Trading Places

Aug 14, 2015
Copyright 2017 NPR. To see more, visit http://www.npr.org/.

GLYNN WASHINGTON, HOST:

From PRX and NPR, welcome back to SNAP JUDGMENT. My name is Glynn Washington. You're listening to the "Crash And Burn" episode. Today, we're exploring what happens when you make the big bets. Our next guest, at a very early age, had his heart set on making some of the biggest bets of all.

(SOUNDBITE OF MUSIC)

JARED DILLIAN: I used to work with this guy. He was an option trader - no emotion whatsoever. He would sit there. He would have his hands on the desk. He would look like the sphinx, right? And he would just take staggeringly huge amounts of risk. You'd never know if he was losing money. You'd never know if he was making money, but that was not me. You always knew if I was making money or losing money. It was written all over my face.

NANCY LOPEZ, BYLINE: It was the early 2000s. Jared was a trader who sat on the second floor of Lehman Brothers.

DILLIAN: You know, when I tell people that it was nothing short of a miracle that I got that job, it really was a miracle.

LOPEZ: Jared didn't go to an Ivy League school. He didn't have a posh upbringing. Basically, he had no connections to Wall Street, but he worked his butt off for two years. And here he was at 25 on the trading floor where $400,000 can be lost in a matter of seconds. Jared's job was to play defense and limit those kinds of losses.

(SOUNDBITE OF BELL)

DILLIAN: Every day was like going to war. It was like going into battle. I really felt like putting on a helmet - that's what it was like. There was one trade in particular - I mean, it wasn't even a big trade.

LOPEZ: Jared bought 100,000 shares from this one client that had a bad habit of selling to different banks at the same, making the price of the stock drop instantly.

DILLIAN: So we lost $50,000. I'm, you know, pounding the desk, and I'm yelling over at the sales guys. I mean, I'm combative. I'm furious, you know, I'm just - I'm sick of dealing with these jerks. You know, I said to the guy sitting next to me, the guy that I worked with, I said I'm not hedging this trade. I refuse to lose money in this trade. So I bought half a million shares of QQQ, which is the NASDAQ 100 ETF. Now I have two positions, which collectively are about five or six times the size, that are both going down at the same time. If you're losing money on a trade, you just close out the position, you take the loss and you just move on. That's what a disciplined trader does. You know, I was doing something not only that was undisciplined, but was extremely reckless, just so I could make the money back - just out of anger, you know, just irrational anger. It worked.

(SOUNDBITE OF MUSIC)

LOPEZ: The risky move paid off. The market went up, and Jared broke even.

DILLIAN: I think I said to myself at the time, I don't think I want to do that again. But I used to do those kinds of things all the time just to keep from losing money. I was a very emotional trader. You know, I would do all this crazy stuff at work, and then I would come home and make a cocktail and sit and watch TV, and that was my life.

I was living in a house that was - it was in New Jersey, and it was not in a great area, that was pretty cheap. And I wasn't spending money on clothes or food. You know, any time I got paid a bonus, I just - I saved the whole thing. You know, growing up, I just had to do without a lot of stuff - very different from most of the folks that I work with, very different. People made fun of me all the time. I would literally bring a can of beans to work, and I would have a can opener. And I would open the can of beans and eat it with a plastic fork. And that would be my lunch - 49 cents. You know, they said that I was crazy. And sometimes they were complimentary. Sometimes they would say, like, genius or something like that. But, like, this crazy, smart ETF trader and then the clients would say, well, why don't you bring him out to dinner? They're like, no, we don't think that's a good idea (laughter). We don't let him out. We don't let him outside.

(SOUNDBITE OF MUSIC)

DILLIAN: For me, it was really about - it was about winning. I mean, look, like, I knew that I, you know, screamed and yelled way more than anyone else, lost my temper, took massive amounts of risk. Something would go wrong, and I would lose a lot of money. And then I would pound on the desk and my computers wouldn't work, which would make me even madder.

LOPEZ: One day, a co-worker asked Jared to close a huge deal. He wanted Jared to buy 400 NASDAQ futures. The stock market was already closed, so making such a huge trade was going to be tough.

DILLIAN: It was a big order, but I thought I could do it. And I didn't want to look bad. I didn't want to be embarrassed. I mean, this is what I'm good at, right? I'm good at trading futures. So I wanted to - you now, I wanted to do it right. So I immediately get on the phone, and I call Chicago Mercantile Exchange. I call the clerk, this guy. I'm almost halfway through, and then all of a sudden, the guys on the floor, they're not trading with me anymore. They won't sell me anymore. They keep moving their price higher and higher. You know, I was getting squeezed by the floor traders in Chicago. And my colleagues were yelling at me on the other end, are we done? Are we done? Are we done?

LOPEZ: Jared felt like he was in the middle of crossfire. The clock was literally ticking, and he wasn't making any headway.

