I'm Out of Their League

Today’s Who’s Who on Market Street is one of the reasons the Wall Street financial industry has always earned my disrespect and I’m not sure if I can resolve this internal conflict. From what I can tell, if you do a really bad job they pay you $161.5 million in restricted stock options and benefits to get you the eff out of there.

Merrill Lynch & Co.’s ejected CEO Stan O’Neal though just might have enough millions to overcome the suffering for being a failure in the industry’s eyes. I guess that’s why most love this business because you win even if everyone thinks you’re a loser. I guess it is good for many but it’s insultingly excessive to my mind. In addition to his millions, O’Neal will receive an office and an assistant for three years. It’s not to difficult to comprehend how he will survive; and this is him being ripped off, according to some commentators.

According to the Wall Street Journal (WSJ), “Merrill directors didn't offer Mr. O'Neal cash severance or a bonus for 2007. They and he agreed he had accumulated considerable wealth during his 21-year career, made a lot of money last year and didn't deserve extra rewards on his way out the door.” So, this is what is status quo and the ousted chief executive officer is not getting anything that he doesn’t deserve but it sounds like some think he deserves more.

Keri Smith at Keri’s Life blog thinks he's being treated poorly because he's black. She said:

Stan O'Neal, the 56-year old CEO of Merrill Lynch & Co. has been forced to leave his job due to a significant multi-billion dollar write-off he announced last week. Although his departure was rumoured to occur, it was surprising how quickly the board was willing to oust Mr. O'Neal.

Mr. O'Neal became the highest ranking African-American on Wall Street - rising from the cotton fields of Wedowee, Alabama, to the top position at Merrill Lynch.”

Respondent lance williams, sr at Nat Turner’s Revenge blog said...
“O'Neal got too slick. He's a cold fish and if he'd just come clean with the board and the big shareholders all at once, he'd be OK.”

Lisa there said: "Will the big stockholders now avoid black CEOs? It's always disparate when it comes to us--they judge us by a few. In corporate America this kind of housecleaning happens all the time but there's "judgment" aspect. It's the same with female CEO on the way out,too."

The Nat's blogger Christopher Chambers, said the chief executive has been criticized for “leading the world’s largest brokerage to its biggest quarterly loss since it was founded 93 years ago.”

Being so new to this industry, first of all I didn’t even know the man was black when I started writing this blog and in fact, this morning as I thought about taking a paltry profit on some of my stocks, to keep me to breaking even, I recalled an interview I saw with O’Neal. I was unaware who he was at that time and didn't realize it until I opened these blogs this morning, which are linked to the WSJ article.

My thought this morning was that it’s better to be safe, which is what O'Neal was saying in the interview that I recalled this morning. Risk management was what O’Neal was talking about in the interview a couple of weeks ago on Bloomberg TV. I liked what the man said and remembered it this morning over coffee. I was thinking I would take the profits from two stocks to total $200, which would bring me close to my beginning capital to break even. I’m definitely not much of a risk taker and told myself that though he was being criticized on the show, I believe in his philosophy.

In the interview the interviewer seemed to be grilling O'Neal about his philosophy when he explained how important it is to resist greed; O'Neal stressed how important prudence is in this business. So, in trying to make a decision this morning I figured I should just stick with my original plan to just make $80/day. That would create an income of $20,000 for the year. (Still, being at this since June, I haven’t been able to make anything, even though I do make some profits but I also lose just as much.)

But enough about my profits and losses because in the final analysis I am once again reminded that what I think this industry is--is not. When I started this post this morning, and not knowing this was the very same guy I saw on the Bloomberg interview, I was thinking this guy is one more greedy guy. I was reminded how excessive it is when I read this type of news; how much money losers make when you work with the big boys.

I am still going to use O'Neal's philosophy too because I respected it when I first heard him and I respect it now. Maybe Merrill and most investors aren't so patient or maybe there are things about this story I don't understand, which is highly probable.

