My daughter and I had a very instructive morning yesterday. A friend at NYMEX (the New York Mercantile Exchange, now under a different official name) got us visitor passes, with a view to Nellie possibly getting an internship at the exchange in her summer vacation. My friend showed us round.
What a thing to see! This is one of the last of the real floor-action exchanges, with traders in the pits shouting and shoving and making hand signals. I didn’t actually see any yellow suspenders, but that’s still the ambience.
It’s some heck of a job, too, requiring very special talents, rather like high-level athletics. When you see the amount of data these guys process in their heads minute by minute, making dozens of judgment calls every working day, with hundreds of thousands of dollars riding on every call, it makes you feel very dumb and slow. It’s not just the data pouring in from the phones and the screens, either, it’s reading people too. You watch the traders from other firms. If one of them, from a certain rival firm, at a certain point in the day, with the numbers moving a certain way, stepped back to talk on the phone for a while, you know which major client he’s talking to. Or if you don’t, you should probably be in some other line of work.
You can see the argument for keeping pit-trading alive. It seems to be a losing argument, though. Most trading now is done sitting at desks watching PC monitors. There’s still some yelling, but it’s desk-to-desk.
Trading in actual commodity futures all seems to have gone this way; the remaining pit action, to judge from what we saw, is all in options trading (options on the futures, that is). Some of the NYMEX pits were pretty much empty but for a handful of tube jockeys tapping away on keyboards. More efficient, I guess, but another little bit of color and energy gone from the world.
We were royally received, I must say. There are a lot of National Review fans on the trading floor. They actually had my name up on the big board when I walked in. Many, many thanks to all the NYMEX staff who gave us their time. I promise to never again tell a heartless-trader joke.
One thing I learned is that our colleges and universities now offer courses in trading. (Here’s one from Northwestern.) While it’s good to see this amazing skill set getting some academic reinforcement, I suspect that book learning will only get you so far in the trading pit. My experience of traders is that successful ones belong to a small number of not-very-common personality types; and personality is a thing that can’t be learned or faked.
After the NYMEX visit, I took Nellie to the Irish Hunger Memorial, which I wrote up for NRO when it opened back in 2002. Still a moving experience; and the complaints of eco-nags at the time — that (if I remember this correctly) the imported Irish heather would swarm all over lower Manhattan like kudzu — seem to have been alarmist.