In one 24 hour period my entire net worth vanished due to a bad trade (Part 1).
- Jun 10, 2005
- admin
- Investing
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Note to readers: In this short-term series I share events that
actually took place in my life that had a huge impact in how
I invest.
The names of people/places/things have been changed for obvious
reasons.
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I couldn’t have been more than 22 years old at the time. The
year was 1994. I had been working on Wall Street for all of
eighteen months.
My official job title was “Stockbroker.” That was before
stockbrokers began calling themselves “Financial Consultants”
and started selling everything from life insurance to mortgages.
That was back when a stockbroker was still a stockbroker and
the job description was the same as it was when it was
back in the 1920’s:
To convince the wealthiest people in the country to buy stocks
you and/or your firm recommended.
But to convince an investor to buy a stock you first have to
convince them that you have good research. And since research
was the one area of the business I found most fascinating
I had spent a lot of time trying to learn the craft.
That’s why I had agreed, when I was still in the firms broker
training program, to come in an hour early and stay an hour late
every day and help the firms Chief Technical Stock Analyst,
Dr. Bob Johnston, update his charts by hand.
I had heard about Dr. Johnston from my manager, an older broker
named Jay Livingstone. “Doc” as he liked to be called was
a retired physician who had built a huge multi-location
practice in California and had sold it for millions.
Instead of retiring he decided to devote his full attention to
his life-long hobbie and passion, investing.
He had started at the firm originally as a client. It wasn’t long
before his reputation as a savvy investor was well known
within the firm.
It was said that a week before the 87 crash he had called Jay
Livingstone, who was also his broker at the firm, and not only
sold all of his positions. The next day he called Jay and decided
to short the very same stocks he had owned the day before.
It was said that he made over ten million dollars that month.
It wasn’t long before all the senior partners were taking
HIS ADVICE. Shortly thereafter the owner of the firm,
Bob Billings, cannily offered him a job as the firms Chief Technical
Analyst. He readily accepted.
Working alongside him during the training program had its
obvious benefits. Obviously he was – according to everybody
in “the know” – a super investor. But he was also a patient
teacher. Doc didn’t say much, but he turned me on to some great
books and when he did talk he was always patient.
He also had some great connections. The day BEFORE President
Clinton gave his first State of the Union speech Doc had
an early draft faxed to him. He wanted to see if there was
any reference to Hillary’s attempt to take over healthcare in it.
I was stunned as I handed the fax to him. He gave me a knowing
pat on the back and smiled as if to say, “You see son, Wall Street
is the true center of power in the world.”
He was even kind enough to let me make a copy and bring it home
to show my family. Not wanting to seem overeager I declined.
For an impressionable 22 year old from Queens, working with
Doc was a big deal indeed.
That’s why I readily agreed to stay with him even after I
finished the training program and started on my own.
Sure, my regular job was hard and the hours were long, but silently
working with Doc in his huge mahogany and brass executive office
was more like a “peaceful” retreat than actual work.
Of course it didn’t hurt that I had access to his ideas before the
morning sales meetings. However the true pleasure I got on a daily
basis was the feeling that we were both prospecting for gold:
Quietly searching through hundreds of stock charts in a race against
time to discover the perfect investment, competing against
thousands of analysts around the world who were doing the exact
same thing.
But the best part about working with Doc – the part I enjoyed the
most – was when he found a stock that he truly loved.
Normally, when Doc liked a stock he would smile at me and say quietly,
“That’s a good one” and put it to the side for later review.
But when he found a stock he really loved it was like the temperature
in the room changed.
We would be standing in front of the big mahogany conference table
in his office with dozens of charts laid out in perfect order. Suddenly
Doc would stop what he was doing and put his glasses down. Then he would
take a meaningful puff from his cigar (which he smoked at all hours) and
slowly turn around to look right at me and smile.
It was that smile that said, “This one is going to be a huge winner” that
I looked for on a daily basis, that we both looked for on a daily
basis.
And that’s why, on one Monday morning in November, I decided to invest
everything I had – right after I was just married – into one of Docs
favorite stocks.
What happened next changed my life.
(Continued next week)……
–Dylan Jovine