This morning as I pondered that interview a few weeks ago, I had the sense that in the end, it will pay off. I’m sure there’s more to it though, as noted in the WSJ article I linked above, regarding the credit fiasco banks are going through and the Securities and Exchange Commission's investigations into wrong doing. Whose wrong doing it is though I don't know and I will look into that and maybe save it for another post as this one is dragging on too long.

And in the final analysis, I know there’s so much I don’t know. That's about all I really know. There’s still so much to learn. Sometimes I just want to quit. In fact, for the last week and a half I have just turned away from it because it became overwhelming. But last night I had a dream that made me sense that I need to get back to it. But that’s neither here nor there and though O’Neal is black and some suggest that he’s being treated poorly because he’s black, I still know that $161.5 million is a lot no matter what color or gender you are.

That he’s being ousted possibly because he had losses in the third quarter may be a racial issue, as Keri suggests. Still, I remember a few peon jobs where I definitely increased profits and you can be sure I didn’t get anything when they wanted new blood in the company. And that's another thing I know: this may be more to do with the huge gap between the rich and the rest of us peons.

Anyway, my head is hurting already and the market hasn’t even opened. I need to get back to looking into what I’m going to do today and let the big-time players hack out whether they think it’s fair to oust someone with a $161.5 million severance package. I’m clearly out of their league.

Maybe just for good measure, I will spike my coffee this morning with some B& B, a blend of Benedictine liqueur and French cognac. I think I should sit in the last rays of Indian Summer sun with some homemade honey sweetened oatmeal with local Empire apples and cinnamon. (I may get out of my pajamas in an hour or so.) I think too it’s a good time to read the next chapter in former Fed Chairman Alan Greenspan’s book titled, "The Age of Turbulence; Adventures in a New World.”

Life is sweet♥



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[Update Nov.4, 11:07 a.m.: According to my print version of the Nov. 3 Barron's Review & Preview, page 18, "O'Neal is leaving after a $2.24 billion quarterly loss; some analysts say Merrill faces a $4 billion writedown in the fourth quarter."]

An Unusual Pilgrim’s Progress

Wow! I can not believe how much I did not know about money and what it really means to our society and to all societies and to me and I can not believe how much I have learned, just in this short period of time.

I also can not believe why or how Jack thinks I’m intelligent, now that I’m learning what he has known all along. Sometimes I think he was just kidding about loving me. I know he’s not and I know he values greatly my other type of intelligence, but geeesh!

Sometimes, it must take him all his strength to resist shaking his head when it comes to the way I have acted regarding money, and all my attendant anxieties surrounding money. I surely have only seen the tip of the iceberg but already I can feel that horrible fear I always have—every time a bill comes in the mail, even though I have plenty of money to pay the bill—begin to fade.

It is actually joy to begin to see how I can finally free myself from this tremendous fear that has gripped me my entire life. It is surprising to recognize the level of disdain I’ve had for money and its management and for no apparent reason, now that I am starting to replace all those demons with simple and realistic facts and information.

A burden is lifting off my shoulders, a burden I have been carrying unaware for a long long time. It reminds me of Pilgrim’s Progress, which I read years and years ago and which is one of Mark’s (my second son) favorite story. The main character in the story lugs around a terribly gigantic pack weighing down his back for years and years without recognizing that he doesn’t need to carry this load.

Of course, that story is about finding God so who would have thought this burden on my back could be analogous to a story about finding God and salvation? And the funny thing is that it has nothing to do with the stock trading or increasing my capital as I am still breaking even and just a little below my red line, but it’s because all these institutions and indicators of economic health have always been such a mystery to me—a complete and total mystery to me. I actually feel like I’m beginning to see the light. LOL!

