The Greatest Trade I Ever Made

The greatest trade I ever made...

They could be the opening words of a best seller authored by a slew of hedge fund managers, options geeks or old-time pit traders. In my case, it's a story about growing up, coming to grips and knowing when to pull-back versus when to go all-in with your chips.

Back in 2003, my life was different. It might be hard to imagine that a young man so obsessed with money could have known so little about finance and markets.
Yet, there I was. So paid I sneezed chipped platinum and crapped gold bars. Getting set to engage in what I fondly thought of as "the world's biggest casino".

The Stock Market.

I was flush with cash and had a gambler's mentality. It was a great time to be a shopper. Everything was on sale. Armed with nothing but the brash confidence of a fool, I dove in head first. I reasoned that spreading money around (something I would later hear called, diversification) was pointless. I was certain of the stupidity of buying anything that cost more than $5 per share. After all, if I buy something for $0.02 it's a lot more likely to double fast than something costing $8.34, right?

Snicker. Take a moment. Enjoy.

Being that I spent a lot of time on the road, I thought Sirius was the greatest thing going. I had grown up on Howard Stern and the rumors of him signing a contract with SIRI was more motivation than I needed. I bought heavy at $0.75 and kept on buying. I swore it was me that pushed the price up more than two-fold from March to June. A year and a half later the price would peak at $7.62. I sold off just over $7.

I'm telling this story because I was the living definition of "it's better to be lucky than good". Sometimes you have to respect the parameters of a given game, more than the actual way someone plays it. In times of bulls even an ant can rule the jungle.

This story goes to show that markets, much like life do a lot of our determining for us. When it's good anyone can eat and when it's tough even the best can starve.

You cannot always control your fate. Sometimes it is good enough to recognize that you sailed your ship as best you could. If things are not as you wished they would be at this moment, take solace. A captain's greatness is not in his directions or skill, it is in how he reacts to having his ship crushed by the waves and washing up on foreign shores.

Remember these words the next time that you are absolutely, positively, without a shadow of a doubt convinced that you are the smartest guy in the room.