In The Market

Előszó

Foreword
John M. Angelo
I first walked onto the bond floor of the New York Stock Exchange on January 15,1966. The room was forty feet square, ringed with telephones. In the center of the room was a fifteen-by-fifteen-foot area surrounded by a brass rail. It was here that members of the Exchange stood to take orders and execute trades.
At 9:30 a.m. each workday, the room was virtually empty. By ten o'clock, when the bell rang to start trading, the place was a madhouse—400 crazed people screaming and yelling in a room that, by law, was allowed to hold only 289. The mob included members of many ethnic groups—Italians, Irish, Jews—citizens with diverse histories, manners, and backgrounds who came together with a single thought: the best possible execution for their clients' trades. The clerk on the phone would get the order and start hollering for his broker's attention. Given the pandemonium, screaming often didn't work and he would be forced to run to the broker, elbowing his way to the brass rail to hand over the order. The smell of sweat and fear was palpable. In the frenzy, fistfights often broke out. Long-standing relationships could end in seconds. Then, suddenly, the day was over. In those days the market closed at 3:30 p.m. Not everyone had had enough. Many of the men would wander off to play gin, poker, or craps.
From the moment I first stepped onto the floor, I knew I wanted to be a trader. I loved it. I seemed to have an ability to hear everything that was happening on the floor. Through the hubbub, I could pick out the important voices and put buyer and seller together. From the intonation of the voice at the other end of the phone, I could tell whether a person was holding back or bidding the limit. I could see in a man's eyes if he was telling the truth. Somehow I could handle two phones at once, watch the ticker tape, and, more often than not, be on the winning side of a trade. It was the free market system at its best—
fierce, fast, frenzied; a thing of absolute beauty.
There is something visceral about trading, knowing within seconds whether you're right or wrong. A natural-born trader has the ability to cull all the facts and instantly make up his mind. An analyst likes to weigh decisions; a trader likes to act and it is the action that provides the high. Clarity is also part of the poetry of trading. There are real winners and losers. Every moment of the day you know exactly how you stand. The bottom line is the score card.
Many years ago, I was walking across the floor of the Chicago Mercantile Exchange—the MERC—with its then president, Brian Monnison. As we walked past the pork belly pit, he said to me, "Come on, let's go and trade a few contracts." I told him I didn't know anything about pork bellies. He said, "What do you have to know? They go up and they go down." He was right.
After three years of trading bonds, I was given the opportunity to manage proprietary capital at a major securities firm and left the floor to learn arbitrage—the simultaneous purchase and sale of securities for instant profit. I might buy shares of Royal Dutch in Amsterdam and sell them at the same time in New York. It was an extraordinary business because the New York Stock Exchange considered such trades to be riskless transactions, and as a consequence, the firm was not required to put up any money. This meant that we were able to put on sizable positions that our balance sheet could never support under normal circumstances. Although the spreads were low, and the profits on an individual trade were small, the volume was high and the cumulative returns were enormous.
The middle to late 1970s was a period of explosive growth in the derivatives market. The widespread use and application of products such as options and futures changed the nature of financial markets across the spectrum of equity, currencies, and fixed income in the Vissza