I just shorted my first stock trade today

I’m telling you, it’s both boring and frustrating to try to learn stock trading and then it’s also kind of funky and exciting. I know this doesn’t sound like much of a woman’s blog in that I’m always talking about stocks and stuff these days but when I was into cooking or into making Halloween costumes for my children when they were little, my diaries were filled with those topics too. (Well, I’m still into cooking, even more so now, but I just am not so scared by it that I need to journal my way through it anymore; we didn’t have blogs then.)

Anyway, back to shorting stock trades. I’m still not making money but I’m still not losing money either. (At this minute, I’ve made $151 in profits year to date and I started four months ago, fulltime.) In fact today again I got another little booster regarding my nature just by listening to this TV station Jack found and which I listen to throughout most of the trading day now, which is from 9:30 a.m. and 4 p.m., but a lot of time has to go in before and after hours to research and decide what one wants to do.

Anyway, short trades (as opposed to long trades) are funny things and it was my first intentional short trade because my first one was a mistake, on which I made a whopping $5 (hey! Not too bad as mistakes go). My very first trade ever, I made a mistake and shorted a stock instead of buying it long, which means that I sold it first and then bought it at a lower price. (crazy shit, I know.)

I remember that day I was so damn scared. I couldn’t tell the difference between red, which means sell on my discount brokerage platform and green, which means buy on my platform. I’ve had lots of reasons to be scared in my life but this was a fear that I was pushing myself into, whereas other fearful situations usually came unbidden.

So anyway, back to what a short trade is: the short trade is when you think a stock is going to go down and if you sell it without owning it then you can make money when you buy it later at a lower price. You can sell it at the market price, which is the price it is now, even if you don’t own it yet. You’re basically borrowing it. Then, you wait hope and pray (after you’ve done all due diligence in your homework before and after hours) for the price to go down and then buy it at a lower price.

I can’t say I even get the whole thing well enough to explain it and I just called the trade desk because I was sure that I messed it up. They said I entered the trade correctly. If it goes down I will earn a grand total of 73.50 after trading costs.

*whew*

I have to say that there is something good here; I have always focused on areas so far from anything financial and yet I’ve always wanted to know what everyone else knows about money and this big giant called Wall Street and the world markets and macroeconomics and….

I feel like this is just what a peri-menopausal woman like me needs. I hate to admit it but I will—I want to feel like the main character in a book I read a very long time ago. It was titled, “Woman of Substance” and I can not remember the author at this time but it was a story of an old lady who started out with nothing when she was little.

Over the years and raising four children alone after several bad marriages she built an empire that she was able to share with her grandchildren. I always think of that story. I just do. (I’ll fill in the author at some point.) I’ve loved and lived for literary and journalistic pursuits but they do not fill this other need in me and this other need in me is to also experience the world of money and its muscle.

As I have said in earlier posts, I was raised that money was not something a lady concerned herself with but we were to just remain hard workers. There was good training there but I need to take it further.

I go through many bouts and fears regarding this latest pursuit because continuing to neglect financial possibilities in my life limits my life’s potential. That my significant other (SO) is a certified financial planner and wants to be the angel on my shoulder can not be ignored and hopefully someday I will not have to write every time about my fears and baby steps or feel the need to justify this new venture in my life because money and financial industries may not be the root of all evil.

After all, isn’t this the type of thing 48-year-old women do when their children grow up? Try new things, push off old and worn out values, wear purple?

(yes, I know, I’m still justifying and apologizing; I will stop this aggravating habit soon…but Mom would not approve of gambling with my life savings...er...I mean the proceeds from the sale of my house in the form of a divorce settlement...so no...I haven't told her for that and other reasons and she doesn't know I keep this blog...real big of me, hah?)

The Cost of Arrogance

I was born for this business, according to William J. O’Neil, Investor's Business Daily. In the ninth chapter of his 1995 edition of his book titled, “How to Make Money in Stocks,” he describes the need for a strong defense. “Sometimes the best offense is a great defense….

In sports, a team that is all offense and no defense seldom wins the league,” according to the 1963 founder of William O'Neil & Co. Inc., an institutional investment research firm. Defense in this case is described as a muscular shrewdness for frugality and prudence to protect oneself against large losses. Defensive is the way I play chess.

The rules he lists are all things that come very natural to me because they’re all based on doing the hard work necessary to find good picks and understand the market as a whole and then apply healthy doses of caution, vigilance, prudence and care. But obviously, I do not understand yet the market as a whole.

“The whole secret to winning in the stock market is to lose the least amount possible when you’re not right.” But, considering that the last six weeks overall closed at a new all-time record high, I’d say that I’ve got this backwards; my whole secret seems to have been to win the least amount possible when I am right.

I have found some well-performing stocks through endless hours of scouring through all the possibilities but I either decided that the market was crashing and it was safer to apply caution, or I bought and then sold, believing that I was being prudent and sensible and settling for a meager win. Or I just didn’t realize that hard work this time could pay off.

I am beginning to see that my caution and penny-wise nature is draining any profits I would otherwise have had after spending four months straight, eight or more hours a day, reading and adding and dividing and multiplying and being exceedingly careful so as not to lose my paltry capital.

I think I am going to need to be a bit more aggressive but the truth is: all the news about the pending crash and/or recession or the parallels between the shocking equivalent between 1929 and 2007 and how the Fed’s cuts, the rate at which banks loan money to one another—could cause another crash like that one in the early 20th century—has scared the dickens out of me!

I’ve not lost money per se but I sure have lost the profits that I could have taken, which would have paid me for these last few months of fulltime-plus work—if I would have followed the market trend instead of all the spooky advice out there. Because I found some nice winners.

Jack knew they were good and bought some of my picks and made nearly $1,000 on them in just a few weeks, but I didn’t. I just sat there knowing the bull market was going to turn bearish any second now. I just sat there consoling myself that I wasn’t going to lose money the way Jack and everyone else was going to lose capital. Geesh, I can be an arrogant little shit!

Lesson No. 1: Don't be an arrogant little shit.

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Inspiration for this post: David Gaffen, MarketBeat

How Much Time is Left to Waste?

This link to fundmasteryblog hints at another reason why I know I need to take my own economics and personal finance more seriously, one way or another.

Of course I am very aware of the debate a while back regarding Social Security and the economic health and welfare of the elderly.

I use to write about it a bit on a former blog I had and that is when I became aware again that I needed to work smarter to secure my own retirement so my children will not be saddled with that concern.

I need to think about ways to ensure long-term care if I become ill when I am older and I know there’s a hefty price tag for that.

Once again, it is late at night and I was going to shut off the computer but I just had to link one more little bit of resource material--if only for my own reminder to check out all the links that are listed in this economics and personal finance commentary by Kurt Brouwer.

Because there is no more time to waste.

Jenna Bush's focus is children's welfare & their economic wellbeing

It's late and I don't have time to comment here but I needed to post this excerpt by Dana Goldstein, The American Prospect, just because I need to.

"As her father threatens to veto the entire $34 billion 2008 foreign aid budget just because congressional Democrats have finally snuck in loopholes providing condoms and abortion services to women in the developing world, Jenna is on a nationwide book tour and media blitz, spreading the message that safe sex and education are some of the most important tools in fighting disease....

"...Jenna Bush has enjoyed every privilege money can buy, from a prep school education to summer poetry classes in Prague, where her teacher's mantra was, "Become engaged with the lives of the impoverished and find poetry there....

"...Jenna has written a book advocating a practical, social justice stance toward the problems of poverty, AIDS, child abuse, sexual abuse, and teenage motherhood in Latin America."
Read the commentary by Goldstein

It's Time to Learn...Again

Today I found another blog on simple investing that says: “If you are looking at investing in US equities, what’s not to like?”

The writer, Todd Sullivan, keeps a blogspot with the subtitle: “Successful investing does not have to be difficult.”

I’d like to learn what, “does not have to be difficult” means. Maybe he’s not economically challenge the way I am.

