“Marty Schwartz here. I’ve got an account with you guys. Sabrina Partners L.P.…What do you mean you can’t find it?…S-A-B-R-I-N-A, Sabrina, Sabrina! I want to short gold and oil! Find me a market! Fast!”
Pause.
“My mother’s maiden name? Snyder, dammit. S-N-Y-D-E-R, Snyder, Snyder!”
Pause. I checked my watch. 1842. The markets were going to get away from me. I didn’t have time for this. I switched to the Board of Trade in Chicago. The Chicago Board of Trade had an after-hours session where bonds were traded from 1820 to 2105. I had direct lines to two clearing firms, Discount Corp. and LIT Futures. Sergeants Kush and Goldfedder came on the lines. Ken Kush at Discount and Avi Goldfedder at LIT (now known as “Doc,” thanks to his timely second opinion when I was in the cardiac care unit) were my two main bond brokers. Immediately upon hearing the news of Desert Storm, these two battle-tested professionals had jumped into cabs and sped back to their positions on the front line at the CBOT. Excellent. Now that I had established radio contact with my two key forward observers, it was time to engage the enemy.
For the last three days I’d been sensing a green light on bonds. On my daily blotter, I keep handwritten notes of every trade, and on the edge, I scribble down my thoughts for later reference. My notes during that week kept saying, “Look to go long bonds.” “Watch for int rate break, buy big.” “Could be major bottom in US Treas.” I had the contacts and the accounts all set up where I could buy as many bonds as I wanted. During the day session, I’d sent out a reconnaissance force into what I was confident would be excellent buying territory by going long 80 March bonds at 9315. (“9315” meant 9315/32, or about 93.47 cents on the dollar. Bond prices were quoted in thirty-seconds of a dollar.) If gold and oil were “shorts” based on these uncertainties being resolved, that meant that other commodities and interest rates would tend to drop. That in turn meant that bond prices would soar. A drop in interest rates corresponds to a rise in bond prices, and vice versa.
“Ken! Gimme a quote on USH!” USH was the symbol for the March 1991 thirty-year Treasury bond futures contract. One CBOT bond futures contract had a face value at maturity of $100,000.
“9318, Marty.”
“Buy me twenty bonds at 9318!” I ordered.
Pause. “You got ’em at 9318, Marty.” I had just purchased twenty contracts, entitling me to $2 million face value of thirty-year Treasury bonds, for delivery in March 1991. At a price of 9318 (93.5625 cents on the dollar), my total cost was $1,871,250. I didn’t have to put up any cash up front, however, because I had enough funds on deposit with my clearing firm to cover the margin requirement.
I checked the quotes on my screens. “USH, 9320.” It had ticked up to 9320/32. My intelligence was correct. The bonds were on the move. It was time to attack in force.
“Hello, Mr. Schwartz, Kidder, Peabody here. Sorry to keep you waiting.” It was 1844. Two minutes on hold, an eternity by a trader’s clock. “We’ve checked your account status. Neither Sabrina Partners L.P. nor Sabrina Offshore Fund Limited is set up to trade gold or oil anywhere but the U.S.”
Fuck! “Get ’em set up, now!”
“I’m sorry, Mr. Schwartz, the only markets trading gold and oil contracts are in the Far East. Hong Kong, Japan, Singapore. And their contracts aren’t fungible into U.S. contracts.”
Doublefuck. “Well, open up a foreign account and let’s go!”
“Let me see what I can do.”
“In the meantime, find me something that is fungible, and make it quick.” I switched back to Chicago to make sure the bonds didn’t get away from me. “Doc! Doc! You there?” This time I was on the LIT line. When you can, always have at least two of everything and spread your business around. You don’t want to be sole-sourced, or they’ll take you for granted. You get the best deals and the best service by having more than one broker and playing them off against each other.
“Yeah, Marty.”
I checked my screens. “USH, 9324.” “Doc, buy me twenty March T-bonds at 9324!”
Pause. “Done, twenty at 93 and 24.” It was 1848.
Beep. It was the Kidder, Peabody night desk.
“Good news, Mr. Schwartz. I can get you Eurodollars in Singapore because they’re U.S. currency and could be swept into your domestic account at the opening.”
