Was that a metaphor for your mood?
Yes. I would have exchanged places with one of those people in that plane on that day. I felt that bad. I
thought, "This is it; I've mined my life."
Did you feel guilty because you had lost someone else's money?
Yes, and I felt like a failure.
Had you started out confident?
Initially, I was very confident because before I started trading on my own, I had clerked for a broker for four
months and picked his brain clean.
And now you thought the game was over?
Yes. In June 1979,1 decided that I better find another job. I went to the Levy brothers, who owned a chain of
restaurants that my dad built for them. They said, "Any time you want a job, you can run one of our restaurants." So,
I said, "Hold that line. I am going to give it one more month,"
Did you feel better because you had a cushion?
Yes. I said, "This is great, I've still got fifteen grand in my account."
You had a stop on your life so to speak?
Exactly, exactly. I had a stop on my career. So, I decided to go back and give it one more shot.
Did the fellow who staked you know how much you had lost? Did he ever say anything?
Oh, good question, Jack. He called me every night. I' ve grubstaked many guys since then, and three or four
of them have lost more than fifty grand each. This man was a multimillionaire, and he acted as if this was the end of
the world.
Did he ever ask you for the rest of the money back?
No, he just moaned and groaned. He had become wealthy through inheritance and money he made in another
business. He really didn't know much about option trading. He had bought the seat to have something to do with his
life. He told me, "If you lose $5,000 more, we'll pull the plug." So, I spent the next few weeks winding down my
positions.
During that time, I sought advice from the more experienced brokers on the floor. They said, "You have to be
disciplined and you have to do your homework. If you do those two things, you can make money down here. You
might not get rich, but you can make $300 a day, and at the end of the year that's $75,000. You have to look at it
that way." It was like a light bulb went on. I realized that this chipping away approach was what I should be doing,
not putting myself at a big risk, trying to collect a ton of dough.
At the time I was in Teledyne options, which was a very volatile market. So, I switched to Boeing, which was
a very tight, narrow range type of market. I became a spread scalper trying to make a quarter or an eighth of a point
on a trade.
I stuck strictly to my goal of trying to average $300 a day and it was working. This period taught me to be
regimented and disciplined.
То this day, I live by the credo of hard work, homework, and discipline. I teach my guys that.
Anyway, at this same time, I still had the remnants of a big spread position in Teledyne that I was in the
process of liquidating. It was a position that would lose in a rising market. One day after I had been trading Boeing
for about five weeks, Teledyne started moving up sharply. I was not going to let it get me again. I rushed into the
Teledyne pit to take my position off. I was hearing floor brokers come in with orders, and all of a sudden I found
myself responding to them. I was adapting the same technique I had learned in Boeing to Teledyne, except instead of
scalping for an eighth or a quarter, I was scalping for halves and dollars.
What size
were you trading at the time?
I was doing one lot at a time. The guys didn't like me because I was getting in their way. They wanted to do
ten- or twenty-lot orders.
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