As we sat there eating, we were shocked that someone could think about the market in the middle of an emergency. Perhaps being in Connecticut made it easier to think that way. Yet by the end of our lunch, we both realized how cold the market could be – it is insensitive and void of emotion and compassion. Over the years I learned that the market, for the most part, efficiently and effectively puts value on the news. And eventually I realized that to be a successful trader, you must always think like a trader – how can I make money? We’ve all heard, “For every action, there’s a reaction.” But on Wall Street, it’s more appropriate to say: “For every tragedy, there’s a trade.” And there’s always something going on... from a new virus, earthquakes, bombers, tsunamis, floods, blizzards, and hurricanes. For example, take last year... We experienced one of the costliest hurricane seasons ever in the United States. Some experts estimated $250 billion worth of damage. In August, Hurricane Harvey hit the Houston area... In September, Hurricane Irma rocked Florida... Later in the same month, Hurricane Maria devastated Puerto Rico. During a natural disaster, traders look for three things: reduced supply situations resulting in rising prices, disruption of growth, and falling prices. And right now, the early hurricane outlook for 2018 is being predicted at “near or above normal,” according to forecasters for the National Oceanic and Atmospheric
On September 11, 2001, I was working in midtown NewYork City... When the second plane hit, our office evacuated the building. My coworkers and I filed out of the lobby onto 6th Avenue. We were huddled in the middle of the street, when we witnessed the South Tower crumbling to the ground. I spent the rest of the day trying to reconcile what had happened. At no point did I think about the stock market implications. A few days later I was having lunch with a friend, who was also one of my sales traders. We were sharing our experiences of the fateful day. His was much more chilling than mine because he worked in one of the towers. When the plane hit, my friend was on the phone with a hedge fund from Connecticut. And on the call, he heard one of their traders screaming: “BUY OIL!” as the phone cut off. At the same moment, he was instructed to leave his building. He told me in the days since, he had kept hearing those two words on repeat ring in his ears... “BUY OIL! BUY OIL! BUY OIL!”
We've all heard, "For every action, there's a reaction."
But on Wall Street, it's more appropriate to say: "FOR EVERYTRAGEDY, THERE'S A TRADE."
88 June 2018
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