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The Dart-Throw Trader: Jimmy Slagle

 

Who Is Jimmy Slagle?

My first experience in financial markets occurred in 1986; at the time, I thought it was just another class. In hindsight, it was one of the best decisions I ever made.

After graduating high school and moving out from under my parent's watchful eye, I went to college to become a pilot. I attended a small college in the great state ofArkansas(Now don't hold that against me, I tell you this to prove a point; even with my “Arkansas” education, I was able to become a successful investor.) Anyway, back to my story.

In my pursuit to become a pilot, I was fortunate enough to attend a school that had just started its flight program. This meant that there were few students involved, which pretty much gave me unlimited access to planes and flight time.

To make a long story short, I was able to get all of my flight requirements completed in just over 2 years. What does this mean? I had what I needed “flight wise” for a degree in aviation, however I still had to get the “filler” courses under my belt to get a degree. (Things like English, history and the basics.) My junior year I was preparing for registration and I decided that I would take some easy courses (read: easy A's) so I could improve my GPA and get on to the friendly skies.

As I was browsing through the available courses at the registrar’s office, I ran across one that I thought would be a no-brainer, based on my family history and “extensive financial market knowledge”. It was titled “Personal Investing”. I was thinking Easy “A”, so I registered for it.

I will never forget the first day of class. I remember it so well because it was on Tuesday morning at 10:00 A.M. And the reason I remember that was because my last two years of college I only took Tuesday/Thursday classes (I didn't want to cut into my weekend time). That morning’s class is still so vivid in my mind because it was the day I found my true calling.

I remember sitting in that classroom with about 35 other students waiting for our instructor to arrive. Most of my fellow classmates were fraternity brothers and we were having a good time speculating on the future outcome of this class. In the midst of our fun, our instructor arrived. I will never forget this man and the impression he made.

 

He walked into the room, an older gentleman probably late 50's early 60's. He carried a worn brown leather briefcase and a complete air of confidence. As he began to settle in you could hear the buzz beginning around the room. Most of us were discussing “how in the world could this man teach us about the markets and how to make money”? I mean come on this guy has probably been a teacher most of his adult life, what could he possibly have to share with us about the real world?

 

And then it began…

 

He opened his brown leather briefcase and pulled out a few papers and a worn, off-white textbook. This textbook had significance because I, and everyone else in the class, was in possession of the exact same book.

However, mine was white and still shrink-wrapped.

He stepped to the front of his desk and leaned back; in his left hand, he was holding that off-white textbook. He began to flip through the pages of the book, grinning and surveying the room. He began to explain to us how this was a wonderful textbook written and edited by talented writers and editors. How it was filled with terms, definitions, examples and theory. Then he abruptly slammed the book shut and promptly through it into the trash.

At that moment, I glanced down at my white, shrink-wrapped textbook and laughed. I was thinking to myself, “Great, I just spent $80.00 on this text book and my professor just threw his into the trash”. Best-case scenario: I can take my book back to the university bookstore and sell it back. However now it is a used book and the best I am going to get is maybe $40.00. Fifteen minutes into class and I have already lost 50% of the value of my investment. Things weren't looking too good in my “personal investing” class.

Then he explained to us why he did what he did. He told us that it was in fact an excellent book and that it was filled with marvelous theory. He stressed the point theory. He explained to us that theory was great to talk about and debate, but wasn't applicable to the real world. He explained to us that the markets didn't trade logically, most of the time they were driven by emotions, most prevalent of these being fear and greed.

From there he proceeded to explain how the class was to be conducted. You see, he wasn't a lifelong college professor.

He was a lifelong investor, and was teaching this course to share with impressionable young minds his 30+ years of being in the trenches.

He informed us that he was going to give all of us in the room $100,000.00 (play money of course) to trade with. He was going to spend the next 3 months teaching us everything he knew about selecting stocks, analyzing them, balancing our portfolio based on our risk profiles, putting in trigger points to exit on profits and losses. He was going to teach us how to make money.

His grading system was right up my competitive alley. At the end of the term whoever had the most money got an “A” and the rest of the class would be graded on a curve. That was pretty much all I needed to hear. I was ready to begin.

Thus began my journey into the financial world, a journey that I am still on today.

 

Fast forward to May 1989…

 

I am now living inAtlanta,Georgia. (How I got here is another story for another time.)  I am working at small, family oriented health club. I am a single 23-year-old male in the big city ofAtlanta, desperately trying to find my place in this world.

I knew most of the members of the club and they would come and go, however one member really stood out. His name was Scott, and what got my attention was that He always arrived at the club at 4:30 to play racquetball. Normally this wouldn't be unusual except for the fact that it wasAtlantaand 4:30 in the afternoon. WithAtlantatraffic, being what it is most of our “working” members didn't usually arrive until after 6:00.

Scott impressed me because of his energetic, upbeat attitude, BMW 740i and his impeccable suits. Scott wasn't much older than I was, yet he appeared to be extremely successful. After observing his routine for a couple of months, I couldn't stand it any longer and finally asked Scott what he did for a living. It turns out Scott was a Vice-President at one of the countries oldest mutual fund companies. When he told me this, I knew I needed to pick his brain.

 

Scott took me under his wing and began to educate me on the inner-workings of the mutual fund industry. I was hooked. One day Scott invited me to lunch and laid an offer on the table. He asked me if I would be interested in coming to work with him. He told me that with his knowledge and experience combined with my enthusiasm, we could take over the world with the split being 60/40. How could I refuse an offer like that?

Thus began my career in the financial industry… October 1989.

 

A lot has happened since October 1989.

 

The firm I started with was sued by almost every state’s attorneys general (or at least it seemed) and my choices were to stay on with a sinking ship or leave the firm and look for opportunity elsewhere. I chose to start an independent financial advisory practice with an associate from the firm. We set up our private practice, moved our securities licenses with an independent broker-dealer, and began to offer our clients any investment vehicle they wanted. During our first year of private practice, we attended our broker-dealer's annual conference. This is when I met Jeff.

Jeff was the top representative for this particular broker-dealer and I made it a point to get to know him on a personal level. Over the next few months, I spent a lot of money in phone calls and plane tickets, spending as much time picking the brain of Jeff as I could. I was determined to replace him as the top dog.

One night my business partner called me to inform me that he had just inherited a large sum of money (mid six figures) and no longer needed to work for a living. Once again I was faced with a choice… do I continue with my investment advisory practice or do I take my knowledge and client base and head for the corporate world?

 

 

Thus began the second phase of my financial industry career… March 1994.

 

At this point, I had about five years of stock market experience under my belt. I was bulletproof and invincible so I proceeded to make the second biggest mistake of my life. I decided to go back into the corporate arena. I don’t know how many of you have ever been self-employed and then went back to work for someone else… It was a nightmare.  I could not wait to get out of that mess.

Therefore, I decided to do what any man would do.  I decided to go out and conquer the world on my own.  I knew that my investment advisory practice was not going to pay the bills (I didn’t have a clue of how to run a business).  So I began to look for a way to make money.  I began to attend every seminar I could find… Real estate, 900 numbers, travel agencies: you name it; I went.  I was looking for a way to make truckloads of money without having to work.  Sounds great in theory, but it doesn’t pay the bills.  The good news is my wife was working as a teacher and pretty much supported us as I tried and failed to conquer the world.

Then it hit me like an iceberg hitting the Titanic:  discover what you love to do and then find someone to pay you to do it.  My next-door neighbor worked in the public school system as the director of adult education and offered to pay me to teach classes on debt elimination and investing.  I jumped at the chance and began to teach others how to get out of debt and begin to invest.  I thought; this is amazing!  I will be paid to teach others, be viewed as an expert, and I can use this as a stepping-stone to rekindle my investment advisory practice. Brilliant.

So from the middle of 1994 to July of 1996, I began to teach others how to take control of their financial lives and I was having a ball.  In July of 1996, I met a man who I believed was going to propel me to financial freedom.  A cab driver.

Now this was no ordinary cab driver, no sir, this was a man who had become a self-made millionaire by investing in real estate and the stock market and he was willing to teach me how to do the same.  Just think; no boss, no 9-5, just back up the truck of cash and give me my free time to enjoy it.  Who could ask for more?

So in July of 1996 I made a decision, with my wife’s permission of course. I would do something very profound.  I decided to take the money that we had and some borrowed funds from my family, go invest in the markets and become a professional trader.

At the dawn of 1997, I quit my job and I began to trade full time in the stock market.  I had spent the previous six months studying at the feet of a cab driver.  Using what I learned from him, this is what I was able to do… I took roughly seventeen thousand dollars… (I did pretty well; check this out.) I took seventeen thousand dollars all the way to zero in six months.

