The Extreme Pragmatism of Wall Street Traders
The extreme pragmatism of Wall Street Traders:
Art Cashin told a story on Tuesday at Barry Titholtz’s Big Picture conference that illustrated the mindset of all good Wall Street traders. In the days before the Cuban missile crisis, Mr. Cashing was a young trader. A rumor exploded that the Russians had launched their missiles and that World War III had commenced. Mr. Cashin ran across the street to find a senior trader who was in a bar having a drink. Breathless, he conveyed the news. The senior trader told him to stop and have a drink. After everything was explained, the senior trader told him, “Buy. Don’t sell. Buy.” Looking back in wonder Mr. Cashing asked, “Why?” The response was cool and calculated, “Because if you’re wrong, the trade will never clear. We’ll all be dead.”
The cool pragmatism of the senior trader took what should be an emotionally charged situation that prompts thoughts of mortality or the end of the world and turned it into a trading opportunity. The ability to trade on news of impending doom makes these guys great at their jobs… and sociopaths.
The Cuban Missile Crisis has been oft used as an allegory to describe the debt ceiling battle currently going on in Washington DC. Both sides are not budging and the threat of default, which is playing the role as the missiles in this crisis, guaranteeing destruction for all. In the midst of all this, some traders see opportunity. As the market goes up and down (mostly down) in response to the budget and debt ceiling talks, some traders are buying during the dips. Most believe that much like during the Cuban Missile Crisis, a deal with be struck in the 11th hour since neither Democrats nor Republicans really want to blow up the world. After all, they they aren’t sociopaths… right?