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The Commodity Broker Chapter 5 By Milton Laene Araujo
Chapter 5- November
2007
Paul started the
Meeting at 8:30 Am
“We had a very nice October. We opened 50 new accounts and
we did over 750 trades…I am very pleased with everyone’s performance. I want
you all to put your hands together for Nikisha who just passed the test…clap, clap, clap… and for Cindy, who
besides her great job making money for all of you is responsible in helping you
with the material for the exam. Clap,
clap, clap, ….Nikisha, I want you to
spend the day watching everyone. I want Chad to stay with you the entire time
helping you with your calls… It’s very important that you know what we call…
INTEGRAL to success… You must dress for success…Look at Victor! He looks very
sharp today…We only work five days per week and only two evenings…Tuesday and Thursday
evenings we just work for three hours. Arriving on time is key and you must
have at least two solid fronts per day…WITHOUT EXCUSES!! What I mean by front
is complete information of the prospect, from suitability to financial
information. I don’t want you to copy from the lead and pretend to be your
front! Keep sick days to one per month average…MAX. Make your personal
appointments during non-office hours. Maintain a quota on new business – ASK
your employer their expectation. Treat your fellow employees with respect…Treat
clients with respect, honesty and integrity…”
And Paul goes on…
“Now… I want to talk
about Bad Ideas for Success in Sales… Lack of focus – Do what you are being
trained to do. First be successful, and then you may try to innovate or create
a plan…Like I said…Lateness or Absences –Sure fire away to fail in Sales!
Excuses…there is NO EXCUSE. EVER! Everything is ALWAYS your fault…missing training
meetings – You can never learn enough…Social Selling –The clients are not our
friends. The brokers around you are NOT your friends. You are there to make
money. There is no place to act like a clown, horseplay or practical jokes…”
And Paul goes on…
“Pay attention to where you work…The place you chose to work
is the most important decision you will make in your sales career. Once you
make the decision to work in a particular place you should commit 100%.
Shopping deals, nosing around your industry and keeping “FRIENDS” at other competing
firms will make you an outsider and keep you there. Mercenaries (a slang term
for a hired gun broker) are only as good as their last month commission and
rarely up the food chain…
Paul spits his chewing gum in the trash and takes a zip of
water… He goes on.
“Like I said…A Mercenary Broker is a personal opportunist
that will change firms, steal brokers and otherwise conduct underhanded actions
for personal benefits. Mercenary brokers are easily spotted. They have a lot of
“friends” at other firms and try to force relationships with entry level
brokers everywhere. They always have a joke or anecdotal comment for various
aspects of the business. They “share secrets” and otherwise try to get others
to believe that they are inside. They have the “illusion: of wealth (maybe a
leased Mercedes or BMW) and a lot of industry experience, but no significant
net worth commensurate with their time in the industry.”
Paul takes a break, looks around the room to see who is
missing…Looks at Jose Roberto…who reads his mind and gesticulates that the
person in question is using the telephone. He goes on…
“Like I said…The firm had better have the money to pay you
on pay day or all your hard work was for nothing. It’s extremely and
unfortunate common for brokers to get screwed out of their paychecks. Get this
straight.”…Another zip of water…”Get this straight right now; there is no story
or excuse for you not getting your pay check. If the boss breaks his leg on his
way to the office on payday he should crawl to the office and hand out the
checks. There is no excuse in the world that excuses no CHECKS. If you ever
don’t get a check (a check you actually deserve) you should run and get another
job.”
Only 12 minutes have passed. Paul walks around the room
while talking.
“Of equal importance is professionalism. The firm for which
you work will be a reflection of the owners and managers. If they act like
slobs, you can expect to become a slob. If they underhand things to others,
they are already doing it to you. You may not realize it yet, but you will
eventually. Observe this…Like I said… here a dead tips offs for unprofessional
firms to avid…Owners and managers talk negatively about each other; Owner
family members’ all over the firm in various positions; Management uses the
firm as a Dating Pool; married owners or managers who lie or cheat on their
spouses; secretive managers or owners; firms with large turnover rates; Dirty
Firms, or Un kept firms…Make sure you clean your desk with Windex every-day
before you leave!”
Paul stops talking and a tall man walks in the office.
“I want to introduce to you a good friend of mine. His name
is Santé di Franky. He will share some valued information with you…”
“Hi, Everyone…Paul and I go a long way. We used to work
together before we became good friends… But what I want to talk about is
Leads…when I was in the business I heard it every day: The leads are weak; the
leads are weak? You are weak! …It’s not me… it’s the leads…they suck! If the
leads were better, then I could open accounts; nobody can make money with these
leads; Look, I am a great broker, so when I have no accounts then you know it’s
the leads…and so forth and so on…Here is the deal, most good companies get the
same leads. In fact they get the same leads from the same places, purchased or
generated from the same people. Think about it, if ABC Company found some new
and exciting way of generating these amazing leads that “Virtually closed
themselves”…wouldn’t everybody just copy it?...A good lead is the one where you
get the prospect to listen. The more carefully they listen the better the
broker…Now imagine you found a phone number on the floor in the deli while were
buying lunch. You called it. A man picked up the phone and answered hello and
you just started by saying… Hi, this is Santé at ABC Company. Who am I speaking
with?” He responds with the name Bill. Bill I am glad I got a hold of you
today. The reason for my call is… Now imagine that guy made a monster purchase
or opened a huge account with you. Wasn’t that a great lead? This happened with
me! Remember, you are in a sales business where leads are provided to you! You
see different names every day! Be assured you are getting a quality lead. Since
you should expect to make 150 to 250 dials per day you will need about 35 leads
per day…due to call backs, left messages and no answers which need to be
recalled at later times.
