The Trading Game (Gary Stevenson)
- Highlight Loc. 303-4
| Added on Thursday, April 11, 2024, 08:27 AM
Something that I’d started to see at LSE. The confidence of
a man who wins, not just today, but tomorrow. That of a man who knows that he
can’t lose. Somehow, even at that early stage when I knew nothing of anything
of trading, I felt it was destined for me.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 316-34
| Added on Thursday, April 11, 2024, 08:30 AM
The betting system is mainly what made the game a “trading
game,” because it was designed to mimic the way that traders make bets in the
markets: “price-making” and “price-taking” using “two-way markets.” Let me
quickly outline how trading happens in financial markets. A big customer—like a
pension fund or a hedge fund or a big corporation—wants to buy, or sell,
something. It could be anything really, but in this example let’s assume they
want to buy ten million British pounds in exchange for US dollars. In general,
they do not call up a bank and say, “Hi there, I want to buy ten million
British pounds in exchange for USD.” They don’t do this for two reasons: If the
trader knows you want to buy British pounds, he’s probably going to try and
push the price of pounds up. If the trader knows you want to buy British
pounds, he could even go out into the market and quickly buy loads of pounds,
in the hope of pushing the market price up before selling them to you at that
higher price. This is called “frontrunning” and is, in many cases, illegal, but
it happens a lot. To be clear, if you are a customer, you don’t want to tell
the trader that you want to buy before you actually get the chance to buy. To
avoid this, you say “Hi, give me a price on ten million pounds.” When you say
this, the trader (in theory) won’t know whether you want to buy or sell. The
convention then is that he has to give you two prices—one at which you can buy
and one at which you can sell. This is known as a “two-way price” and is the
way that almost all large financial markets work. If you think about it, you
see something similar when you approach the foreign exchange counter at an
airport: it will have one price at which they buy pounds in exchange for
dollars, and another price at which they sell pounds in exchange for dollars.
The price at which they buy is, of course, always much lower than the price at
which they are selling. That is how foreign exchange counters make their money.
Traders do exactly the same thing.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 368-78
| Added on Thursday, April 11, 2024, 08:34 AM
Now this game was only a maths game, but it does tell you a
few things about markets: Individual traders don’t set the price. Just because
you think something is worth 60, you don’t offer to buy it at 59 if everyone
else is selling it at 50. If other people are selling it at 50, the highest you
should possibly quote is 50–52. There is no point offering to buy at 51 if
someone is out there selling at 50. This shows something interesting about
markets, which is that an individual trader shouldn’t quote what they think
something is worth, but rather what everyone else thinks is the price. Because
of this, if you ask ten different traders for a price, you shouldn’t get ten
different prices: they should all converge on a similar price. This will be
true even if the ten different traders have totally different views about what
the price should actually be. If another guy looks like he knows what he’s
doing and is making a load of money, and you have no clue what you are doing,
then maybe you should just copy that guy. Point 3 is the main driving force in
most financial markets.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 408-23
| Added on Thursday, April 11, 2024, 08:39 AM
My strategy would have to be totally different for this
round. Everyone here had played in the first round and done well enough to go
through. They should have been good enough to realize that it’s nonsensical to
quote prices that diverged from the others on the table. That meant there would
be no easy money to be made simply by buying low and selling high between
different players. That fact, however—that players would realize the
foolishness of quoting far apart from one another—created new opportunities.
Through my relentless practice games, I had realized that most players
demonstrated a rigid willingness to stick closely to the prices being quoted
around them, diverging only slightly. They did this largely by ear, listening
out for the prices being quoted, so as to keep their own prices nearby. This
presented an opportunity to manipulate the prices being quoted by others simply
by quoting prices myself, very loudly. The game operated in a free-for-all
style (much like real markets), and if prices were being made around the 62–64
level, loudly quoting 58–60 enough times would often bring the price down to
about there. Another opportunity to set the price level would be by immediately
quoting a price, again loudly, at the beginning of the game. This presented a
new, potentially profitable, strategy. If I had a high card, I would begin the
game by calling out a low price. This is a relatively simple bluff—indicating
that I have a low card, to bring the overall price down, so that I can then go
on to buy at a low level from a variety of players, since everyone has stuck to
my initial low price. The risk of this, of course, would be that other
participants would realize I was bluffing, simply buy from me at a low price,
and continue trading at a high price. I was counting here on that relatively
simple message that had been taught to me some weeks before by my friend Sagar
Malde: rich people expect poor people to be stupid.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 425-35
| Added on Thursday, April 11, 2024, 08:41 AM
Here I was relying on another piece of information that I
had gleaned from the LSE players: most of these guys were not counting on
winning the tournament, but were hoping to use the final as a networking
opportunity. Given this, most players could be trusted upon to employ a
relatively simplistic strategy—quote slightly higher than the average if they
had a high card, slightly lower if they had a low one. Some might quote a
neutral price so as not to reveal information, but that was rare. Very few would
ever bluff. Remember, these guys are economics students, they’re not poker
players. The key takeaway here is that economists nowadays are ultimately
mathematicians, not great thinkers or game players. The other students were
playing through calculators, and while they were playing through their
calculators, I was guiding their ears, and reading their eyes. Start with a
loud bluff, then rapidly assess every other player’s intelligence, level of
complexity, and likely card. Once that was established, I’d decide whether I
wanted to buy (bet the total would be high) or sell (bet the total would be
low). If I was a buyer, I guided the price down by loudly quoting low prices,
while actively buying from other players at that low level. If I was a seller,
I did the opposite.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 440-44
| Added on Thursday, April 11, 2024, 08:43 AM
The cards came round and mine was a -10. This is a good
card. The -10 is the furthest card from the average, which means it has the
most power to change the total of the game. But of course, it’s only of value
if other people don’t realize you’ve got it. Otherwise, they’ll immediately
start lowering their own prices, and you’ll have no way to profit from it. This
is another general rule of trading: you don’t necessarily make money by being
right, but by being right when others are wrong. I
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The Trading Game (Gary Stevenson)
- Highlight Loc. 722-24
| Added on Thursday, April 11, 2024, 08:53 AM
that the ideal strategy depended on the level of player
against which one was playing; that weak players could be beaten with simple
arbitrage; that the more complex players in the game were still generally
uncomfortable with bluffing and could be thrown off by aggressive loudness.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 982-85
| Added on Thursday, April 11, 2024, 09:00 AM
So what’s the big deal with a book? The big deal with a book
is, when you run a book in a currency, all the customers and all the trades in
that currency come directly to you. Why’s that good? Well, remember what we
learned from the trading game. Anyone can ask anyone for a price
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The Trading Game (Gary Stevenson)
- Highlight Loc. 990
| Added on Thursday, April 11, 2024, 09:01 AM
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The Trading Game (Gary Stevenson)
- Highlight Loc. 985-91
| Added on Thursday, April 11, 2024, 09:02 AM
at any time, and that person has to make a price with a
“two-point-spread.” For example, 67–69, meaning “I will buy at 67 or I will
sell at 69.” Now imagine there’s a bunch of outside customers in that game who
are willing to trade on a bigger spread: for example, the four-point spread
66–70, meaning “I will buy at 66 or I will sell at 70.” That’s a little bit how
real markets work. If that were to happen, then you could, say, buy from those
outside customers at 66, and then immediately turn around and sell what you
bought for 67, securing an immediate and guaranteed profit of 1. If you were
willing to hold on to the risk for a little bit longer, you might even find
someone willing to pay 68 or 69, potentially doubling or trebling your profit.