DILLIAN: I mean, I was just stuck. I couldn't get the trade done. I had a physiological reaction. It was almost like I couldn't hear, like I couldn't see. It was just rage. I just flipped out. I just picked up the phone, and I slammed it as hard as I could on the desk. It exploded. I mean, it absolutely just shattered into a million pieces. And the whole floor just went silent. There was probably about 150 people on the trading floor at that moment. The market had just closed, and so it was very quiet when I smashed the phone. So everybody could hear it perfectly. I get the sense that everybody's looking at me. And then I just started to walk off the floor.

LOPEZ: It was so quiet Jared could hear his own footsteps. Then without even thinking...

DILLIAN: I do, like, this fist pump in the air and the whole place goes nuts. I get, like, this standing ovation. One of the funnier traders on the cash desk, he yells out - he says, never too late in the day to break [expletive]. I was actually smiling by the time I walked off the floor.

LOPEZ: To Jared's surprise, he didn't get in trouble - not for walking away from the trade, not for breaking the phone. In fact, that grandiose outburst got him promoted to run the ETF trading desk.

DILLIAN: It was a big deal. I was very happy about it. It was a big job, and I knew I could do it. I knew I could do a good job. But my behavior was erratic enough, I knew that something was wrong because nobody else acted this way.

LOPEZ: Then one day, Jared got an email from a compliance officer at Lehman Brothers.

DILLIAN: They identified, like, one or two very tiny trades - I mean, like tiny trades, like, 65 shares of some stock that I had traded, like, eight months before. And they wanted more information on it. You know, I mean, look, like, in my job, I mean, I make tens of thousands of trades a day. I can't possibly remember all of them. So I'm, you know, racking my brain. Like, what did I do? What did I do wrong? What's going on here? You know, I got a hold of the compliance officer. I'm like, I don't even remember this. And he says 49 times out of 50, you know, I fill out the paperwork and we just never hear anything again. And I said to him, well, what about the 50th time? My brain just went into, like, paranoid overdrive.

LOPEZ: The high stress of the job was getting to Jared at his core. There were days he couldn't get out of bed. And the days he could, it'd take him an hour just to leave the house.

DILLIAN: I started, you know, thinking that people were watching me. I believed that - that I had done something criminal, and the New York Stock Exchange had hired the FBI to come after me, and they were following me. And so I started to see, like, guys in suits looking at me. I lost weight. I mean, I lost an incredible amount of weight. I lost over 40 pounds. I was just living in this, you know, this fear, this terror all the time.

People were concerned. People told me that they were concerned. You know, someone was like, you just look terrible. You know, is everything OK? This had been going on for a couple of months. And I was at work, and there was a Fed meeting, you know, where they decide interest rates and - I always traded around the Fed meeting. And it means the market gets really volatile, so I always made money. And for some reason on this Fed meeting, I bought a huge amount of futures and the market went down.

LOPEZ: He was down half a million dollars, definitely not the first time he was down by this much. But on this day, it felt different.

DILLIAN: Somehow, like, my brain told me that I had something to worry about. I was paralyzed, and basically, like, I was paralyzed with fear about this whole FBI thing. Like, I thought I was being watched. And I couldn't get out of - I couldn't get out of the trade. I couldn't sell it. I just looked up a random psychiatrist, got out of my desk and I just started walking across town. I knew something was wrong. You know, I get to the psychiatrist's office, it's, like, on 55th Street on the other side of town. I throw myself on the couch in the waiting room, and I'm just shaking and crying. And of course, they bring me right in. And, you know, she starts asking me questions, you know? You know, she says, are you depressed? And I'm like, yes. And she says, well, have you felt good recently? And I said absolutely. She says you need to go to the hospital. I was happy. I was like, great.

(SOUNDBITE OF MUSIC)

DILLIAN: I ended up in the psych emergency room. I'd never seen one of these before. I didn't know what was going to happen. They took my clothes and all that kind of stuff. And one of the other patients, I introduced myself to him, and, you know, I asked him what he was in there for. And he said - he said, well, you know, I was super depressed and, you know, I ate a bunch of pills and blah, blah, blah. And he says, what are you in here for? I said, well, I'm not crazy. I'm here to get away from the FBI. I believed that agents would come to the hospital and demand my release and the hospital would refuse or something like that. But they weren't going to let me out. And I was at least going to be able to buy some time in the hospital. That was, like, my plan. It was really real. It was really real. It sounds crazy in retrospect. But I mean, this is what I believed. I think I might have slept an entire day, like 24 hours. I just slept and slept and slept and slept.

(SOUNDBITE OF MUSIC)

DILLIAN: You know, when I woke up, I sort of figure out that, you know, I'm in, like, this - I'm in a psychiatric ward. And I don't know how long I'm going to be there.

