I remember May of 2001 like it was yesterday. My birthday was around the corner and my business was stable, albeit boring. After the crash of 2000, my business was solely focused on preferred stocks and bonds. My gross production was a joke, about 15% of what it was just a year prior; but I was building assets. To couch my boredom, I started playing with my own money, in a very aggressive manner.
I was in my early 20’s and had no respect for money. If I lost $250k in an option trade gone awry, big fucking deal–I’d make more money. The only problem with this mentality was I hadn’t come to grips with the new reality, which entailed me being a fucking piker. My income was a joke and my spending habits didn’t reflect that “new normal.”
So I took $300k from my checking account and splashed it into the markets, leveraged it up and said my prayers. I couldn’t lose; after all, I was a genius. The market was ripping tits and 9/11 hadn’t happened yet. I was the shit and the other brokers could suck my dick if they didn’t like it.
By mid-May, I was really feeling myself, as you can see by the chart of the Nasdaq, circa May 2001. Things were on fucking fire and the internet stocks were making a comeback. I made my small fortune buying and selling dot coms, that later became dot bombs. But it wasn’t clear to anyone still in the game that they were dead. Although I cursed these stocks on a regular basis and didn’t dare buy them for clients, with my own money, I didn’t give a fuck.
What transpired next was a worst case scenario, spawned from hell, delivered to my door–executive class.
In less than 2 weeks, the Nasdaq dropped a little more than 10%. However, my portfolio of high octane HORSESHIT plunged. After they plunged, they plunged some more. I stopped going to work because I could not concentrate and wanted to focus on my account–because it was pretty much the bulk of my savings. I started trading from my friends office in Bay Ridge Brooklyn. He was managing $20 million for one guy, like some sort of devil degenerate. Aside from that, he was a nice guy.
As the market plunged, I bought more. I could not believe the prices on the screen. Things were getting so fucking cheap. It defied logic. I was levered to the hilt, greedy as fuck, fully convinced that the market was wrong and I was right.
It all ended on my birthday with my account at $00.00. “Happy fucking birthday, asshole”, said my margin clerk, as she liquidated everything. I remember the pangs of misery, the sharp knife in my stomach, as I celebrated my 25th birthday. I had to tell my wife “honey, I shrunk the bank account”, which led to “no touching the savings account for speculation ever again” polices, at The House of Fly, which were later revoked as I regained my footing of manhood.
To make matters exponentially worse, EVERYTHING I SOLD came right back to my basis, and more, literally one week after I was flushed.
The moral of the story: Markets don’t give a shit about your birthday.
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Your biographical stories are the best.
Indeud.
That’s a good woman you got there.
Wow thank you for sharing!
ain’t that the truth
Happy Birthday Master Fly.
That story sums up why I (almost) never trade on margin. It seems like trading on margin is just asking the stock gods to bend you over and take advantage of you.
Here here. I only went on margin once and that was purely by accident. Instead of buying the number of shares I really wanted I forgot to change the default share amount and bought 2x as much.
I quickly noticed the mistake; after the buy went through of course. Still, I was OK with the stock that was just purchased but quickly dumped some non-performer just to get out of margin.
Things worked out ok in the end. The stock I bought traded down for about a week then reversed. The one I dumped went on to lose another 50% before it found firmer ground.
I’m perfectly happy missing out on some gains in exchange for not having to worry about a dickhead margin clerk liquidating my account.
Cool story bro. Tell it again.
Fly…I’ve been reading your blogs daily for what– 5 years now. You have a certain Midwest style of work ethic and transparency that mixes with your Brooklyn smarts.
I have known since Broker A days that you are the real deal. Really grateful for the forum and premium content you provide.
Markets feel broken here. Sad.
Happy Birthday
Thanks.
My b day is 5/25. However, I started the process that led to my demise around this time, 11 years ago.
Happy Birthday Le Fly!
sometimes its not about the story ..sometimes its about whats said between the lines ?
that’s just a chapter…story’s not ovah…cheers!
Nice YELP pop. Happy anniversary of your destruction, and upcoming birthday Senior Fly.