“Clap, clap, clap…”
Paul returns to the floor.
“We have a program that states how many calls each one of
you made from the telephone that you are using…every day! I posted it on the
board along with your name…you can check this after 3:00 PM…But I see here that
Diva only made 52 calls yesterday while Milton made 107 calls yesterday… Cindy
made exactly 150 and Victor made the most…200 calls. I know who is working and
who is not working!...Also on the same board you can see the number of accounts
opened and each respective broker…Milton opened seven accounts last Month…If he
keeps up he will have a great paycheck next week…I want to take this last
minute to call to the floor Peter …who made $65000 for himself last month and
give him this gold Rolex watch for his services. Peter we appreciate you! The
meeting is adjourned.”
At this time everyone returns to their post.
“Hey Sofia, I need to speak with you.” Diva said to Sofia.
“Hi Diva,…sure. Can we leave here today at 3PM and skip gym?
Would you come to the bank with me? They have an agency in Boca Raton. I need
to make this deposit yesterday”.
“How much is your paycheck Sofia”
“Mine is $3700 this week and yours Diva?”
“Mine is $6400…it could have been $12,000 but I had to split
with Peter. Well, Peter is very nice actually, because I wouldn’t have made
anything by myself…He is the one who got the client to send an extra $50,000…I
thought you would make one million by now…”
“Maybe next week it will be better for me. I just put Mr. Jenkins
in the market yesterday.”
“Yesterday? Why? You opened his account last month Sofi.
Maybe you should ask Peter to help you.”
“That’s what Paul tells me, but I am reluctant…I will think
about it…See you later.”
… ((A CALL HOLDING ON LINE 2, SOFIA HAS A CALL HOLDING ON
LINE 2))
“Damn speakers!”
“Good morning, this is Sofia”
“Good Morning Sofia, Bob Bowen here”
“Bob!!! How is Indiana this morning?
“It is in the same place Sofia”
“Bob, we have a birthday coming, don’t we?”
“Not for a couple of weeks Sofia…how do you remember?”
“I have it written here on my calendar. Plus I have a sister
born on the same date. No brainer.”
“The reason I am calling is that I don’t know how to answer
on question on my application.” Bob said to Sofia.
“What application bob”…don’t tell me that you are going to
be my client?”
“Off course Sofia….Who
wouldn’t? I mean, you explained the risk more than the profits. I decided to
gamble, and you are my casino.”
“Very funny! What is the question Bob?”
“On the individual information form… middle of the page…What
is your investment purpose in opening the account? I am not sure if the answer
is Speculation or Hedging.”
“It’s Speculation Bob.”
“OK. I get it. What is your expected trading pattern? Here
it says, Futures, Options or Both”
“The answer for that one is Options, Bob.”
“Got it…Why can’t a put both?”
“Because you are opening an account with an Introducing Broker (IB), which is my firm. An IB is an individual or organization that
solicits or accepts orders to buy or sell options, but does not accept money or other assets
from customers to support such orders. As you can see your money is not coming
to my company, or under my company’s name. It is directed to the FCM who is
above us. I will carry your account with a FCM on a fully disclosed basis… they
are our guarantor.
“OK. Whatever.”
“This is actually
for your protection Bob. In case something happens to our company, you have
your asset with a larger company that operates like a bank. I am working in
your behalf with such a company. There are others FCM’s out there. I call them
mother companies! Some FCM just like to deal with a few commodities, while
larger FCM’s deal with other or even all commodities. As your Broker I will use
a different FCM only if we decide to invest into something our FCM of use
doesn’t carry. It sounds complicated, but it is just that small firms cannot be
receiving checks from clients… This is serious business Bob.”
“I get it Sofia.
Is there anything you don’t know?”
“Is that a
compliment Bob?”
“Yeah, I mean…Here
I am filling out papers and I do not see your company’s name on this form, but
a TRUSTCOM something…”
“Right, this is
our FCM, and you will receive your statements under that name.”
“Why am I going
through you then?”
“A FCM doesn’t
deal with clients directly. They deal with IB firms like mine. So, one FCM
could serve all IB’s in one state. I however deal with you directly and I am
under the FCM”
“What does it
stand for?”
“Now you are
pushing it Bob...Just kidding. It means Futures Commissions Merchant.