But, at least I was taught too and still believe that you don’t get anywhere without hard work.

Maybe “they” meant certain types of work though because although I’ve worked hard all my life, I surely have not gotten anywhere.

I have not lost anything in stock trading yet as far as year-to-date totals. Still, in four months my year-to-date total, according to my calculations is $50 but my calculations are probably wrong because my discount brokerage house says I’m up $332. I’ll have to ask Jack to help me figure out what the true number is when he gets home.

(Jack is a CFP/stockbroker and it’s all his fault that I’m trying to learn how to do this *wink*)

But back to Todd’s blog. I found it at MarketBeat (did you know there are a million websites out there on this topic?) and according to a summation by David Gaffen, “it’s hard not to react positively to the jobs data.

“‘We have inflation under control, Fed funds were lowered and the economy, based on jobs numbers, is looking less likely everyday to have any chance of heading into a recession…’”

This is good news because I’ve been worrying about all this recession news a lot too but that I’m so new at paying attention to economic news, I have no clue what to think.

For example I just tried to read Robert Kuttner’s testimony yesterday and though I was happy to realize I understood a lot more than I would have a year ago, I still would be hard pressed to write any type of summary on it, never mind an opinion.

But I know enough to know that what Kuttner, an economics and financial journalist, is saying is not good for the country on the whole. Maybe soon I will work through it piece by piece or I will take one element at a time and try to sort through the myriad issues surrounding each point he presented to the Committee on Financial Services Oct. 2, 2007.

So, I’ll save that for another day but would like to note a few comments I found today on a proprietary website chat on investments (therefore, I have no link to provide). A regular there, who is a 30-year trader said, “its very simple stuff...... Traders make it harder than it needs to be ...”

I kind of like that guy because he says a lot of simple things--like being patient and delaying gratification, not being greedy and things like that--things I was raised to believe and which I still believe.

And speaking of interesting tidbits and words of advice, Desi said, “...let tomorrow take care of tomorrow. Enter right, exit safe. Enter wrong, learn.”

Enter is a term used to describe buying and exit is selling. In addition to a topic on not being greedy I think Desi meant that we do the work to learn how to get in and out at realistic places but when we do it wrong, then it’s a time for evaluation, a time to look back and learn from our mistakes.

That can be my analogy for the weekend. Economically speaking, I clearly entered this world wrong. So, now it’s time to learn.


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Other stories that inspired my post and/or led me to links used in above post:

Joanna Ossinger, WSJ: Robust Jobs Data Rally Stocks; S&P 500 Achieves Record Close


Brian Blackstone, WSJ: Employment Rebounded in September as August Decline Revised to Gain

I'm in a Zone

I just realized today that I said that at least three times yesterday to Jack, maybe even more. He knows that when I’m “in my zone” I’m trying to figure something out, I’m on a new threshold and he knows that no matter what he does, he’s just going to have to wait. He took me out to dinner last night because I was in my zone and could not even begin to think about making dinner, which typically I love doing as I adore cooking.

But when I’m in my zone, there’s no dinner in the oven. Dinner out is typically a time for romantic play and possibility. But not when I’m in my zone. I just realized today that it doesn’t happen too often but when it does, he’s so great at dealing with it and just lets me fly. That is one of the things I love about Jack.

What is a zone though anyway? I guess I could say it’s when I need more time to focus on something, or more time alone to think through something that I am unsure about, or it could be the days that I just want to soak up rays of Indian Summer or Harvest Moon, or maybe it’s when I need to cry for no good reason or remember things from long ago just because they need to be remembered.

Whatever a zone is, I always come away knowing something in a more clear fashion then when I decided it was time to take time alone or reduce my attention in one area to focus on another area. I think mostly though it’s the time that it takes to figure which new elements of life I want to integrate and which old elements I want to wrap up and store in the attic or basement.

