by Alan Glynn
I’d get off the phone after one of these sessions with him and feel exhausted, as if I somehow had produced a grandchild, unaided, spawned some distant, accelerated version of myself right there on the living-room floor. Then, like in a nature documentary time-lapse sequence, the old me – twisted, cracked, biodegradable – would shrivel up suddenly and disintegrate, making the struggle to recover any meaningful sense of who I really was even more difficult.
*
But moments of anxiety like this were fairly rare, and my abiding impression of the period is of how right it felt to be so busy all the time. I wasn’t idle for a second. I read new biographies of Stalin, Henry James and Irving Thalberg. I learnt Japanese from a series of books and cassette tapes. I played chess online, and did endless cryptic puzzles. I phoned in to a local radio station one day to take part in a quiz, and won a year’s supply of hair products. I spent hours on the Internet and learned how to do various things – without, of course, actually having to do any of them. I learned how to arrange flowers, for example, cook risotto, keep bees, dismantle a car engine.
One thing I did want to do for real, though, and had always wanted to do was learn how to read music. I found a website that explained the whole process in detail, rapidly deconstructing for me the mysteries of treble and bass clefs, chords, signatures and so on. I went out and bought a stack of sheet music, basic stuff, a few well-known songs, as well as more challenging stuff, a couple of concertos and a symphony (Mahler’s Second). Within a matter of hours I’d worked my way through everything except the Mahler, which I then approached with caution, not to say reverence. Being so complex, it took me a good deal longer, but I eventually managed to find my way through its magnificent swirl of aching melodies and horror-show fanfares, its soaring strings and stirring chorales. At about two o’clock in the morning, in the eerie silence of my living-room, as I reached the mighty E-flat climax – Was du geschlagen, Zu Gott wird es dich tragen! – I felt one of those goosebump shivers rippling through my entire body, and tears welled up in my eyes.
The next step from this was to see if I could play music, so I headed off to Canal Street and bought myself a relatively inexpensive electric keyboard and then set it up beside the computer. I followed an online course and started practising scales and elementary exercises, but this wasn’t at all easy and I very nearly gave up. After a few days, however, something seemed to click and I started being able to pick out a few decent tunes. Within a week, I was playing Duke Ellington and Bill Evans numbers, and soon after that I was actually doing my own improvisations.
For a while, I envisaged club dates, European tours, rain showers of record-executive business cards, but it didn’t take me long to realize something crucial: I was good, but I wasn’t that good. I could play ‘Stardust’ and ‘It Never Entered My Mind’, passably, and would probably be able to play both books of ‘The Well-Tempered Clavier’ if I worked at it non-stop for the next 500 hours – but the question was, did I really want to spend the next five hundred hours practising the piano?
For that matter, I suppose, just what did I want to do?
*
It was around this time, therefore, that I started feeling restless. I came to realize that if I was going to go on taking MDT, I would need some kind of focus and structure in my life, and that flitting from one interest to another wasn’t going to be enough. I needed a plan, a credible course of action – I needed to be working.
I also had a more immediate question to deal with. What was I going to do with the 450 or so tablets? Some of them could be sold at $500 a piece, so the obvious thing I considered doing was, well … dealing them – and dealing them myself. But how, exactly, was I going to do this? Hang out on the street corner? Hawk them around nightclubs? Try and shift them in bulk to some scary guy with a gun in a hotel room? There were too many complications, and too many variables. Besides, it didn’t take me long to see that even if I did get full price for even half of the tablets, $120,000 at the end of the day was nothing compared to the potential gains there could be from just ingesting them, and using them creatively, judiciously. I had more or less finished Turning On, for instance, and could easily knock off others in a series like that.
So what else could I do?
I sketched out possible projects. One idea was to withdraw Turning On from Kerr & Dexter and develop it into a full-length study – expand the text and cut back on the illustrations. Another idea was to do a screenplay based on the life of Aldous Huxley, focusing on his days in LA. I considered doing a book on the economic and social history of some commodity, cigars maybe, or opium, or saffron, or chocolate, or silk, something that could be tied in, later on, to a lavishly produced TV documentary series. I thought about putting out a magazine, or starting a translation agency, or setting up a film production company, or devising a new Internet-based service … or – I don’t know – inventing and patenting an electronic gadget that would become indispensable, achieve world-wide brand-recognition in six months to a year and establish my place in the great twentieth-century pantheon of eponyms – Kodak, Ford, Hoover, Bayer … Spinola.
But the drawback with all of these ideas was that they were either too unoriginal or too quixotic. They’d each take a lot of time and capital to set up, and there was no guarantee in the end – regardless of how fucking smart I was – that any of them would work, or have enough appeal to be marketable. So the next thing I considered was the possibility of going back to school to do a post-graduate course. With a prudent use of MDT I could accumulate credits fairly quickly and shortcut my way to a belated career in … something, but the problem was – in what? Law? Architecture? Dentistry? Some branch of science? Even listing these options was enough to take me back twenty years and start my head spinning. And did I really want to get into all of that shit again – exams, term papers, dealing with professors? The mere thought of it was enough to make me throw up.
