Everyone kept his head down. They knew the drill by now. The boss was upset with a trade, a simple 10,000 shares of Brocade, and now the stock was collapsing in after-hours trading, and he was doing what he always does when a trade goes against him. First to go was the keyboard. Sometimes he just smashed it with the phone; this time he picked it up, turned it on its side, and gave it four good whacks with enough force to send the qwerty keys to the left and the zxcvb keys to the right – that’s where Jeannie Cullen sits, his sidekick, his desk mate, his confidante, and she’s been picking flying letters out of her coffee, her sweater, and her hair for six years now. Jeannie shuddered. (Later she admitted that she was praying he wouldn’t slam the monitor with the staple gun, or overturn the whole desk, because in the past that had led to shards of arcing broken glass that gave the whole staff splinters during the ensuing cleanup.)
Next came the phone. As Brocade continued to fall – down twelve quick ones, plunging into the $140s – the boss yanked the phone off the cord and pounded it into the desk until it split into dozens of sharp pieces; he was beating time to a cadence of shouted curses, all directed at the sinking stock. Still no one looked up. They knew that as long as the stock kept sinking, everything on the boss’s desk could be turned into a missile launched right toward one of them.
And as it hit $143, the second keyboard went into orbit, the space bar and backspace key separating in midair, before it collided with the stuffed-animal totems that lined the partition between the boss’s desk and that of the now-absent head trader, who knew enough to slink out well before he became a target.
At last, the stock bottomed, and then, mercifully, it bounced, and the boss stalked off to his private office to scream over the phone at a few colleagues in the field. He always did that; partly so that Jeannie could pull out the backup keyboards and phones, tidy up, and have everything ready for the next outburst. She kept a closetful of spares.
But there would be no more tantrums. Because the very next day, the boss quit.
I had broken enough furniture and monitors and keyboards and coffee mugs to last a lifetime. More than a lifetime, in fact. As a 45-year-old hedge-fund manager, I knew I had already overstayed my actuarial table. Time to get out before the game killed me. Time to get out before I killed someone else!
This month, at the top of my game after nineteen years of running other peoples’ money, I resigned. I’m turning the reins over to my 33-year-old partner, Jeff Berkowitz. It’s his turn to slam phones or shatter monitors. His turn to sweat and worry and fret about how well he’s doing in the viciously competitive hedge-fund world.
I want none of it. I’m giving it up willingly, without a fight, because I know that I don’t have it in me to care enough come January, when it’s time to feel the angst of starting over at zero again, even after turning in a terrific year-2000 performance. I simply can’t summon the stamina to pick stocks in this crazy environment, where you can lose a fortune in 40 minutes of trading.
You have to understand that with the ranks of hedge-fund managers swelled by the thousands since I started trading in 1981, the pressure to be the best, to outperform all others, and to make the most money for your partners has gotten greater every year. Making things even tougher are the changes by the government to level the playing field by taking away the professional’s informational edge. Increasingly, only speed and wits matter in this game, and while I was long on the latter, I had gotten too old to maintain the former.
I wanted to get out before it became obvious to all that I had lost my trading edge. And a plus-35 percent year, when the averages were down double digits, seemed like as good a time as any to leave my trading turret. Fortunately, because of my writing, I still have something to keep me busy, so I won’t be sitting on the couch in the den watching the CNBC ticker all day.
To those not involved in the high-performance game of hedge-fund management, my hysterical anger after a loss like the Brocade slide probably seems excessive, childlike, and totally unnecessary. You couldn’t be more wrong. The reason we in the hedge-fund business have such high burnout – why there are no old hedge-fund managers – is that if you don’t care about a ten-point decline, even if it’s a small position, you shouldn’t be in the game anymore. The moment you say, “You know, I am so good and so secure that I could give a rat’s butt about Brocade’s decline,” that’s the moment they should take the money away and give it to someone who cares more than you do.
You have to want to win so badly that you don’t care what others think about your behavior when you don’t win. Good money managers constantly compare themselves with others. I followed the performance of 50 separate money managers every day, and I grilled my staff regularly about why Smith Barney Aggressive Growth clobbered us on an up day or how the more defensive Contra trumped us on a down one. I could barely contain myself when we pulled ahead of the pack. And I literally had to choke back tears on the days when the bad guys – everyone else running money – tacked on more points than we did. (Ironically, five days after I blew up because Brocade went down ten points, to $143, it was at $220! I was dead right after all … and almost dead because of it.)
The manic misery of nonstop performance, day in and day out, can’t be sustained without believing the fiction that poverty still lurks just around the corner. But trying to stay hungry when you are making $10 million a year is difficult. Taking all that risk – the necessary risk if you want to see outsize rewards – seems stupid once you’ve made all that money. You only need to get rich once, but you have to pretend that you need ever-larger sums just to stay hungry enough to make as much money as you can for your partners. So the great ones are either pretending or they’re driven by crushing insecurity, the feeling that no amount of money is ever enough.
When you are 30 and you have a tantrum after losing money, you can go work out afterward – run a few laps around the Reservoir or go lift some weights at the health club. When you are 35 and you smash some computers, you head to the nearest watering hole, and two vodkas later you’re thinking, Oh, what the heck, get a good night’s sleep and right back at ‘em. When you are 40 and you try to throw your monitor through the window because you bought Intel too soon on a downgrade, you are too old to have a drink after work without ruining the next day, so you learn to just go home and hug your wife and kids.
But when you are 45 and you smash two keyboards and a phone, you can’t breathe, your head spins, your fingers go numb, your chest pounds, and your assistant calls 911. You can’t sleep that night, and you walk in the next morning strung out like a drug addict going cold turkey. The stress is too great for a 45-year-old to handle, at least not without leaving lasting damage. It takes a little more out of you each year, until there’s nothing left, and that’s when you screw up. There are a lot of guys who just drift lower and take their reputations with them. As much as I love Julian Robertson and respect George Soros, their declines at the end of their careers made them seem like Willie Mays to me, pathetically trying to hit third with a throw from center and having it hop near second. You want to go out on top like Elway or Michael Jordan, because you are only as good as your last trade. If you don’t quit, you become second-rate, or you die. I wanted to be Jordan, not Mays.
Over the past few years, I’ve been dreading the last days of December, because that was when our beautiful, hard-fought year would end, and a new clock started. All that excruciating work and performance would be history. The great record we had amassed the previous year would be wiped out the moment we started trading again in January. As it is every year. Unless I retired.
So I did.
TheStreet.com
Check out the “Streetside Chat” this week, where market guru Ray Dalio, head of Bridgewater Associates, is interviewed. Available free at www.thestreet.com.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At the time of publication, his fund had a long position in Brocade. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer’s writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites comments at [email protected]