The Cost of the Fear of Money

Having been raised with the idea that money is the root of all evil, I realize now as I inch toward my 50th year that the fear of money may in truth be the root of many evils throughout my life and the lives of my children.

Love was suppose to be enough and that was suppose to be the end of that.

As a youth, I started working very young; I was taught and I found it to be true, that hard work could strengthen and heal the mind and body.

I loved work and throughout most of my working life, that is where I’ve found my greatest satisfaction.

So why did I believe that I was suppose to purge work’s monetary compensation, potential and its attendant sense of wellbeing?

Personally, I have never been a spender (although I did allow myself to be manipulated by my ex-husband into a mortgage we could not afford but that's another story regarding another miscalculated value).

I’ve always felt proud about this--thinking perhaps in the back of my mind that I would enter the pearly gates in grander splendor (or some such cockamamie bull).

I have typically responded with a misguided, even smug reaction, when I hear warnings to “excessive” Americans who live beyond their means.

How could I have been so arrogant?

I found a blog today on topics of economics, the topic of which I am sorely lacking.

It’s an uncomplicated posting on economics about the cost of a trip to Washington D.C. The writer is discussing the money he saved to take a trip but the way cost is limiting his options.

How many times have I been unable to do something that was important to my family and me because I didn’t have enough money?

How many times have I felt like an unappreciated martyr for politely saying things like: “oh, that’s okay, we can do without; we didn’t really need that anyway.”

I’m not quite sure how to correct my faulty thinking but as I explore these concepts through the second half of my life, I hope to understand it better so that at least I can leave my children with something.

I may not be able to leave my children with money but I hope they come to see that their economic health was worth my hard work.

I also need to apologize to them now. I have tried to deny failing for a long time but I can not anymore.

I need to ask my children to forgive me because my own fear of money was the root of many of the evils they experienced in their childhood.

Speed Dialing Mom

Revised 2:52 p.m.

As I said to JJ, I often want to write about my new focus but somehow feel like it doesn’t fit in “a woman’s blog” but now that I’m typing this, I realize that’s just silly. She kindly reminded me that blogs are like journals so I guess I am going to have to just accept that.

And, although I have a Nin quote in my sidebar that suggests I will not blog for solace, I guess I will have to continue to do just that--through all the newness that is happening in my life; please bear with me as I continue to wade in new waters(Mom would approve):

I’m juggling two different types of experiences/life changes/career changes/new values and new needs in my life (or is that three or four… whatever…I can’t keep count…) but I am most driven by some unseen force to concentrate more on one. But this one scares the bejebus out of me.

I have not opened my platform to do any type of trades because I don’t want to face what I may find. Worse, I didn’t open it yesterday either but yesterday I told myself I was taking a day off while the market was in a slight decline. So, I'm scared to see what happened.

And according to Wall Street Journal, hopes for economic strength and more Fed rate cuts are causing a flat market today. I have stop losses on the trades that I have not sold off so I know that if it dips again, I would only lose six percent of my investment. But I am scared to see what happened yesterday.

I remember, as I write this out, a former pastor who admonished me to stare the lion in the face. But if I look at my stocks first, I will not post a blog because I will be sucked into the tides of trepidation and wavering that takes hold for days on end.

The fear feels more familiar to my nature though than the languor I experienced only a year ago and after my children grew. I use to have a pretty scary life. Sometimes I wonder if it could simply be another effect of perimenopause but it seems more true that it is because I am related to my mother.

Mom can never sit still. She was always like that and it had nothing to do with estrogen; it is her nature. It sometimes drove me crazy when I was younger but mostly I admired her energy. She is 76 but no one would ever believe it…which reminds me...I need to call Mom before doing stocks or I’ll put that off for three more days.

*:::speed dials Mom:::*

[looking back: ok, that did not come out the way i first wrote it and it's all screwed up with too much editing but you know what, i can't deal with this right now, I've got to get back to work; how do you write about things when you feel like you know nothing anymore?]