Are You Team Ed or Team Bill?
Are You Team Ed or Team Bill?
Financial markets are the original social media. How much attention do they need?
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I took some time off last week and went on a short vacation with the family.
It’s good practice to unplug on a regular basis, yet I seem to do so far too infrequently.
The previous time was in early July of last year when I spent a full week in Lake Tahoe, exploring its stunning natural beauty, imbibing at its more than adequate tasting rooms, and leisurely sifting through the stacks of its surprisingly numerous used bookstores.
It was on that trip, while strolling along the shores of Emerald Bay, adjacent to Vikingsholm, the Scandinavian castle built-in 1928 by widowed heiress, and underwriter of Charles Lindberg’s historic trans-Atlantic flight, Lora Josephine Knight, that my mind drifted to thoughts of Ed and Bill.
If you were interested in trading during the late 80s and early 90s, there were two must-read books, Jack Schwager’s Market Wizards and The New Market Wizards.
By today’s standards, they feel quaint, certainly outdated, but back then, for anybody serious about making money in the markets, these books were The Talmud, The Vedas and The Upanishads, The Quran and The Hadiths, The Kokjiki, The Guru Granth Sahib, The Book of Shadows, or any other holy text that conveys their importance while allowing me to avoid yet another cliched invocation of the Good Book.
I devoured both of them over a long weekend in Dana Point with my then new girlfriend, later, ex-girlfriend, and eventually, wife, who apparently wasn’t fazed by the fact that I paid more attention to those dogeared texts than I did to her.
Thirty years and two anchor babies later we’re still together, so obviously she made the right call.
I was intrigued by the characters Schwager profiled, and in a pre-Internet world, used my imagination to fill in the gaps as to how they looked, what their lives were like, and most importantly, how they spent the trading day.
It was perhaps my fascination with the last of this triumvirate of queries that led me to focus on Ed and Bill, the “Bill” being Lipschutz and the “Ed” being Seykota.
I must have read the books out of order because I remember coming across Bill, who belongs to The New Market Wizards, first.
In a profession that few people could understand, Bill operated on the esoteric fringes.
He was a currency trader.
Currency was the original crypto, trading 24 hours a day, from Sunday to Friday afternoon, a timeframe reflected in Schwager’s description of Lipschutz’s NYC apartment.
Lipschutz has market monitor screens everywhere. Of course, there is the large TV monitor in the living room, receiving a feed of currency quotes.
There are also quote screens in his office, the kitchen, and near the side of his bed, so that he can roll over in his sleep and check the quotes-as indeed he does regularly (since some of the most active periods in the market occur during the U.S. nighttime hours).
In fact, you can't even take a leak without literally running into a quote screen (there is one conveniently located, somewhat tongue in cheek, at standing height in the bathroom).
This fellow obviously takes his trading very seriously.
Lipschutz lived for the markets.
And not only that, in an era when it was still cool to be a big swinging dick, he was one of the biggest, accounting for 50% of the currency option volume on the Philadelphia Stock Exchange and 80% of the open interest.
I mean, the guy put on a $3 billion short against the D-mark in the early 80s. It was enough to get a young trader long LBS futures.
Perhaps one of greatest traders ever, Seykota had taken one of his customer’s accounts, which started with $5,000 in 1972, and ran it up 250,000 percent by 1988.
That number would have been several million percent had the customer not taken regular withdrawals.
Yet when Schwager was writing his book, this true market wizard wasn’t on his list of interviewees.
He’d never heard of him.
It was only after Seykota’s name had come up in numerous other interviews that Schwager decided to pursue his story, which took him to a most unlikely place.
Seykota works from an office in his house, which borders Lake Tahoe.
Before beginning the interview, we took a brief walk out onto the beach behind his house. It was a cold, clear morning, and the view was idyllic.
In contrast to virtually all the other traders I had interviewed, Seykota's desk is not flanked by an array of quote screens, or, for that matter, even a single screen.
His trading is largely confined to the few minutes it takes to run his computer program which generates signals for the next day.
The contrast between Lipschutz and Seykota couldn’t have been greater, not just in location, but engagement.
As a 20-year-old I idolized Bill Lipschutz and hungered for the same non-stop action he was so well-versed in.
I wanted to trade bank stocks on the Sydney Exchange after U.S. markets closed.
I wanted to get up in the middle of the night to take a pee and get filled on an Aussie/Yen cross.
I wanted to roll forward futures contracts before the sun came up.
And then jump into the open with both guns blazing.
I didn’t understand Ed Seykota. I couldn’t understand him.
Why didn’t he want the action?
Why wasn’t he watching every tick?
How could he walk the shores of Lake Tahoe, lingering on the beach in Sand Harbor, navigating the terrain at Cave Rock, staring at the cerulean blue of Emerald Bay as it reflects off the picture windows of Vikingsholm – all while the market was open?
34 years later, I get it.
Market Strategy Video: 04-22-2022
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The Lund Loop Podcast
Decontructing a Trade: Closing Out A Basket of Long-Term Trades (Video)
This Week’s Setups & Watchlist’s
Potential Setups (close to triggering) - No setups this week 😠!
Keep An Eye On These (need to set up) - Nothing to keep an eye on 😡!
Market & Finance Links
Some tips for getting around paywalls.
Is the era of “Netflix and chill” over? Variety
Common trader mistakes: Reacting instead of acting. TraderFeed
Should Twitter be split into two separate companies? Stratechery
Even “serious” collectables are mathematically destined to underperform. Full Stack Economics
The impact of higher rates on the housing market. The Bonddad Blog
Just what we need, another pot ETF. Yahoo Finance
A low unemployment rate has not been good for stocks in the past. Compound Advisors
Elon Musk is both a genius and a troll. A Wealth of Common Sense
It’s now starting to look like there was a lot of insider trading in many of the most popular SPACs. Bloomberg
Cryptocurrency is non-correlated to traditional assets, until it is. Morningstar
Four reasons the housing market won’t crash. A Wealth of Common Sense
Why is staying the course so difficult? The White Coast Investor
The warehouse industry is booming. The Verge
It’s Good, It’s Good
Some tips for getting around paywalls.
The photos that introduced the world to Arnold Schwarzenegger. The New Yorker
The voice of reason against book banning is a 17-year-old high school junior. The New York Times
The best hikes in every U.S. National Park. Conde Nast Traveler
The game you should never play. More To That
You may remember that I posted a story a few months back about a YouTuber who had to parachute out of his plane when the engine failed – and filmed the whole thing. He’s in a little trouble now. The New York Times
The reaction by passengers when the TSA dropped its mask mandate wasn’t surprising. Twitter
Reports of an American decline are greatly exaggerated. The Week
Why don’t things like this happen to me? Woman wins $10 million after accidentally buying the wrong lotter ticket. Los Angeles Times
There’s a new Tony Hawk documentary on HBO. Here’s a look back at his 10-year quest to pull off the first 900-degree spin. The Ringer
The tragic story of one of the top Air Force drone pilots. The New York Times
You wouldn’t believe the amount of data you’re putting out into the world. Howard Lindzon
The latest casualty from the war in Ukraine - British fish and chips shops. The New York Times
A look at how quickly an athlete can blow through their multi-million-dollar contract. Brobible
Can’t make it as an actor? Consider becoming a professional “scream artist” instead. The Guardian
Glamping is getting big in California. Travel and Leisure
The Week In Tweets
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-B
P.S. It should go without saying - but I’ll say it anyway - all opinions expressed in The Lund Loop are my own personal opinions and don’t reflect the views of my employer, any associated entities, or other organizations I’m associated with.
Nothing written, expressed, or implied here should be looked at as investment advice or an admonition to buy, sell, or trade any security or financial instrument. As always, do your own diligence.
