MAGGIE LAKE: Well, that gives you a little sneak peek. Hi, everyone. And Tony, welcome to My Life in 4 Trades.
TONY GREER: How are you today, Maggie?
MAGGIE LAKE: I'm doing well. Thanks. This is a first for the podcast because it's the first one we're doing in person together in front of a live audience. I hope that we'll have the chance for questions. I don't know, I don't have an iPad or anything up here, maybe somebody will give me one. But if not, you can be sure to track down Tony afterwards. And we'll get to as many as we can.
Tony, you picked four trades, the two best, the two worst that really stand out to you in your very long career. But before we jump into that, give us a little background on you. We do the Daily Briefing together a lot. But we talk about markets all the time. I actually don't know that much about where you came from and how you got into trading in the first place. Give us a little bit of background on Tony Greer.
TONY GREER: Okay, I'll try to give you a really quick background. I graduated from Cornell University in 1990 with the firm intention that I wanted to work on a trading desk because my dad worked on a trading desk and he had one seat for 30 years on Wall Street, who was an over-the-counter trader for Dean Witter.
Bids and offers and buying and selling were a dinner table conversation and learning about the competitiveness of the job and that it was very performance based was something that was always intrigued with me. Let's cut to the chase. I spent the first 10 years of my career out of college as a currency commodity trader. I worked for Sumitomo Bank. I worked through two years for UBS. I spent some time in Zurich, and then I spent the rest of that decade up through 2000 as a commodity trader at Goldman Sachs, in the J. Aron division for Goldman Sachs.
In there, I ran the Goldman Sachs commodities index for a period of time and ran the gold book for a period of time, which is a really powerful job. And I was down on the exchange floor for a period of time, which was really, really eye opening. And the firm went public, and it went public at a time when I had been investing in technology stocks during the beginning of the dotcom bubble.
MAGGIE LAKE: By this point, it sounds like you had a lot of experience in a lot of different places, but it's almost going into the family business. Because some people, I grew up in a house where we didn't talk about investing. That just not part of my experience, but it's something that sounds like was going on at the dinner table all the time.
TONY GREER: Yeah, I knew about Microsoft when I was like eight years old.
MAGGIE LAKE: Talking in tickers.
TONY GREER: Yeah, exactly. That was it. I remember the days that my dad got those tickers on his pad and came home and was like, I could trade this Microsoft thing. Didn't even know what it was at the time. But that was it because he was into the trading side and the competitiveness.
MAGGIE LAKE: Did it seem glamorous to you? Did it seem exciting?
TONY GREER: Yeah, my dad, he came through the door every day loaded with energy, and then went right out to run to literally work off all of his anxiety. He was a great competitor at that. But he was very even keeled about managing the risk. I appreciated that. And I try to now carry myself the same way. But now I learned that it took him 30, 40 years to be able to do it without sweating.
MAGGIE LAKE: Right. You saw the finished product. Were you always good at numbers, too? Were you a math guy? Or like a student?
TONY GREER: I'm a wildly average student, wildly average. Yeah, I didn't love school. I love where I went to school. I love being at Cornell University. But I graduated with a B plus average. And that was fine with me because it was fine with my dad, too. He was all about get your experience, et cetera, et cetera. And then we'll get you out into the world. And that's what really mattered to him. Because he didn't go to college, so he didn't have that time in between.
MAGGIE LAKE: Very common, a lot of guys on the floor. Even when I was down there, reporting from there, it was very common for people not to have gone to college, go right into trading.
TONY GREER: Well, when he realized that it was something that he could figure out and didn't necessarily need the school, book smarts. He was very street-smart guy. And I think when he figured that out and got levered into seeing the success that he could have, he just figured out how to play the game.
MAGGIE LAKE: Yeah. Let's start with your first trade. And that is quoting gold to the Swiss National Bank at UBS in 1993. Set the scene for us, give us little backdrop of what was going on in your life. How old were you? Who was tony in 1993?
TONY GREER: I was a 25-year-old kid that UBS saw some potential in because I joined the FX desk with a little bit of experience and a lot of hunger. I was the guy that liked to get there before everybody else and leave after everybody else. And they appreciated that about my work ethic. They sent me to Zurich for six months to work on the Treasury desk there and trade currencies and commodities and really just help the risk management there.
MAGGIE LAKE: You're a young guy, a single guy in Europe.
TONY GREER: A young single guy living in Zurich having the time of my life, showing up in a really cool place to trade, the European time zone, by the way, because you get the end of the Asian day, and then the beginning of the New York time zone. You get a really good look at the global picture of trading.
That was really an eye-opening experience right from there. Let me go into just a couple of the details. To make a long story short, I get to quote the gold book. And this is very early in my career of quoting a gold price. And make a long story short, it's just a very hectic day, the market's rallying.
And essentially, I was getting longer as the market went up, just by the way, I was managing my book, number one, trying to be long. And number two, I was getting gold sold to me, but gold was still going up. I had a good long position, I had a winning position on the day. And we were getting towards the end of the day, and a salesman stands up and he says before the close, we got to quote Swiss National Bank for a chunk of gold.
