The Day Trader (8 page)

I hear the squeal of tires as the Mercedes makes another 180-degree turn, then disappears down into the parking garage’s next level. As the whine of the engine fades, I’m left to wonder if there are any more surprises waiting for me out there in the eerie silence—pierced only by the sound of my pounding heart and terrified breath. Left to wonder if that five-thousand-dollar emergency loan Vincent arranged for me a while ago from some “friends” has anything to do with what just happened.

CHAPTER 6

“Look at this stock price. It’s falling off a cliff and I’m getting massacred. The shorts are screwing me. This is bullshit!”

Now I understand why people at Bedford call Max Frasier “Slammer.” He pounds his desk and curses constantly as he rides the stock market roller coaster. “You all right, Slammer?” I ask, rubbing my wrist as I stand up to stretch. It’s Monday morning, a week since I started at Bedford, but my arm is still sore from my tumble off the Suburban’s hood.

“The shorts are baking me on this penny stock I bought Friday afternoon,” Max gripes, banging out a message on the stock’s Yahoo! chat board as he watches its price tick down another few basis points. On the chat board Max can complain to other traders out there in cyberspace about the early morning dive in the price and speculate with them about the cause of the sudden dip. “I knew I shouldn’t have held this thing over the weekend. Jesus Christ, look at this!” he shouts, pointing at the spot on his screen where the ticker blinks its bad news. He sends out another quick message. “I knew this was a mistake,” he bitches, slamming his desk hard. “Damn the shorts.”

“By shorts, you mean the people who want that company’s stock price to go down, right?” I observe tentatively, trying to learn whenever I can.

To really grasp the equity markets, it’s important to understand that not everyone out there wants to see a stock’s price go up. Not everyone is a bull. It may seem strange, but some investors—those who believe the outlook for a company is poor—expect to see the price go down, and so they invest that way.

To execute this bearish strategy, shorts borrow a block of shares from a market maker—usually an investment bank—then sell the borrowed shares to someone like you or me through a broker, get the proceeds from the sale, and invest that cash in other opportunities. At some point in the near future they’ll have to get the shares back to the market maker to satisfy the loan so, in essence, while they’re borrowers, they are “short” the shares. The shorts are hoping that the price of the borrowed shares will drop quickly so they can purchase other shares more cheaply in the open market and deliver those newly purchased shares back to the market maker to satisfy the original loan. When the loan is satisfied, the shorts’ profit is measured by the amount the price dropped while they were borrowing the shares.

“Isn’t that what you mean, Slammer?” I ask again when he doesn’t respond.

Of course, if the shorts are wrong and the price rises after they’ve borrowed the shares, they’re screwed because ultimately they’ll have to buy a new block of shares at a higher price, losing the difference between that price and the price where they originally sold the borrowed shares. Plus they’ll have to pay interest.

Selling short is a risky strategy because there’s no limit to an investor’s risk. The price of the borrowed shares could go way up while they’re short. But the rewards can be substantial too. The neat thing is that, as a day trader, you can be active whether the market is going up or down, or the price of a particular stock is going up or down. So you can make money no matter what the economy is doing, or what a particular stock is doing.

“Slammer?”

Max’s frantically moving hands finally pause for a moment over his keyboard, his fingertips trembling slightly. He looks up at me, teeth clenched. “Of course that’s what I mean, you idiot. And don’t call me Slammer again. I hate that name. You hear me,
Gus
?”

From where I’m standing I have a clear view over the chest-high walls of everyone in our five-cubicle group, and I see Mary glance up from her computer screen and roll her eyes.

“Be nice, Slammer,” she chides delicately. “Let’s all just try to get along. There’s enough stress in here as it is without us being mean to each other.”

“Shut up, Sassy,” Max snarls, pounding on his keyboard again. “I’m gonna double down,” he says loudly. “I’ll teach the shorts not to screw with me. And if they keep doing this, I’ll find out where the fuckers live, and then they’ll be sorry.”

“Keep it down, Slammer,” Daniel warns, staring at his screen. Daniel is the most intense trader in our group—what they call a “banger”—executing a new transaction every few minutes. He rarely leaves his desk all day, methodically buying and selling from the opening bell to the close. “I’m trying to concentrate.”

Slammer jumps out of his seat and points angrily past Mary at the younger man. “You say one more thing like that to me, Freak Show, and I’ll come over there and teach you a lesson. I’ll dye that purple hair of yours bloodred, and I’ll yank that damn piece of jewelry out of your eyebrow. Then we’ll see how big and bad you are.”

Daniel mutters something I can’t hear and continues to trade.

“What did you say, you little coward?” Slammer demands. “Hey, maybe I ought to show you what we did to people like you down in Nicaragua.” Slammer glances at me. “What the hell are you staring at, asshole?”

My temper flares instantly, but kicking Slammer’s ass right here on the trading floor probably wouldn’t be a good idea, even though I know most of the people in the immediate area would love to see it.

“Easy, Max,” Mary says soothingly, standing up and patting Slammer’s hand. “There’s no need to get upset. I’m sorry that position you took over the weekend isn’t working out, but it’ll come back. You know it will. Your instincts are always so good.”

“Yeah, I guess you’re right.” Slammer glances down at Mary’s hand. “Lunch today?” he asks.

She shakes her head. “Can’t.”

“Why not?”

“I have some errands to run, but why don’t we get a drink after work? Just you and me.”

Slammer takes a deep breath and nods. “Okay, yeah, that’s a good idea.” At the prospect of drinks with Mary he eases back into his chair and begins trading again as if nothing happened.

I mouth the words “thank you” to her, grateful that she defused the situation. She smiles up at me sweetly as she sits back down, pointing at Max through the cubicle wall and shaking her head as if to say, “Don’t worry about him. That’s just the way he is.”

She’s taken an early liking to me, helping me learn my way around last week and asking me to lunch later on today—the real reason she couldn’t accept Slammer’s invitation. She’s nice, but her watchful eyes and the lines around the corners of her mouth suggest that her life hasn’t always been easy. She has a hunted look about her, constantly raising her head up and looking around as if she’s expecting to see someone or something pursuing her.

A gentle tap on my shoulder surprises me. “Could I have a word with you?”

It’s Roger, the bearded guy who sat with me in the conference room last Monday while Seaver sold us on Bedford. Today is Roger’s first day, and Seaver has assigned him to the last vacant cubicle in our group. “Okay,” I agree hesitantly.

“Let’s take a walk,” he suggests in his soft voice, stroking his whiskers and glancing furtively past me.

I nod, wondering what this is about.

Roger leads me to an unoccupied conference room on the other side of the the trading floor. The conference room is at the corner of the building, and I take a seat at the table. From here I have a panoramic view of northern Virginia and downtown Washington in the distance.

“What’s on your mind?” I ask. Roger seems troubled, but then I’ve already noticed that’s his natural expression.

He sits silently for a moment before starting. “I thought maybe we should get to know each other,” he finally says. “We’re both new kids on the block here. We ought to stick together.”

I don’t know how to respond. I spent most of last week getting my bearings and so far have made only a few small investments, much less begun to day trade the way Daniel and Slammer do. I’m impatient to put the lion’s share of my Unicom proceeds to work, and I have to make a decision on whether to follow through on the Teletekk tip. The announcement about the satellite application could come at any moment, and if I miss out I’ll feel like a fool. Roger and I will have plenty of time to get to know each other later. “Look I—”

“I don’t understand much about investing, Augustus,” he admits quickly as I make a move to leave. “I’m nervous about this whole thing.”

Roger arrived at eight o’clock this morning, a half hour after I did, and I noticed that he simply stared at his Trader One introductory page for the better part of ninety minutes before the stock markets opened. By this time on my first day last week, I had completely personalized my software. “Then what the heck are you doing here?” I ask, easing back into my chair. I need to get to work, but I want to find out why this guy would throw himself headlong into something he has no training for. “Day trading is difficult enough for people who know what they’re doing.”

“I understand that now,” he admits, looking depressed.

“Roger, I’m kind of busy and—”

“I was at the Department of Energy for the last ten years, doing budget work.” Roger’s voice is so soft I can barely hear him. “It was terrible. In at nine, gone by five. It was a total grind. I always took orders from other people. I got a steady paycheck, but it was never enough. Four percent raises a year and no bonus.” He lets out a frustrated breath. “I thought joining Bedford would make me seem more exciting, especially to my wife. She’s never said anything, but I don’t think she has much respect for me anymore.” He pauses and swallows hard. “I’m worried that she’ll, well, that she’ll . . .”

