I just finished reading the chapter regarding Black Monday. I'm liking the book a lot more now, and some interesting things to learn here and there... --- At the opening Thursday morning, I was on the horn with Debbie. Prechter was the guru of gurus. If he said the market was going down, there was a good chance it would. Either way, up or down, this market was so volatile that I had to be on top of it. Ding. There was the bell. The market was open. “Marty!” Debbie screamed into the phone, “Shearson just came with an order for a thousand contracts to sell, at the market!” “Quote! Quote! Dammit, gimme a quote!” “Offered at 240!” “Shit, it closed at 258! What the hell’s going on? Lemme think! I gotta think!” How much was I ahead? A twelve lot short at 255, now offered at 240. Twelve times five hundred times the fifteen-point profit equaled $90,000. “Marty! Offered at 230! Offered at 225!” “The size! What’s the size at 225?” At this price, I stood to make $180,000 if I could cover my twelve lots short. “What’s the size?” “Marty, there’s no bids, I dunno! 220! Offered at 215!” Holy shit. What the fuck was happening? The bottom was falling out of the S&Ps. Nobody was making a bid. In over five years of trading S&P futures, I’d never seen this before. “210! 205! Marty, there’s a fill at 202!” “The size? What’s the size?” “I dunno, I missed it! 200! Another fill at 198!” “COVER!!!” I shrieked. The boys in the pit were starting to buy. “Cover the twelve lot, and input it to the clearinghouse right away. I don’t want those bastards ripping up my tickets!” With the market moving like this, it wouldn’t be unusual for the boys to conveniently forget about a few of their trades. “GO!” Click. I turned to my screen. The 202 was just coming up, then the 200. Then a 198, 197, 195. Wait a minute! 197. 200. 204. The market had turned around. But that was all right. I had to be covered at no worse than 200. What a killing! Ring. “Debbie! Debbie! DO YOU HAVE THE TRADE?” “Marty! I got five filled at 200, but they won’t give me the card on the other seven!” “Where are they now? 210? They’re moving so fast, if they’re not gonna give you the card at 200, buy another five at the market! NOW!” Those fucking bastards. They’d buried my order to cover on the other seven. They’d just ripped me off for at least ten points on seven con- tracts, $35,000 at least, maybe more. Ring. “Marty, I got five more filled at 210, and the last two at 215. It was the best I could do. They’re ratting out on trades left and right.” I was shaking. I didn’t know whether to be happy or pissed. I’d made $290,000 on the twelve lot (5 × 500 × 55 points in profit, 5 × 500 × 45 points, and 2 × 500 × 40 points), and the boys at the Merc had taken about $50,000 in “slippage.” Two hundred and ninety thousand dollars on a twelve lot! That was unbelievable. What the hell had happened? It turned out that Shearson’s thousand contract sell order at the market had been on behalf of George Soros’s Quantum B.V.I. Mutual Fund. Apparently, Soros felt like Prechter and had decided to dump all of his fund’s 2,400 S&P futures contracts at the opening bell. Accord- ing to Barron’s, when the first order to sell 1,000 contracts at the market hit the pit, “the pit traders picked up the sound of a whale in trouble.” They hung back until the offer dropped to around 200, then attacked. The Soros block sold between 195 and 210 and, within minutes, the market had bounced back to 230, leaving a lot of instant millionaires celebrating in the pits. This is one of the most famous trades in the his- tory of the Merc and many of the details subsequently came out in U.S. District Court in Chicago, where Soros sued Shearson for $160 million (subsequently settled out of court). According to Inside Skinny, Soros actually lost $800 million. “Motty. He was long up the ying yang and he panicked.” I just remember it as the day I out-traded the great George Soros.
It's after 9 pm on Saturday night. I'm past page 250 now... got to the first section that made me laugh out loud. --- I knew all about Porky. Everyone on the Street knew all about Porky. He was a real top dog, a big swinging dick. His fund ran several billion dollars, and Porky took great pleasure at pissing on everyone else’s hydrant. I’d never met him before, but I didn’t like him. He had a reputation for being gruff and abrasive and he thought that he was a great practical joker. He liked to brag about how he would tweak brokers. Brokers were always calling Porky looking for business, so what he’d do was call them back when there were just a few minutes left before the market closed and say, “Okay, you want some of my business, buy me five hundred thousand shares of Urmigblmsblurg.” Then he’d hang up. The broker, having missed the name of the stock, would immediately call back, but Porky would tell his secretary to say that he was in the can and couldn’t be disturbed. The broker would be going crazy, screaming at his secretary to look up every stock starting with “Urm” or “Erm,” and pleading with Porky’s secretary. “Honey, please! Just stick your head in the can and ask him the name of the stock!” At the average commission, that would be 6 cents a share, or $30,000, and the broker would get to keep 20 percent, so he was looking at missing out on a $6,000 paycheck. What the hell was the name of that stock? The market would close and the broker would be devastated. Not only had he lost a big commission, he’d blown his only chance to do a deal with Porky. Porky loved it. Some joke, huh? ... “Tommy,” I said, “you ever run into this fat fuck, Porky from the Bronx?” “Porky, yeah, I’ve talked to him a couple of times and he always says to me, ‘Listen, Collins, you ever come across something that can make me some money, gimme a call. Ya know something, give itta me, ya know, first and I’ll make it worth ya while.’” “Tommy, here’s what I want you to do,” I said. “I want you to call Porky just before the market closes and tell him that you’ve got some- thing real hot for him, and then when he asks you what it is, you say ‘Marty Schwartz says, Urmigblmsblurg’ and then hang up.” “Say what?” “Urmigblmsblurg. Don’t worry, Porky will know. And he’s gonna call you right back, and he’s gonna be bullshit.” So at 3:59, Tommy called Porky’s office. He said that Mr. Porky had told him to call if he ever had anything that could make Mr. Porky some money. Porky hopped right on the line. “Yeah, Collins, ya got something good for me?” “Yeah, Marty Schwartz says ya oughtta go get some Urmigblms- blurg.” And Collins hung up. Sure enough, Porky called him right back. “Collins, you fuckin’ jerk, whose phone lines you using? I’m gonna get you! I’m gonna get you thrown out of there.--