(SOUNDBITE OF MUSIC)

DILLIAN: So it actually was a little spooky for a while. Like - I was like, man, am I stuck here? This is actually worse than I thought. In the meantime, you know, like, once - once I started being medicated - like, all the - you know, all these delusions that I had about being followed would - just went away. They just seemed preposterous.

LOPEZ: Jared spent three weeks in the psychiatric ward and learned that he has bipolar disorder. But when he left, he didn't think twice about going back to Lehman Brothers.

DILLIAN: The guy who was head of equities, you know, I bumped into him the day I came back to work - and, you know, gave me a big handshake, you know, pat on the shoulder, you know, get back in there.

(SOUNDBITE OF MUSIC)

DILLIAN: It was very hard because I - I had to learn how to trade all over again. You know, I'd be staring at my screens, and I'd sort of watch, you know, the prices flickering around. And I'd be like, you know, watching my screens, and it just felt like - it felt like everything was moving in slow motion. And, you know, honestly in the beginning, I was like, I don't know how I can do this. Over the course of a couple of months, what actually happened was I was a much better trader on medication than I was without - much, much better.

(SOUNDBITE OF MUSIC)

LOPEZ: But even though he was a better trader, he realized it wasn't enough.

DILLIAN: Instead of, you know, being about the center of attention and all this glory and being, like, the stud ETF trader and all that kind of stuff, I just - my priorities changed. I didn't want that anymore. I mean, what I wanted before, I didn't want anymore.

LOPEZ: So at that time, what did you want?

DILLIAN: You know, I just kind of wanted some peace and quiet, actually.

LOPEZ: But now would not be the time. The year was 2008, and Wall Street was about to crumble.

DILLIAN: I knew that there was a housing bubble. I knew that it was massive. I didn't know the extent to which the banks were at risk.

LOPEZ: It was becoming very clear that most banks wouldn't come out from under the financial crisis unscathed. Lehman Brothers was on the verge of going bankrupt.

DILLIAN: For most people, the bankruptcy was really scary. I wanted to walk away clean. I wanted Lehman to go bankrupt. The bankruptcy was sort of a nice exclamation point. You know, it gives me an excuse to get out of there. You know, management was trying to put deals together all the way up until the very end, trying to find somebody to buy Lehman. I was really rooting against the deal.

LOPEZ: Finally, the day arrived when the verdict of Lehman's future would be handed down.

DILLIAN: I could see from a couple blocks away that there was TV trucks lined up all around the building. There were reporters shoving microphones in your face and stuff like that. So you get inside, and everybody's like, you know, they're hiding. And I just kind of waited for like, you know, the final news that, you know, we were bankrupt and that was it. The CEO of Barclays at the time, this guy named Bob Diamond, he came down to the trading floor. They gave him a microphone, and he announced that we were going to get bought.

(SOUNDBITE OF CHEERING)

DILLIAN: You want to talk about a standing ovation? I mean, the place was going nuts. People were going crazy. They were so happy they were going to get to keep their jobs.

(SOUNDBITE OF MUSIC)

DILLIAN: I was the only one who was not happy on the trading floor. I was not happy. It was really hard. I had a lot of people in my ear telling me what an idiot I was because everybody got to keep their jobs. A lot of people got retention bonuses. And I turned all that stuff down. I literally could not do one more ETF trade. I had just gotten my head caved in so many times over the years. I just took off my tie. I just walked away. I was absolutely done.

(SOUNDBITE OF MUSIC)

WASHINGTON: Thank you, Jared Dillian, for sharing your story. Now, Jared still keeps tabs on Wall Street, but now from a safe distance. He has a financial newsletter, "The Daily Dirtnap" and a book, "Street Freak." We'll have links on our website, snapjudgment.org. The original soundscape for that piece was created by Renzo Gorrio and was produced by Nancy Lopez.

(SOUNDBITE OF MUSIC)

WASHINGTON: It's about that time, snappers. But you say, give me more - give me more stories. Well, I've got what you need. Do not fear. Subscribe to the SNAP podcast; never miss a beat - full episodes, pictures, movies, stuff available right now at snapjudgment.org. Hit SNAP on Facebook. Follow us on Twitter. SNAP was produced by myself and the team that always takes one for the team.

Now, did you ever strip down to your drawers and do pushups in the lobby of the Corporation for Public Broadcasting? Well, it turns out they've hired security since the last time we tried that, but much love to the CPB. PRX, the Public Radio Exchange, always wins those pushup contests. I think it's because of the shiny lotion. WBEZ in Chicago doesn't need no stinkin' lotion. You hear me? And this is not the news - no way is this the news. In fact, you could build a secret room in your secret house and hide secret experiments in it, and when someone knocked on the door, you could scream, it's upstairs, it's upstairs, and you would still not be as far away from the news as this is. But this is NPR. Transcript provided by NPR, Copyright NPR.