And I think it was just a lack of gold or something like that, which is 100,000 ounces. We get in and the salesman stands up, and he's like, alright, Swiss National Bank for a lack of gold. And I'm a little bit like a deer in the headlights now because I don't have the experience yet of knowing that when you're quoting a book, you need to have small positions, so you can be nimble, so you can provide liquidity and get in and out of whatever little positions you're left with.
To make a long story short, I tried to get the salesman's opinion on what do you think he is and gold, they're usually sellers when big producers call up, National Bank calls up, they're usually sellers. For some reason, one of the traders who's like, this is the options guy, and I think that he's covering some negative gamma, I think he's a buyer, I think he's this way. To make a long story short, I quoted him a bid price.
If the bid offer price was call it 25 cents, bid at 75 cents on whatever handle, I quoted him like 50 cents bid at the figure. I quoted him a higher price. And he sold me gold. Now, I went to my position, it was twice as long, and he asked for a fresh price. And I didn't even know that that was within the realm of possibility.
MAGGIE LAKE: You're way over your head.
TONY GREER: Way over my skis now. And I've got a huge position on, so he says, okay, I'll sell you 100,000 ounces of gold. Now, I've gotten-- basically, that made me long 200,000 ounces of gold, which is now for every dollar that it moves, is $200,000 of P&L. Because I showed him a bid price, the seller assumed that I wanted to buy.
The salesman says can I get a price for another 100,000? I quoted him $1 lower. And he said, no, I'll pass on that. And I was like, oh my God. He passed on that because he's still selling. What he did was went around the street and hit all the other bids in the street, and all of a sudden, my 200,000 shares was $5 out of the money. And then $10 out of the money, and now I'm just a young kid frozen deer in the headlights, and I have no idea what to do.
MAGGIE LAKE: What's going through your head at this point?
TONY GREER: I'm going to get fired.
MAGGIE LAKE: Without question.
TONY GREER: Yeah, what's going through my head is--
MAGGIE LAKE: But you're in another country, this is a big deal. You're like, the guy, the young guy they send you over there. Were you present of mind enough to know that that was all potentially ending? Or were you not even thinking about that?
TONY GREER: I was concerned for my job, I thought that I was going to have a terrible P&L day, and somebody was going to drag me in a room and say, like, dude, you can't do that here. And you just lost seven figures and money at 25 years old. And that's not acceptable. To make a long story short, by the time the day was over, I lost more than that, and did get taken in to have a conversation with the manager of the desk and everything.
And he was cool about it, believe it or not, and he said that you got some bad guidance on the desk. And he acknowledged that, and I think that that's probably what saved my life. Because in the end, he was like, you got to know that the Swiss National Bank is a seller on a rally of $7, $8 in gold, which then, was a big move, because gold was like 250 bid at 350, and nobody really cared that much. A $5, $10 move was like--
I learned a lot of lessons that day, I went from being up on the day and having a really good day to making a mistake being down on the day, being afraid I was going to get fired, sent home, have to look for a job, start from scratch. And luckily, you'll learn that the people that are-- and that was a lesson for me where I learned that the people involved in trading are actually more understanding than you think.
This isn't the first time that they lost a million dollars on the desk in a day and so he just wanted to have a conversation with me about it to smooth out what happened but that scarred me for a while.
MAGGIE LAKE: No doubt. How long a period was this going on? You can see, like, if this was a movie, the close up, the sweat, the stress, the dramatic-- was it like quick in an hour or were you in agony for like half a day to get yourself out of this hole?
TONY GREER: Yeah, it was probably four to five hours of-- from the time that I went from having an up day to quoting them a bid price to getting sold that gold to some time I got out of the gold and knew my P&L, it was four hours. And now I'm twisting. I didn't have a lot of allies there. Everybody in the office spoke Swiss German, and they're like, look at Superman over here that just lost seven figures in a day.
MAGGIE LAKE: Well, I was going to ask, at any point, did you think about asking for help?
TONY GREER: Oh, yeah, I was asking for help with getting liquidity and that's how it goes on the desk. And you're like, when you make a decision that you have to get out of something, you're like, alright, give me gold prices. And everybody in the room will go to your liquidity. Everybody in that case has got a scheduled call that they've got to make to go out.
And they'll call and find somebody to bid them for gold, whoever their counterparty is to call. And then I would say, I got to sell this 300,000 ounces now. And literally, by the time I got done selling it, it was the low tick of the day. And then it traded up $3 or $4 after that. And I sat at my desk like this for about, I don't know, 15, 20 minutes after the close and just contemplated what was going to happen. And that was brutal time.
MAGGIE LAKE: That you're going to get the phone call. Can you come see me?
TONY GREER: Yeah, yeah. And I literally thought it was like, I'm going home.
TONY GREER: [?] on the gangplank.
TONY GREER: Yeah, exactly. But it worked out okay, so you learn that that's in the course of business at some level, and I just had to do better the next time. But that was really agonizing.