Shit. Tell me something I don’t know, you maggot! “I can get those on the SIMEX any time I want ’em. Keep working on getting me accounts so I can trade gold and oil.”
“What makes the grass grow?”
“Blood, blood, blood.”
“What do we do for a living, ladies?”
“Kill, kill, kill.”
“Bullshit, I can’t hear you.”
“KILL! KILL! KILL!”
Beep. Sergeant Kush. “Yeah!”
“Lookin’ strong, Marty. The bonds are galloping. They’re up to 9403.”
“Get me forty more USH at 9403!”
Pause. “We got ’em, Marty, forty at 9403.” It was 1905.
My bond position was now long 160 contracts, 80 from the day session at 9315 and 80 more just in the last twenty minutes. Since each bond futures contract had a face value at maturity of $100,000, I now had $16 million face value of USH with a paper profit of $67,500. Things were going great. My left flank, the bonds, anchored by Sergeant Kush from his command post in the upper booth of the CBOT, was solid. It was time to send Sergeant Goldfedder over to beef up my right flank.
“Doc! Doc! Do you read me?”
“Roger, Motty.” Interestingly, Goldfedder in his other life was a member of the Israeli Air Force Reserves. For two weeks every summer, I couldn’t trade with him because he was back in the Middle East on active duty. I wondered what his thoughts were about Desert Storm, but I didn’t have time to talk about it, not with $16 million bonds flying around.
“Doc! Get me one hundred March Eurodollar contracts! Buy them on the SIMEX in Singapore.” (The SIMEX was the Singapore Mercantile Exchange. Eurodollars were U.S. dollars on deposit in overseas banks, predominantly in Europe.) I wanted to touch all of the bases. By going long Eurodollars I was making a bet that short-term interest rates were going to fall, just as I’d made my bet in bonds that long-term rates would drop.
Pause.
“One hundred March Euros secured for you at 9265.”
It was 1918. Back to my left flank. “Ken, twenty more at 9407.” As the bonds kept going up, my confidence rose with them. I became more and more convinced that my battle plan was working. I was long two hundred bonds, large, but not nearly large enough in this market. I had to press the offensive. I was starting to perspire. Audrey came in to refill my canteen with a nice cup of tea. She wiped my brow with a napkin. “Buzzy, are you all right?”
“I’m smackin’ ’em, Audrey! I feel great!”
“Are you sure it’s not the Prednisone?”
“I hope not, I’m long up to my eyeballs, and I’m goin’ longer.”
Audrey studied my blotter. “Buzzy. You look good. If you like it, go for it.”
1958: “Doc, twenty more at 9422!”
2006: “Ken, twenty more at 9425!”
2019: “Ken, fuck it, it’s time to take the hill, get me seventy at 9428!” I was long 350 USH, $35 million in bonds, and the market was still rising.
Mama and Papa were layin’ in bed.
Mama rolled over, this is what she said.
Oh give me some
(Oh give me some)
Oh give me some
(Oh give me some)
P.T.
(P.T.)
P.T.
(P.T.)
Good for you
(Good for you)
Good for me
(Good for me)
“Ken, buy me fifty at 9506.”
Pause. “Can’t get ’em, Marty. They’ve gone through 9506.”
“The hell with it. Not Held, NOT HELD!” “Not held” meant pay whatever you have to pay. Sergeant Kush got twenty at 9509 and thirty mor
e at 9510.
“Doc, thirty more, NOT HELD!”
“Motty, ya gotta slow down. Remember, you’re still sick.”
“Don’t tell me what to do! You just buy the fuckin’ bonds, NOW!” My Israeli commando nailed them at 9512.
By 2105 when the CBOT evening session closed, I’d been trading for two and a half hours straight and was long five hundred bond futures. I clicked on the news. Our technology was working to perfection. We were killing Iraqis as easily as I was killing the bonds. This war was going to be over before it began.
Audrey came in with a sandwich and more tea. “Buzzy, how are you doing?”
“Great. I think I’ve got it figured out perfectly. I don’t have an account to short gold or oil overseas, but I’m working on it. And I’m killin’ the bonds.”
“Well, you’ve done all you can do for today. You should go to bed. You need your rest. You don’t want to have a relapse.”
Audrey was right. I was running on adrenaline and 20 milligrams of Prednisone. I’d forgotten that I was still recuperating. “Yeah, you’re right. Just let me finish checking my positions and setting up my strategy for tomorrow.”
Audrey left. I dismissed Sergeants Kush and Goldfedder for the night and checked in with Kidder, Peabody. They hadn’t been able to set up an overseas account, but assured me that they were working on it. With one eye on CNN and the other on my blotter, I began my calculations. I was long 500 USHs at costs ranging from 9315 to 9512, long 100 Eurodollars at 9265, long 160 S&P futures, and long $12 million in stocks. The stocks and the S&Ps wouldn’t start moving until the market opened tomorrow. My paper profits on the bonds were close to $400,000. Not bad for two and a half hours of work, and I was sure that the best was yet to come. If only I could short some oil and gold….
I still had to do all my regular paperwork, computing the moving averages and put-call ratios, jotting down ideas for the next day on five-by-eight cards, checking my hot-line services, going through twenty pages of incoming faxes, charting my new $12 million worth of stocks, all the work I normally did right after supper. It was 2330 by the time I closed the books.
I struggled out of my chair and went into the guest bedroom to lie down. I was sleeping in a hospital bed by myself in the guest bedroom because the Prednisone made me sweat and I’d have to get up two and three times a night to change my johnny. I wasn’t wearing pajamas; I had a supply of hospital gowns that were easier to get in and out of, because my chest was still sore where they’d cut me open. My heart was racing, and that was not what I wanted after suffering viral pericarditis. I lay there sweating, thinking about my positions.
“Candidate Schwartz, you run like old people fuck. Do you know that, Schwartz? Get moving, you bag of shit. Move it, move it! Whatever you do, don’t stop, that would break my fucking heart. Keep moving, moving! Well, what in the fuck are you waiting for, Candidate Schwartz? Move it, move it! Are you quitting on me? Well, are you? If you do, I’m gonna rip your balls off so you cannot contaminate the rest of the world. I WILL motivate you, Candidate Schwartz. DO YOU UNDERSTAND ME?”
“SIR, YES SIR!”
What the hell was I doing lying in bed? Sergeants like Kush and Goldfedder and camp followers like Audrey could sleep, but there was no rest for the captains until the battle was won. Still dressed in my johnny, I went back into the office and turned on CNN. CNN was interviewing pilots who had returned to their bases in Saudi Arabia after bombing the shit out of the Iraqis. It was now 0200 in the United States. The sun was high over the desert. Even though they were all trying to sound like Chuck Yeager with his folksy aw-shucks, down-home, understated West Virginia drawl, they couldn’t hide their excitement. Desert Storm was going better than anybody could have expected. We’d pounded the parliament buildings, knocked out an oil refinery, shut down the Baghdad International Airport, and delivered bombs literally to the front steps of Saddam’s presidential palace. It was a picture-perfect operation. Damn. I had to short oil and gold.
I called the Kidder, Peabody night desk again. Still no luck setting up my account. Gold and oil futures were plummeting on the Far East markets. London was getting ready to open, could Sabrina trade there? He didn’t know. I called Kidder, Peabody in London. Sorry, old chap, not fungible. I called Kidder, Peabody in Sydney. G’dye, mate, no listing in Sydney, try Melbourne. Shit. It was 0345. Gold and oil were starting to stabilize. I’d missed it. I couldn’t keep my eyes open.
“Pray!”
“This is my rifle. There are many like it but this one is mine. My rifle is my best friend. It is my life. I must master it as I must master my life. Without me, my rifle is useless. Without my rifle, I am useless. I must fire my rifle true. I must shoot straighter than my enemy who is trying to kill me. I must shoot him before he shoots me. I will. Before God I swear this creed. My rifle and myself are defenders of my country. We are the masters of our enemy. We are the saviors of my life. So be it, until there is no enemy. But peace. Amen.”
“At ease, good night, ladies.”
“Buzzy. Buzzy. Wake up. It’s after five o’clock. What are you doing sitting here in your chair in a johnny? You’ve gotta go to bed.”