He doesn’t finish, but I understand what he’s trying to say and the words hit home.

“But now that I’m here, I’m petrified I’m going to lose everything I’ve ever saved,” he continues.

And he could too. An inexperienced day trader can get caught in a whirlpool and drown before he even realizes he’s wet. “You were able to save half a million dollars working for the federal government over the last ten years?” I ask, remembering the discussion we had with Seaver about our initial capital.

Roger grimaces. “I exaggerated a little. Well, actually a lot.”

“How much are you really starting with?”

“Less than fifty thousand. It’s everything my wife and I have.”

“And she’s okay with this? Risking your entire savings on day trading, even when you don’t know what you’re doing? Just for the sake of being exciting?”

Roger leans back and looks up at the ceiling. “She doesn’t know I’m here,” he admits quietly. “She thinks I’m still at the DOE.”

“Oh, man,” I groan.

Roger’s taking a drastic step to try to solve his midlife crisis, but he’ll only end up making matters worse for himself. Then who knows what will happen? A shooting spree at a fast-food joint or a school? A suicide attempt from the Chesapeake Bay Bridge? Roger could become that next headline we all see flash across our portal page when he finally loses every cent he has and dives into debt to support a habit that people say can be more addictive than crack. And Roger
will
lose everything if he doesn’t get very smart very fast. The capital markets are brutally efficient, constantly chewing up and spitting out the weak and the naive.

“I figured I’d make a bunch of money here and surprise my wife with the cash. Then she wouldn’t care when I told her I had quit the DOE and made the money day trading.”

“Day trading is tough, Roger,” I say firmly, as though I’m an expert. “What made you think you could be successful right away without any experience?”

“I’ve got this neighbor who’s spent the past two years bragging about how much money he’s made investing in all of these dot-coms. My wife lit up every time he started talking about how he’s into this stock or that one, and the guy has been buying new furniture and flashy cars. Even a boat. He’s no rocket scientist so I figured I could do the same thing.” Roger shakes his head. “But get this. Last night he and I were in the backyard watching our kids chase fireflies while it was getting dark, and he lets on that he hasn’t really made much money in the stock market after all. In fact, he’s lost a lot lately. He’s bought all of the new stuff on credit, and now the bill collectors are closing in on him. He actually asked me for a loan. He almost broke down in tears, and it shook me. When I came in here this morning I was paralyzed thinking about how he’s going to lose everything. I had a couple of stocks I wanted to buy, opportunities he told me about, but I couldn’t pull the trigger. I was worried I’d end up like him. I mean, who is he to make recommendations anyway?” Roger stops stroking his beard. “Will you help me, Augustus?” he pleads. “It seems like you know what you’re doing. I could tell Seaver was impressed with you.” Roger hesitates. “I guess that Slammer guy knows what he’s doing too, but frankly, he’s a prick. I doubt he’d be very helpful.”

The last thing I need right now is a pupil. I’ve gotten off to a good start with Unicom, but I don’t know how I’ll react when things go against me the first time—which they inevitably will. Everybody hits a slump sooner or later.

“I’m losing my wife, Augustus. I can feel it.”

I lean forward and rub my eyes. This is no good.

“I’ll pay you,” he offers desperately. “I’ll give you a share of my profits.”

“You don’t have to do that.”

Roger looks up. He’s heard a friendly tone. “I don’t?”

I don’t need a second shadow, but I feel Roger’s pain, and down deep I like to help people. I don’t want to see him lose everything, nor do I want him coming into the office one day brandishing a loaded twelve-gauge shotgun like some deranged postal worker who’s finally realized he can’t ever get ahead because the mail will never stop coming. “I can’t work with you right now, but if you stick around after the markets close today, I’ll help you personalize your Trader One and we’ll go over a couple of basics.” He breaks into a wide grin. It’s the first time I’ve seen him smile, and that makes me feel good. “But promise me this,” I say gravely, pointing at him. “Don’t execute a single trade until we talk.”