American Consequences - February 2019

I believe the market is designed to make the greatest number of

But I believe the market is designed to make the greatest number of people look stupid. So it makes sense to read people just like you read charts, especially when a large part of the finance community is looking at or wanting the same thing – like the bottom in the market. There’s an emotional see-saw within trading that’s sometimes easy to spot. Reading people works best over a long period of time... You get to know someone better the more dates you go on. It's like how the historic behavior and emotional reactions lead me to understand how a stock might trade in the future. When I sit next to someone or speak with someone every day, I assess their normal behavior as a baseline. I use this method to determine what the stock or market normally does, too. And when I begin to see a pattern, I’m in business. Apathy and capitulation are huge signals for an opportunity to trade stocks. You can recognize that a stock usually moves when a particular trader gives up. The next time you see it, it’s time to strike because he or she isn’t positioned for the move. I also used to keep track of how well a trader or analyst performed. If they had a bad feel for the market, I always wanted to hear what they had to say – so I could go the other way. People who are always wrong are gold.

So by the 10th call from UBS, I knew what he was going to say before I even picked up the phone, “Hey Turney, we’ve got $200k shares of IMCL for sale.” “OK, thanks,” I said, and hung up. Then I said to myself, “Did he just say for sale ?” I quickly called back and confirmed that, in people look stupid. So it makes sense to read people just like you read charts, especially when a large part of the finance community is looking at or wanting the same thing.

fact he did say for sale. “I BUY,” I screamed.

With so many larger buyers on the street, it only took minutes for the stock to be up a quick $5 and that’s when I sold my shares. It’s usually not that easy, and it seems more like common sense than reading tea leaves.

Turney Duff is a former trader at one of the biggest hedge funds in the world, the Galleon Group, where its founder and several Galleon employees were found guilty of insider trading. Turney rose through the ranks and then fell prey to the trappings of Wall Street: money, sex, drugs, alcohol, and power. Turney chronicles his spectacular rise and fall in his bestselling book, The Buy Side: AWall Street Trader’s Tale of Spectacular Excess .

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