It was very hard to do that:  it actually was, because we were in a very bullish market at that time.  How in the world, as a former broker and investment advisor, could I possibly do that?  Because as a broker I was never taught how to trade, I was taught how to sell.  I was taught how to make cold calls.  Moreover, how many cab drivers do you know who are actually making any real money in the markets?

I took roughly seventeen thousand dollars to zero.  Now that was a very frustrating experience for me as I am sure you can imagine.  For you, maybe that kind of money is nothing or maybe it’s a lot, for me it was everything.  It was all I had.  Now the bad side of this for me (as if losing money is not bad enough) was that my wife did not know that I had done this, she thought I was doing well (because that is what I had led her to believe).

I was in a mess here and I needed to find a way out fast.  So once again, I did what any man would do.  I stepped up and found a way to make some money to pay the bills while I could figure a way out of this mess.

 

I took a job throwing newspapers.  It didn’t pay a lot of money and I was ashamed and embarrassed, however I did what I had to do.  This job would allow me to pay the bills and still have time to study the markets to find a way out of this mess.

One morning, while running my newspaper route, I was startled out of my routine by the ringing of the market bell over the radio. When I heard that very distinctive sound I knew one of two things was taking place, I was either very late running my route or still home dreaming. As it would turn out neither was true, I was listening to an ad on the radio discussing a new way to trade in the financial markets.

 

I will always remember that radio ad.

 

It said, “Come to this free seminar and we will teach you how to make money in the market safely, stress free, with a low defined amount of risk, regardless of market direction”. That appealed to me. When I arrived home that morning, my first call was to register for the class that I had heard advertised.

 

One week later, I was in a hotel room on a Wednesday night in July of 1997.  I was sitting there waiting for the instructor to teach me how to make money in the market safely, regardless of market direction.  I was sitting on the front row and this guy walks up to the front of the room, spun himself around and introduced himself as Rance Masheck.

For about the first hour, of this three-hour seminar, I knew everything he was talking about, but the last two hours changed my life forever.

At the end of that three-hour seminar Rance gave everyone in the room a life changing challenge.  He challenged everyone to continue their education in the markets and give him the opportunity to teach them all they could learn.

Three Months later I was in Boston attending a two-day, knowledge intensive, live market-action trading class with 3 of the most respected traders in the industry.

The day after I arrived home fromBostonI began contacting my client base to explore the new opportunities in trading I had learned. Most of my clients rejected my newfound approach and brushed my suggestions aside. Determined to prove what I had learned was the answer to many of my clients' financial problems, I initiated a personal challenge to myself.

I opened a small trading account that I would only use for trading the new strategies I had been taught. My purpose was to share the results with my clients and then begin to move them into this newly discovered style of trading. After four months of trading, I quit my job. I had found the “Holy Grail”. I had found what I had been searching for from the moment I bought my first share of stock way back in 1986.

I was now obsessed with finding the right combinations of trades and strategies that would enable me to reach a point where I could do what I wanted, when I wanted, without having to ask anyone else. To accomplish this task, I approached my originalBostoninstructors and asked for all the help they would be willing to offer… books, classes, tapes, conversations, anything they could suggest. Anything they offered or suggested I took. As my knowledge began to increase, my mistakes began to decline. I began to share my results and breakthroughs with those who had introduced me to this type of trading and was ultimately asked by them to share what I had learned with others.

 

 

Thus began the third phase of my financial industry career… January 1998.

 

In January of 1998, I taught my first trading class inDallas,Texasand never looked back.

The world of options trading is a world where time has a different meaning. It is a world where “long term” is often viewed as a matter of weeks or sometimes months, but never as years. It is a world where those who are on the right side of a price move can make a lot of money in a very short period of time.

I made my first trade in 1986. I am now rapidly approaching 46. In the 26 years that have passed between 1986 and 2012, I have learned much about having money in the bank, about having money invested in stocks, about investing money in option contracts. I have learned much about the value of time and the value of money and the value of things besides time and money. In those 26years, I have seen many markets soar and I have seen many markets collapse. I have learned what one must do to be on board markets that are soaring and what one must do to avoid or go short markets that are collapsing. In those 26 years, I have learned a great deal. You and I are about to embark upon a journey. It is a journey of those twenty years. The one point I want to make, or the lesson that must be learned, is obvious. Through every phase of my knowledge, through every mistake I made, through every break-through I experienced. I always had someone I could turn to, someone to ask questions to, some one to brainstorm with: teachers, mentors, and friends.

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