YELP and TRIP. Thanks for everything you do Fly. Happy Birthday!
this year things will be different, and things will be the same.
im sure that the lovely and talented mrs.fly has no regrets ..buy her something nice on your birthday and tell her that thing all women want to hear
My BD Day is May 29th I do not want to have a BD with 0.00 in my account. So back to 98% cash. This could get real ugly the next two weeks.
thanks for your candor, its moments like that define,improve or destroy. im glad u came out of the other side.
new book title for u, if u please, coming thru the black hole, or so what i fucked up,im better for it.
11.5 more years and you will be banned from this site!
I’m interesting in how you came back from that debacle. Some wouldn’t do too well after something like that.
Damn typing on an iPad… Correction: I’d be interested to know how you came back from that debacle…
Dr. Fly, I will be sashaying my way through New Jersey to visit some close friends over the next few days. Where would you like me to drop off your birthday cake? It is Earl Grey flavoured (sic) cheesecake. The candles are Roman.
Been to da dumps before and seen the same family reactions. Lost 300K in CCME after a 2 month trading halt and left with barely more than a seed from a home equity loan. Stayed in cash for 2 months, bond fonds for 3 months. Played with small positions for bounce trades in oil last summer. Finally waded back in chest deep in early October. No margins is my new rule and always have a Plan B if my trade goes south, average down only if there is an exit strategy.
just fer u.http://youtu.be/EfH46DTAkxo
Good story Dr, thanks for sharing…
again – I love your writing and these stories, I hope you have more for us
This reminds me of July last year when I bought everything at the top and sold in October before the monster rally.
Sadly my story does not have a happy ending but CCJ & SU are back where I sold for loses that will forever haunt me.
Thanks for sharing this Senior T.
I too really appreciate the insight, candor, and forum here.
Hands down -my favorite site on the web.
all of these losses can be avoided no need to blow up your accts. simply dont be a ticktard ,yes you ,you know who you are buying shit first thing in the morning because your candle blinked green thinking you caught the bottom …well how did that work out today ….you couldnt manage a dead cat bounce ….only one direction we are going. down…..my faz posistion is only up 3.77% today and well no need to tell you what its up since i bought it ..do yourselves a favor before its to late to hedge save yourself before you cant afford to ….i am being nice to help you..next week i wont be nice… i like fish and to me your accts are fresh salmon
oh and by the way have a nice fuckn day
You write like a 5 year old.
you are correct my friend
the morphosis has begun
my comment was not directed to you, or at you and should not be interpreted as such
1. Show some respect.
2. Have you thought of a name change?
Like BIG DOUCHE?
Or maybe MADEMOISELLE BIG DOUCHE?
fuck off right now
maybe you should change your name from sub soft chinchinilla to a wimp in disguise
That was for BIG tough FAZ bear, genius, and I AM a chinch in disguise.
See you at church on Sunday.
immature, and lacking . fly just just posted truth, u posted “im better than u” not in jest but to prove u r better, great…youve proved your point, now go home and see if your dad will do the same.
this is part of the big problem.. people read and have no idea what they read then they do dumb shit based on what they didnt get then they go off half cocked with their lips sewn to somebodys ass and cant see the correct box to post a comment
took 2 weeks, but dude called it – 1328 to 1264 –
http://www.youtube.com/watch_popup?v=eVTXPUF4Oz4&vq=medium
Happy Birthday..
here’s to many more!!
pre~Happy..for the next 9~days
(just read through responses)
Oh yes, 1998-2001….I was right there, myself, back in the halcyon days of the dot-com day-trade.
A lot of people took the easy way out, when they realized those huge losses.
Yet, is it really that much different today?
I mean, you have companies like GSVC, who talk about 2 million share follow-on offers, that turn into 7 million shares sold, a few days later.
Just think about it, GSVC made an easy $112+ million for the executives to spend on private jets, Cristal, whores and caviar.
I think I will call them GSVC.com from now on.
That is why I do not own it anymore.
You picked the right woman Fly. If I levered up the savings account and blew it all, I can assure you my wife’s reaction would not be “no more speculating.”
