About Dr. Terry Allen
I was not born with a silver spoon. My father was a baseball coach at a not-so-prosperous college. He was the first person in his family to go to college, and he gained entrance mostly because of his athletic skills. My mother was a nurse. We lived a happy post-war life in the suburbs. We were not poor, but eating out was a rare event.
I paid most of my way through college (Wesleyan) with some scholarship help and loans. I washed dishes every day for four years in exchange for meals, averaged 20 hours a week of work in the college library, and managed to find the time to play two varsity sports as well. When I graduated, I couldn’t find a decent job (who really wants a liberal arts graduate?) so I opted for graduate school, and somehow convinced Harvard Business School that I wouldn’t tarnish their reputation if they would accept me.
I very much wanted to live in Vermont, and sent my resume to every company in the state that had more than 40 employees. I accepted an offer from a small company in Rutland where the founder said that not only could I have a job, but his wife had found the perfect wife for me as well. Three months after I set eyes on this young lady, we were married (most of this time, she was in upstate New York finishing her senior year in college, so we really didn’t know each other very well when we tied the marital knot).
For my first 5 years of working, about a third of my net income went to paying off educational debt, so it was difficult for me to start building a nest egg. To make matters worse, I got fired from my job after just one year (that is another story, as a year later, I was offered it back at triple the salary, but I had other interests by then).
Newly married, and soon to be the father of three sons, apparently unemployable, I bootstrapped several small companies and invested heavily in real estate (at a time when you really could buy lots of rental properties with no money down, which is precisely what I had). One of the nice things about living in a remote part of the country is that there is not much competition for opportunities that might come along, and at the age of 26, I became the president of the regional Chamber of Commerce and the local Savings and Loan Association (both part-time jobs). My grandmother proudly pointed out that these accomplishments would look great on my obituary.
When most of my little businesses failed (or were marginally profitable and closed down), I started teaching business courses at night to feed my growing family. I moved to the Boston area because one of my businesses expanded down there, and then it had to declare bankruptcy. So I switched to teaching full time, at Babson College, in Wellesley. I was voted by the students as the Outstanding Teacher of the Year, and the president of the college encouraged me to get a terminal degree (sounds a little fatal, doesn’t it?) so that I could become a tenure-track professor.
Since my wife did not work, going back to school and continuing to support my family was a little challenge, but the University of Virginia’s Darden School offered me a full scholarship as well as a small monthly stipend, and we headed south to Charlottesville (after one year, I continued my course work while teaching full-time).
At Virginia, a required course involved financial modeling, and I chose stock options as my topic. The publicly-traded options industry had begun just a few years earlier at the Chicago Board Options Exchange (CBOE) and option prices were quite inefficient. I created a computer model to determine what those prices should be, and to help me make trading decisions. It was easy to make huge profits. I took out a small personal loan, and doubled my money every six months for two years while I was a doctoral student.
As soon as I achieved ABD status (All But Dissertation), I headed for Chicago and the CBOE (it would be over 5 years until I got around to finishing the thesis and earning my Doctorate, and ironically, I never taught school after getting the degree). I leased a seat on the CBOE and traded on the floor. Just as I was getting established, a couple of math professors named Black and Scholes developed and published a computer model that told everyone what option prices should be (they later earned a Nobel Prize for their work).
Several commentators stated that if these gentlemen had traded with their model instead of publishing it, they would have become multi-millionaires quite quickly. I had to agree with them. Except for one minor variable (the dividend payable if there was one), their model was essentially the same as the one I had developed while at Virginia.
Everyone on the floor suddenly started using the Black-Scholes model, and the inefficient markets quickly became efficient. The easy money has gone. I had a good thing going until they came along. I left trading on the floor and “retired” to Vermont where I continued to hold my seat in Chicago but relied on a clerk on the floor to carry out my trading decisions.
My marriage ended. We had made it for 15 years, a remarkable achievement for two people who hardly knew each other when they got married. We had learned over the years that we were basically unsuited for one another (we do remain good friends, however, and proud co-parents and grandparents).
Benjamin Franklin said that in times of stress, three things are important – an old dog, an old woman, and ready money. Thankfully, I have all three, My “final” wife, Debbie, had been a widow (her husband was killed in a Pennsylvania tornado as he stood next to her in their horse barn) with four daughters the same age as my sons. Some of our children had become friends, and we met at her oldest daughter’s wedding.
Debbie and I are living the kind of life that many Boomers will be doing soon (or already are). We are extremely active, both physically and socially. For the last 15 years, we have averaged two trips a year to foreign countries, mostly in Europe, for hiking. In 2007, we walked from one coast of England to the other, a distance of 200 miles. Each year, we visit the same small island in the Bahamas where they have not much of anything except pink beaches and world-class restaurants (and Internet-connect, of course).
Hardly a day goes by when we don’t take a long walk, play golf or tennis (including an occasional tournament) or go cross-country skiing. For 12 consecutive years, ending only when they canceled the tournament, we played in a USTA-sanctioned senior tennis tournament in Bermuda, often taking home prizes. We have many good friends and play or party often with them, and our family of seven mostly over-active children and four grandchildren presents us with daily celebrations and challenges.
Debbie has written an award-winning book on her passion of tending perennial gardens while I continue to trade stock options every day. Europe is the perfect place for me to be because we can spend an entire day of hiking or exploring and I can get on the Internet at the end of the European day when the market opens in the U.S.
And we have given back to the community. We built a swimming pool for the local Boys and Girls Club, and I have served on the board of Champlain College for many years (also giving several hundred thousand dollars worth of scholarships mostly for first-in-family college students and single parents). Champlain offers cutting edge courses in new technologies – including web site design, computer game design, search engine optimization, and cyber forensics. Debbie started and managed a non-profit artisan’s guild that provided a market for 170 juried Vermont artists, and has also sponsored a large number of fund-raising projects for many local charities. Over the past 10 years, we have given away over $2 million to worthy charities in our home state of Vermont.
I have worked and played hard for many years, but as Confucius said, “If you do what you love, you don’t have to work a day in your life.” That, in a nutshell, is my story.