That’s what “getting a book” means. It means access to customers who are
willing to trade at worse than market prices, and that means nearly guaranteed
profit for you
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The Trading Game (Gary Stevenson)
- Highlight Loc. 1447-63
| Added on Thursday, April 11, 2024, 09:12 AM
An FX swap is, quite simply, a loan. In more detail, it’s a
collateralized loan. Think of it like this: you go to the pawn shop, you give
them your gold watch, and they lend you £200. This is also a collateralized
loan. You have received a loan of £200, and you’ve lent the pawn shop your gold
watch as “collateral.” “Collateral,” in this case, means simply a security you
give to the lender, which they can keep if you don’t repay the loan. That makes
the loan much less risky. This loan is, in a sense, also, a “swap.” The lender
has given you money for a period of time, and you have given the lender, for
the same period of time, your gold watch. Then you both give it back, so it’s a
swap, isn’t it? It’s a “cash-for-gold-watch” swap. An FX swap is exactly like
that, except, as collateral, instead of giving a gold watch, you give foreign
currency. You borrow £200 and, as collateral, you give an equivalent amount of
euros, which, at today’s exchange rate, would be €232. That’s a collateralized
loan, and it’s also a “currency-for-currency” swap: an “FX swap.” This raises a
question though. When you go to a pawn shop, you are the one who pays interest,
not the pawnbroker, because you are the one borrowing money. But in an FX swap,
you are both borrowing money—one of you borrows pounds, the other borrows
euros—so who pays interest? The answer is simple: you both do! One of you pays
the interest rate for pounds, which, at that time, hovered around 4.5%, and the
other pays the interest rate for euros, 3.5%, give or take. Those cancel out,
don’t they, and, in the end, the borrower of pounds, which has the higher
interest rate, pays the difference, about 1%, to the borrower of euros. So who
uses these things? Well, basically, everyone. For any investment fund, hedge
fund or corporation with incomes in one currency and investments in another, FX
swaps are the go-to product. That could be The Gap opening a sweatshop in
Bangladesh, or your grandad’s pension fund buying Japanese stocks. All of that
stuff is foreign exchange swaps. By daily volume traded, they are one of the
biggest financial products in the world.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 1584-95
| Added on Thursday, April 11, 2024, 09:21 AM
Well, at that time, pretty much every major bank in the
whole world, but especially in America, went bankrupt. As a result, banks
stopped lending to each other, for two simple reasons: You probably shouldn’t
lend someone money if they are about to go bankrupt. You probably shouldn’t
lend someone money if you are about to go bankrupt. These are good rules for
life. Write them down. Now, if nobody’s making loans, then loans become
expensive, and, as I’ve explained to you, an FX swap is, basically, a loan. Not
only is it a loan, but it’s a collateralized loan, which means you don’t make a
huge loss if your borrower goes bankrupt, and, when the whole world is on the
verge of bankruptcy, these are the only loans you are able to make. We were the
only game in town. The way that we saw this happening was that all the spreads
blew up. Remember the spreads in the trading game? 67–69?
I-buy-at-67-and-I-sell-at-69? Well imagine if suddenly that’s 47–89, and you’ve
got people trading with you regularly on both sides. As soon as you get one
buyer and seller, that’s a guaranteed profit of 42, when you used to be playing
with 2’s. Welcome to the buffet, eat as much as you can.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 1625-30
| Added on Thursday, April 11, 2024, 09:24 AM
Well, what Bill was doing it turns out, was this. Bill had
been skeptical about the global economy for some time. He didn’t believe you
could run an economy simply by lending money to dickheads and he could see
global debts going up. He had long suspected the math-genius-credit-traders to
be the spoiled rich idiots that, in hindsight, they probably were, and he’d
been expecting their shit to blow up. The problem was, he had been a little bit
early, and he’d been betting on this blow-up for years. This had probably cost
him a few million dollars in PnL in each of the previous three years, which
explained both why he had not, thus far, been particularly profitable for
Citibank, and why Rupert thought that he was an idiot.
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The Trading Game (Gary Stevenson)
- Bookmark Loc. 1631
| Added on Thursday, April 11, 2024, 09:24 AM
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The Trading Game (Gary Stevenson)
- Highlight Loc. 1631-52
| Added on Thursday, April 11, 2024, 09:26 AM
What Billy had actually been doing was that he had been
betting that different kinds of interest rates would diverge. OK, imagine this:
imagine you need to borrow money for three months. What do you do? Well, you go
to your bank or your mum or the mafia or whoever it is you go to to get your
loans and you ask for a loan for three months, right? Simple. But if you’re a
big bank or an investment fund or a corporation, there’s another thing that you
can do. If you’re a big institution like that, then you could call a big,
institutional lender, like Citibank, and you could ask for a loan for only one
day. OK, you’re thinking, that doesn’t fix the problem, because I need money
for three months, not one day. Well, that’s no big problem, actually. When the
loan comes due, tomorrow, you go back to another big lender, maybe Deutsche
Bank this time, and you borrow the money again for a day. Now you’re good for
two days. Do that every day for three months, and you’re laughing. Basically,
if you want to borrow money for three months, you have a couple options—you can
take one loan for three months, or you can take ninety separate loans each for
one single day. So which do you choose? Which would you prefer? You are
probably thinking, I’d rather take the three months because then I can have it
all sorted and know the whole interest rate in advance. But in the
international money markets, you can easily arrange ninety single-day loans in
advance as well, so in both cases, you can fix your interest rates in advance.
The correct answer is that if you are the borrower, you prefer the ninety-day
loan, and if you are the lender, you prefer the single-day loans. The reason
for this is that if you lend someone money for ninety days, and they go
bankrupt on day twenty-five, you are fucked, but if you only lent them money
for one day, you are not. And if you are a borrower, and you borrow money for
one day, and on day twenty-five people realize you’re going bankrupt, you are
fucked, whereas if you borrowed money for ninety days, then you might have a
chance. Of course, before 2008, none of this mattered, because banks didn’t go
bankrupt back then. But in 2008, that all changed. The ninety-day lending
market totally evaporated, whereas the one-day lending market remained
virtually unchanged. Little gray Billy was the only guy in the whole City, it
seemed, who realized that was going to happen. He’d been betting on it
happening for years. When it happened, he made tens of million dollars in a
single week, and much more than that after that, too. Turns out, when he had
been saying the global economy was going to blow up, it had not been a turn of
phrase, after all. He was right, after years of being laughed at.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 1684-89
| Added on Thursday, April 11, 2024, 09:29 AM
“Why’s everybody lending dollars? Why’s nobody borrowing
dollars?” Spengler looked at me like I was an idiot. “Why the fuck would we
borrow US dollars? Borrowing US dollars is fucking retarded.” I tried to strike
a pose with my face that made me look like I wasn’t “retarded.” But it must not
have cut the mustard because Spengler let out a deep sigh and opened his
spreadsheet. “Look, what’s the interest rate for dollars right now? It’s 1
percent, right? And it’s going down to 0 percent. But look what interest rate
we can get in the FX swap.” He started to fiddle some numbers around in the
corner of the sheet. “We’re getting over 3 percent. It’s free money.”
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The Trading Game (Gary Stevenson)
- Highlight Loc. 1694-97
| Added on Thursday, April 11, 2024, 09:30 AM
An FX swap is a loan. It’s a two-way loan where both people
borrow one currency from one another. They both pay interest, which means, in
the end, only one person pays the interest differential. If pounds are 3% and
dollars are 2%, then the pound borrower pays the difference, which would be 1%.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 1716-19
| Added on Thursday, April 11, 2024, 09:32 AM
The very, very short-term FX swaps, the one-day ones, were
free: the price was effectively zero. But for anything longer than a couple of
weeks or a month there was a really huge premium for borrowing US dollars. This
created an equally huge opportunity for FX swap traders to lend dollars for
three months at a time, and then just borrow them back every day. It was, as
Spengler explained to me, free money.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 1751-56
| Added on Thursday, April 11, 2024, 09:34 AM
“Good fucking answer, why the fuck did you do it if you
don’t know what the fucking risks are?” “I did it because you’re doing it,
Bill.” And Bill smiled at that. “Good fucking answer again. Well, I’ll tell you
why I’m doing it. I’m doing it because the world needs US fucking dollars and
we’re fucking Citibank, and we’re the biggest American bank in the whole
fucking world and we’ve got the dollars and they don’t fuckin have them, so
we’ll charge them whatever we want, and we’re all gonna get paid. OK?
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The Trading Game (Gary Stevenson)
- Highlight Loc. 1757-65
| Added on Thursday, April 11, 2024, 09:35 AM
“And now I’m gonna tell you something even more important,
right? Don’t you ever fucking tell me, in your whole fucking life, that there’s
a trade that doesn’t have a fucking risk in it. OK? That’s what those cunts
over in Credit thought and look what the fuck happened to them. And I’m gonna
tell you one last thing, the most important thing of all of it, and then you’re
gonna fuck off and sit back in your corner. This trade will blow up, and we’ll
all lose our fuckin arses, in one situation. The trade will blow up if the
global banking system collapses. And if that happens, this whole place goes
under. You’ll lose your job, and I’ll lose my job, and the whole global economy
comes down with it. We’re betting that’s not going to happen. And we’re gonna
be right, right? And we’re gonna get paid. And then we’re all gonna go and have
a good few drinks afterward, and now you’re gonna do it as well. And you should
probably go back to your seat now and have a good long think about what all of
that means. And you make sure it’s the last fucking time you ever do a trade
that you don’t know the risks of. It’s a good fucking trade though Gal. Well
fucking done.”
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The Trading Game (Gary Stevenson)
- Highlight Loc. 2498-2513
| Added on Thursday, April 11, 2024, 11:10 PM
Now as you know, the trading story thus far has been simple:
we lent dollars out long term, using FX swaps, and we borrowed the dollars back
every day. That was a very reliable earner. But good trades are like oranges,
even the best ones will run out of juice. In the aftermath of 2008, everybody
needed dollars. Nobody had them and we did, so we made a ton of money. But that
money does not last forever. It didn’t take long before central banks all over
the world realized that a lack of available dollars to borrow was risking the
bankruptcy of banking systems worldwide, and relatively quickly the US Federal
Reserve started to lend US dollars to central banks in other countries. They
did that through FX swaps, the exact same product that we were trading on the
desk. The international central banks who borrowed those dollars lent them on
to the commercial banks in their respective countries, and before long, what
was once a life-threatening desperation for US dollars became merely an
impending need. That cut into our margins. Not only that, but over the course
of 2009 governments and central banks the world over lent so much cheap money,
and bought so many of the banking system’s bad assets, that it started to
become clearer and clearer that the banking system wasn’t going to blow up. On
one hand, that was great. That was exactly what we had been betting on and it
meant that our bets all paid off. It was one of the reasons that I, like
everyone else in STIRT trading, made so much money in 2009. On the other hand,
it was bad. It meant the gravy train was no longer running. As the global need
for dollars became less and less urgent, and it became more and more obvious
that the global banking system would survive, more and more traders and banks
entered the game of lending dollars, and what was once an extremely lucrative
business started to become less and less profitable. No longer could we lend
dollars out at 2 percent and borrow them back at zero. We’d be lucky to get 1
percent.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 2557-89
| Added on Thursday, April 11, 2024, 11:14 PM
When you lend a currency, you are betting that the interest
rate will go down. The way it works is this: when you get a loan, you go to the
bank and you ask for a loan for, let’s say, the next five years. Now, at this
point in time, the bank does not actually know what the market interest is
going to be over the next five years. That is because the interest rate is set
every single month by the Central Bank, and your bank does not at this point
know what they are going to do. Your bank will then come to someone like us,
the traders, the risk takers, and ask us to take the risk, the gamble, on what
the interest rate is going to be. At that time, at the beginning of 2010,
interest rates all over the world, including in the UK, were pretty much 0%.
But everyone thought (incorrectly) that they were going to go up. Let’s say
that the traders think rates will go up gradually over the next five years from
0% to 5%, meaning the average rate over the period will be 2.5%. They might
offer to lend your bank money at 2.55%, who will turn round and lend you money
at 2.8%. Everyone’s taking their little bit of cut. But once the trader has
promised to lend your bank money at 2.55%, in what situation does he make
money? The answer is that the trader makes money if interest rates go up less
than expected. If rates don’t actually go up, but stay at 0%, the trader—who
has agreed to lend money at 2.55%—can ultimately fund your five-year, 2.8%
mortgage by borrowing cash every day at 0%. He makes himself the 2.55%, and
your bank takes its 0.25% cut. Magic—free money! Of course, it’s never really
free money. If rates were to go up much quicker than expected—say for example
up to 5% instantly and then staying there for the whole five years—the trader
could be stuck funding his 2.55% loan at 5%, and taking the hit. The lesson
here is that lending money is betting that rates will stay low. And when do
rates stay low? In general, they stay low if the economy is weak. This is
because of the way that central banks set rates. They cut rates when they think
that the economy is weak, and they raise them when they think that the economy
is strengthening or inflation is overheating. They cut rates to try and get you
to spend money, and they raise them to try and get you to stop. This is why
Bill didn’t lend everything. Economies are very connected: they tend to be
strong or weak at the same time. If US rates stayed low, that meant the US
economy was weak, which meant the UK and European economies would probably also
be weak, which meant that UK and European rates would also stay low. Lending
dollars, and lending pounds and lending euros were, to some degree, the same
trade. Or, rather, they were highly correlated trades. If you did all those
trades together, you might think that you have three different trades. In
reality you kind of have the same trade three times. This is what Bill called
“pig on pork.” Billy never had “pig on pork.” Bill built palaces of culinary
balance. First, he would start with his favorite trade, the best trade in the
market at the time. That’s the base of the palace. Then Bill would ask himself,
what’s the risk to this trade? As an example, Bill knew that the risk to
lending dollars was further collapse in the global banking system. He would
then look at all the trades that would do well if the banking system collapsed,
and pick which one of them was likely to do well even if the banking system
didn’t collapse. He’d add that trade to his portfolio, and then he’d make money
either way. He’d continue building his portfolio up like this. What real-world
situation is a risk to my bundle of trades? What good trades are there that
would do really well in that scenario? In that way he built up a palace of
trades in which every risk was covered. That’s why Billy always made money. Whatever
tragedy struck, whatever the shock to the system, Bill had some sort of ace to
cover it. He seemed to make money whatever way. Doing this was not easy. I
tried to do it, but you needed to know everything about everything. I couldn’t
do it. I couldn’t be Bill.
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The Trading Game (Gary Stevenson)
- Highlight Loc. 2698-2711
| Added on Thursday, April 11, 2024, 11:19 PM
FX swaps get quoted as a “left” and a “right” price, rather
than a “buy” and a “sell” price. That’s because in both cases you are lending
one currency and borrowing another, so there’s not really a “buy” and a “sell.”
In US Dollar/Swiss Franc FX swaps, the left-hand side was the lending of
dollars and the borrowing of francs. There were no left-hand sides. That meant
nobody wanted to lend dollars. I had lent an awful lot of dollars and, over
time, would need to borrow them back. Morley had moved his screen down to minus
forty-five. I refreshed my PnL again. It was now minus $600K. That was more
than I’d ever lost in a day. Much more. “Morley, what the fuck’s going on?”
Another long pause. At least it felt long to me. “All right mate, mate, I think
I’ve worked it out. The SNB’s put something up on their website. Something
about a trade in the three months. Here, I’ll send you a link on the IB chat.”
IB chat is like an internet messaging service for dickheads. The message popped
up on my screen and I clicked the link. The link took me, as promised, to the
Swiss National Bank’s website. It was a simple, clean, minimalist page, with a
short paragraph of text written at first in, presumably, Swiss-German and then
in English. In the bottom corner was the SNB’s simple, clean, minimalist logo.
The English said something along the lines of, “The Swiss National Bank will be
offering Swiss francs via the three-month USDCHF FX swap at a rate of minus 35.
For transactions, please call this number.” I
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The Trading Game (Gary Stevenson)
- Highlight Loc. 2728-43
| Added on Thursday, April 11, 2024, 11:21 PM
Negative 4.5% is a very low interest rate. No country has
ever had negative 4.5% interest rates before. No country has ever had them
since. I pulled a piece of paper from my desk drawer. Important maths like this
has to be done by hand. When I lent the dollars out, and borrowed the francs,
the expected interest rate on both had been pretty much zero. But I was still
getting about 1.1% premium on the dollars. Remember it’s the differential that
matters—I’ve lent dollars out for 1.1% MORE than I’ve borrowed the francs. To
cover the trade, I need to borrow those dollars back (and lend those francs
back out) at a lower differential. I make money if the dollar interest rate
goes down (as of course, it always did) or if the Swiss rate went up. OK, let’s
be optimistic. Let’s assume that I can borrow the dollars back at zero, like
I’d expected. What does it mean if I need to lend the Swiss out at minus 4.5?
That’s a differential of 4.5%. I got in at 1.1, so I’m losing 3.4. I had, at
that point, something equivalent to about 1.2 billion dollars in the one-year
trade. Losing 3.4% on 1.2 billion dollars of one year, that was…$40,800,000.
