Chapter 6
Moving On
oe had told no one but Emily and and her father about his plans to
leave Grant, including Doug Scott. By coincidence, Doug himself
was thinking of moving on. He angrily told Joe that at year - end he
had been screwed by the fi rm and his warlord on compensation.
Grant had taken a big hit on a fi xed - income trade, but that had nothing
to do with him. In addition, some of the other prop traders, including
three in Doug s group, had been too bullish, and with the market sell-
ing off into year - end had pierced the drawdown limit and had been shut
down. Doug had sat out the fall, and as a result booked an $ 8 million
profi t for the year. He was pleased with himself and expected under the
12 percent formula to get paid $ 960,000, which was decent.
However, when Doug s warlord sat down with him to discuss
performance and compensation, he had been very complimentary on
the former but had told Doug his payout was going to be only 9 percent,
or $ 720,000. He explained the shortfall by a smaller overall compensa-
tion pool because of the poor performance of the fi rm s prop trading
in general and the other members of the warlord s group in particular.
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92 a hedge fund tale of reach and grasp
Doug was furious. You told me the payout was going to be twelve
percent, come hell or high water. You never mentioned it had anything
to do with what the fi rm or what other prop traders did. You re reneg-
ing on our deal!
The warlord was defensive. I said about twelve percent. There was
no guarantee.
Bullshit, said Doug. We had a defi nite arrangement, and you
and the fi rm are violating it. Why should I be penalized because other
guys screwed up?
I could probably fi nd another fi fty thousand for you. Will that
make you happy? We like what you re doing, Doug. Your returns and
your Sharpe ratio are good.
No, it won t make me happy! What about next year? What s the
payout going to be? Are you going to increase my line?
Sorry, but I can t commit to either, yet. The fi rm is rethinking
the size of its allocation to prop trading. It s the usual senior manage-
ment story. They love prop trading when she s pretty and hate her when
she s ugly.
That s reassuring, said Doug. Thanks a lot, he said as he angrily
stomped out of the warlord s small offi ce.
It really pisses me off, Doug told Joe. He painted me a picture.
I thought prop trading was going to be fun and exciting. It s not. It s
grinding, scary stuff. Last summer, when the shit hit the fan I was pretty
fully invested and the pressure practically ruined my life. Day and night
I was agonizing over every tick. It s not investing; it
s fucking mindless
day trading with your career and family s survival at stake. It stinks.
He sighed. One night this summer when Susan and I were out to
dinner, I got physically sick at a restaurant. Every night like clockwork
I was waking up at three in the morning hallucinating from nightmares
to check Japan and Asia. Try going back to sleep when your positions
are going the wrong way! I was taking Tylenol PM to sleep, and then
I would wake up with that crummy, lousy, hungover feeling. While I
was on vacation in August, I actually couldn t get it up either because
of the Tylenol or because I was freaked about what was happening.
And then after I survived all this trauma and booked good money for
them, they cut my payout and I earn a lousy seven hundred twenty
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