Busby holds a bachelor's degree in business administration from the University of Georgia and a juris doctorate degree from Oklahoma City University School of Law. He was a distinguished graduate of the United States Air Force Budget Officer School and served seven years in the US Air Force before becoming a professional securities broker and trader.
Technical Analysis of Stocks & Commodities Editor Jayanthi Gopalakrishnan
(JG) and Staff Writer Bruce Faber (BF) interviewed Tom Busby via telephone
and email on March 31, 2008.
I got started in the markets when I was still in the Air Force. One of the guys in my squadron was trading pork bellies. It seemed exciting and so I decided to open a stock account, not knowing the difference between pork bellies and stocks. With that account I bought a couple of stocks. Both of them have gone into the history books as not good buys.
JG: What were they?
One was Pan Am and the other Eastern Airlines. Eventually, I transferred those stocks into the brokerage office of Merrill Lynch in Oklahoma City. I was fortunate. I had a great broker named Henry, who taught me a lot about the markets and also taught me about the option market. Well, I fell in love with the option market, because I made a bunch of money real quick. By that time I was going to law school and Merrill offered me a job. We worked out a deal where I could go to law school at night and be a broker during the day. I started doing it, fell in love with it, and I am still doing it to this day.Once the S&P came along in 1982, I knew the S&P market was for me because there I had a market that I could trade both up and down. That was a luxury in those days, because most everybody would trade to the long side. I was an expert in everything associated with trading back then. I was trading stocks, futures, and options, and doing real well until the crash of 1987. That wiped me out.
JG: That happened to a lot of people.
It took me a while to get my confidence back and get together enough money to start over again. After four or five years, I started trading again. Then in 1996 a friend of mine from my Merrill Lynch days came to me because he had gone to a school for trading and he was unhappy because they just took his money and would not give him any support. After some prodding, he convinced me to start the school I currently run today. He said that it would make me a better trader if I taught other people. I agreed with that, and now, the more people I get to meet, the more people I get to teach, and the better I get.
JG: You have had some interesting experiences going from boom
to bust to boom. What were some of the lessons you learned?
I learned that sitting in front of a computer all day did not make you money. It was better to take breaks and try to have a balanced approach anytime I looked at the market. I also learned that there were certain critical times during the trading day that would increase your odds of success. I learned it was okay to take losses. The losses are where the better lessons come from.BF: You mentioned that the crash of 1987 wiped you out to some degree.Looking at the world as a global market added consistency to my trading. Prior to 1987 I only focused on the day market, and I believe that most people trading in the US still think like that. Jumping forward to 2001, I learned about the Dax market on the Eurex. That market is very important to the overall analysis of the trend. After the US markets closed for the trading day, I went searching for a market to make money in, and the Dax was the one I found. I use it every day.
Nope. It wiped me out to all degree. There wasn't any degree left....Continued in the June 2008 issue of Technical Analysis of STOCKS & COMMODITIES
Excerpted from an article originally published in the June 2008 issue
of Technical Analysis of STOCKS & COMMODITIES magazine. All rights
reserved. © Copyright 2008, Technical Analysis, Inc.
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