Home / Decade in Review

Decade in Review

A Decade for Dicks

With 2009 winding down and CNBC reminiscing over “The Bubble Decade,” I thought it would be helpful to some of you new-jacks to understand what it was like to be part of “A Decade for Dicks.”

In the late 1990’s, my business started to take-off. I was an early investor in a lot of internet stocks and the future looked bright. I had the energy of a coked out race horse and the stock market was my track. By late 1999, the market had gone fucking bananas. During that time, if your company announced that it had launched a website—just a fucking web address—that news would buoy shares anywhere from 10-100%—in a single day. Back then, before trading was done on the internet, my trades had to be submitted via old school order tickets. My partner and I would spend hours just filling out those fucking stupid tickets, in anticipation of monster runs in the market. Needless to say, our hands hurt from writing so much, as stocks—literally—disregarded all laws of reason and began to trade on sheer insanity.

I couldn’t go to lunch, from 1999-2001, for a variety of reasons. During the boom, going to lunch meant missing out on killer trades. I’m not talking 100,000 shares up a buck. Stocks sprinted back then. Stocks like CMGI, Inc. [[CMGI]] and VERT, both positions of mine back then, went up 100’s of points inside of a few short months. I remember buying QUALCOMM, Inc. [[QCOM]] at $1,000 per share, just before their odd-ball stock split. Whenever a stock was mentioned on CNBC, with regards to their internet exposure, that fucking stock took off. There was so many different ways to skin the cat. If you were a trader/broker/investor back then and missed out, you should shoot yourself in the face with a fucking grenade launcher, right now.

However, like everything in life, all good things end badly. When the bubble popped in 2000, my face was lit aflame; and as a result, I lost millions. Personally, I was losing like 10k per hour. The margin clerk was my mortal enemy, due to her insistence that I sell out by 2:30pm, or chalk up some dough. Fucking bitch. The problem that I had, not too uncommon with my stubborn personality type, was a severe case of hubris. I could not accept the fact that I was on the losing end of so many trades. When the internet bubble popped, it fucking popped bad, taking out an entire class of assholes with internet dreams—to the woodshed— AND MORE. All of the stocks that were trading at $200+ came crashing down to fucking zero, without rest. It was surreal.

One of my favorite memories was cutting a large personal check for a margin call at 11:00am, only to see it vanish by 4:00. Easy come, easy go.

I was absolutely staggered by the whole experience. After the 9/11 induced nosedive, I pledged to NEVER buy a Nasdaq stock again, as it was my belief that tickers with more than 3 letters represented evil. The market was so bad; it was almost comical. My friends and I would just leave the office in disgust, in favor of beers and chicken wings, on many occasions.

Shortly after, I began rebuilding my business, based around distressed debt and preferred bank shares. It was a boring way of life; but it gave me peace of mind. When the market bottomed in late 2002, I had a war chest built up in ultra-conservative bonds and preferred securities. I had to make a massive adjustment out of old man investments, back into the fire aka “technology stocks.”

Despite pledging to “NEVER buy Nasdaq stocks again,” by mid 2003, I was knee deep in the shit, long Amkor Technology, Inc. [[AMKR]] , MEMC Electronic Materials, Inc. [[WFR]] and Broadcom Corporation [[BRCM]] in size. Stocks like Nortel, which was priced for bankruptcy in 2002, took off like gangbusters in 2003, making lucky investors fortunes in the process. Thanks to the Federal Reserve pumping liquidity into the markets, stocks were back in play again. However, underneath the surface, another bubble was brewing—this time in housing.

From 2004 to 2007, there was a relative calm in the markets. A lot of people thought we were experiencing some sort of “economic Renaissance” or a “Goldilocks economy,” when in fact it was all bullshit. Because of my personal wealth destruction in 2000-2001, when the real estate bubble popped in late 2007-early 2008, Senor Tropicana was prepared, as you well know. In 2008, I sold short just about every investment bank and every regional bank located in California—all documented here on the site. Subsequently, I cleaned house.

The lesson to be learned from this decade is: we are all dicks. Nothing will change, because greed will never dissipate. I am cynical for a reason, stemming from my lack of faith in human emotions, which is why I am S.A.M. (space alien magician). I see people making the same errors today that were concocted 10 years ago. Small start-ups are being built to flip, instead of operating as a profitable businesses, etc.

Believe you me, over the next 10 years, we will be tricked into believing some sort of lie. We will all buy into an asset class or an investment theme, thinking “this time is different”; but it always ends the same.

Tread carefully.

Comments »