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The Greatest Loss is Self Confidence: Part II

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Jerry Welch, Commodity Insite!
Call me at 406 -682 -5010
Ennis, Montana 59729

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The Greatest Loss is Self Confidence; Part II

Intermarket Magazine in 1985 interviewed Roy W Longstreet, age 84 at the time. The interview was reprinted in 2010 by Peter L Brandt of, Factor Research Trading Services. Mr. Longstreet was described as, a legendary grain trader and pioneer of technical analysis of commodity markets. As a principal of the brokerage firm Longstreet Abbott, Roys specialty was a technical approach known as analog-year research. Roy had great insight on the role of emotions in market speculation. Mr. Longstreet is also the author of Viewpoints of a Commodity Trader.

Here are my personal recollections of Mr. Longstreet from my book, Back To The Futures in a chapter entitled, The Greatest Loss Is Self-Confidence. The column was penned on January 15, 1987 and dedicated to Mr. Longstreet, better known as the,Chief. And it was the Chief that hired me to work for him.

Eventually the Chief decided to write a book about his experiences in the marketplace. After all, Longstreet-Abbott, Clayton Brokerage, and Clayton Commodity Service were all a direct result of his efforts and dominant personality. His book was entitled, Viewpoints of a Commodity Trader. But the book is concerned with more than just the markets. The book deals with self-motivation, harnessing ones emotions, and maintaining a positive outlook on life. Mr. Longstreets book is as much about self-improvement and human psychology as it is about commodity trading.

In the early 1970s, the Chief, and many Clayton Commodity Service customers, were bull-spread in the orange juice market. The Chief was convinced that the nearby orange juice products would gain in price compared to the back months. And he was right. Thanks to the Chief, Clayton customers were soon sitting on substantial profits in bull orange juice spreads. Then, disaster struck.

Over a week end, President Richard Nixon ordered a freeze on all commodity prices, an unprecedented action on the part of a President of the United States. It caused turmoil, volatility, and chaos never before seen in the commodity markets. For several days, the nearby orange juice contracts went limit down, while the back month contracts were steady, and in some cases, limit up. It took us days and days to liquidate those orange juice spreads. It was a nightmare that cost most of our clients, including the Chief himself, a great deal of money.

But what really hurt was the fact that we had huge profits on those spreads. But President Nixons price freeze turned those handsome profits into enormous losses. It was a mess! A few days later I walked into the Chiefs office after the fallout from the orange juice trade was over. I said, Chief, I just cant believe we got hit so hard in that market. We had such huge profits. To lose the money we got so quickly is just unbelievable. I dont know if Im cut out for this business. Losing all that money was a killer.

The Chief, then in his 70s, was seated behind an enormous, special made, crescent shaped, wrap-around desk. He looked up and stared at me. After what seemed like an eternity, he said, The greatest loss is the loss of self-confidence. The money comes and goes. Without uttering another word, he glanced down at the chart that he was focusing upon intently.

I stood there for a second, feeling fifteen years old and foolish. But there was nothing more for me to say. I turned and walked out of his office. The Chief never looked up as I left. Not once.

Longstreet-Abbott, Clayton Brokerage, and Clayton Commodities Service no longer exist. The Chief, however, is still around and a legend. Believe it or not, I swear he looks no older now than he did when I worked with him in the early 1970s. And he still trades commodities!

A short time after I left Clayton Commodity Service the firm closed the doors for good and the Chief retired. However, the Chief opened a personal account with me at Commodity Insight and continued to dabble in the markets, allowing me the opportunity to talk with him daily. He passed away in 1991.

To this day, when it comes to investing, trading or any endeavor, of all the advice the Chief gave me back in the olden days I savor this above all else: The greatest loss is self confidence.


Sunday, October 13, 8:50 a.m. Chicago time

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About the author

Jerry Welch has been in the futures industry since the late 1970's and is a true veteran of the markets. He has been quoted often in Wall Street Journal and is author of Commodity Insite, one of the longest commodity futures newspaper columns in history. His weekly column has been published each week since the mid 1980's and is one of the most recognized names in the world of commodities.

Mr. Welch is also known widely as a, "so so" flyfisherman.  

His column is published by the Illinois Agri News in La Salle, Illinois, Cattle Today, in Fayette, Alabama as well as Consensus, in Kansas City, Kansas.

He can be contacted at 406.682.5010 for a view of his, "twice a day" market column that includes price forecasts and trading suggestions.

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