Part I
Beginnings
March 10, 1961. Yes, to put these chronicles of recent trading years in proper perspective, we must first go back to the day I took my first breath. Long before we can talk about the failures and redemptions of my trading life, we must first journey through the years that would shape my view on life and mold a certain degree of perseverance that would become paramount in later years.
Actually, we must go back two additional years, to 1959, because although we all came into this world through no asking or effort of our own, I consider myself particularly blessed given that two years prior to my arrival, my parents had experienced a devastating stillbirth. And although they've never discussed those trying days much with me, I do know that the baby was male and that my mother carried him to full term.
For many parents, such a devastating life event would understandably end attempts to further expand the family tree right there. Yet largely because my parents didn't want my sister, Judy, who had been born two years prior, to be an only child as my mother had been, they set aside their doubts and fears to try once again. Of course, life is never easy, and as they prepared for my arrival, my mother had the bad fortune of coming down with the chicken pox, which would complicate the delivery. Nevertheless, on March 10, 1961, and certainly through no effort of my own, I was brought into the world via a cesarean section in such a way that I was effectively isolated from the virus. Of course, I had no inkling at that time as to the events that led to that day, but later discoveries of my brother's premature death and my parents' subsequent perseverance would clearly help shape my views on life and its accompanying struggles.
Early Tunnels of Life
It soon became evident that a mix of struggles, accomplishments, and setbacks would accompany me throughout my life, with most of the setbacks during my youth surfacing in the form of health battles due to a compromised immune system. Although I survived the birth without complication, my first 10 years would include multiple visits to doctors and hospitals as the result of an asthmatic condition and various allergies that required frequent shots and occasional stays in oxygen tents. Of course, I also picked up all the typical childhood illnesses at that time, including the mumps, measles, andâyes, finallyâthe chicken pox in the second grade.
My teen years were equally challenging for my parents and myself as I seemed to be a magnet for a variety of obstacles, setbacks, and embarrassments, some self-inflicted, others outside of my control. Although I hated going through what my future wife would later call these âtunnels of life,â the experiences served to install a certain degree of perseverance and perspective pertaining to the concept of âtimeâ that would later serve me well in my future trading years. Examples of my early âtunnelsâ include:
- Repeatedly being ridiculed as the son of the assistant superintendent, often having to sit on the floor on the bus.
- Shooting at the wrong basket in a junior high school basketball game. One not-so-funny aspect of that event was that I missed the first shot, rebounded it, and made the next one. Imagine the official scorer trying to figure out if I should be credited with a rebound!
- Being hazed as a high school freshman during basketball road trips.
- Bombing in front of a full auditorium while performing a trumpet solo for which I hadn't adequately practiced. (This one was clearly a self-inflicted wound that would later have strong trading parallels.)
- Having any degree of success, including winning the sixth grade science fair, challenged by a few nitwits as being illegitimate due to my father's position. (Another eerie parallel to later trading successes.)
- Missing half of my junior and senior high school years due to an unrelenting mononucleosis-type virus.
- Tearing my ankle ligaments as I tried to return to basketball during my senior year only to miss our school's run toward the state championship.
- Being ridiculed again, this time in college because I refused to drink or do drugs in an era when many attended school solely for that purpose.
I could list more, yet my point is like so many others, I was faced with various challenges that felt so very painful at the time, yet in later years would seem nothing more than insignificant bumps in the road thanks to the combination of time and perspective. Although I could list various successes such as honor societies, eagle scout attainment, and others, I prefer to emphasize those aspects that most contributed to shaping my future years: the tunnels.
A Late Bloomer
Another aspect to my life that would become clear was that I seemed to be what many would call a late bloomer. Perhaps it was because my mind or body simply needed more time to mature than others or perhaps because I underestimated the required preparation time required to accomplish anything significant in life. With respect to the latter, one of my greatest weaknesses to this very day is a general lack of patience, and this Achilles' heel has repeatedly gotten me into trouble over the years, especially as I began my trading career. It would also become clear that I'd typically emerge from each tunnel stronger and with greater vibrancy and desire to succeed as well as an improved perspective on life.
Said another way, I loved coming back from defeat. For example, years after shooting at the wrong basket, being hazed on road trips, tearing my ankle, and essentially lacking any innate basketball talent, I'd eventually worked my tail off to become a fairly decent player in my college years. One example occurred during the summer of 1982, when I returned to my hometown to score 27 points on a âcouldn't-missâ 13-for-14 shooting night where I outscored, outhustled, and generally outplayed some of my very peers who had hazed me in prior years, a few of whom left the court that night in utter disbelief. This late-blooming trait would go on to accompany me throughout my life and especially throughout my trading career.
Early Vocations
From the outset, I was a finance guy. As early as age 10, there are pictures of me at our kitchen table helping my father balance his books with a giant calculator that took up half the table. I also loved brainteasers and jigsaw puzzles, and I was pretty good at them. To this day, both my mother and wife will tell you that I can find a missing puzzle piece in seconds. As high school evolved into college and college evolved into early career years, finance would dictate much of my life in the context of initial vocations. In 1983, I graduated from a business college summa cum laude with a major in accounting, and after rejecting offers from a number of large accounting firms, I accepted a position with a large corporation in the telecommunications industry that emphasized the early and continuous development of future executive leaders.
From there, I spent approximately 16 years climbing the corporate ladder in two firms and living in a variety of places, and at 37, I was blessed to have reached a career level with a high degree of scope and responsibility. From a corporate perspective, I had it all, including position, stature, a company car, and an executive home. I had even recently completed an aggressive two-year Executive MBA program at a leading university. Still, I felt that something was missing. The professional spark that had ignited my earlier career years was no longer there, and I felt that if I was going to make a career change, I'd better do it soon before time as age would zap the energy required to pursue a new field.
It was during these soul-searching years that the Internet and access to the financial markets were combining to provide an inviting combination for one who embraced the combination of finance, computers, numbers, brainteasers, and challenge. The more I learned about the challenges and possibilities of trading the financial markets for a primary or secondary career, the more I realized that doing so would reflect in the ultimate pay for performance endeavor, where one could be compensated solely based upon one's ability. As I would later tell people, though, it's also one of the only fields where if you perform poorly, you pay your employer! I'd grown tired of modest cost-of-living raises amid occasional promotions, and getting paid 100 percent based on performance seemed to be an optimal compensation structure for one who was confident of his abilities while also satisfying a strong entrepreneurial craving that had accompanied me throughout my life. Said another way, âI was bitten by the bug.â
Don't Quit Your Day Job
At this point in our journey, if you feel a similar urge to leave your current stable vocation to pursue trading the financial markets, think long, hard, and long again . The rocky path I'm about to lay out is meant to fully disclose the ramifications of my choice, which although ultimately leading to success in later years, resulted in a difficult, soul-searching journey that included believing I'd made the worst decision of my life.
In 1999, at the age of 38 as primary wage earner and father of a young family I had established a six-month track record to prove to my wife that I could make at least as much as I was making in my current career as the result of part-time trading. Believing that my trading results had been suboptimized due to the lack of full-time focus, I made the decision to leave my safe career as a corporate executive to enter the world of trading on a full-time basis.
The immediate result? Well, in financial terms, during the first month, I lost everything I'd earned from trading in the previous several months as I broke every rule in the book trying to force profits. Far more importantly, in life terms, I felt I'd lost anything and everything I gained in 38 years, including the near-term and long-term future of those most dear to me: my wife of 14 years and my two children, ages 7 and 10.
I can't stress enough the inner turmoil that I experienced during those initial months, which was only countered by the even greater powerful support of love, family, and God. Despite my personal selfishness and shortsightedness that placed my own career aspirations ahead of what was likely best for my family at the time, grace and support abounded everywhere and forever changed my life's priorities. And although much of that time was admittedly a blur, I do recall hitting my lowest lowâwhat I call my personal abyssâone night as I fell on my knees in tears and asked God to help a soul who had gotten too far ahead of himself for his own good.
