I mentioned earlier that I was going to quit my tv meteorologist job and teach high school physics, math or science to be a 7 day a week dad but never went back to school(wouldn't have had the time).
Something unexpected happened.
In 1988, we had a severe, widespread drought in the Midwest. This is a very agricultural driven community and I'd become very tuned into weather forecasts that considered our farmers.
As the drought developed in the Spring, I was on top of it ahead of others.
Then, when we hit May/June, the headlines on the front page in the Evansville Courier were often "Corn and Soybeans were limit up again on dry weather forecasts" or the updated forecast had more rain and they were limit down. Then, they showed the prices.
I grew up in Detroit. We got the morning paper, Detroit Free Press and afternoon paper, the Detroit News and I don't ever remember the front page having headlines like this.
I had no clue what futures and commodities were. Seriously, no clue and I was 32 years old and a meteorologist for over 6 years(I spent 9 months in Cincinnati working for a private weather firm in 1982 for my first real job in the field). You have to also remember that there was no internet back then.
I'd made good friends with Tom Ruder, a broker for Edward D. Jones who did a financial report and gave investment advice during our Noon show on Wednesday's. I was actually in his wedding party. I got advice from him about investing in stock with him as my trusted broker.
I told Tom that everything I read about in the paper about the weather, I had already forecasted a couple of days BEFORE they were attributing that same weather to the extreme price moves of C and S. I asked Tom what the heck commodity markets were and how could I use them and my weather knowledge to make money.
He shot back that I should never throw my money away in markets like that. And his exact words were "it's worse than horse trading and by the time that you find out about the news, it's already in the price from traders that know more than you"
I trusted him and didn't pursue it. Then in 1989 we had a record cold December and the news headlines often discussed heating oil prices spiking higher from cold that I'd predicted many days(weeks) earlier.
At that point, I decided to educate myself more with a strong feeling that there must be some way for me to make a lot of money in weather markets like that. I was busy raising my kids and doing 4 shows a day Noon, 5pm, 6pm and 10pm without a lot of free time but got a library card to use the library's of both local colleges.
In 1991, I read a dozen books that they had on commodities..........all of them. Called the CBOT and had them mail me all their historical price charts. I called countless places, including commodity trading firms to see what I needed to do to open an account and trade. I identified all the potential weather markets and got price charts and weather for time frames that caused big moves.
In January 1992, I sent $2,000 to Ira Epstein to open an account. All the other places required a minimum of $5,000 but $2,000 was all the savings that we had, so I picked them. They included free phone quotes. I was assigned a full service broker charging $60/round turn. I called the broker many times to try to get feedback about how to place my first order. He knew that I was clueless.
I also subscribed to a monthly charting service. At the end of each day, I got the open, close, high/low of 15+ different commodities and hand plotted this on a chart. Never missing a day doing this for 3 years. I always drew trend lines and sometimes computed crude stochastics and RSI and moving averages.
Anyway, I made my 1st trade buying `1 contract of February heating oil on a Friday in January 1992, based on a change in the weather models to much colder. On Monday, the heating oil was up over 2c and I made almost $1,000 or 50% on my money.
I called the broker on Monday, to tell him to sell and his response was "I didn't know that you wanted me to buy on Friday, so you don't have anything to sell"
I argued with him but he insisted that I messed up and didn't properly place the order with him.
Wow, I was positive that I made that clear and this guy was ripping me off. So I called around and got the number to the FTC and CFTC. They told me that my order was on a recorded line and filled me in on lots of other stuff.
On Tuesday, I called the broker back and told him who I spoke with and asked him to play back the recording of me calling in the order. His response was "I was just kidding yesterday, can't you take a joke?"
At that point, I had nowhere else to turn to but figured the guy knew better than to try to pull any more fast ones on me.
So my account grew pretty quickly based entirely on big, sudden changes in the weather forecast. It was unbelievable that it took the market so long to react to weather updates back then after they came out. Almost every trade made money for me.
I was getting my weather from the equipment at the TV station +having Accu Weather fax me the 10 day MRF every morning. I lived 40 minutes away from the station.
There really wasn't that much data either. Just the 10 day MRF that came out very early and the 48 hour NGM that came out 2 times/day. The markets were only open from 9:30 am to 1:15 pm(grains).
There was no internet back then.
I shopped around to see what it would cost me to get the data at home. A system with a satellite dish, printer and other items was 10K.
I knew that I had to have this in order to do best. As soon as the account grew from 2K to 15K, in 1993 I turned around and used 10K for the equipment and paid $275/month to WSI for them to send it to the dish on my roof. Knocked the equity way down but improved my trading.
Later that year, in September 1993 when I got fired, there was no way I could take money out of the account to replace income. The account was back up to 15K or so.
In case this didn't work out, I started working on getting the American Meteorological Society's seal for weather consulting and doing things like testifying in court in late 1993. I already had the AMS seal for broadcast television.
Several months after getting fired from WEHT, I got a call from the competition, WFIE wanting to hire me.
I had numerous discussions with them and I really, really wanted to take the position but it was going to greatly interfere with my family life, so I kept stalling.
They finally said that the next Monday, they had to have an answer. It just so happened that I also had a big trade on over that weekend. On that Monday morning, before calling them, I made almost as much money as they were offering me to work there. A years worth of income for me over 1 weekend.
That made it easy to say no.
++++++++++++++
Almost losing everything with a weekend position
By June of 1994, I'd grown the account to 25k from 2k in 2.5 years and bought the satellite system for 10k and had been taking money out to replace my income.
I remember telling my wife that this can't go on. Nobody goes without big losses. It just doesn't happen and it can't continue.
So one June Friday when weather maps showed a dome of death for the next 10 days,, I loaded the boat long with corn/beans. After the market closed, the 6-10 day showed Much Above temps and No Precip everywhere in the cornbelt.
I took my sons to Hartke pool to celebrate over how much money this trade would make us.
By then, I'd dropped the IRA Epstein broker to use their discount desk(he actually refused for a long time because he was likely copying my trades and making good money-so I had to make legal threats)
I'd picked up 3 new accounts with brokers to try them out and get fundamental information that I didn't have, each of them requiring 5K which I wired from the growing IRA Epstein account.
At all 4 places, I loaded the boat, actually going over margin on that Friday in June, 1994. This is exactly how I'd made 25 times my starting capital in 2.5 years. This trade was going to really make us wealthy!
I got up super early on Saturday to see the MRF, 10 day forecast coming out on my printer. HOLY SHIST!
The dome was gone, with a chance of rain. OMG, I was trapped and we would lose at least 50% in the account on the open, I thought.
I use to love beer drinking back then but started drinking immediately after seeing the writing on the wall for Monday morning.
I was up early Sunday to watch the maps print out, DOUBLE HOLY SHIST! Now, instead of a dome, the models were showing an upper level trough, tons of rain and cool temperatures. I was convinced that by Monday morning, EVERYONE would know this and both C and S would be locked limit down from the open with me trapped until Tuesday, when we might have another locked limit down.
OMG, this was going to be a disaster because 2 limit downs would not just wipe us out, it would cause me to be as much as $12 k in the hole with no savings and no job.
I broke the news to my wife. During the first year of my trading she begged me not to tell her about any of the trades because she was petrified that I would lose all of our money and is an extremely risk aversion type person. I opened the 1st account with 2k with her furious with me for doing it.
Now, her worst fears were going to happen. She wondered what I was going to do for income next. I couldn't believe that I'd just completely blown my entire new career over 1 weekend. I was 98% sure that the market would be locked limit down on the open Monday and just wanted to hurry up and get it over with.
The outcome and more next: