Funny thing, if Lee Stern weren’t employed at the office at Roosevelt University (Roosevelt College at the time), he would probably never get into trading. While working in 1947, he noticed a sign in his office about marketing positions for runners at the Chicago Board Trade, a block away. Stern was 20 years old, and he was hired by no one else but Merrill Lynch as a runner.
The job was good, paid him well, and he even received a sort of scholarship for going to school on the GI Bill. In 1949, he became a CBOT (The Chicago Board of Trade) member. Fast forward, or sixty-nine years later, he is still trading (and even operating a whole trading company). He said it seemed important, so that’s why he got into it. Simple as that.
Soybeans and Spread Trading
Lee had to get a loan to get into the business, and luckily his mother and father wanted to help him. Memberships at the Board of Trade were costly when he got into the market, so he had to purchase a seat for $2,250. On top of that, he needed someone who could vouch for him because he was a new member, so Howard Hinman and Larry Sachs agreed to do that. Stern decided to manage his brokerage account but still needed to trade using a company. He was a small trader, had only $500 in his pocket, so he started with soybean.
He realized he was good at spread trading and stuck to it. McCarthy saw his potential, so they became associates soon enough. Stern took over McCarthy’s firm in 1967. He established Lee B. Stern & Co., and became a clearing member in 1971.
Trial and Error
The biggest scandal that hit Stern is called “the bond fiasco,” which happened in 1992. What happened was that two exchange members (one of them was a new customer) were trading illegally. This cost the company $8.5 million, and they were temporarily suspended from any exchange. The company covered the loss, taking a very big financial loss instead of going to bankruptcy. They got back the membership, but Stern decided he wouldn’t be a clearing member anymore.
In 1993, his company recovered, and they made more profit than ever, thanks to soybeans. He said that you could create new once you lose the money; you don’t make it back.
Stern today manages LBS Limited Partnership, which is a small futures company. His routine involves trading on his home computer, coming to the office for around 3 hours, and then returning home. He trades with commodities (still including the grain markets), bonds, gold, and crude oil. He witnessed every change in the way the stock market works and how it evolved technologically. He says he didn’t have any problem with it, and that it just allows him to trade more.
Lee Stern has been trading for nearly 70 years. Guess what? He doesn’t think of retiring. He goes by the logic if he’s going to live up to 100, he needs to stay active.