Like most entrepreneurs, I’m usually too busy to spend much time thinking about opportunities that I coulda’, woulda’ or shoulda’ pursued.
Oh, sure, I still kick myself from time to time for not investing in the Google IPO (I didn’t think a company that sold ads on a per-click basis could be viable long-term) and for not jumping on Research in Motion stock back in February 2000 when I bought my first BlackBerry (I figured that big telecoms like AT&T would try to crush the little company from Canada, not sign up as channel partners).
But for the most part, the choices that I made back then are still the choices I’d make today. And there’s a reason–there’s only so much downside risk I can tolerate without a Xanax.
Back in 1982 when I was a reporter at The Wall Street Transcript, my editor assigned me to cover the art and antiques market. With double-digit inflation and the economy in the tank, investors started pouring their cash into collectibles and the smart money moved uptown to Sotheby’s and Christie’s. Records were being set on a weekly basis in everything from Old Masters to Inuit carvings.
As a 22-year-old reporter making $200 a week and struggling to pay the rent on a Brooklyn apartment, I couldn’t help thinking there must be a better way to make a living than banging out stories about other people’s financial success. But lacking the capital to buy Oriental rugs or Impressionist paintings, I decided to sign up for a night course in commodity futures trading, an activity in which a small investment and a lot of leverage lets you rake in big profits in a very short time.
I don’t remember exactly where I took the course, but I do remember standing on a trading floor with a group of 25 or 30 other aspiring commodities traders listening attentively to an instructor teaching us the hand signals we needed to know to trade futures contracts. Back in the days before online trading, you had to stand in a trading pit and scream your lungs out to find a buyer or seller willing to take the other side of the trade. Motioning forward meant “I want to buy;” motioning away meant “Sell, sell, sell!”
This can’t be too hard, I remember thinking to myself. In less than a day, I can make more than I make at my newspaper job in an entire month.
Then, on the third night of training, a commodities trader came in to talk to us about a typical day on the job. Like most traders in those days, he worked for a brokerage firm but he also traded for his own account, putting his own capital on the line. He told us about the excitement of the trading pits and the big money he had made there, but he also warned us about the downside. One morning, he said, he was up $100,000 and decided to break for lunch. Half an hour later, he came back to the trading pit and his $100,000 was gone–and then some. (When you trade commodities, you can actually lose more money than you invested. I guess the trader was at lunch when he got the margin call. )
Let’s just say I decided to keep my day job.
Over the years, I’ve put money into a lot of risky things, but commodity futures has never been one of them. (I leave that to my hedge fund managers.) And even with oil, gold and corn at record highs, I haven’t once been tempted to open an online account or pick up the phone and call my broker.
Because what goes up that fast can just as quickly come down. I’d rather leave the roller coaster riding to the professionals than lose my lunch the next time the market plunges.
This entry was posted on Thursday, July 3rd, 2008 at 2:29 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.Leave a Reply