But I also wasn’t ballin’ as hard as you were in the late nineties. Perspective is everything.
Woo hoo!
Breaking news..
“NY Judge blocks “indefinite detention provisions of the NDAA law”
Thank God!
I hope y’all get aware of your rights being sucked out from beneath you, and send a note to your local rep’s to vote yes on the Amendment to take out that unconstitutional part of the NDAA.
This is serious business.
Link:
http://www.bloomberg.com/news/2012-05-16/military-detention-law-blocked-by-new-york-judge.html
tks,
This statute “blows me away”….sorry, that’s a holdover/permanent scar from the Granholm years here in Michigan….
So
A. I am heartened that someone has seen the writing on the wall here and done something about it. The NDAA is a truly malevolent piece of sh.. I mean legislation.
B. It is beyond comprehension to me that this comes from the same administration that wanted to try foreign terrorists on US soil in US courts under the same laws as a US citizen. Now they want the latitude to incarcerate US citizens and hold them, treat them, as the terrorists should have been treated in the first place. Who ARE these people and what are they trying to do to the USA?
Class A post, fly.
Today is my father’s birthday… just saying. Happy birthday dad!
For me, it is always most enjoyable reading the posts like this. It almost defies reason that you could go from where you were then to where you are now and is an inspiration.
Also gives young idiots like me some hope.
IT’S A TRAP! S&P Futures Spike 5
====
Damn how desperate are you?
Who are you talking to?
Holy Shit!!! That was my story….leveraged to the ass…holding a big name storage company at 105/sh..bought a bunch of assfuckers on the their way down..XRX,GLW to name 2…only to watch my big holding follow those fucktards right into the toilet!!! Margin calls and liquidation…FUCK!!! I was dam near suicidal so I drank like a fish and cried like a little bitch….my lesson??? YOU’LL NEVER GO BROKE TAKING PROFITS!!fin
Great story. Fortunately what I blew up that year was so little that it only taught me a few lessons.
I learned to:
a) Never use margin.
b) Never think that a stock “can’t go any lower”
c) Sell when you have quadrupled your money.
I know, simple stuff.
yep…simple
“Sell when you’ve quadrupled your money”?!?
I remember going through all my past trades and calculating what my portfolio value would have been if I just sold everything once it reached +5%. Not much lower than it is today without nearly the draw downs.
Anybody in the mood for an OEW update? Tuff shit … here it is!
“The market started off the day to the upside. This fit with the short term abA-B-abC count, from SPX 1415, noted yesterday. Apparently yesterday’s SPX 1328 low did end wave ‘a’, and it appears wave ‘b’ ended at today’s 1342 high. Wave ‘c’, to complete the pattern, should be underway now. We do have a fibonacci price cluster right at SPX 1321/1322.”
“Technically, the SPX/DOW display a short term positive divergence, and are currently at the most oversold condition since August 2011. Plus the NDX/NAZ just broke through Intermediate wave iv support, today, and are also the most oversold since August 2011. This market appears very close to a downtrend low.”
“Short term support is at SPX 1322 and the OEW 1313 pivot. Short term resistance is at SPX 1342/1347 and the OEW 1363 pivot. The short term OEW charts remains with a negative bias from SPX 1395 with the swing point in the low 1350s. Should the market rally to that level (low 1350s) a new uptrend is likely underway.”
things can remain oversold for a long period of time ..is that a safe assumption
my reasoning is this …there is a lot more to be sold to get to SPX oo.oo
my wave guy has been dead on, not dead short … GLTY!
there was a time when i had a hard time understanding what you were saying but now i look forward to your post
ty
If it goes up, we’re in a new uptrend. If it goes down, we’re still in the downtrend. Man, they are geniuses!
road signs like Stop and Go … learn how to read and obey the traffic signals otherwise get drunk and drive blind … but you’re already mad so never mind.
im having trouble getting a SPX chart on my drink and drown platform , do you know what i have to enter to bring it up if thats even possible
look for the “little man” symbol and once inside find the extra wide door then insert fist into mouth and you’re good to go.
