Market guru shares secrets to his success


For Tom Baldwin, a man who once traded $6 billion in one day, trading is more than just a job; it’s a way of life.

“You could call it an addiction,” he said to a full-house in Jamrich 101 on Wednesday night.

Throughout the evening, Baldwin spoke about various aspects of trading, including his start as a trader and the traits needed to become successful in the field.

Although he volunteered his time, Baldwin’s speech was orchestrated by the Student Managed Investment Fund.

After earning his MBA, Baldwin began his working life as a produce manager in a meatpacking company.

He’d saved $20,000 in the two years he worked for the meatpacking company, and in March of ’82, he began working in Chicago as a floor trader.

“When I got into trading, the whole world changed,” he said. “It’s an emotional experience. The fear you go through protects you. I just got good at knowing myself.”

While Baldwin gave a short history of his first few years trading, he spent a majority of the speech discussing the emotional angle of his work, and how that emotion can affect the outcome of any trade.

“This business is hard on you emotionally,” he said. “What I’ve said is trading 101. The next step is being in it, the day-in, day-out torture. In baseball, you hit a .300, that’s great, but in this business, you lose. You have to be Babe Ruth.

“You have to learn emotional strategies of — let go of it,” he added. “Tomorrow is another day.”

Baldwin spoke about having a limit to how much money a trader is willing to lose, and that while it is important to be emotionally ready to lose that money, understanding the timing of the market is essential as well.

“There’s a lot of randomness (in the market),” he said. “That randomness can force you out of a trade that could be right. It’s all about timing.”

And though Baldwin is known as one of the best in the trading world, he’s still susceptible to mistakes.

“I (once) lost $5 million in 15 minutes,” he said. “And you’re standing there, and you feel the blood go from your head to your feet. you learn to be humble.”

After being in the business of trading for 25 years, Baldwin said he has seen a lot of changes, from hand gestures in the trading pit to electronic trading.

He also said that young people looking to get into his field have a big advantage.

“When I was in college, I had a typewriter,” he said.

Baldwin added that most young people are already computer savvy, and in a world of electronic trading, that gives them an edge.

However, he warned against anyone who was looking into trading as something less than a full-time job, saying it takes a lot of commitment and dedication to become successful.

“This isn’t a pursuit you can do part-time,” Baldwin said. “If you make the leap into this world, you’ll be competing with me. What makes you think can do it? I live, eat, sleep and dream this. I love it.”

Baldwin also spent some time discussing the downturn in the global economy.

He typically trades in treasuries, and said he was surprised to see that prices in that field were rising.

“The prices of treasuries are at record highs,” he said. “Despite the fact that we have these bailouts. the world wants to finance it.”

He also spoke briefly about the numerous possibilities President-elect Barack Obama has in selecting a new Secretary of the Treasury.

Baldwin said if it was his choice, he’d pick Paul Volcker, an economist who has worked as the chairman of the Federal Reserve under both the Carter and Reagan administrations.

“I don’t know if I’d actually do it though,” he added.