That was the most I could lose on the trade, realistically. Yeah, that would be
bad though. That would be really bad. You might be thinking, “Well, just call
the SNB back and get the fuck out of the trade,” but if you think that, you
don’t understand what’s happening. I’ve lent dollars and borrowed francs, and
the SNB are offering to borrow dollars and lend francs, at a much much cheaper rate
than I ever paid to borrow them. In unlimited size. I can’t get out of the
trade with them. They’re trying to do the same trade that I need to do. At the
moment, there’s no left-hand sides in the market. I can’t get out of the trade
with anyone.
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 2769-77
| Added on Thursday, April 11, 2024, 11:24 PM
“They haven’t done anything to the overnight market. We can
still place Swiss francs at 0 percent. Even if the three-month market stays at
negative four and a half, we can just roll them down and lend them out every
day.” “I wanna do some.” That was Snoopy. Snoopy was in. “What if they cut the
overnight rate?” “There’s no way. They can’t cut the overnight rate to negative
4.5. The banking system would collapse.” “I’m in.” That was JB. He was still
eating a toothpick. With that he turned back to his screens. Chuck was still
thinking. He didn’t look at me and he thought for a long time. “OK. You can do
it. Good luck.” So Snoopy was in, JB was in, I was in. I had about twenty times
as much as anyone else. Billy wasn’t in.
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 2778-2801
| Added on Thursday, April 11, 2024, 11:26 PM
So what the fuck was happening here? The Swiss National Bank
were taking action to protect their currency. Not to stop their currency from
going down, but to stop it from going up. If your currency goes up everything
gets too expensive for foreigners. Your exports become non-competitive and your
exporting businesses can struggle. The SNB had already brought their official
interest rate down to zero and they wanted to try something flash. For some
reason, and I’ll never know the real reason, they chose this crazy move in the
FX swap market. Lending Swiss francs for minus 4.5% in the three-month FX swap
is basically cutting the interest rate on three-month loans to minus 4.5%. But
they were still accepting daily deposits from commercial banks at 0%. This seemingly
created an opportunity for “arb.” Arbitrage is when you can do a set of
different trades that cancel each other out and make a free profit at the end.
In this case, you borrow a load of dollars, at 1% or whatever, exchange them
for Swiss francs with the SNB at a 4.5% differential, and then leave the Swiss
francs with the SNB every day for 0%. That leaves you with 3.5%. The problem
with arbitrage is that it’s almost never risk free. If it was risk free, then
it wouldn’t exist. Someone would do it and keep doing it until the prices moved
back into line and all the profits disappeared. The second problem is that arb
requires you to do a lot of different trades, and on the STIRT desk we were
only allowed to do the FX swaps. We weren’t allowed to just go out and borrow
dollars, we weren’t allowed to lend francs to the SNB. Trades like that were
managed on another desk. So I had to just do the FX swaps for longer periods,
like three months and one year, and hope that I could lend the Swiss francs out
every day, for a day at a time, at zero. Hopefully other traders, who were
actually able to actually leave the francs with the SNB for 0, would pay me
something close to zero for them. The risk to that trade was so obvious that
even Chuck had noticed it. What if the SNB were to slash the rate that they
paid on overnight deposits of Swiss francs? They had already done something
totally mental to the three-month FX swap market—what if they were to do
something crazy to the daily interest rate too? The reason that I gave to Chuck
was that it would cause the banking system to collapse. My logic behind it was
this: Minus 4.5% is an extremely negative rate. If the SNB were to force Swiss
Commercial banks to pay 4.5% on all their Swiss franc deposits, the banks would
have to pass that on to customers. But there was no way customers would accept
taking a 4.5% annual cut from all of their savings. They’d take all their cash
out of the banks. If everyone takes their money out of the bank simultaneously,
it causes a bank run. The banking system would collapse. At least I hoped it
would. Otherwise I was gonna be fucked.
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 2834-41
| Added on Thursday, April 11, 2024, 11:28 PM
put his hand on my shoulder and said, “That was senior
management. You know what it means.” “Yeah. I know what it means.” Chuck kept
his hand on my shoulder when he said, “I know that you’ll learn from this.” It
took me two days to close the trade out. By the end I was down 4.2. And then
the fucker came all the way back. — So what’s the lesson here? Is there a
lesson? There’s always a lesson. The lesson is that Snoopy was wrong. The price
now and the price at the end are not the only two things that matter. You must
also be there at the end. The trade was good. It was the right trade. Snoopy
and JB didn’t get stopped out and they both made a ton of money on it.
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 2843-55
| Added on Thursday, April 11, 2024, 11:29 PM
Having the right trade is not all that matters. It’s also
important that you survive. Every trader has a pain threshold. Every trader has
an amount they can lose. You could have the best trade in the world, but if you
hit your pain threshold, it doesn’t matter, you’ll lose all your cash. The
lesson, then, is never hit your pain threshold. And since that trade, I never
have done. Every time you put a trade on, you must ask yourself: What is the
worst possible thing that can happen to this trade in between now and me being
right? Is that realistic? Am I lying to myself? Could it go a lot more? Take
your worst-case scenario, and double it. Me, I know what I’m like. When a trade
kicks my arse, I’m gonna do more. If it kicks my arse more I will do more
again. I don’t know why I’m like that. Maybe because fuck you that’s why. All I
know is if a trade’s gonna fuck me then I’m gonna fuck the trade back and I’ll
keep fucking it until I win. But if I’m gonna do that, then sure as hell I had
better be able to afford it. And sure as hell I had better be right in the end.
Two rules for life: Be right in the end. Be alive at the end. Write them down.
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 2898-2920
| Added on Thursday, April 11, 2024, 11:32 PM
Why had the SNB acted as they had? Was the minus 4.5% rate
sustainable? Were the FX swap prices really arbable? I stuffed my old textbooks
into my work bag, and in the afternoons when trading slowed down, into the
evenings when everyone had gone home, I would read through them while sitting
on the desk. That lasted for two days. Billy did not accept the third day. I
was deep into a chapter on the mathematical nuances of forward interest-rate
parity when the book was slapped powerfully from between my hands, straight
into the bin at my feet. In its place was thrust a perfectly round, frosty
white-tipped, deep-red Liverpudlian face. “What the fuck are you fucking doing
you fuckin cunt!? How old are you mate!?!” Billy swore a lot, but he wasn’t
usually so red when he did it. I had to think for a moment because I hadn’t
been in the mental space for taking personal questions. “Erm…I’m twenty-three.”
“So why the fuck are you in here reading fuckin books mate? Does this look like
fuckin Jackanory!?” Bill was standing but bent ninety degrees at the waist like
a maniac, and he gestured wildly toward the trading floor with his left hand. I
wasn’t sure if I was supposed to look round, but I decided that it was probably
best not to. “No. It doesn’t.” Bill sighed and placed both of his hands deep
into his white hair then wiped them all the way down his red face. He looked
tired. He sat down. “Listen, you’re not a fuckin kid anymore. I know you’ve
lost a lot of fuckin money. But you’re not gonna find a penny of it there in them
books. You wanna know what’s happening in the world, you go take a fucking look
at the world. You wanna know what’s happening in the economy? It’s fucked. And
you can see it everywhere you fucking go mate. Go take a walk down the high
street. See all the fucking shops closed down. See the fucking homeless people
under the fuckin bridge. Go look at the ads on the tube. Debt relief, home
equity release, debt relief. People losing their fucking homes just to pay for
the kids. Go home and ask your mum about her financial situation. Ask your
friends. Ask your friends’ mums. The time for books is fucking over mate.
You’re not a fucking kid. You’re here now. You’re in the big leagues. Look at
the world with your fucking eyes.” And that was it. The most important thing I
ever heard. —
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 3047-3128
| Added on Thursday, April 11, 2024, 11:41 PM
Titzy always thought that the market was right. Always. Just
like he always thought the textbooks were right. I think the guy had some sort
of deeply laid innate desire to believe in a kind of higher wisdom. To trust
that the guys upstairs had it under control. Bless him, his dad must have been
a nice guy. That was exactly what I wanted. I wanted a kid who read the
Financial Times in the morning and then spent the whole day on the phone to his
business school mates. Let me explain to you why. When I lost that eight
million dollars I realized something. You don’t become the best at anything by
copying people. I wasn’t going to get better than Bill by copying Bill. And I
wasn’t going to get better than Spengler by copying Spengler. Ultimately, when
the shit hit the fan, it took me out and nobody else. Billy and Spengler didn’t
come to save me. That’s what you get from copying people. Second-hand tactics,
second-hand skills. It’s not good enough. I needed something that was mine. And
when Bill slapped those textbooks out of my hand and into the bin, I realized
what it was. See, Billy was right about those textbooks. They were bullshit.
Textbooks are for kids. If you want to understand the real world, the time
comes when you have to go and look at it. That time had come for me. Rich
daddy. Private school. Princeton Finance Society. Citibank. Algebra. Calculus.
Lagrangians. Proofs. Most of those dicks on the trading floor, they’re still
living in their daddies’ pockets. They believed everything they read and sucked
up every word they got told. Why the fuck wouldn’t they? It gets everyone paid.
That’s why Billy beat them year after year. But when Billy threw my books in
the bin, there was something else. I could see it in his eyes. See, when we
were memorizing algebra in castles, and lining up in queues for Finance Society
events, little teenage Billy wasn’t doing that. He was sitting down behind a
sheet of glass, in the middle of buttfuck nowhere in Yorkshire somewhere,
handing out wads of cash to punters. He was a cashier. A checkout boy. Billy
never had those books. And I could see it then: Billy was jealous. — Now, I’m
going to tell you a secret about trading. Making money trading is not about
being right. It’s about being right when everyone’s wrong. Billy was right.
Billy was right year after year after year after year. But when did he make his
big money? He made his money when something happened that no one else had
foreseen, when the global banking system collapsed. When people are wrong,
their predictions are wrong. When people’s predictions are wrong, their prices
are wrong. And when prices are wrong, we make millions. The reason Billy was
right, year after year, when everyone else wasn’t, was because Billy knew that
the economy was a real thing. The economy is people, it’s houses, it’s
businesses, it’s loans. The rest of us had all been trained to see it as
numbers, and besides that, barely any of the traders knew a single person who
wasn’t rich, if you don’t count their cleaners. What did they know about the real
world? That was one advantage that both Billy and I had over them. We didn’t
have to strike up conversations with our cleaners. But I had something else,
too, something that Billy never had. Billy knew he was surrounded by idiots.
But I’d been inside the universities. I’d taken the courses. I’d memorized the
book. I’d seen the dark heart of the idiocy. I knew it. Its flavors. Its taste.
The best trading, you do it with your nose. It smells like stupidity. And back
then, at the beginning of 2011, the whole place was stinking of it. — See,
something happened in 2010 that I couldn’t get out of my head. Interest rates
stayed zero, all year. That probably means nothing to you. You saw interest
rates stay zero for nearly fifteen years. Zero interest rates were normal for
you. They weren’t normal back then. More importantly, they hadn’t been
predicted. In the beginning of 2010, everybody thought that interest rates
would go back up that year. Everyone had thought the same in 2009. But it
hadn’t happened. Everyone had been wrong, two years in a row. Why? Well I’ve
read the textbooks, just like Titzy, and every other pink-shirted dickhead on
Wall Street. Let me tell you the story they tell. Interest rates control the
economy. If you control the interest rates, you control the economy. We are
good at this. We have this well under control. Sometimes people lose confidence
and they stop spending money. When people stop spending money businesses lose
customers and they go out of business. That means that people lose their jobs,
and they spend even less money. That means more businesses shut down. That can
lead to a spiral of rapidly increasing unemployment and poverty. It can cause
your economy to collapse. That’s what happened in the Great Depression in the
1930s leading, ultimately, to fascism in Europe and the Second World War. That
could have happened again in 2008, but it didn’t because we’ve got it under
control. We know how to deal with this problem. When this happens, we cut
interest rates. Cutting interest rates is great because it makes saving less
attractive, and borrowing cheap, so people and businesses will save less, and
they’ll borrow and spend. This perfectly counteracts the root cause of the
problem—people stopping spending money. Through diligent management of interest
rates, a tweak here and a tweak there, we can always reach the
first-best-optimal-outcome-for-the-economy. The best of all possible worlds.
Back in 2008, economists were very confident in their ability to achieve this.
The previous two decades had seen a golden age of success for economists,
during which they successfully Conquered Inflation Ended Boom and Bust Achieved
Sustained Economic Growth All through the miracle of interest-rate management.
