Transcript
0:04 Yes, there will be some type of a decline without a question in the next 10 to 20 months and it will be earth-shaking, it will be saber-rattling, and it'll have Wall Street in a tizzy, and it will create headlines that will be that will dwarf anything that's happened at this point in time. Huh? I'm about there, look. I wonder where we're going to take off. It has to go and I'm getting ready to give him a little drums along the Mohawk.
0:39 Do a little tom-tomming on the market here on the end. >> OFFER 3,070. >> Offer 3,070. >> Offer 3,070? >> Yeah. >> Offer into the phone. >> Hey hey listen, Vinnie, don't offer that. Sell 540 market. Sell 540 >> 540 market. Sell 540 market. >> Yeah, March, go. Well, anyway, the whole point is I risk 10 cents, all right?
1:12 >> I risk 10 cents to make eight bucks. I'd like to you know, that's not a bad trade. Right? >> Yeah. Oh god, and then it would work so perfect with the stock market and bond market if this were to happen. The stock market would explode. I mean, the Dow 2,500 wouldn't even be the first stop at 4:00 today. >> I mean, I've heard stories about this guy. He wakes up at like 4:00 in the morning and trades like gold in Hong Kong and all sorts of places. I mean, if I woke up at 4:00 in the morning, my wife would say, you know, get back to bed. This is ridiculous.
1:41 >> Yeah. >> 6373, 800 contracts. >> I'll tell you what I'll do. I'll You own 540 You own 540. Own 540. >> 540, what are you doing? >> I'm selling D-Marks. You own 540. >> He really loves it and it involves sort of the use of all his energy, all his power, all his knowledge and everything. He puts it together into one incredible life. >> If I make the market I want to make, I'll stop. I'll retire, hopefully a champion.
2:16 >> >> Paul Tudor Jones is a futures trader. He speculates on the future value of almost anything. It's been called an art, a science, a gambling game. It's a high-risk game for high rewards in an arena that is increasingly under scrutiny.
2:51 Recent scandals have brought the Wall Street community into the glare of public and media attention, and the regulatory agencies are questioning the very existence of a certain kind of trading, stock index futures, at which Paul Jones has recently been one of the most successful players in America. It is March 1987, the third month of one of the most dramatic rises in the history of the stock market, and Paul Jones is taking a holiday. Well, sort of a holiday.
3:30 >> Well, the reason I decided to come here was going to be a vacation, get away from everything. And then, as it turned out, I can a number of the clients that I have, are here in are here in Europe, and most of them here in Gstaad, as it turns out. So, I've done an enormous amount of business. I've been in Paris, I've been in Geneva. So, I kind of combined business with the pleasure. I wish it'd been more pleasure, but it I still wouldn't trade for anything in the world. The most, you know, I always think of I mean, if life ever ceased to be an educational experience, then I probably I probably wouldn't get out of bed.
4:05 >> This morning, Paul got out of bed at the Palace, one of the most elegant hotels in the world. >> The lifestyle in New Stahli's incredible because the the people that I've met here and the people that I deal with, most of them are my clients. They pay me to allow them to enjoy this lifestyle, which is wonderful cuz I enjoy working. I had a friend that I played backgammon with in college all the time. We were having barbecued ribs for lunch during my second semester senior year in college.
4:34 And he said, and I've always liked backgammon, chess, those type of games. And he said, if you think those are fun, if you really enjoy that type of stimulation, then then he said, I'll I'll show you a game that that is the most exciting, the most challenging of all of them. >> Good morning, Paul. Don't you look handsome. >> Paul's company, Tudor Investment Corporation, manages other people's money. The firm has about 300 clients and has been rated top performer in its field for two consecutive years.
5:08 Paul is the oldest one in the office. He's 32. >> Really? >> His chief economist, statistician, and right-hand man, Peter Borish, is 27. >> We're making history today. This is the market >> Futures trading is a young game. >> Just everyone jumped in. >> You know there's a way >> You know how the You know how there's a way to check? >> As firms go, Tudor is small. It has only 22 employees and manages $125 million, which isn't so much on Wall Street. But the team, for the time being anyway, likes it that way. They see their firm as a small, fast boat on a large, rough sea.
5:43 >> What I love about it is I'm doing my work, I'm doing my analysis and I'm being I'm graded instantly and through the harshest teacher in the world. It's the mark. There's no curve. You know, I can't say that boy, I was out late last night and everybody else in the class was at a pep rally for the football game and I only got a 70, but that was the highest in the class, so I still get an A. It doesn't work that way in the market. It's an intellectual challenge and it's it that's what makes it so exciting. Every day is something new and every day is providing new information. Every day, every hour.
6:14 >> Paul buys and sells futures in cotton, oil, dollars, Deutschmarks, bonds, precious metals, anything he thinks can turn a profit. Every rumor, every news item can be a warning or an opportunity. For example, this morning the wires say OPEC is on the verge of a new agreement. >> OPEC has basically come to an agreement where by they're going to have a 7% production cut. And my whole feeling is is that anytime that you try to get 13 people to agree to anything and I have a chance to take a position on it, well, they're going to have to you know, wild horses couldn't keep me from from betting against them succeeding in that.
6:54 I'm selling I'm selling the equivalent of about four tankers on the opening. >> You've heard nothing else on OPEC? >> No. >> I got you. >> Thank you, Paul. >> Yeah. What do you think of a JJ? Is this a spot to nail it? I'd rather sell it down though than sell it >> Betting that the agreement won't hold, Paul is selling oil futures as fast as he can, hoping that the other traders won't see what he's up to.
7:19 Speed is everything. >> Is 40 bid at a half? Offer a thousand OFFER OFFER 1,540 OFFER 1,500 AT A HALF. Show the size. Ask him HOW MUCH HE SOLD. GIVE ME A NUMBER. TELL HIM MORE THAN A HUNDRED DO IT DO IT DO IT THERE'S MORE THAN A HUNDRED IN IT. I CAN FEEL IT. THEY'RE going to get it. I'm going to get it. All right, who said something? does Iraq say? That's a great That's great. They have an agreement between 13 people, but two of them said they won't agree, which happened to be two of the top producers in the world.
7:52 That was tough to figure out, wasn't it? >> Paul is on the phone to an oil trader who's saying somebody's been selling a lot of oil. But he doesn't know who. >> That was my buddy at probably again the the second or third largest crude trading firm, and he's cuz my man, these guys These guys they sold the hell out of it. And the people that he worked with don't know that it was Which is great.
8:21 That's even better. I hope they think it's some wild ass Arab who knows the whole agreement's getting ready to fall apart. >> Even though Paul trades in every kind of commodity, his specialty is stock index futures, which are traded in pits at various commodity exchanges like the Chicago Mercantile Exchange, the Merc, or the New York Futures Exchange, the NYFE. These people are betting not on a company or an industry, but on the future direction of the entire economy.
8:53 And this week, just before Thanksgiving 1986, the big news is not good. The Iran-Contra affair has just broken, the insider trading scandal is heating up, and the market has been going nowhere. >> It's a fast market. >> In spite of the bad news, Paul and Peter are convinced that at any moment the market is going to soar. >> Because that'll be what we'll be selling. So will every So will every other So will everybody else in the street, which means I want to Get Paul off. Paul!
9:29 >> Yeah, I'm here. >> DO IT AGAIN. Another 300, sell them. 3 minutes. 3 minutes. >> Paul has bet a lot of money that the market is about to go up, but nothing is happening. If he's bet wrong, he's in trouble. >> The market goes down so much more faster than it goes up. It's It's incredible, right? It can take out 2 weeks of work in 3 hours. In fact, it took out 6 months of work in 1 day in September.
9:54 >> We're going to get a big move one way or the other. And it's just right now trying to gauge which way that move's going to be. Everyone right now has to be negative walking in the morning looking at the newspaper, looking at the fact that the bonds are down, and yet this thing is maintaining an enormous premium to spot. All that stuff is sitting there looking at us every morning in the headlines, and yet the market won't go down. It's telling a different story than the headlines are. What is happening again is that the the the market continues to build energy, and every time you see these incredibly sharp downturns, all that's doing is To me, all that is is a signal of the fact that that people are absolutely skeptical, negative, and to a certain extent frightened through here, and yet the market won't break. It is screaming to me that it wants to go higher.
10:46 >> At times like this, what gives these two confidence is a theory that says the stock market moves in cycles, in patterns. And Paul and Peter subscribe to the Elliott Wave Theory, which says to them that what happened 49 years ago in the late 1920s is happening again now. >> If the market is a reflection of people's behavior, and people behave similarly in similar circumstances, then history of market prices may give us an indication of what may happen in in the near future.
11:20 Well, one of the last the last great bull market really was the 1920s. And we looked back and did a statistical analysis on the 1920s through today, punching in literally thousands of Dow high low and closes to run correlations between what happened in 1925 to 1945 to 1928 to what happened to 1982 and where we were in 1986. Well, that correlation turned out to be over 90%. In fact, since I've run that correlation, the correlation has gone up from about 90.7% to close to 92.2%.
11:57 And as you can see >> is Which one is the 20s? >> The 20s is the blue and the red is the 80. >> So, what day back in in the 20s are we at right now approximately? >> We're like in early August 1928. >> And so, let's see if my memory serves me correctly, and we've got another 40% of the Dow on the upside. >> Correct. >> So, we're talking about >> And then about another year a little over a year up move in the Dow.
12:24 >> And and and then there then then it looks like there might be some storm clouds on the horizon. >> Let's say the little >> The the correlations here are phenomenal. That's incredible. That's What What are the chances of taking any two five-year period in the stock market and getting that kind of correlation? What would you guestimate at the top of your head? >> I mean, it's got to be astronomical. You're talking a thousand observations. I don't know.
12:49 One in a thousand? It's It's really pretty scary. You know, if it looks like a duck and it acts like a duck and it sounds like a duck, it's probably not a chicken. And that's that's what's scaring me about the activity in the stock market right now. >> Some analysts disagree, but Paul Jones and Peter Borish are among those who think there's a crash coming and a big one. >> You're probably talking about something with incredible fireworks with with unbelievable and unprecedented volatility and with moves that will leave people gasping. It's going to be total little and roll.
13:27 >> The market should continue to rally into the first quarter of 1988. a rough projection would be somewhere around 3,200 on the Dow. And then in March, April of 1988, there's weakness. And at the at some point shortly thereafter, and if you're going to hold me to a date, let's say the end of March 1988, the market then drops sharply and retraces, you know, 50% of this bull move from 770 to 3,200 in a matter of a couple months.
14:03 >> The last guy that buys a share of stock when the Dow's at 3,000 or whatever number it is, he's buying it because of the fact he thinks it's going to 6,000 because it's been reinforced in his mind over the past however number of months, years, or decades that the stocks can't go down. >> In one sentence, buy low and sell high. That means buying now, riding it out till the market goes to about 3,100, 3,200. Don't wait for top tick.
14:29 That's 1988. Severe drop, a little rebound, by 1991 the market is going to be under 500 on the Dow. >> It that gets to the bottom of every accumulation and then the and then the repayment of debt basically drives every economic cycle that there is. And right now, we have probably explored the envelope with regard to mortgaging our future earnings. The next part of this cycle will be the repayment of what we've enjoyed now for the past four or five years. I mean, again, we're in the largest post-war business expansion cycle in history.
15:18 >> I'm I'm concerned. And knock on wood, if we're successful here and the play comes about and we make a lot of money, I I want to go work for the Treasury or work for the State Department or work for the Fed to help out of this out of what I consider will be dire economic consequences. >> Paul spends weekends at his farm in Virginia overlooking Chesapeake Bay.
15:48 It is early Sunday evening. >> And 45 minutes and New Zealand is >> But the only markets open at this hour are in New Zealand and soon in Hong Kong. So, he gets on the speaker phone with some brokers and starts to trade currency. >> contracts you give me a dealing quote on. the biggest number >> At any hour, any day of the week, someone is trading money. And the price of the dollar is never still. It jumps and falls in little ticks every half minute or so.
16:16 At this hour, most of the players are Japanese, Chinese, and Australian. >> What kind of size can you give me right now? Can you do me Can you do me 1,100? >> 1,100? >> Yeah. >> 1,100 contracts? >> Yeah, $60 million. Can you do $60 million? >> Well, that's 135 million D-marks. >> That's a bundle, isn't it? >> Yeah, you better buy you know, that's about $67. That's about $70, yeah. >> Okay, let's do it. >> Hey, hold on a second.
16:45 >> What a nice way for them to begin their morning. >> 1,080 contracts. >> I hope they never see daylight on them. >> Okay, that's 135 million D-marks. >> Here's the deal. Paul is betting that the dollar is about to go up. So, as quickly as possible, he wants to sell a huge bundle of Deutschmarks he bought last Friday and buy dollars. >> I think they'll be bidding it up as soon as they walk in, which should be 15 minutes, and that's why I'm really going to buy them right now.
17:13 I'd like to go on and do business, but none of these guys will make me a quote. They don't want it. They don't want the exposure. They all think that we know something. >> Mhm. >> Yeah, can you do me can we do it again if you give me 30 45 I'll I'll deal on that. >> Yeah, I can't I can't hear what you're saying, Paul. >> If you can give me 201 30 bid at 45 I'll deal on that for the whole amount.
17:31 >> Okay, well let me see what they come >> The price of currencies is a little hard to follow, but if Paul can sell his Deutschmarks at a quote that sounds like 30 45 he figures he's getting a terrific bargain. >> I want a quote in 15 pips for the whole thing. >> Okay, stay with me. >> They all think that whenever someone from the States is coming in and dealing this early in the morning that they know something.
17:54 So they're very wary about doing business cuz they assume that we have some knowledge that they don't know about. Whereas an hour from now after the market's been open and they've had a chance to digest all the news items that >> >> you know, and they've seen the direction of trading and the volume that's gone through that they're not as nervous. But by that point in time the dollar could be considerably higher than where it is now. That's why I want to do business.
18:20 >> No, I'm asking this one very good bank in Tokyo for the whole wad. >> Yeah. >> I'm you know, I would like to break it up because I probably make it >> When you take your initial position you have no idea whether you're right or not. What's exciting is if it starts to go your way. Now that's thrilling. >> I'm asking these banks you know, for the whole amount. I know you want it on one quote. I'd rather break it up maybe even if you have to sacrifice a little bit because they're going to check.
18:44 >> Right. And you know what? I'll just call you back in 10 minutes. >> No, don't hang up. I'm asking them. Maybe they're going to come back. >> Okay. Okay. >> See see what they say. You can always pull back and then we could split it up. >> Okay. >> Wait a minute, somebody's making me a thing. >> Okay. Because I mean after a while the size means nothing. You know, it's just again it's gets back to question of whether you're making a 100% rate of return on $10,000 or $100 million. It doesn't make any difference.
19:14 All right? You know, if you're if you're if you complete 78% of your passes, it'd be nice if you're in the NFL, but if you're in college or high school or even elementary school, I'm sure the thrill is just as great. >> Okay, you still want to go ahead with that size or >> Yeah, I did. What do you show on your screen? >> Okay, I My screen is 45 55, but >> Damn. >> Let me You know, I The bank called me up and they said they could do it all on one deal. Yeah, so that's 100 1,080 cars.
19:42 >> Yeah. >> I'll call you back then. >> That's exactly what we're talking about. I'm already I I sold some white Friday. I sold some D-Marks. >> If the quote rises over 50 60, Paul's plan is in trouble, and with every passing minute, it keeps rising. >> I should have been >> 50 65.
20:15 >> Oh, no. Tell him to forget it. That's >> Nothing, huh? >> No, nothing. I'll call you back. >> Okay. How was your call? >> I can't hear you, Gerard. >> 50 60 now, I want >> This is unbelievable. Do you hear this? We started off at 35 45, 45 40 50, 50 60, now 67. This is just pissing me off.
20:46 >> Paul's choices are narrowing fast, so he lowers his sights and goes for a smaller deal. >> Sure. Yeah. >> 63 73 800 contracts now. >> I'll tell you what I'll do. I'll You own 540 You own 540, only 540. >> Paul settles for half the dollars he wanted. >> I'm selling D-Marks. You own 540. >> Sometimes you'll find a cowboy who will say, "Okay, come on, I'll play. No problem. Take your best shot." Which is what I was hoping would happen tonight. And then sometimes and more often than not you're better off calling up maybe three different houses and say, "Give them give me a quote for 15 million a piece."
21:24 And then just going boom boom boom. And I probably should have done that. The people that I called a lot of times, again, like them they like to be macho men and want they want take the whole thing. And you know, this time in terms of execution, it was very poorly done. Trading requires an energy level and it's very difficult to sustain it 24 hours a day, which is what this requires. So, you know, this this lack of aggressiveness probably cost me a little bit.
22:00 >> Even at the higher price, Paul made money. He eventually sold his dollars for a profit of a hundred thousand dollars. >> To do the job right requires, again, such an enormous amount of concentration that you've got to be able it's it's it's physically and emotionally mandatory that you know, that that you find some time to to relax. And you've got to be able to turn it off like that. There'll be times though when I get so incredibly excited about a trade or even a project that I'll wake up at 4:00 in the morning. There's no way in hell I'm going back to sleep. I'll sit there and I'll trade in my dreams for 4 hours.
22:42 >> Well, we've got to pay for it another major calamity on Wall Street or in the White House because if we get >> December 3rd, 1986. The market is about to close. Paul is on the phone from Chicago and Peter is at the helm. >> Yesterday there was so much buying after the close that the tape was 9 minutes late and that was 130 million share a day. I believe that today will be record volume, which matches perfectly with the analog to 1928 when there was record volume on the decline and it did not take it out until the week, which corresponds to this week on the analog, right?
23:16 When the market exploded. >> I know it's it's my problem. >> Can I drop the scenario of what happens as the Dow approaches 2000, given >> Just days after we heard Peter and Paul forecast a major rise in the market based on their 1920 stock charts, it now seems to be happening. >> Okay, I'll be here until about 7:30. >> Okay. >> All right, bye-bye. I'm speechless, to tell you the truth. There is nothing Well, there's nothing we can do. Now we have to let the market tell us. It's phenomenal. Record volume, advanced declines. So everybody all of a sudden is starting to turn bullish. This thing, to me, is not going to stop immediately. You just don't You don't stop a train with a brick wall. Even if there's a wall of selling, the train is going to go through that brick wall and take out a lot of bears.
24:05 >> This morning we were trading over a million shares a minute. >> And then what happened? They were caught short. >> And they got out and on futures exchange where I trade, they got out 30-40 points away from their position. We were sitting there at New Haas and everybody was just looking and seeing what was going on with the S&P's and we just sit there and everyone was just nervous. They wouldn't There were no bids and no offers.
24:26 I mean, literally for 20-30 seconds we'd all just sit there and look at each other. because it was just an anxious time. And it was just constantly moving. >> December 5th. Two days later and the energy is still building. >> And it's I feel like it's already in the market, you know, in terms of >> And it's just watch this. Whatever is going to happen is going to happen. >> 10 minutes to the opening bell. Paul is phoning friends and competitors trying to get a feel for the market.
24:59 >> Yes, sir. >> What do you think? Buy the stocks, buy the first. >> I'm very bullish. >> Our bonds? >> I'm very bullish on both of them. >> My guess is that you're going to have to fool enough people to you know, get some people short, get people out of their long positions, and you're going to have to but do it not by looking like for most of today. >> Zack. >> I'm not. >> What do you think?
25:23 >> Well, I think that in the >> Bonds and S&P's, let's do bonds first. >> Okay. Well, you know, say if I got to follow yesterday was a B wave, which it looked like it was. >> No matter how you cut it, the news today's bullish on stocks. >> And and the thing is everyone's going to be watching bonds and euros, and that's going to be the trap. And I'm just thinking that that this might be the perfect scenario for it to go today.
25:44 >> All right, Joey's going to do his orders and be helping him. >> Mike Maronek, a pit trader, prepares his clerks to take some of Paul's orders. >> Do all those orders. I'm not going to worry about that. >> Okay, right. >> All right, we'll do them, Mario. >> It's Friday. If the day gets up this afternoon, no one in the world's going to sell this thing if it's if it's up 10 bucks. Any if it crosses into positive territory, I think it's just a question of when they close it. They'll the bulls will be on the stampede all the way to the close.
26:10 >> Buy 560. >> 1020, 1020 lower. >> Hey, may buy 80. >> Hey, 60, 70. >> The 1-minute warning bell. >> What dip? >> Can you try to watch Dave? I'll try to watch these guys. >> Tell him I want to buy 300 in the first 2 minutes, no matter what the price is. >> And >> I'm writing it out, I'm walking it in. >> Okay. >> Paul is assuming that any second stock prices could shoot up. So, he tells his traders to buy stock futures as quickly as possible before the price goes up.
26:43 >> First 2 minutes? >> 2 MINUTES? >> HEY, I'LL BE BUYING AT EVEN. >> WHAT'S HE BUYING? GIVE ME A TOTAL. >> ALL RIGHT, HOLD ON. >> JUST TELL me approximately how many. Come on. >> All right, hold on, be right there. >> The goat. >> DAMN THIS LITTLE >> WHAT ABOUT 200 SO FAR?
27:16 >> MARK. >> YES, what about 200 so far? >> have a catcher in that ring? >> Excuse me? >> Do you have a catcher? There should be somebody there signaling that stuff to you. You shouldn't have to leave the phone. Do not leave the phone. >> 70 bid but at least 200. >> Tell him finish it up. >> Prices are starting to rise and Paul is not finished buying. The longer this takes, the more it costs.
27:37 >> it up right now. >> Tell him to finish it up right now. Well, we got 200 so far. He's holding the 100 so I'm buying them all. >> Yeah, go up. I GOT MORE. GO DOWN. GO DOWN. WHAT YOU GOT? >> IT'S FINE. Anything you can get. It's fine. Anything you can get out there. >> Speak to me. >> Mr. 35 and waiting for a total of 150 so far. >> Prices are still rising.
28:11 >> What about 300? 70 bid out there. >> Tell him offer offer offer 1,075. >> Offer 1,075? >> Right now. >> Paul offers to sell some contracts to disguise the fact that he's buying. Anything to keep prices from rising so fast. >> Mark. >> 75 80 75 80 >> Mark. >> 75 80 is offered 1,075. >> I'm out. Hey Mark. >> Offer 20, Paul. >> Mark.
28:41 >> You're on the rest. >> Do not ever leave this phone. You get someone, get the other broker to come and run the orders in. Do not leave this phone. >> All right, Paul. >> What do you got? >> Joey, HE'S GOT MY CARD. ADD 10 TO THAT AND YOU GOT IT, ALL RIGHT? >> WHAT DO YOU GOT? 25 BUCKS. >> Buy 75 and 80. >> 75 and 80. >> So, we buy 300 and sell 20, right?
29:04 >> Yes. >> What do you got, Paul? >> Paul is checking Chicago prices at the same time he's trading in New York. Every bit of information could give him a critical advantage. >> Buy 300 and 90 your better right now. >> Can you repeat that? >> 90 for 300. >> 90 FOR 300? >> BUY 390. Buy 390. >> 390, okay. >> This is setting up as a beautiful trend day. Look at this. >> It's not even moving.
29:28 >> We could be right there. That's what I'm thinking. That's where I want to run a couple of days from >> Okay. this period cuz that's where we are. >> Let's look at the 1500 too. Is that what you're looking at? That's perfect. >> Okay. >> What do you got, Mark? Speak to me. >> 75 and 80, Paul. It's Joey. >> Hello, Joey. What are we doing? We're We're trying to buy 390, right? >> Yeah. What's the market now?
29:46 >> Give me tolls. Give me tolls. >> In time, do not around. I want to buy them. >> OKAY. >> QUOTE ME. QUOTE ME. QUOTE ME. WHAT'S THE MARKET? >> I'M AT THE 80 90. 85 90. >> 80 90 FOR 3,000. >> 85 >> 90 FOR 3,000. FILL OR KILL. >> FILL OR KILL means do it now or don't do it at all. >> HEY JOEY, WE FILLED. >> YOU'RE OUT. >> ALL RIGHTY. LET ME KNOW WHAT WE'VE DONE.
30:16 Call Sal back and let me know what we've done. Paul, how many we done? >> 85 and 80. You're out. How many we done? >> All right. I'll call you back. >> How many we done? >> Well, I think we have a position. >> I want to sell 200 AND BUY 20. GIVE ME 80. RIGHT? GIVE ME 80. WHAT? WHAT DID I DO WITH YOU, JOEY? WHAT DID I DO WITH YOU? HEY, WHAT >> IN JUST 10 MINUTES, PAUL HAS acquired stock futures contracts worth approximately 80 to 90 million dollars.
30:45 He is betting the market will keep going up. But 10 minutes later, it is slightly down. >> These tennis shoes and the future of this country hang on because they've been good for a point rally in bonds and about a $30 rally in stocks. Every time I put them on and I wait till I get the max and then I put these suckers on. I bought these at a charity auction. They're Bruce Willis's.
31:15 The man's a stud. Pretty good. Right now, everything's on the lows. I hope he I hope he's I hope he in spirit can do a little bit better than this, though. We'll find out. >> The business seems to attract people often very driven by greed. Life expectancy, yeah. I'm 32 years old right now and I've been trading, let's say, since I was about 23.
31:49 I've been physically on a trading floor for about 7 years, since I was about 25. And I hope I won't have to be here too much longer. I sort of have goals for myself in terms of an income that I'm trying to put some away in savings and get to a place where I can retire, so to speak. realistically, I'm guessing another 5, 6 years.
32:20 most people don't last too long in this business. I don't know many older men or women in the business. There are some, but the floor trading game, which is a very high-pressure, even physically demanding job with a voice, you can hear my voice, And they're being pushed around, they're being spit on, they're being knocked out of the ring, getting into fights, all this kind of stuff. The sort of work expectancy is not too long. As I said before, people that would last 10 years, I think have done an admirable job in terms of survival.
32:54 >> Where can we put this, Ally? Can we put this in >> 11:10 a.m. The market's been open an hour and 40 minutes, and still nothing is happening. >> This is what we need to ward every bear on Wall Street back into their dens. I think this will just do it. >> In the past 2 weeks, we've been playing as big as we've ever played before. Because of the fact we think we know what's going on.
33:17 Like right now, I'm watching the currencies, I'm watching crude, I'm watching stocks and bonds. They're all interrelated. You know, the whole world is simply nothing but a big flowchart for capital. And if I start getting hurt in, for instance, stocks or bonds, then I'm going to make a tunnel portfolio adjustment. But just because of the fact I might not like the way the numbers are going over the course of the day. >> I personally gone bankrupt not declared bankruptcy, but lost everything I had and had to borrow from friends three times in 9 years that I've been in the business.
33:52 Where I'd go sit in the park and just sit there and just go, "I can't believe this. You know, this this is the end. This is the end of my life." >> Where you want to be is always in control, never wishing, always trading, and always, first and foremost, protecting your ass. I mean, that's why most people lose money as individual investors or as traders because of the fact they're not focusing on losing money. They need to focus on the money that they have at risk. How much capital is at risk in any single investment they have. If everyone spent 90% of their time on that, rather than 9% of their time on pie in the sky ideas about how much money they're going to make, then they'd be incredibly successful investors.
34:40 >> 2030, 95 even, 890. >> Jesus Christ. >> 12:20 p.m. The market has suddenly turned sharply down. >> What's he say? >> 90 offer 80 90 Even bid, even at half. >> Long count. Long count, long count. Okay. >> These guys are It's It's their barrier. >> Don't worry about it. >> Paul decides to cut his losses. >> Time to Time to cancel the buy and sell out whatever you just bought.
35:11 >> BUY. BUY. >> >> BUY. >> SALLY. >> HI. >> MHM. >> CALL MARY and cancel the balance. Out. >> I got 350. >> You sell him 300 and a half. >> 300 and a half, okay. No, no, NO, NO, NO, NO. >> SELL 300 NO, NO, NO, NOT YOU, not you. >> A phone in his hand connects Paul to the bond pit in Chicago, where bonds are also taking a beating, another bad sign. >> Go, go, PAUL. TIME TO GO, DO IT.
35:40 >> THE PRESSURE TO SELL HEATS UP. >> 80 bid I got I got 110. >> TIME TO DO IT. MOVE IT. MORE, MORE, MORE BEHIND IT. >> 85 90 85 90 85 90 85 90 80 90 80 offer >> Go, Paul. >> 80 I'm checking, Paul. >> Time to offer right now. Jam everybody. >> Buy.
36:10 >> Jesus Christ. Hey. What do you got? >> 70 75 >> We're out, Paul. We're out. Just tell him to do the total 350. That's it. >> 2:30 p.m. >> Get Tony on Sally. What do you got? >> I I It's 5667 now. >> If it goes five seller sell unit. >> Okay. There's There's one order.
36:43 >> If it goes five seller sell unit. What do you got? >> All afternoon the market has been dropping, then pausing. Every pause brings hope for an upturn, but then it drops again. >> Go, Tony. >> One minute. 67. >> That's just total devastation. You know, the the agony and the ecstasy? This is what's known as the agony.
37:15 >> 4:10 p.m. The stock market is closed. >> We're on the wrong side of the market. What can you say? Just total devastation. We had a game plan and Yeah. We lost the battle. We haven't lost the war by any stretch of the imagination. Look, we just fumbled. We're the We're still down 17-0. It's only the first half and we can score three touchdowns in the third quarter and take the game easily. Yeah, we're still up for the month. It's just it's just painful to give when you got a good profit, it's really painful to give some stuff back.
37:48 >> They cost me a lot today and they're going to pay me 100% interest for this. They're going to pay 100% interest. >> They in this case means the market. And today, they are the enemy. >> Well, did you have it to give? Well, I did, too. So, the hell with it. It's part of the business. >> Thanks. >> All right, buddy. Take it easy. God, Zach had a 10% day. >> No.
38:19 >> Yeah. >> You're kidding. >> No. I'm afraid I guess what ours is. So we lost 500 there. And we lost Well, I think we lost about 5% today, which is one of the bigger hits we've ever taken, which is a drag.
38:59 >> 5% of Tudor Investments equals about $6 million. >> Yeah, well, you just take losing, right? And you hate but I mean, the money's irrelevant. It's the whole concept of having an analysis that's so completely off the mark. But you know, it's a mental blow. It's an intellectual blow. And you know, it's part of the business. Who is it? I have You'll have to get a message I'm calling back.
39:30 This is going to happen a thousand times in the next 5 years to me, so it's just something you got to learn to live with. Hate it. >> Paul learned to handle the bad days 11 years ago in New Orleans. He got a job working for a commodities trader who taught Paul much of what he knows. >> It was a hell of a training ground. The first year I did nothing but get us coffee. I mean, I was learning by osmosis and stuff like that. But I was you know, I was I was a glorified secretary, which is fine because I was sucking in everything every everything he did, every move that he made, every step that he took. And I'll never forget Friday afternoon three wives of three of his clients from Mississippi came into his office cuz he had the most beautiful office I've ever seen, period. and everyone wanted to come in and see his office and his art collection stuff.
