Just One Thing: The trading pits
I never traded at the Chicago Mercantile Exchange. (I did trade at Chicago's other two major exchanges, the Chicago Board Options Exhange and Chicago Board of Trade.)
In today's show I'll tell a little story about a nerdy thing from my stock market contest so I was looking for a picture related to the S&P 500 and I found this from the CME trading floor from about 15 years ago, which would have been near the beginning of the end for pit trading. Volume in the pit steadily dwindled as volume on electronic trading platforms exploded. Surprisingly the S&P futures pit lasted until 2021 when it was shut for good.
Closing time for Chicago’s trading pits
I was a pit trader from 1987 until 2001 except for almost two years in the mid-1990s when I moved to Europe to get away from Bill Clinton's income-tax hike. It was an incredible job and, like plenty of other careers in human history, essentially doesn't exist any more. And what few trading pits remain open won't remain open for much longer. It's just too expensive to keep the real estate, much less to keep it operational.
I'm a really fortunate guy, having had two wonderful careers. I don't mean to imply at all that I think my current career is near an end; I sure hope it isn't. I mean only that I think being a pit trader and being a talk show host, especially on a station as impactful as KOA, are two jobs/careers that most folks only ever dream of (and, of course, more folks never dream of either!)
Still when I stumbled across the picture that is today's blog note, it brought back memories.
Now I found this picture, and it's really something. This is from the first day of trading after the attacks of 9/11/2001. I was at work that day. I was managing my firm's traders from our office and I don't actually remember if I went down to the floor. It's hard for me to tell what pit this is. I don't recognize the traders which means it's one of the few pits I didn't spend much time in, maybe Storage Technology (STK) which is, or was, a big name with lots of property up near Boulder. The guy with the overwhelmed expression is a guy I knew a little. His name is Fran Gleason and I think he was a floor broker for Charles Schwab. I think his badge was GLE but I could be misremembering. Mine was RGK (on both the CBOE and the CBOT.)
Obviously the market was nuts that day. The S&P was down about 5% and the Dow was down more than 7% and a lot of people lost a lot of money...and probably a lot of people in this picture made a lot of money. But what strikes me about this picture with Fran's expression is that as a floor broker working for a big brokerage firm, he never had his own money at risk whereas almost all the other people in the picture, the people doing what I did, were risking their (and their employers') money, or at least their bonuses if they were on salary (which was a rare structure.) The people really taking the risk look fairly calm and the guy with the least risk is frazzled. To be fair, though, he probably had huge numbers of orders coming in that he was supposed to execute for customers and if they didn't get executed on time, the firm could have been at some risk to make good on the price that the customer probably should have received so it was definitely also a stressful job in "fast markets."
Last comment on this: I don't miss trading. Being a pit trader was the best job ever, at least if you were good at it. There's nothing like it, including trading on a screen. Once screen trading started to take over, I knew I wanted -- needed -- to find a new career and somehow (with a lot of perseverance and working for free and always saying "yes" when someone asked me to fill in even if I knew I would lose money in my options positions if I wasn't by the computer) I've ended up in a second career that I also love.
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Today's Guests
Romina Boccia, Director of Budget and Entitlement Policy at the Cato Institute, joins us to discuss her interesting and important new analysis of the Social Security program's (terrible) financial situation: Congress Can’t Outgrow or Inflate Away the Social Security Financing Problem | Cato Institute
With a staggering $25.2 trillion in projected shortfalls and 68 million beneficiaries, Romina demonstrates why conventional solutions fall short and outlines what this critical situation means for every American's retirement security.
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As we so often do on Friday, CU Physics Professor Paul Beale joins us to talk about gravitational waves, why (some) things get thinner/runnier/less viscous when heated (but not all things), and about his talk tomorrow at CU Boulder about The Big Bang.
This Gravitational-Wave Breakthrough Could Rewrite What We Know About the Universe
Go hear Paul on Saturday! (It's free!)