So what, then – I asked myself – was I left with?
Well, what do you think? Making money.
Making money … how?
By making telephone calls.
Hhn?
The stock market, stupid.
[ 10 ]
IT SEEMED LIKE THE obvious thing. I’d been reading the financial sections every day in the newspapers, having those chats with the old man, even spinning elaborate stories to strange women about being an investment analyst, so the next step was surely to get involved for real, and in some practical way – by day-trading on my PC at home maybe, in options, futures, derivatives, whatever. It would be better than any job I could find, and of course playing the markets had the added attraction of being the new rock-and-roll. The only problem was that I didn’t have a clear enough understanding of what options, futures and derivatives actually were – not enough, in any case, to start trading in them. I could bluff my way through a conversation, sure, but that wasn’t going to be much use when it came to putting some real money on the table.
What I needed was an hour or two with someone who could explain in detail how the markets worked and then show me the mechanics of day-trading. I thought of Kevin Doyle, that guy I’d had breakfast with a couple of Sundays back, the one who worked for Van Loon & Associates, but as I remembered he was fairly intense and the kind of Wall Street suit who’d probably scoff at the notion of day-trading on a PC. So I phoned around some business journalists I knew and put it out that I was doing a section for a new K & D book on the whole day-trading phenomenon. I got a call back from one of them saying he could set up an interview for me with a friend of his who’d been day-trading online for the past year and would be more than willing to talk about it. The arrangement was that I’d go to this person’s apartment, chat, take notes and watch him in action.
The guy’s name was Bob Holland and he lived on East Thirty-third and Second. He greeted me in boxer shorts, led me down a hallway into his living-room and asked if I wanted a hit of espresso. The room was dominated by a long, mahogany table that
had three computer terminals on it and a Gaggia espresso machine. There was an exercise bike between the far end of the table and the wall. Bob Holland was about forty-five, lean and wiry, and had thinning grey hair. He stood in front of one of the terminals, staring at the screen.
‘This is the lair of the beast, Eddie, so you’ll have to, er …’ He pulled distractedly at his boxers with one hand, simultaneously keying something in to the computer with the other, ‘… you’ll have to excuse the dress-code.’ Still distracted, he pointed to the Gaggia and half whispered the word espresso.
I busied myself with the coffee machine and looked around as I waited for him to speak again. Apart from the table and the immediate space around it, the room had a neglected feel. It was dark and musty and looked like it hadn’t been vacuumed in a while. The furniture and décor, as well, were more than a little fussy – too fussy, I thought, for this Spartan and focused warrior of the Nasdaq.
I figured that he’d probably been divorced in the last three to six months.
Suddenly, after a long bout of intense concentration and intermittent key-stroking – during which I sipped my espresso – Holland started speaking. ‘Many people believe that when you buy a share of stock you are buying a proportional share in a business.’ He spoke slowly, as though delivering a lecture, but continued to stare at the screen. ‘Consequently, to figure out how much any proportional share is worth, you have to determine how much the business is worth. It’s known as “fundamental” analysis, and it’s where you look at the company’s basic financial health – growth potential, projected earnings, cash flow, that kind of thing.’ He paused, stroked a few more keys and then went on. ‘Others look at the numbers only, with almost no regard for the underlying business or its current valuation. These are quantitative analysts, or “quants”. Number crunchers. They consider judgements about things like management expertise and market potential to be too subjective. They buy and sell on a purely quantitative basis, using sophisticated algorithms to find minute price discrepancies in the markets.’ He glanced at me briefly. ‘Yeah?’
I nodded.
‘Then you’ve got technical analysis. That’s where you study price-and-volume patterns and basically try to understand the psychology surrounding a stock.’
He continued looking at the screen as he spoke, and I continued nodding.
‘But trading is not an exact science, Eddie. I mean, the stock market can’t be pinned down to any one system, which is why you get fuzzy talk of “irrational exuberance”, and people trying to explain market behaviour in terms of psychiatry, biology, and even brain chemistry. I’m not kidding you – there were actually suggestions recently that investor caution was being inhibited by the high percentage of brokers and dealers on Prozac. So,’ he shrugged his shoulders, ‘given that no one knows anything, it’s not surprising that most investors use a combination of the three basic approaches I’ve outlined to you.’
Over the next hour or so, still standing at the table – and looking like he’d just stepped in from a vigorous game of tennis – Bob Holland expanded on these ideas and also went into the minutiae of options, futures, derivatives, as well as bonds, hedge funds, global markets and so on. I took a few notes, but when I heard the explanations I realized that in a general way I did understand these terms, and that furthermore, just by thinking about this stuff, a large store of knowledge was being unlocked in my brain, knowledge that I had probably accumulated unconsciously over the years.
When he’d done with the big picture – how the investment banks and fund managers operated – he started in on day-trading.
‘Then you’ve got guys like me,’ he said, ‘the new pariahs of Wall Street. Ten years ago it was the LBO types, the Gordon Gekkos. Now it’s the geeks in baseball caps who sit in front of computers at home and trade thirty or forty times a day, picking off eighths, sixteenths, even thirty-seconds of a point per share, and then closing out their positions before the end of trading.’ He looked away from the screen and directly at me, for maybe the second or third time since I’d arrived. ‘We’re accused of distorting the markets and causing volatility in share prices, but that’s bullshit. It’s what they said in the Eighties about the takeover guys. We’re just the new wave, Eddie – electronic day-trading is the spawn of technology and regulatory change. It’s that simple, it’s flux, it’s the nature of things.’ He shrugged his shoulders again and turned back to the screen.
‘I mean, come here – look at this.’
I stepped over quickly and stood behind him. On the middle screen, the one he was working at, I could see tightly packed columns of figures and fractions and percentages. He pointed to something on the screen – ATRX, a stock symbol for a biotech company – and said, ‘This one opened at around sixty dollars a share and has just pulled back a little so its bid is now 59⅜ … and its offer …’ he pointed to another part of the screen, ‘is 59¾ – that’s a ⅜ spread. Now the thing is, thanks to the latest software, and to regulatory changes introduced by the Securities & Exchange Commission, I can trade within that spread, and right here in my living-room.’
He highlighted the row of figures after the ATRX symbol and stared at it for a while. He checked something on one of the other screens, came back to the first one and keyed something in. He waited for a couple of moments and keyed something else in. He waited again – one hand held up in mid-air – and then said, quietly, ‘Yes.’
He turned around to me and explained what he’d done. Using that new trading programme, he’d discovered that there were three marketmakers on ATRX’s bid and two on the offer. Reckoning that ATRX would rebound, he took advantage of the wide spread by bidding 59 for 2,000 shares, which was over the best market-maker bid. Having topped this bid, Holland then got first in line to execute an order. The first 2,000 shares for sale at market went to him at 59. Very soon after this he offered to sell for 59, which was still lower than the ask price posted by the big market-makers. Holland had guessed right, and the stock was taken off his hands almost immediately. In just fifteen seconds and a few strokes of the keyboard he had netted over $500 and cut the spread by of a point.
I asked him how many trades like this he made every day.
Holland smiled for the first time. He said he made about thirty trades each day, mostly in lots of 1,000 or 2,000 shares, and rarely held a stock for more than ten minutes.
He smiled again and said, ‘OK, they’re not all like that one, but a lot of them are.’ He paused. ‘It’s about identifying ripples in the charts and then reacting quickly.’
‘You mean, it’s not just about who has the most information?’
‘Shit no. With all the indicators that are available these days, you just end up with conflicting signals. Shit no.’
Now that I had his attention, I bombarded him with more questions. How much preparation did he do for each trading day? How many positions did he keep open at any one time? What kind of commissions did he pay?
As Holland answered each of my questions, he gradually pulled himself away from the computer screens on the table. Then he started making himself an espresso, but by the time it was ready and he was drinking it, he seemed to have become sufficiently detached from his work to notice again that he was wearing nothing but boxer shorts, and to be self-conscious about it. He knocked back the remainder of the espresso, excused himself and wandered off down the hall into what I assumed was a bedroom.
In his absence, I went over to look at the computer screens again. It was amazing … he had made $500 – the price of one hit of MDT – in just fifteen seconds! I definitely wanted to learn how to do this, because if Bob Holland could execute thirty orders in a day, I was sure that I could manage a hundred, or more. When he came back, wearing jeans and a T-shirt, I asked him how I should go about learning. He told me that the best way to get into day-trading was to just do it – trade, and that most of the online brokers facilitated this by giving free access to simulated trading games and by conducting live tutorial
s.
‘Simulation games’, he said, in a tone that was becoming increasingly stilted, ‘are an excellent way of developing your skills, Eddie, and of gaining confidence in placing trades but without actually having to take any risks.’
I got him to recommend some online brokers and software trading packages, and as I wrote this stuff down I kept firing questions at him. Holland answered everything I asked him, and comprehensively, but I could see that he was becoming slightly alarmed, as if the rate and nature of my questions was perhaps more than he’d bargained for – as if he felt that by answering them, by passing on this information, he might be unleashing some kind of Frankenstein monster into cyberspace, some desperate, hungry individual capable of who-knew-what financial atrocities.
It had taken a while, but Holland was completely focused on me now. In fact, he appeared more concerned with each new question and started introducing a cautionary note into his answers.
‘So look, start small, start by trading hundred-share lots for the first month or so, or at least until you find your feet …’
‘Hhm.’
‘… and don’t get too excited if you have a good day – one good day’s trading doesn’t mean you’re Warren Buffet. The next trade you make could just as easily blow your account out …’
‘Hhm.’
‘… and when you enter a trade, make sure you have an idea of how you expect it to behave, because if it acts counter to that – get out!’
My impulse was to go Yeah, yeah, yeah to all of this, and Holland could see that. But the reason he wasn’t getting through to me was because the more he warned me about the potential dangers of day-trading, the more excited I could feel myself becoming at the prospect of actually getting home and doing it.
As I was slipping my notebook into my jacket pocket, and then putting the jacket on to go, Holland upped the pace a little.
