‘Guts, that’s what it takes. Guts and instinct. Guts to make you buy stocks which you wouldn’t normally touch and instinct to know just when you should dump them. If you rely too heavily on instinct, you never take the necessary risks. But if you just relied on risky decisions, you’d be way down at the end of every day. It’s a fine balance.’
We were strolling through Battery Park on the southern tip of Manhattan and Rob was explaining to me why he could still succeed as a day-trader while everyone else around him crashed and burned. Rob, it transpired, believed he had just the right mix of natural bravado and common sense to make him stand out from the crowd. What had originally started as a hobby, had slowly started eating into his working week. Now it accounted for all his incomings and, I suspected, an awful lot of his outgoings, too.
Still, Rob had so much faith in his own ability it was verging on the religious. As far as he was concerned there were only two things anyone need ever know about him and then they’d get on just fine. First, he is always right. Second, he is never wrong. The trouble is, the markets hadn’t quite got the hang of either of Rob’s laws as yet.
‘But what makes you think you’re good enough to win the bet day in, day out?’ I asked.
‘It’s not a bet!’ Rob retorted. He was so incredulous that he’d stopped in his tracks. He looked me up and down, his eyes filled with pity, amazed that anything so foolish as I could manage to find a way in the world. ‘All my decisions are based on careful research and a planned strategy. Sure, I’m sometimes in and out of a stock PDQ, but that’s because I know its real timeline. This, I assure you, is an extremely skilled operation,’ he insisted.
I suggested that not even the best fund managers in the world got it right all the time, but at least their firms were big enough to soak up some downside. I knew that if Rob messed up for more than a few weeks in a row he’d be sitting on the sidewalk soaking up the rain.
Rob would hear none of it. ‘Those guys are just corporate creeps. They can’t really make a proper call on which way any stock is going ‘cos they’re too bogged down in it all. They’re so up to their eyes in benchmarks and other risk protection stuff that they can’t see the wood for the trees. They don’t know how to take risk. They’re all so weighed down with qualifications and theory that they’ve lost the thrill of the chase, the ability to sniff out a good investment from a pack of dogs.’
‘There is a reason behind all that though, Rob. Haven’t you heard about the risk-reward trade-off?’
‘Yep, I spend my day riding high on carefully judged risks and then I reap the rewards before it all goes belly-up. I tell you, with my knowledge, instincts and guts I can’t fail to make the right call…most of the time. All I need at the moment is a little more capital to push me in the right direction…’
Now we were getting somewhere. I’d suspected the real reason for Rob wanting to meet up all along but I’d given him the benefit of the doubt. He’d been day-trading full time for two weeks and had already run into difficulties.
‘…It’s so safe, it’s almost a guaranteed investment,’ added Rob. And then with a ham-like flourish toward the Statue of Liberty now in view across the water: ‘I tell you, it’s exactly the sort of project she’d be encouraging if she had half a chance.’
Up until that point, I was feeling somewhat beneficent toward my young friend but that really blew it all away. Not, you understand, because he had taken the name of the Lady of Freedom in vain. That was fine in my book, as I’m sure it was in hers.
No, it was Rob’s belief that such mystical backing for his venture might just swing my check-book in his favor. Oh dear, the poor guy had a lot to learn. And, for once, I wasn’t about to help him with his school fees. This was one lesson he’d have to get to grips with on his own account.