Out of the Abyss
The good thingâif there is oneâabout feeling that you've hit rock bottom, is that it's, well, the bottom. In other words, there's only one direction one can move from the bottom, and that's up. And although I believed at the time that the climb out of the abyss was slower than I'd like, I can now say with the utmost confidence that the series of events that would ultimately pull me out of life's low began to occur at startling speed.
These events begin and end with my family, and specifically, with my wife, Debra, who had always supported every one of my career decisions, regardless of relocation and personal uprooting. She wasâand continues to beâmy rock and my best friend. And what a rock she was during that time as she convinced me all was not lost, that she would still love me even if we were dirt poor, and that things would work out. Then came a call out of the blue from my parents, who sensed something was wrong, and who offered me their vacant house on Cape Cod (or as known in these parts, simply the Cape) should I choose to downsize and return to my New England roots. The home had actually previously belonged to my grandparents, yet it had stood vacant in recent years, with my aging grandmother living with my parents during her final years. Ironically, it was also a home that Gram wanted to keep in the family, yet one that she knew my folks would likely sell upon her passing.
As I was still digesting my self-served humble pie, and despite an ironclad son-versus-parent independence streak I had intentionally forged, I considered the offer and chose to fly back to Boston in the dead of winter to check out the house which had been closed for a few years. The next sequence of events simply border on indescribable, if not surreal.
First, the day was a Friday, and as I had traded poorly that day, I just wanted to sulk. Second, I hate flying, and the two Midwest cities from which I'd have to depart and change planes were experiencing near-blizzard conditions. Nevertheless, just as I was about to postpone the trip for these reasons and more, I felt a Presence that just said, âGet on the darn plane.â And so, I did, cursing internally all the way.
I somehow managed to make it to Boston that night without ripping the armrests out of their sockets, and once I landed, I decided to see Gram at my parents' home before heading to the Cape the next morning to check out the house. Although healthy most of her life, Gram had gone downhill quickly in recent days, and I had to communicate with her via a whiteboard that simply said something like, âhouseâ and âchecking it out.â And although I didn't know if she fully understood me, she seemed to grasp at least some of what I was saying.
The next morning, I headed to the Cape house, which was small and musty as expected. As we were pulling back the carpets and I was internally deciding to make the move, the phone rang with news that Gram had passed away at the age of 98, but not beforeâaccording to firsthand accountsâsmiling for the first time in weeks and waving good-bye. Simply put, she was at peace, and to this day, I sense with great conviction that she held on until she could give her grandson and his family her most prized possession.
Yes, this book is about trading. Yet none of these remaining pages would be possible had it not been for the ârescueâ team that circled and rallied around me, a team that would forever change my views on the importance of a strong network of family and friends.
Evolving Perspectives
The next few years would bring about additional challenges, including selling our newly built executive dream home for a loss, relocating my family to an older house about one-third the size, and dealing with two major health crises. On the health front, during one four-month stretch, we almost lost Deb to a massively burst appendix and subsequent infection, and then we learned that our younger daughter, Chelsea, would have to spend the rest of her life dealing with type 1 diabetes. There were also the continual starts and misfires of my trading career as stress, lack of focus, commitment, and skill refinement combined to produce inconsistent results that didn't really amount to much and that led to a growing sense that trading would perhaps best be suited as a secondary pursuit with a reduced stress level versus primary source of income.
I soon discovered that, for me, optimal trading had its strongest probability of success if I had another revenue streamâsuch as my spouse's wages or other supplemental incomeâto put food on the table as long as such effort didn't impede on my ability to monitor and participate in the markets. Over the years, I've frankly found that balancing the need for undivided trading focus with managing a separate income stream to lessen any ...