True Legendary Trading Stories

T

thetraderprofit

I'm starting this thread in hopes of generating specific stories of "legendary" trades of which the writer has personal knowledge.

I'll start with my own:

While trading at Bright in 1999, I traded a joint account for Bob Bright and myself. At the time I turned the account over to the firm to concentrate on my own trading, we had a small position of 19,000 ENN (Equity Inns), which was under water by about $20k.

A few months later I learned that Bob had "added to the position in ENN." I believe his exact words were,"I bought a little more."

A week later I learned that "a little more" was 1,000,000 shares.
It seems 'adding to a loser' does work sometimes.
After the stock had rallied $2-3 dollars, Bob told me he had lightened up on his position. Each week, Bob told me he was 'lightening up.'

After about two months of lightening up, I found out he was down to ONLY 986,000 shares!!

I think he's collected about a 13% dividend during the whole time he's owned it, on top of the capital gains. I'm not sure if he still has a position.
 
I was a local at the CME in the spoo pit in 1987. It was October and the market was at all-time highs. The week before Monday the 27th had been exciting enough, with 80, 90, and 100 point days. This was volatility unheard of previously. Thursday and Friday had been "big" down days.

Over the weekend Peter Lynch of Fidelity decided to sell. Nobody knew until after the fact however. Monday futures were down but nothing too extreme, although there was an air of apprehension as the NYSE was about to open. As I recall, the Dow opened 400 lower.

The gasp from the floor was in unison as everyone watching seemed to expel the breath they were holding simultaneously. The futures dropped and rose by half point increments. Paper literally was flying everywhere. It was the first...and last...time that I had ever smelled fear. Somehow we made it thru the day, having recovered somewhat by the close.

Louis Borsellino was, and is, a presence in the pit. Everyone knew and respected him. Some guys want to tell you he's "just another guy." Not so. That's testosterone talking. Louis is worthy of any trader's respect.

Louis had been on vacation, I don't remember where, but he wasn't there Monday. He was Tuesday...and in a big way. As the market was about to open, paper was offering 200 lower than the close. Almost without hesitation Louis bellowed, "I'm 300 lower!" Paper countered with 400. The exact numbers escape me, but I remember Louis moving the market to 600 or so lower, and buying them.

The price bounced off that low like a superball and I saw Louis sell his cars and get out of the pit. Later I learned that in the course of a few minutes, Louis had made over $1,000,000 on that trade.

Now that is one heckuva scalp.
 
a couple of years back, when YHOO was trading at 86, there was a fella that stopped into a public trading chatroom the night YHOO was to announce earnings.

He said he was buying lots of puts into the close. Said YHOO would go to 45 within 2 weeks and then bounce back up to 70's.

Everyone in the chatroom dissed this guy and said he was totally stupid to for even thinking of 45.

Anyhow, YHOO came out with positive earnings. However, it started to drop like crazy. Within a week or two, YHOO was at 45, EXACTLY. This fella came back into the chatroom. He said he sold his puts while YHOO was at 45, and he bought calls and said it was going to 70's within a month. Sure enough it did. When YHOO was at 70's, this gent said it would become a teenager soon after.

Soon enough YHOO became a teenager.

That was the weirdest thing I ever saw and it sparked my interest to become more active in the markets.
 
The CTA had 75%+ returns for 4-5 years before he blew out his pooled accts in 1 trade.

The pic below is when the NatGas market went nuts in late 2000. He exclusively wrote premium and he had somewhere around $15 million in managed accts.

One overnight session in NatGas led the exchange to double the daily price limit move and greatly increase margin requirements. Then the next day the price of the calls he was selling went from a couple of thousand to upwards of $15,000-$20,000 each.

His pooled accts went totally bust and his individual managed accts were left with something like .20 cents on the original $1 (they were up a couple fold).
 

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I know a housewife who lost $25k by investing stocks from recommendations of brokers. After loosing money, she studied stocks & how institutions invest, manage equites & how to determine equities value. After years of studies she found how to pick up real value of companies. She invested in a company which does not have any debt, a solid products & low PE compare to same industry. She stick with this strategy for 2 years. She eanred over $1 million just investing this way. And she published one of best seller book " How to invest" in foreign country!
By the way, she was just high school graduated house wife in a foreign country....
:)
 
A chic I knew back in college.. bought PUMA at $5 back in '99 then sold it near 100. Then she reversed her long and went short and covered it near $5. She made about 190 point x 2000 shares ($380k) on PUMA. Not bad.. she doesnt even know what a p/e ratio is... she told me it was pure luck!!

--MIKE
 
I personally know of a guy who, for some reason, decided to start trading options. he was not in the biz. he had 4350K to start when the internet was going nuts. He used eTrade or AmeriTrade. He has eSignal with satellite feed set up in his basement I recall. He juts bought internet stock calls. And ketp rolling them over to the next month at higher stike as they kept ripping up. He ran up the account to $8M in about 1 1/2 years. He then lost $7M of it in next 6 months when the first of the internet burst came along. he plain refused to buy puts. Couple of months later, he started again with $350K and he said "Im going to stop when I reach $3M this time". Well...he didn't. He ran up his account to $15M (!) in the next year or so (this was when QCOM came out with earnngs and doubled or tripled overnight - I cant recall the details now). To make the story somewhat fitting, he proceeded to lose most of that $15M when the NAZ broke for real and I dont know where his account is at now. Last I heard, he was back down to $1M. Crazy but I can understand how a thing like that can happen. Even to the best of us.
 
In late 1997 or 1998 perhaps I have the date wrong but it was when ktel first started going stupid. A woman and her husband came into our office. The man was a math professor at a local university and he and his wife had done a little trading and they wanted his wife to trade in our office. We talked about 100 shares at a time to you net 100 bucks and then stepping it up over time. She reviewed our advice and showed us a trade plan that she purchase from a website and it seemed reasonable.

While in our office paper trading she got me to break my normal listed stock discipline and I made three points on Ktel in about 20 seconds. I played with this fire a bit and quit while I was ahead. Soon her account was open.

She then said how come my trade won't go through. My business partner looked at her screen and she tried to buy 7000 cwave or phonewave or something wavelike ---just about to be the next ktel according to her. We said 7000 shares was too much risk and the software blocked it. She said how muchcould she trade. We called the risk manager and he said 3000. But he asked her to trade smaller and warned her he would shut it down at certain levels. She bought 3000. She lost 9000 dollars by the end of the day. The next day she bought a big stake in something else and by the end of the day the risk manager closed her account.

Needless to say we tell this story to everyone who starts and we get them to agree to trade smaller.
 
here's my story number 2.

One of my 2 roommates my freshman year in college was a Petroleum Engineering major. For purposes of this thread, I'll call him Ken (especially since that's his real name).

Ken was, and is, extremely bright and studious. He carried a 3.9 GPA in a very tough discipline.

Ken bought 1 million shares of a Texas penny stock oil company (it was either Golden Triangle or Black Giant) at around 1 cent.

The stock shortly rallied to, I recall, about $3.50, netting roughly $3.5 million on a $10k purchase.

This guy was very unassuming, and still is. Ken has averaged, in his own words, "a 22% return, after taxes and living expenses"
since we left college in 1982. For years he drove around Austin, Texas in a beat up car with no a/c. In fact, he still lives in an apartment. Since he was a millionaire when we left school, do the math.

Ken now invests in overseas markets. He goes to the country, talks to the managements of the firms, and buys huge stakes (often 5-10%) of a company. He buys cheap and sells dear.

Ken recently sent me an analysis he did of an Indonesian company, replete with his own 30 yr cash flow projections!
Talk about overkill.
 
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