All I wanted to do was sleep, but not today. I could sleep anytime. Great trading opportunities like this only came along three or four times a decade, and I wasn’t going to miss this one. I took a shower, changed into a clean johnny, got some breakfast, and was back at my command post by 0630. The fax machine had been humming all night, spitting out account information. I reconciled all my trades from the previous day, because today, more than ever, it was essential to have everything in order before the markets opened. They were going to be so volatile that an error could cost hundreds of thousands of dollars. I scanned the Times and the Journal and my newsletters and services. The headline of the New York Post, founded by Alexander Hamilton in 1801, screamed WAR!
At 0730, General “Stormin’ Norman” Schwarzkopf gave a briefing. It was the most massive air strike in history. Baghdad was the center of hell. The Republican Guard had been “eliminated” and most of the Iraqi Air Force had been “decimated without getting off the ground.” Saddam Hussein was in hiding someplace. Not a single American plane had been lost, and not a single casualty suffered.
Everything was telling me to go long stocks and S&Ps and get out of the bonds. I called London. Gold and oil futures were continuing to stabilize, and that meant that bonds and Eurodollars should follow suit. It was time to hear the cash register ring. I decided to start selling my bonds and Eurodollars at the opening. At 0800, I got Sergeants Kush and Goldfedder on the line. The Chicago bond futures market would open in twenty minutes.
“Candidate Schwartz, why did you join my beloved Corps?”
“Sir, to kill, sir!”
“So you’re a killer.”
“SIR, YES SIR.”
“Then get out there and kick ass, you sorry maggot!”
“Doc, let’s nail the Euros. What are they?”
“Motty. The Euros are 92.89.”
“Sell ’em all.”
“Done, Motty.” That was a quick $60,000.
“Good work. How are the USH? 9612? Sell fifty. Doc! Sell fifty USH. Ken, sell fifty more.” Bing, bang, boom. A ray of morning sun peeped through my window as the last bond bit the dust at 9619.
“The deadliest weapon in the world is a marine and his rifle. It is your killer instincts which must be harnessed if you expect to survive in combat. Your rifle is only a tool. It is a hard heart that kills. If your killer instincts are not clean and strong, you will hesitate at the moment of truth. You will not kill. You will become a dead marine. And then you will be in a world of shit because marines are not allowed to die without permission. Do you maggots understand?”
“SIR, YES SIR!”
I had not hesitated at the moment of truth. My instincts had been clean and strong. I had killed the stocks and bonds to the tune of $1.2 million. I had done my duty as a good marine and a good officer. Semper fi.
>
Money Talks, Bullshit Walks (aka Early in the Day, Early in the Week)
In the late seventies, when I was in the early stages of trying to build my grubstake, Audrey and I would drive out to our group house in Westhampton Beach to escape from the City. When we were in Westhampton Beach, I used to hang out at Robb & Robb, a small brokerage firm on Main Street. Robb & Robb was owned by a group of Big Board specialists who’d check in at the office on summer afternoons after a round of golf, lunch, and a few pops at the Westhampton Country Club.
Robb & Robb felt more like a clubhouse for wayward speculators than a place of business. The office was just one room with half a dozen desks in the main area and a bench along the west side under the windows. High up on the east side, dominating the room, was a big Trans Lux ticker tape with the latest quotes marching along it from wall to wall. Anyone who wanted to could wander in and make himself at home on the bench and there was always a group of old-timers watching the tape and swapping stock tips. Whenever one of them sold a winner, he’d strut proudly over to an empty desk and shout the sell order into the phone. A loser, on the other hand, was whispered into the phone in the farthest corner, out of presumed earshot. I loved sitting on the bench, watching the tape with the old-timers and listening to the boys bullshit each other. The egos were so thick you could hardly breathe.
I pretty much kept to myself, but one day I struck up a conversation with John, a guy in his midseventies who came into the office once in a while. Like me, John carried a stack of dog-eared charts. He’d come in, find a spot on the bench, start to watch the ticker, and begin collecting data for his indicators. In between scribbles, John told me that he was retired, but that he’d spent years on Wall Street and was now supplementing his income by consulting for some of the specialist books on the New York Stock Exchange. Then he taught me something I’d never heard of before or since, but I’ve found to be true.
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