By the time Zimmerman was hauled out of the pits by Board of Trade security guards, he had ruined an old-line trading firm, threatened the Board of Trade with its first default in history, raised serious doubts about its trading system, and changed forever the way business on the world’s futures exchanges is done. Zimmerman spent the next three years trying to stay as far away from LaSalle Street as he could.
Step 1 Dream Big
In 1984, Zimmerman picked up a copy of a girlie magazine–Penthouse maybe, he can’t remember exactly which one–and read a story about six men in their 20s who chartered a Learjet to Las Vegas and blew ten grand on an evening’s entertainment. One was a rock star, two were professional athletes, and three were commodities traders. Zimmerman nixed music and sports careers. The next day at the Vancouver library he pulled every book on commodity trading. He read only one: How to Make Money in Commodities by Dr. Bruce G. Gould.
Before Zimmerman could get heavily into the gold markets, however, the Canadian government busted the firm after discovering that its officers had plundered $5 million from customer accounts to cover their own losses. Zimmerman and a few of the other stranded brokers set up shop in the borrowed back room of a Chinese restaurant.
Step 3 Move to Chicago
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If Zimmerman had arrived a few hours earlier he would have found the frantic action he was looking for, but inside the building. Since futures were first traded here during the Civil War, Chicago’s financial markets have been more famous for their hubbub than for their economic purpose. Then, as today, futures contracts existed for the simple purpose of letting farmers, grain processors, and merchants establish prices for commodities months in advance of the actual shipment. That helped insulate the producers and commercial users from the risk of price swings by letting them transfer much of their risk to speculators, who bet on prices going up or down. In the 1970s the Chicago Mercantile Exchange changed the futures markets forever by expanding beyond agricultural products to include financial contracts. Futures on foreign currencies came first, then contracts on stock indexes, bonds, and other financial instruments. By the time Zimmerman arrived, the transformation was complete: financial pits outnumbered agricultural pits, and Chicago was giving the world’s other financial centers a run for their money.