40:22 And he sat there right in the middle of getting absolutely decimated across the board in these commodities and with the most beautiful smile on his face, the most incredibly elegant, poised, and stylish composure, and just had a wonderful little chat with him for about 45 minutes to an hour, and I just was overwhelmed that anybody could be that strong. >> >> This is one of the few turkeys that thinks he's actually a dog.
40:55 He was raised with a dog, and he thinks he's a dog. And he will follow you wherever you go. If you go inside the house, he'll lie on the couch, he's going to come up and get on the couch with you. If you if you get in the car, he's going to follow you in the car. If you get in the garden and start working, he's going to get in the garden with you. I don't know whether he thinks he's a he's a dog, Joe or whether he thinks he's a I I think he thinks he's a human.
41:19 You know, I guess it's the old getting back to nature concept. That I bought this place because of that tree over there. That tree in a very transitory world has been here 300 years. It's the one thing of permanence. It's been here 300 years and will probably be here another 200 years, and I will probably have come and gone. That house may have been burned down and something else put in its place. But it'll always be here.
41:42 >> Paul was born and raised in Memphis, Tennessee. His father is an attorney, his mother a housewife. >> Well, I would leave school early when I wasn't supposed to. I would go by myself over to Arkansas and go on back bars of Mississippi where I shouldn't be, where no one should be by by themselves, and I'd go duck hunting, which was just the greatest feeling of adventure cuz you knew that if you you knew that if you screwed up that you were out there all night and you probably weren't going to be coming back at all, and you knew if you're caught, that your parents going to kick your butt.
42:14 And that what you're doing was dumb and was foolish and all those types of things, but it was it was just this it was this feeling of being, you know, being somewhere 200 years ago. >> At the University of Virginia, Paul majored in economics. He became the campus welterweight boxing champion, was elected to every office in his fraternity. After college, he wasn't sure what to do, but following the trading job in New Orleans, he joined E.F. Hutton. And 4 years later, he became a vice president at the age of 25.
42:48 2 years later, he quit, moved to another firm, quit again, and started Tudor Investments in 1983. His weekend home has 18 rooms and a staff of three. Paul lives there alone. >> I just donated that boat to the Chesapeake Bay Foundation because obviously being down here and watching the bay deteriorate as I have over 4 years, that has an impact on me. and that hurts me because when I was a kid, all I did was hunt and fish. This year, I just decided that 10% of all the money that that we made as a firm was going to go to various charitable endeavors, primarily I Have a Dream.
43:32 >> As part of the I Have a Dream project, Paul has joined with other businessmen to help disadvantaged kids stay in school. At least one night every week, he meets with some of the 85 kids in his group in the Bedford-Stuyvesant section of Brooklyn. He has pledged to pay the college tuition for every one of them who graduates from high school. >> And Don told me that what they really needed, they did not have, was an enormous amount of discipline and people to motivate them and people TO PUSH THEM.
44:03 I CANNOT HEAR YOU. >> >> OKAY. I HAD A KID OVER CHRISTMAS, 13 years old, got in a fight and with another kid who's 16 and he had a bullet put in his head at 13 years old. And that was when I stopped that was when I decided that my role had to be one that was that was that had a lot of interventionism or that I was going to intervene in their lives as opposed to sitting back and commenting and asking them to do this. Instead, I was going to play a very active role in their life.
44:39 And that is And the program has changed our program which it has changed the point where we are now imposing our value systems on those kids. And a 75 is not going to cut it, right? We're going to have And what did I tell you if you made an 80 next time? >> I ain't going to want to go. >> That's right. >> My average is 80. >> It's 80? It's fantastic. It's great. It's super. Well, next time on your report card you got a Bring it in so we can go over it.
45:06 Being here, and particularly being in a business that I have, I have been in a position to reap enormous financial benefits. Obviously, that's given me an enormous amount of power to do things that that a lot of people can't do and affect people's lives. And then it seems to me that incumbent with being a human being on this earth that there is and there has to be some type of awareness of the rest of the people out there. There have to be an awareness of the fact that they need help just like I needed help 11 years ago when I didn't have a job and didn't have a clue as to what I wanted to do.
45:50 And so, all I'm doing is paying back. And the payback that I'm making is one that everyone owes. It's just a question of whether people accept the responsibility or own up to the responsibility and ignore the obligation. >> February 17th, 1987. The stock market closes in 14 minutes. Based on the 1920 stock chart, Paul has bet against the herd that the Dow will take off today, and so far it has.
46:24 Right now, Paul could cash in and make several million dollars. But if he holds on for a few minutes more, he could do better. He could also do worse. >> I want to sell so bad I can't stand it. I just been sitting here wanting to sell it all day, but I know the thing for me to do is just not to I know the thing for me to do is just to sit back. In fact, I shouldn't even be talking to you looking at the screen. I should just I should try to go take I should go work out right now.