Given the generally accepted wonderfulness of the strategy, it is no surprise
that when the massive (and unforeseen) banking crisis of 2008 dropped, there
was uniform nodding of heads within the economist community that the correct
response was to slash interest rates. Interest rates were, accordingly, slashed
enormously. Whereas previously central bankers would do things like pruning
interest rates from 5.75% to 5.5%, suddenly they were slashing them from 5.5%
to zero. And this happened across the rich world. Everyone was very confident
it would work. I won’t bore you with the technical details, but slashing
interest rates is printing money. The way a central bank lowers interest rates
is that it prints a fuckton of money, and then it lends it out to banks
super-duper cheap. Everyone was very confident it would work. The level of
confidence in this plan is probably best summed up by a quote from Ben Bernanke
at about the same time. Ben Bernanke (ex-Princeton, ex-Harvard, ex-MIT) was at
that time the head of the US Federal Reserve, on paper the most powerful and
smartest economist in the world. Here’s what he said: “The US government has a
technology, called a printing press, that allows it to produce as many dollars
as it wishes at essentially no cost…Under a paper-money system, a determined
government can always generate higher spending.” Everyone was very confident it
would work. It didn’t work. — That’s why I wanted to sit next to Titzy Lazzari.
I wanted to sit next to Titzy Lazzari because Titzy was wrong. OK. This is not
about Titzy Lazzari personally, this is about the whole market. By the
beginning of 2011, it had started to become clear to me that the market was
wrong. Not just the market, but the economists, the universities, the fucking
Monetary Policy Committee in the Bank of England, the dickheads on the news,
the whole fucking shitshow. These fuckers had been wrong about everything.
Every single fucking thing since the day I showed up. When I showed up
everybody thought that the pink-shirt dickheads were one step down from God.
Next thing those guys blew the world up using nothing but mathematics, idiocy
and hubris. After that, every economist in the whole world had spent two and a
half years constantly predicting a recovery that never happened. One day I sat
down and looked through some historic interest-rate predictions. Every single
one was a mile too high. They were wrong about everything. We were wrong about
everything. I needed to know why. That’s why I needed Titzy. I needed to
measure the distance between the real economy and the universities, between the
real world and the markets. For that reason, I needed someone beside me who was
fresh out of university, fully plugged into the matrix. Someone who knew every
economic theory, who read every business paper. Someone whose friends were all fresh
out of business school, and whose father messaged him asking for stock trading
tips from a yacht. Someone whose silver suit was pumped full to bursting with
Kool-Aid. Yep, I needed Titzy. I needed Titzy because he was wrong.
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 3138-49
| Added on Thursday, April 11, 2024, 11:43 PM
People lost their homes and their jobs. But those homes are
owned by new people now, and unemployment is coming down and inflation’s going
up. Now that the banking system is repaired, it’s only a matter of time before
the economy, and interest rates, bounce back. It’s an opinion, I guess. What
did Antonio Mancini, the wealthy, snakeskin-belted Oxford macroeconomics
professor think, when I asked him seven years later, in 2018? “We always knew
rates would stay zero! People had had a shock to their consumption-savings
preferences!” Well…It’s an opinion, I guess. JB used to have a saying about
opinions. “Opinions are like arseholes. Everyone’s got one.” I asked Harry
Sambhi. Harry was still just a kid. Harry had holes in his shoes and was
jumping over the barriers on the tube to save costs. That’s why he didn’t spend
money. I asked Asad. Asad said his mum had sold the family home to support him
and his sisters and now he was sleeping on the sofa to try and save up a
deposit. That’s why they didn’t spend money. I asked Aidan. Aidan’s mum had
lost her job and hadn’t been able to get a new rate on the mortgage. Now the
monthly payments were sky high, and Aidan was having to pay them himself.
That’s why they didn’t spend money. They were losing their homes. I hadn’t even
noticed.
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 3152-58
| Added on Thursday, April 11, 2024, 11:43 PM
“Titzy. Do you think the reason no one is spending money is
because no one’s got any money?” “What the fuck are you talkin’ about, geeza?
How can no one have any money?” His accent is deeply Italian. “Geeza” is a new
word that he’s recently learned and he’s trying it out. “Well, you know, I been
askin’ people and that’s all they keep saying. ‘I don’t have no fuckin money.’
” “ ‘I don ava no fuckina money.’ ” Titzy tries to copy my accent and somehow
comes off sounding even more Italian. “Come on geeza. It’s a monetary system.
It’s not possible for no one to have any money. The whole thing has got to add
up.”
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 3179-93
| Added on Thursday, April 11, 2024, 11:45 PM
I couldn’t get it out of my head. Not the collapse of
western welfare states, no, I wasn’t too worried about that. What I couldn’t
get out of my head was this sense of similarity. It was the same. The
government of Spain, the government of America, the government of Japan. The
situation was just like Asad’s mum, it was just like Aidan’s mum. Outgoings
more than their income. Losing the ability to borrow money. More and more
income going into servicing debt. Losing their assets. The situation was the
same. It wasn’t just Harry with holes in his shoes, it was the world. But it
came up against the economics though, Titzy’s wisdom. We’re in a monetary
system. The whole thing always has to be in balance. For everyone who’s in
debt, there’s someone who’s in credit. For everybody losing money, there’s
somebody who’s gaining. The whole system is designed to be in balance. Not only
that, but what about the houses? What about the stock market that was rising
and rising? These assets weren’t disappearing. But if we didn’t own them, if
the people didn’t own them, and the governments didn’t own them…Then who did?
And that was it, I think, that was the moment that it hit me, surrounded by
millionaires and sandwiches. I looked to the left of me. Pink shirt, pink
shirt, white, sky blue. I looked to the right of me. White shirt, white shirt,
pink, ooh, pinstripes, don’t see much of that nowadays. There, in string, sewn
into a collar, four letters: “A.I.E.Q.” Who the fuck’s surname begins with a Q?
Millionaires. Every single one of them. And me, too. What about me? I’d be a
millionaire, before long. It was us. It was us, wasn’t it? We were the balance.
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 3193-3225
| Added on Thursday, April 11, 2024, 11:48 PM
We were the ones with the growing bank balances that
balanced the Italian’s debt. We were the ones receiving the interest on Aidan’s
mum’s mortgage, that Aidan himself was now having to pay, to us. And our
children. Maybe my children. Maybe they would own the house that Asad’s mum
sold. And the rent from that house, and the interest from the Italian
government: maybe our children could lend that back out to Asad’s own children,
and then we’d own the houses and the debt, as well. And it would grow, that’s
what compound interest does. We would use the money from the assets to buy the
rest of the assets. You’d sell your assets to us, to pay your mortgage, to pay
your rent. To pay it to us. That’s how it would go. It would get worse and
worse. It would grow, it would grow out of control. It wasn’t a crisis of
confidence. It wasn’t the fucking of the banking system. It wasn’t an
“exogenous shock to consumption savings preferences.” It was inequality.
Inequality that would grow and grow, and get worse and get worse until it
dominated and killed the economy that contained it. It wasn’t temporary, it was
terminal. It was the end of the economy. It was cancer. And I knew what that
meant. It meant I had to buy green Eurodollars. — A green Eurodollar is a bet.
A nice, clean bet on what American interest rates will be in two and a half
years’ time. None of this complicated “lend one currency borrow another”
bullshit that you get in FX swaps. None of this having to borrow the money back
every day. We are talking pure betting now. Casino stuff. We loved it. Billy
loved it, Snoopy loved it, I loved it. Our job was not supposed to be betting.
We were supposed to provide FX swaps to customers. But we were given access to
products like Eurodollars (and their equivalents in all the other currencies)
so that we could “hedge our risks.” We hedged a fucking lot of risks, often
risks we didn’t have. I was about to take the hedge of my life. See what I had
realized, at that moment, was exactly, precisely why we were all wrong. We had
been diagnosing a terminal cancer as a series of seasonal colds. We thought the
banking system was broken, but fixable. We thought confidence had collapsed,
but would recover. But what was really happening was that the wealth of the
middle class—of ordinary, hardworking families like Aidan’s and like Asad’s,
and also of almost all the world’s largest governments—was being sucked away
from them and into the hands of the rich. Ordinary families were losing their
assets and going into debt. So were governments. As ordinary families and
governments got poorer, and the rich got richer, that would increase flows of
interest, rent and profit from the middle class to the rich, compounding the
problem. The problem would not solve itself. In fact, it would accelerate, it
would get worse. The reason economists didn’t realize this is because almost no
economists look in their models at how wealth is distributed. They spend ten
years memorizing “representative agent” models—models that view the whole
economy as one single “average” or “representative” person. As a result, for
them the economy is only ever about averages, about aggregates. They ignore the
distribution. For them, it’s nothing more than an afterthought. Moralist window
dressing. Finally, my degree was useful for something after all. It showed me
exactly how everyone was wrong. If I was right, this was a big deal. It meant
that markets were horribly, horribly mispriced. The recovery would never happen
and the normalization of interest rates would never happen. At that point, the
beginning of 2011, markets were pricing nearly 6 full hikes of 0.25% each from
the US Federal Reserve in the following twelve months alone. They were going to
be wrong. Everyone was going to be wrong. Those rate hikes weren’t going to happen.
They would never happen. I would be able to make money off this year, after
year, after year, as the interest predictions got pushed back and back. These
idiots never even looked at inequality. It would be a decade before they caught
on, at least.
==========
The Trading Game (Gary Stevenson)
- Highlight Loc. 3256-78
| Added on Thursday, April 11, 2024, 11:52 PM
They evacuated 154,000 people from the prefecture of
Fukushima and people thought the nuclear plant might blow up. That was good for
my position. Up three and a half million dollars. Up four and a half million
dollars. By a week in I was up six million and JB was absolutely choking. It
was hard to watch. Then I did something a little bit crazy which, as a trader,
I probably wouldn’t do nowadays. There was a sales guy on the floor on the desk
next to ours. I liked him. He was a nice guy, but he wasn’t the smartest. A
crisp, clean cut, nicely raised Englishman in his mid-forties. His name was
Stanley Palmer. One day, in the midst of the nuclear panic, Stanley Palmer went
crazy. He stood up, at 11 a.m., in the middle of the trading floor, and he
screamed out, “THE NUKE RODS ARE EXPOSED!!!” The words echoed around me as desk
juniors across the floor repeated them loudly to their own desks. Titzy stood
up beside me and shouted, “THE NUKE RODS ARE EXPOSED!!!,” his hands around his
mouth. There was a chaos of noise and activity as people ran back to their
seats and shouted at their brokers and each other. Stanley was still standing
and repeating the words, “THE NUKE RODS ARE EXPOSED!!! THE NUKE RODS ARE
EXPOSED!!!!” Titzy was echoing it like a clown. I told Titzy to shut the fuck
up. Titzy spread his hands real wide and shrugged wildly as if I was the mad
one. “Titzy, what the fuck is a nuke rod?” Titzy did that thing that Italians
do with their hands. I turned back to Stanley, he was still shouting and
shouting. What did I know about Stanley? I was pretty sure he had graduated
from Oxford. What was it he had studied? Was it History? Or was it Classics?
Could it have been PPE? “Titzy there’s no way. There’s no fucking way Stanley
knows what a nuke rod is.” Titzy wasn’t listening. He was deep in his screens.
JB was screaming down his broker lines. He was finally stopping out of his
position. I picked up the heavy brown telephone and I pressed the button to my
Eurodollar broker. I covered my mouth with my hand, and I sold a fucking ton of
Eurodollar futures. That flipped my whole position. I wasn’t betting on a
disaster any longer, I was betting on rates going up. You shouldn’t do that.
You shouldn’t flip your whole position on a feeling, on a whim. You shouldn’t
play God, you are not invincible. But what am I gonna tell you? I was
twenty-four years old and I did it. The nuclear plant never exploded. Thank
God. I made another five million on the way back up. The best trading, you do
it with your nose. It smells like stupidity.
==========
“Stocks are the trade?” “Stocks. They’re too high.” “What do
you mean stocks are too high?” “Look at them! They’re too fucking high! They’ve
barely fallen and the economy’s going to shit! They’ve got to go down.” I
turned away from JB and I picked up the pen again and I tapped it onto the bare
desk about twenty times. “JB, you don’t get it do you? It don’t work like that.
Stocks never go down. Stocks only go up. When the economy is good stocks go up,
and when the economy is shit, they print so much money stocks go up even more.
Same with fucking houses. Everything goes up. The asset holders never lose. The
rich never lose. The rich only win. Buy the fucking stocks mate. They’ll go to
the moon.
==========