..Remember when we talked about futures and the difference with Options, being
that futures have unlimited loss potential, while with options you only can
lose what you invest? Well, my firm deals with options because we do not want
to be calling you to make a deposit every time the price takes a turn against
what we aimed. It is safer to know that you can lose only what you have
invested, but I recommend that you read about futures to see if it is something
you would like to do in the future.”
“I have to go Sofia.
FedEx is coming here in half an hour and I want to have this envelop signed
sealed delivered…I am yours!”
“Great Bob… How much are you sending?”
“I was going to
send $15,000 to start, but I changed my mind and made the check for $5,000.”
“Should I send
more?”
“NO PLEASE! Let’s
do baby steps Bob. If I am good I will make $5,000 for you this month, and I
want to send it back to you! I feel better to play with the profit you made.
Imagine you spending $5,000 and receiving it back and still have $5,000. This
way if I tell you to buy sugar options instead of cotton, you will listen to
me.”
“Can you just
like… do whatever you want with my money and call me to tell me what I have?
“Yes Bob. I can,
but only two years from tomorrow. You see…this is the dream of everyone who has
money to play. They have money but they do not have time or the desire to be in
front of a computer screen all day checking if it is the right time to get out
of the market or re-enter. This is my job…I am your ears and eyes with the
market, and two years from now I will obtain a power of attorney from you
giving me this right. You need to get to know me better…any broker for that
matter…”
“Oh, like my
stock broker?”
“No. Your stock
broker calls you when he makes change to your account or moves you to a
different market as well. You don’t hear from him very much because you must be
involved in mutual funds, retirement accounts. It is less risky Bob. What we
are doing now, I mean, what we are going to do is very risky. Your money can go
away the day after, but if the market bounces back and rallies you are back in
the game, yet, you won’t lose more than what you invested.”
“That is fair.”
“Bob, I have another call on hold. I will call you tomorrow to
let you know
whether I received your application or not.”
“Thanks Sofia.
Good bye.”
“You are welcome,
Bob. Good bye.”
“Click.”
“Hi, this is Sofia”
“Hi Sofia this is
Bob Jenkins”
“Hi Mr. Jenkins,
I see you are up early today”.
“I got a message
to contact you.”
“Yes, you did. I
asked Marta to call you for me, but I did not expect her to call you while I
was on the other line.”
“She didn’t. She
located me and asked me if I was going to stay around in the next fifteen
minutes or so. I wanted to know what is going on and I didn’t want to wait.”
“Good. I see here
that your 10 positions on Crude Oil are with a profit around 35% and I want to
get rid of it and enter right back in with another 10 positions.”
“Why not 14?”
“Mr. Jenkins, I
want to leave the remaining on your account to try a different market later. I
have a feeling that sugar is going up in the next week or so. I was reading an
article that coca cola is going au natural. I also read an article about an
increase of ethanol in our gasoline, which means price of corn also going up,
as well as sugar. Russia makes ethanol with beets, but Brazil makes ethanol
with sugar cane. The price of sugar will go up if we have a hurricane in the
Caribe…”
“OK”
“Mr. Jenkins, I
am going to transfer you to (compliances) and they will record your voice. You
will authorize the sale of 10 Contracts. Hang in there please…Ah, and within 30
minutes I am going to spend all the remaining of your investment into other
commodities, I am not sure yet, but I will call you to let you know.”
“OK.”
“Click.”
“Hi this is Sofia”
“Sofia! Jonathan
Rolls here”
“Hi my friend
from Missouri. How is the weather there?”
“It is insane Sofia.
We had a tornado last week. Thank God, we are fine, but the city is not so
well.”
“I guess, you’re
going to work even harder to fix the power lines and the electrical damages.”
“I am.”
“Good. More money
for us to invest… So, how may I help you Jonathan?”
“I have mailed to
you my account information yesterday. I have the FedEx tracking number right
here, would you like it?”
“We got it
delivered to us fifteen minutes ago”
“Oh, Good… I have signed a transfer authorization form
for you to handle my positions with a different firm. I have 27 contracts on orange
juice, and the guy said that it is deteriorating…I think I am going to lose it
all”.
“Whose idea was
to get into OJ?”
“His idea and it
sounded good…I had heating oil and crude oil, but he sold it three days later
with profit. And now I only have OJ with them. I prefer to transfer to you
because the guy is an asshole and he wants more money from me.”
“How much money
are you sending to me Jonathan?”
“I can only send
$10,000. I’ve sent him $20.000”
Chapter 1 http://miltonlaenearaujo.blogspot.com/2013/08/the-commodity-broker-chapter-1.html
Chapter 2 http://miltonlaenearaujo.blogspot.com/2013/08/the-commodity-broker-chapter-2.html
Chapter 6 – 7 http://miltonlaenearaujo.blogspot.com/2013/08/the-commodity-broker-chapter-6-and-7.html
“That is good,
but you should‘ve sent me $5,000. I will not re- invest your profit… we will
play with your $10,000 until the end. If we get out with profit, we will put it
aside. Understand?”
“Click”