46:48 >> Yeah, I think that's what everybody else is doing, so. >> Dow is up 48 bucks, with $3 off an all-time record advance. And right now, I've got 10 kids in the back of the car, just screaming to get out. Meaning that I'm so long, I am scared to death. Oh, man. There's nothing but air above this thing. It's 28660. It's 10 ticks off its all-time high. And the Dow Jones right now is at an all-time high 2233, up 49 bucks.
47:24 And we've got 13 minutes to go. And I think it's going to go. I think we're going to have an all-time advance today, which will be very exciting. I'm Get Get your ball, Davis, please. Sorry, Stein. >> 4:00 p.m. The stock market has closed, up 54 points, an all-time high. >> Like that. >> excuse me, but is that a $54 day in the Dow? >> Congratulations.
47:54 Want to know how much we made today? It was a good day. It was It was It was over $5 million. And serving those people. >> It absolutely thrills us to death because that's what it was Two months have passed since we saw Paul's fund take that $6 million loss. >> Right. Well, now you saw us get it back and then some. >> What you didn't see is what we did between then and now. >> Which is which was extract our 100% interest >> just times about seven.
48:28 >> The amazing thing was the analog had to close today at 22 41. Remember I told >> Even on a big win day, Paul is still nervous. The futures exchanges are open for another half hour and Paul's instinct is to cash in to protect his winnings. >> All right, buddy. I'll get back to you. I think that's going to be it for the day. That's a wrap. >> Okay. >> Thank you. I tell you what, I did this just in case I get crazy.
48:50 >> Yeah. >> Sell a unit I mean sell 290 at 30 and 87 25. >> There'll be people selling. There's The easy trade is to sell, right? >> you doing? >> Buy. >> Because when a market's in new high ground, it's never been there. It's gone up so far and so high and so fast. It's like, well, I want to sell. >> How many did we sell? >> 250. >> Who bought them? >> Lester. >> Oh, I love it.
49:14 >> Even better than if you just killed me on 30. I could have gotten those too. >> It's up 1,000 points since we bought it. What's the point? You know, what's what's the big deal of lightning up five 10%. This way you can sleep at night. >> I wouldn't mind doing that. >> Of course, I can't sleep if I can't sleep. I I I think it's good prudent >> You know, the whole concept of the investment manager sitting up and making these incredible intellectual decisions about which way the market's going to go. You know, that I don't want that guy managing my money because if he can be that dispassionate, then he's obviously never ever He didn't To me, he doesn't have the competitive nature, which is necessary to be a winner in this game. I want the guy who's not going to panic, who's not going to be overly emotionally involved, but who's going to hurt when he loses. And when he wins, he's going to have a quiet confidence. But when he loses, he's got to hurt.
50:12 >> Winning has another effect on these, too. Even with Peter's 1920 stock chart, even with Paul's lucky sneakers, they're never sure of being right until they are. >> What's nice about winning is not winning, but what that means is is that not only have you done well to this point in time, but obviously whatever script you've got that that you have written for the ensuing week, 2 weeks, 2 months, 2 years, obviously it's a script that has a great deal of weight behind it. And the And the market's corroborating it. So, today's today's gratifying, but what's exciting is the fact that we probably will know what's going to happen tomorrow. And conceivably, we know what's going to happen the next couple of weeks, and months, and years. And so, you go home and sleep better when there's no uncertainty. And that's why today's good, not because of the money we made, but because of the fact we know where we are in the total economic landscape, or at least we think we do. And that Maybe that's a Maybe that's an illusion. Maybe it's a false sense of security. But it allows you to sleep at night because we've done our work, and so far the market's corroborating it.
51:17 >> I'm still in awe at the fact that the way he purchases these contracts. And he went out there and he made a commitment. And the commitment paid off, not you know, for all our clients. And knock on wood, you know, it'll continue. >> The one thing that I am absolutely certain of as a trader, and you're talking to someone right now who is incredibly long stock market, is that all of Wall Street right now, the investment community at large, basically is geared towards a Dow somewhere in the 2,600 to 3,200 range. And again, these are people that I think have track records that are impeccable.
52:04 Let's assume that they are 100% wrong. If nothing else, there will be a point in time, unquestionably, when the market turns down, when all of them, when when again the investment community almost at once will say, "This would That may have been the top, or this was the top." And you're going to have all the people that are right now very comfortably invested, that are believing and and feeding off the hope that the market will move higher, try to get out the same time. When that happens, you know, it's going to be it's going to be the the famous Acapulco cliff dive.
52:42 Just a question of how fast before we hit the bottom. >> Over here. Over here. >> You got to stop this thing. >> It is possible to make money when the market is going down as well as going up. And right now, Tudor Investments is preparing for a market collapse in 1988. If his timing is right, Paul's firm will survive, even get richer. But what's the lesson for the rest of us?
53:15 >> First of all, you're talking about certainly 6 to 8 years of pain. It's a horrible thought. It's not one that I hope happens. And I hope I lose my ass, and I hope the Dow Jones goes to 5,000 in stocks, but that's not what I think's going to happen. and I and it just won't be it'll be it'll be just like if you have an injury, it takes a while to work yourself back into great shape. And I think the long-run benefits will be fantastic. I think the short-run will be unpleasant. It'll be painful. And there'll be an enormous amount of general suffering for not just the US populace, but but on a worldwide basis. The You know, the other thing I mean, I guess the the flip side of the coin is is that you know, we've had an incredible 10 years.
54:58 >>