I’ll talk a bit about my trading background over the next few entries. I’ve been investing since I was 14, but only trading heavily in the last 7 years. Before that I was mainly holding mutual and closed-end funds. I only discovered the need to look at my stocks throughout the day after getting the Internet at work in 1997. The Asian crisis introduced me to the joys of watching my portfolio diminish by the hour
I was living in New York City at the time and had just bought a co-op on the Upper West Side. Its hard to believe now how soft the market was. In 1996 I bought my co-op for a little more than half of what it had sold for before the 1987 crash. I was working as a systems developer using the newly introduced Java programming language and had just incorporated (subcontracting to another Java consulting firm). As the tech boom deepened, cash flow was good and rising.
The LTCM crisis and Russian default in summer of 1998 again hit my emerging markets positions, but by late in the year these were recovering and my tech holding were doing well. By then the big story was the Internet. Amazon, Yahoo and EBay began to take off, but I felt sure they were overvalued. The other story was the looming Y2K crisis and I was looking for ways to hedge myself against the impending crash. Strangely enough, selling my tech holdings didn’t occur to me. Well I suppose it did, but for whatever reason shorting Internet hi-fliers seemed an even better idea. Part of my motivation was seeing a corporate finance friend of mine in la-la land about how great the price run-ups were. He was speaking in this dreamy voice which struck me as willful self-delusion. I really wanted to pop his bubble, but refrained from saying anything. Instead I put a short on YHOO,my first short ever. Arriving at my mother’s house the day before Thanksgiving, I saw YHOO falling 15 points and felt completely confirmed in my intellectual and moral superiority. The next week I shorted Amazon and then doubled my position on Dec. 11th at around 200.
I remember shortly thereafter having a particularly easy time buying a Christmas present on Amazon and thinking about closing the short. It was at 190 and I could have taken a small profit. I didn’t though and AMZN started to run. I took a gain on YHOO and again could have closed Amazon and netted a profit on my shorts, but I was still laboring under my €œhedging€? fantasy. AMZN continued to run and then on Dec. 15th Blodgett made his famous call of 400 which AMZN reached within three weeks. Ouch.
How does our hero recover from this debacle? Does he decide to stop fighting the tape, go long and reap a fortune? Or at least escape with only a flesh wound? If only. The not so happy ending to this trade in my next installment.
Advertisement
Like this:
Be the first to like this post.
Genesis of a Trader (My trading history Pt. 1)
I’ll talk a bit about my trading background over the next few entries. I’ve been investing since I was 14, but only trading heavily in the last 7 years. Before that I was mainly holding mutual and closed-end funds. I only discovered the need to look at my stocks throughout the day after getting the Internet at work in 1997. The Asian crisis introduced me to the joys of watching my portfolio diminish by the hour
I was living in New York City at the time and had just bought a co-op on the Upper West Side. Its hard to believe now how soft the market was. In 1996 I bought my co-op for a little more than half of what it had sold for before the 1987 crash. I was working as a systems developer using the newly introduced Java programming language and had just incorporated (subcontracting to another Java consulting firm). As the tech boom deepened, cash flow was good and rising.
The LTCM crisis and Russian default in summer of 1998 again hit my emerging markets positions, but by late in the year these were recovering and my tech holding were doing well. By then the big story was the Internet. Amazon, Yahoo and EBay began to take off, but I felt sure they were overvalued. The other story was the looming Y2K crisis and I was looking for ways to hedge myself against the impending crash. Strangely enough, selling my tech holdings didn’t occur to me. Well I suppose it did, but for whatever reason shorting Internet hi-fliers seemed an even better idea. Part of my motivation was seeing a corporate finance friend of mine in la-la land about how great the price run-ups were. He was speaking in this dreamy voice which struck me as willful self-delusion. I really wanted to pop his bubble, but refrained from saying anything. Instead I put a short on YHOO,my first short ever. Arriving at my mother’s house the day before Thanksgiving, I saw YHOO falling 15 points and felt completely confirmed in my intellectual and moral superiority. The next week I shorted Amazon and then doubled my position on Dec. 11th at around 200.
I remember shortly thereafter having a particularly easy time buying a Christmas present on Amazon and thinking about closing the short. It was at 190 and I could have taken a small profit. I didn’t though and AMZN started to run. I took a gain on YHOO and again could have closed Amazon and netted a profit on my shorts, but I was still laboring under my €œhedging€? fantasy. AMZN continued to run and then on Dec. 15th Blodgett made his famous call of 400 which AMZN reached within three weeks. Ouch.
How does our hero recover from this debacle? Does he decide to stop fighting the tape, go long and reap a fortune? Or at least escape with only a flesh wound? If only. The not so happy ending to this trade in my next installment.
Like this: