If there’s one thing those incredibly flatulent sons o’ bitches on Wall Street taught me in my 3-years trading corporate bonds…. it’s to “mark your book”.
Allow me to explain:
As a trader, you always own something when you go home at night… otherwise you wouldn’t have anything to trade the next day right?
Well, the things I owned were corporate bonds. I know “bonds” evoke a boring and dusty feeling, but they actually run your life...
I can safely assure you that nearly every breath you take, every job you take, is impacted by corporate bonds.
And when I’d go home at the end of another day of getting dunked on by whoever choked down one too many Red Bulls that day…. I’d own a lot of corporate bonds.**
**When I say “I”, I mean the broker-dealer I worked for… I’m saying “I” to simplify things, but as I type this, I realize… it hasn’t simplified a thing :(
And every night I would worry that something crazy would happen overnight, and the value of those corporate bonds that I (the company) owned would change dramatically (and not in my favor).
I’d go to sleep early, trying to be CHILL….
And by the time I’d wake up in the morning my phone was loaded with notifications like:
MARKETWATCH: Kim-Jong Un launches rocket over Japan
BLOOMBERG: Trump calls Un “Rocket man”
CNN: Iran: We’ll kill America tomorrow
FOX: Biggest data leak in history
CNBC: Sonic launches cheesy burrito wrap in effort to save dying brand, say’s “won’t go down without a fight”
And before the cold winter air (the heat in my apartment didn’t work sometimes) could even kiss my face good morning..
I was already trying to figure out what the f*** I was supposed to do with headlines like that?
Is war with North Korea good for stocks…. bad for bonds? Bad for both? Good for both? Who leaked the data? Was it AT&T? Because I own a lot of their bonds…. What does a rocket over Japan mean? What does Iran mean by “kill us”? Why is a cheesy burrito the Hail Mary for a drink-centric business????
And most times (this is the part that most traders won’t admit), you have no clue how it’s going to impact anything.
You just manage your risk as best as you can based on what your current assessment of “the entire world” is.
So when the market would open, prices would start moving quickly… and the guy at the end of my desk who just crushed 45 espressos would start shouting:
“Telecoms are dropping cause of the AT&T data leak! Defense stocks are up on the Iran/North Korea tension! SONIC IS RIPPING HIGHER ON THE BURRITO LAUNCH.”
(Ok I’m done with the Sonic bit, they’re not even a publicly traded company.)
In a flash, the price of everything I owned would be different.
And the prices of everything I owned would continue to change until the market closed….. at which point I’d go home, eat a peanut butter sandwich and a half a bag of baked lays, and do it all over again.
Now I know what you’re thinking…
Who is this guy? How did you get my email?
But that’s not important really, here’s what is:
There was (pretty much) only one rule you had to follow to be a good trader.
And if you actually follow it, you can translate it to any business.
“Mark your book” simply means to reassess and remark the value of your bonds based on the market. If the AT&T bonds you owned dropped $10,000 in value because of the data leak news, you need to reflect the new price in your internal valuation of those bonds.
This seems obvious right?
But it’s harder than you think, especially when you’re wrong.
Because even if I know that my T-Mobile bonds dropped $10,000 that day, I still haven’t sold them yet….
Maybe they’ll go back up tomorrow and I don’t need to take the $10,000 loss at all.
Why stress the boss out when this will all smooth over by tomorrow.
*Goes to bed*
MARKETWATCH: *T-Mobile Under Investigation by SEC*
BLOOMBERG: Kim Jong Un launches ANOTHER ROCKET
CNN: Iran: It’s over for America
FOX: Multi-billion class action lawsuit filed against T-Mobile over data leak
CNBC: It’s over for Darden Brands, Olive Garden “just can’t nail their Alfredo like they used to”
Oh no.
The market opens. You-know-who has already had his 59th espresso and is shouting headlines.
“Defense stocks are moving higher! T-Mobile is down another 10 points.”
*A bead of sweat forms underneath your effing sick Patagonia vest*
Now I’m down $20,000????? What is happening???? One more day… surely it can-
*sleep*
MARKETWATCH: *T-Mobile raided by the SEC, new charges filed*
CNBC: Jim Cramer gets skimpy (and shy) in new EXCLUSIVE CNBC holiday calendar
*espresso man shouting headlines*
“T-Mobile down another 20 points in historic collapse!”
No no no no no no no. I’m gonna cry. Oh my gosh, I’m gonna actually cry in public. In front of these orangutans I work with……
Eventually, I mark my book. Suddenly the “Gilbride” book (that anyone could check at any time), was showing a $40,000 loss.
The CEO exits his office and heads towards my desk.
“What’s the story?”
And I’d explain that I didn’t mark my book because I was scared and so instead I decided to lose 4X what I should’ve lost, and also spent the last 3 days not collecting any trading fees because I refused to sell my bonds.
And he (or one of the brutes on the sales desk) would colorfully tell me to “mark your f****ing book. No one would’ve cared if you lost $10,000. Just take the loss and keep trading.”
And I would go home, eat a peanut butter sandwich, and wait for the sweet release of death (until I met my wife and was happy again).
So what is the needle of wisdom in this haystack of a substack?
When you have no idea what is going to happen from each day to the next, there is only one way to keep your balance and stay afloat.
No matter what happens, no matter how bad it hurts, or how embarrassing it feels, you have to mark your book and keep trading.
If you:
Don’t mark your book
Mark your book (but sit around and sulk about it)
You will go bankrupt. In any business.
How is this actionable?
Start by acknowledging whatever truth you’ve been repressing because it’s embarrassing or isn’t what you hoped for.
Once you do that, it’s usually pretty obvious what to do next.
For example - when I finally admitted to myself that my artist “career” wasn’t what I hoped for or expected… it became incredibly obvious that I should dive headfirst into MAD Records.
And (ask my colleague Preston), I’ve made more mistakes than you could ever imagine.
Which is ironically why I’m good at this job.
Because when we fail at something, we acknowledge it and we keep moving.
It hurts like a BIOOOOOOTCHHHHHHHHHH but we move on.
Because if I lost $10,000 on T-Mobile but made $20,000 in trading fees because I kept trading, I was still positive on the day.
But marking your book requires you to be radically honest with yourself about what’s working and what isn’t.
And not cutesy honest like “I’m working myself too hard” or “I need to be my own best friend”, but like real honest like “I just spent $1,000 on play listing for my last single and made approximately $4.”
Once you’re able to do that, you’ll know what to do next.
Or at the very least you’ll know who to ask.
Just don’t ask me because I’m very busy and I think I have like a stomach cyst or something because wow it’s been tough this week.
MARK YOUR BOOK.
And then subscribe to this SubStack.
(If any of my old coworkers are reading this then I meant every word.)
(I’m just kidding, they were good people……. sweet people.)
(You didn’t subscribe yet)
🫡⚔️🫡⚔️🫡⚔️🫡⚔️🫡⚔️
Michael from MAD Records