I Fought ACME9 and ACME9 Won: Part 9 Enjoying It in Siberia

 So I was exiled, which as it turned out was perfect for me. I was so fed up that for a couple of months or so I stopped worrying about being fired. When you’ve been picked on every day for three months, being ignored is almost ideal. Not only that, once you stop caring so much, you usually start making better trading decisions. Much I’m sure to Brown’s dismay; I actually started making pretty good money again.

Meanwhile, I wasn’t the only one on my own anymore. They were gradually letting seven or eight of the new kids begin to trade under the same situation as me, so I was no longer being compared to the big accounts and their daily infusion of free money public trades.

Eventually, Brown and Orange came up with a new strategy for me. Instead of trading the names in Brown’s group I’d trade a list of the 250 stocks with the most option volume. Personally, I think that I was being set up to fail. A name with high option volume isn’t necessarily the best one to trade. By it’s very definition, if a stock has a lot of volume then its option’s markets are more efficient, which means there is less statistical edge.

Having good names to trade is as important to a trader as having connections is to a politician. If there isn’t any statistical edge in your names, you might as well just take a guess and pray. You could be the greatest trader in mankind’s history, but if you’re trading in a completely efficient marketplace, it just doesn’t matter. 

For once, though, I didn’t let it bother me. While it was true that there wasn’t much edge in these names, there also wasn’t as much risk. I wasn’t going to have to worry about waking up to any unexpected monster losses. So I put my head down and didn’t let it bother me.

By the time year end bonuses and reviews came around, my return on capital, since I was given a separate account, was just about exactly 50%, which was the goal that had been given to me at that time.

Before my review with Orange, I wrote a scathingly honest appraisal of myself and sent it to him. I admitted the mistakes I’d made. I said that despite meeting my goals that I felt some errors had kept me from easily exceeding them. Essentially, I tried to give every impression that my willful streak had been broken, and that I intended to be every bit the trader that all of ACME9 expected me to be.

Orange congratulated me on my honesty. He told me that he had confidence in me, and then basically made me feel awful about not exceeded the goals they’d set for me. It actually tells you how easily this firm had been making money for so long that they considered a one year return on their equity of 50% to be an utter disappointment.

My bonus was fairly healthy, but it was clear to me that since my last review I’d done nothing, but cost myself at least $50,000. Orange assured me that he was confident that I was going to surprise everybody and have a great 2007. For a while, he was right.

I Fought ACME9 and ACME9 Won: Part 10 Making Enough Money to Please Anyone!