Russian Grain Embargo
By Mark Andrew Ritchie
Jan. 9, 1980, 9:25:00 a.m.:Only once in a lifetime does one stand at the vortex of a political maelstrom. I stood at my usual spot between the meal and oil pits, 20 feet from the giant bean pit. We’d had a two-day “cooling off” period; regulators assumed we traders needed it. Maybe; maybe not.
9:26:00: President Carter had done it this time. He had finally learned “more in the last week about Russian intentions than in a year of high-level talks.” So he announced a grain embargo against Russia. This was a personal epiphany for me; I thought these “high level” politicians knew something we didn’t know. As a boy I had ridden my bike across Kabul and looked up at the Russian grain silo—enormous, mysterious, empty. How much genius was required to discern these intentions? In the 20 years since returning from Afghanistan, I did not discuss my boyhood there. It was a rare American who knew the location of the country. Now we were boycotting the Olympics and cutting off grain exports. And I was required to buy and sell in this environment.
9:27:00: I was allowing all this to swirl through my head instead of focusing on the numbers that would determine proper price; big mistake. Proper price? The president had threated the livelihood of every farmer. Would there be a buyer anywhere today? I had traded for kites and pigeons in the bazaars around Kabul. But, this was crazy.
9:28:00: And I’m still doing it—not focusing on my numbers, with a mere 120 seconds left. Only one job was critical before the 9:30 a.m. bell—figure out where this thing was going to open and be ready to buy or sell if it was out of line. No time in the trading session was as critical as the opening bell, no time more erratic and no time more advantageous for the trader. Obviously, no time with greater risk.
9:28:00: And here I was recalling my childhood, venting against a president, and participating in self confusion. I got in the pit, got my arms in the air, and eyed the clock.
9:29:00: There was little to calculate. Everyone knew where this would open: LIMIT DOWN. The only question was how many days it would be limit down, and what would I do with anything I sold. Most traders do not carry positions; we spread them off against something else. But what grain would not be limit down today? That would be a concern to worry about after the opening.
9:29:30: For now, we assumed that value was far below the lowest possible limit for this day. So the goal was to get a position from which one could dominate the pit and give any buyer, in the extremely unlikely event that there would be a buyer, the most obvious possible target to execute a foolish trade.
9:29:00—9:29:55: There is nothing illegal about having your arms in the air, but you are not supposed to say anything until the actual bell, now five seconds away. It is customary to jump the gun by a few seconds; three seconds being the typically allowable time and almost always led by the bean pit.
9:29:56: So when we heard the beginning of a roar go up in the bean pit, the clock-watching was over. “SELL LIMIT!” It’s impossible to imagine whatever happened to 9:29:57 and the two seconds following. And we surely never heard the bell either. The point was to give any broker with a buy order the easiest target. I certainly never noticed that morning that I had taken a position that just happened to be facing the fifth floor visitor’s gallery, where a Milwaukee Sentinel photographer stood.
Mark Andrew Ritchie is author of God in the Pits (Macmillan, 1989), a contributor to Jack Schwager’s Market Wizard series, and is soon to release My Trading Bible: Lose Your Shirt, Save Your Life, Carry on Trading.
About the Author
Editor-in-Chief of Modern Trader, Daniel Collins
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