About those new drones that will be flying over your backyard, with their gyro-stabilized, 60 megapixel night-vision cameras, looking into your bathroom window while your teenage daughter is in the shower:
http://www.youtube.com/watch?feature=player_embedded&v=7fNP51hZtVI
Great story rich boy… Lol
awesome story fly, thanks. You’re not a real man in this business until you’ve blown your own account out at least once. Reading “The Market Wizards” book I noticed an interesting common ground between all the interviewed money managers: they had all crushed their personal account at some point.
We all remember our most brutal losses. The important thing of course is to learn from them and rise again from the adversity like a true boss.
Good story for the readership, and nice to see someone pick up the similarity between Fly and the markets wizards. On a different level… nice to JPM failing too – validates the “truth”, “it’s not ‘if’, it’s ‘when’ that’s the question.”
Important to try to learn from other’s mistakes, but more important to learn from your own. The next chapter could usefully deal with money management, and how to avoid becoming a gun-shy perma-bear.
Many of them were also specialists on the floor capturing the spread between bid and ask. Not much talent required to do that which is why, helped along by electronic trading, their kind have mostly gone the way of the dinosaurs.
You aren’t a man until you’ve blown your account up. It’s a right of passage in this game.
Thanks for that great story.
Today happens to be my birthday also and I am now 50 years old. Bill Clinton once said that if you happen to survive to 50 in this world you are a lucky man/woman. He was right. It’s funny how good “old” can feel 🙂
happy b day
Happy B day Howard.
Same story only I started in 98 built it from about 100k to 4X. Spring of 2001 same story. Not zero but like 45k left. Stayed away until 06. Next, I blew out an account in futures…. didn’t respect naked short positions. traded too big, huge when behind and pissed. Market doesn’t care that its over bought or over sold until you’re over.
Lets just say I’ve got more ideas of what not to do now, still learning and love options spreads with defined risk much more then pure plays 70% of time. Ranges are easier than pure direction and pay just fine.
Like your candor, and self depricating ways. Stay nimble Fly.
Way to go Lakers … 0-2 to OKC !!!
To truly appreciate the good times, you must go through the bottom, be on suicide watch, and see mortal close enemies bank on your demise.
I believe that they say, That all great traders have suffered a major loss, or will. I wish I could have been doing all of this in 2001, very interesting point in history. Love Fly Stories.
Leverage is a double edged sword. You have to pick your spots when the odds are most in your favor. With the dollar rallying like it has and the markets and commodities having tanked, the risk/reward favors a sharp move higher so leveraging a long position makes sense. I think we get a pop and then it’s time to run for cover but after so much selling and sentiment so negative, now is the time to roll the dice.
These types of losses and stories made you who you are today. Excellent read. :))
Happy Birthday, Fly–from a Queens boy. My accountant is still in Brooklyn, one of the least likely overweight Russian men you’ve ever met. Used to be off Avenue X, now in Manhattan Beach. Only time I ever get out there. But it’s always an adventure.
Fly,
I would love to hear part two (how you made it back). I think we are close to a short eating rip reversal. I am surprised I still get no iBank certified balls for gorging on JPM Sep 35 puts.
So, endeth todays lesson!
Well, let’s see here……what way will the market go today?
Wally World, the largest purveyor of junk and Chinese offal in the world reports records profits.
Timmy says we live in a dangerous world.
Mortgage rates are at record low but few take advantage of them to build a new home.
Consumer credit grows.
Wally World’s CEO says.
“In a highly competitive retail environment, Walmart U.S. is increasing price separation across categories and driving increased traffic to both the grocery and general merchandise areas of our stores,” Chief Executive Mike Duke.
Europe looks to be in the shitter for at least a decade, if it makes it out of the “Black Forest” in one piece without killing each other again.
1+1 = ?
Fly, have you dumped the Microstrategy of 2012 – AAPL?
Thanks, Theresa. We’ve shared a lot of video time looking forward to this next class!
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deja vu, I effectively did the same thing at the same time…too fucking smrt (sic) for my own good