The Opportunity Is Where the Fear Is

What’s it like to make your living trading stocks during this calamity? “Land mines are everywhere,” says Serge Milman, 35, of Ronin Asset Management on Madison Avenue. “Panic obviously rules.”

How do you trade now?
I manage two accounts, one longer-term and one shorter-term. In the longer-term account, I’m buying stocks or shorting stocks that I think will go up over months, if not longer. In my shorter-term account, I try to be positive, make money every day. Over the course of this year, I’ve made a killing with the shorter-term account.

Let’s talk about that shorter-term account.
For starters, there’s enough volatility intra-day that we close out almost all of our positions at the end of each day. We’ve more or less stopped holding positions overnight. Who needs to gamble on what’s going to happen in the next few days when this world is a chaotic clusterfuck?

What are you trading?
Lots of ETFs [exchange traded funds]. Some are ultrashort derivatives that move up when the market goes down.

And how is this different from your old positions?
In 2007 our favorites included GOOG, BIDU, DRYS, EXM, TBSI. In my long-term account, I’m easing into these stocks. In my short-term account, I’m not really watching them closely because volatility has kind of dried up in them. So we’re watching where the action is now.

Where’s that?
It’s where the fear is. Banks. Financials. Insurance.

The SEC temporarily banned short-selling the financials. What did you make of that?
It makes no sense. They might as well take control of the news services.

How does your day start?
I’m in my office around seven, 7:15. I’m reading the news and research reports that we subscribe to. I check out Drudge for the latest fearmongering. Talk with the guys at my desk, ideas for the next hour and for the day, the levels on the stocks we watch: Where does the stock have support? Resistance? Are we buying or shorting it here?

Do you take breaks?
I eat lunch at my desk. You can never get up, unless it’s for the bathroom. At any given moment, the Fed can do something foolish, like bail out these shitty companies. Oh, I guess they already did that.

How does your day end?
I’m totally dorking it. In bed by tennish every night, sober. Too much at stake every single day.

What happens next?
Real money is made at major market bottoms. So I am slowly accumulating a lot of these beaten-down non-financial companies in my long-term account, like Warren Buffett. The key is to stay disciplined, don’t bite off more risk than you can afford. You can profit in this market. But I can’t tell you what happens next. No one can. If the world is really coming to an end, it’s out of my hands and yours.

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The Opportunity Is Where the Fear Is