MAGGIE LAKE: I'm curious. How did you manage to come in the next day? Because it's one thing when you survive, but then you have that weird feeling, like you walk in, and it feels like everyone's staring at you.
TONY GREER: Well, that part was okay. I'm a terminal optimist. I've never woken up one morning thinking that today was not going to be better than yesterday.
MAGGIE LAKE: Even that day.
TONY GREER: Yeah, even that day. I had already gone through hell. It was like once I got the confirmation that I was not getting fired, my blood pressure, calm down, my hand, stop sweating, and I could finally gain some composure and just think about it.
MAGGIE LAKE: Did you understand in that moment that it was a mistake from inexperience? Or did you doubt that you had what it took? Because up until now, you're impressing everyone.
TONY GREER: Yeah, it had been going fairly well. And this was one event and what I decided was that I shouldn't lean on anybody. If you're the gold dealer, and you're responsible for quoting the gold book and reporting a P&L at the end of every day, I don't really care what that sales trader says anymore. I had I had a conversation with him, and he was abundantly apologetic.
And the whole thing, and he's like, I didn't know your position at the time and all this stuff. There was some stuff that we got through, and a lot of learning experience, but it was one of the mega lessons in my life about being a broker dealer, and what goes on when things go completely wrong.
MAGGIE LAKE: Yeah. Did it change the way you approach risk?
TONY GREER: Yeah. Then it was the beginning of my understanding that as running the gold book, this is a lesson of working at a big bank. Running that book, it's not your job to be-- first of all, as an inexperienced trader, it's definitely not your job to have maximum risk on all the time and really be willing positions around.
The job there in that seat is to provide liquidity for people that want to trade gold for clients of the bank, for internal traders of the bank, proprietary traders, traders on the desk that have all got a gold position, anybody that's got that on is going right through you. You learned after that that even though I'm bullish, sometimes it makes sense to be just flat when the market's going up so that I can quote somebody and have the freedom to be like, okay, I don't know which way he is, I'm just going to bid an offer and buy or sell and then lay off the risk.
And if you do that all the time, there's value in the book that you can glean because a lot of times, you've got better liquidity than you just offered your client so there's ways to get a lot savvier about becoming a desk dealer. And from there, I made it my life's vocation to learn how to be a good desk dealer and to quote markets better.
MAGGIE LAKE: You understood the job better.
TONY GREER: Yeah, exactly. It was a much fuller understanding of your role in that seat. And I thought it was they're sending me across the pond to Zurich, I got to make money. I'm going to go there and I'm going to be the smart guy from New York and I'm going to try to outtrade and outwork everybody and eventually, you go speeding into a wall at some point.
MAGGIE LAKE: Yeah, but you got back up. You didn't take it to heart. You didn't think, wow, I thought I was really great trader and actually, I suck at trading.
TONY GREER: Every day has always been a new day for me both in life and in trading. And I think that that's important. When you take your lumps, it's okay, when you go to sleep that night, it's over. It's got to be over.
MAGGIE LAKE: And it's easier when you're young I think to feel like that.
TONY GREER: Well, yeah, because I didn't have any responsibility except myself. That changes for some of the other trades--
MAGGIE LAKE: You don't know what you don't know.
TONY GREER: Yeah, exactly.
MAGGIE LAKE: Your second trade is buying short-dated S&P puts during the great financial crisis of 2008. Once again, this is a long time-- you've been at it a long time that you have a lot more experience now. Where are you? What are you doing? Have you shifted the kind of work you're doing?
TONY GREER: In life now, I just left the Bank Hapoalim, where I ran an equity desk and a sales operation sales and trading operation there. And I had really tight restrictions on trading. In fact, they made it for me so that I essentially could not trade. And while I was irritated with that, I understood the role that I had there because I just had this lesson several years back so I'm like, okay, I can facilitate this job. It's worth it.
And then I had left there, I went to Dahlman Rose, which was a really Maverick natural resources-based sales and trading shop broker dealer to work for my friend, Ernie Dahlman and to work on a desk where I really thought that I could do even better than I was doing at Bank Hapoalim. I had a ton of equity business that I would put in through the machines, I was making a good living, etc, etc. And the great financial crisis happened so the markets now, 2008, the market's crashing.
MAGGIE LAKE: I think it's worth pausing. I know most people know what happened then and were in that, but it was a really crazy time. People were petrified, things were going on, people didn't want to talk about things. There were really, really experienced traders and investors who were just scared. The wheels were coming off.
TONY GREER: Yeah. And you can sense a lot of that too. You can sense that in the market. And that's what helped me with my trade in that I wanted to speculate that the market was going down. Here I am sitting at-- leaving having a big job at Bank Hapoalim where I'm a manager to going to Dahlman Rose, where I'm like a co-manager, but really, I run a team of sales traders, five sales traders, and that's my job.
But now, I can trade again. I've got very loose restrictions on what I can do. To make a long story short, when I've got a trading group of friends and my confidants are like, yeah, this tape is going to go