts for something. I understand things faster and more completely than I used to. I can't watch CNBC or read the WSJ anymore for information flow because when even the guys at the FT are getting it wrong I know full well the former aren't even close. I am not a cliche. I'm not vain (vanity is the cancer of far too many otherwise interesting people). I am just older. I've worked, I've paid attention and I've learned the importance of being stubbornly humble. A lot of that success people view as their own is just delta anyway, the faster you learn that the better.
I like this trajectory in life; the deeper breaths and the more reasoned and tempered heartbeats. The feeling of real steadfast connections to ideas, concepts and people. If I haven't been shaken from those things yet, I think the odds are I won't. I like that. With a lot of runway still as a given, I don't think anything is intractable.
Now if only Dick Clark would die...
WWMMD,
-I Heart Palindromes
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