Meet CIS, Japans market-moving enigma who can make millions of yen in his pajamas -

It was six minutes after the opening bell on Feb. 4, and dozens of big-name stocks were still untraded in Tokyo. Telecommunications giant SoftBank Corp. was among those that hadn’t budged. The offer price fell 5 percent, then more, and still there were no takers.

Then an order was filled: 300,000 shares at 6,714 yen — worth just over 2 billion yen, or almost $20 million. Other buyers followed, momentum built, and the stock ended the day as one of only two gainers in the Nikkei 225 stock index.

The man who made the market for SoftBank that winter morning was sitting in pajamas in a bedroom cluttered with comic books. He was leaning into the glare of four computer screens and munching a carrot — something to calm his stomach.

Betting on rebounds was dangerous, but he’d watched SoftBank lose a fifth of its value over nine days, and a drop in U.S. markets overnight had driven the shares even lower. The odds were tilting further in favor of a bounce, by his reckoning. He decided to pull the trigger, rat-a-tat-tatting the orders in.

Ninety minutes later, he cashed out with a profit of 140.6 million yen. Then it was on to the next trade for the former video game champion and pachinko gambler who goes by the name CIS. The 35-year-old day trader says he made 6 billion yen, after taxes, betting on Japanese stocks last year.

During a decade of day trading, having started more or less from scratch, CIS has amassed a fortune that he says now exceeds 16 billion yen. In the process, he has become a cult figure among Japanese day traders, a tight circle of self-taught professionals who take pride in working one of the world’s toughest markets.

Only a handful of his peers know his real name, and no one has watched him work. CIS didn’t offer a complete accounting of his investing returns and his wealth for this story, and some of his claims can’t be verified.

He did show multiple 2014 statements from one of his many brokerage accounts, in addition to his 2013 tax return. Those brokerage statements, from SBI Holdings, showed liquid assets ranging from 4.4 billion yen to 4.8 billion yen. His tax return showed he traded 1.7 trillion yen worth of Japanese equities in 2013 — about half of 1 percent of the value of all the share transactions done by individuals on the Tokyo Stock Exchange. On his busiest day, he says, he bought and sold 70 billion yen worth of stocks.

CIS, pronounced “sis,” means death in classical Japanese. The nickname is a holdover from his gaming days, when he used to crush foes in virtual wrestling rings and online fantasy worlds. “Games taught me to think fast and stay calm,” he said over tea at Tokyo’s Hotel Grand Palace a few days after the SoftBank trade.

Rail thin, with a shaggy mop of hair, he showed up in a gray sweater, jeans and sneakers. No one would have taken him for a multimillionaire.

CIS wants people to know what he’s accomplished; he just doesn’t want them to know who he is. Even after six sit-down interviews over many months, CIS asked not to be named for this story. Married with three kids, he says he’s worried about being targeted for robbery or extortion.

First big score

CIS’s first big score came on Dec. 8, 2005, when someone at Mizuho Securities made a costly typing mistake. Rather than selling a single share of a small recruiting company called J-Com for 610,000 yen, Mizuho offered 610,000 shares for 1 yen each. The order was for 42 times the number of outstanding shares. CIS saw it had to be an error and was among a small number of day traders and institutional investors who pounced. CIS says he bought 3,300 shares, about a quarter of the actual total, at the limit-low price.

By the time everything was sorted out, Mizuho’s quarterly profit was gone and CIS was, as he tells it, 600 million yen richer.

Even now, the J-Com trade ranks as the best 10 minutes of CIS’s professional life. But he didn’t celebrate. He didn’t even pause. Instead, he shifted his winnings into Nintendo, reasoning that whatever had happened that morning, lawsuits were bound to fly and it would be harder to seize his gains if they weren’t in cash. Then he shorted the brokerages. Somebody had screwed up, and financial shares would probably get punished for it.

Early in his career, CIS made a name for himself trash-talking on 2channel, Japan's most heavily visited online bulletin board. He became notorious for such lines as "Not even Goldman Sachs can beat me in a trade" and "Excuse me while I go flush some cheap wine that only cost me 800,000 yen."

In person, it’s not easy to square CIS with the bravado of his online alter ego — or his wealth. Pale from hours staring into computer monitors, he looks like the video game junkie he once was. Stress has given him chronic stomach pain and a dusting of gray at the temples.

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CIS’s friends are primarily other traders, people such as Kenji Uemura, a former Sony engineer and the author of a how-to book on trading, now in its fifth printing. A 39-year-old with an Elvis-style hairdo and sideburns, Uemura says that he has put together 300 million yen in a decade of trading and that, like CIS, he doesn’t go in for bling.

“The kind of person who wastes money on that stuff would never have made it this far,” says Uemura, whom traders know as Kemu. “Self-control is so important. You have to conserve your assets. That’s what insulates you from the downturns and gives you the ammunition to make money.”

Gamer mind-set

CIS says he barely got his degree in mechanical engineering, having devoted most of college to the fantasy role-playing game Ultima Online. Holed up in his bedroom, he spent days on end roaming the game’s virtual universe, stockpiling weapons, treasure and food. He calls this an early exercise in building and protecting assets.

Wicked keyboard skills were a must. He memorized more than 100 keystroke shortcuts — Control-A to guzzle a healing potion or Shift-S to draw a sword, for example — and he could dance between them without taking his eyes off the screen. “Some people can do it, some can’t,” he says with a shrug. But the game taught a bigger lesson: when to cut and run.

“I was a pretty confident player, but just like in the real world, the more opponents you have, the worse your chances are,” he says. “You lose nothing by running.”

That’s how he now plays the stock market. CIS says he bets wrong 4 out of 10 times. The trick is to sell the losers fast while letting the winners ride. For him, a well-played stop-loss is just about the most beautiful trade there is.

That’s why he says a less flashy SoftBank trade than the one from February may turn out to be his best move of 2014. On the first trading day of the year, he dumped 4.5 billion yen worth of SoftBank shares. He took a 2.5 percent loss on the day but got out with a 650 million yen profit on the position, which he’d built since mid-October. SoftBank slid 18 percent in the month after he sold, and weeks later, regulatory filings showed why: Capital Group Cos., the giant U.S. fund manager, had been offloading the shares.

Stocks entered the picture for CIS when he was in his early 20s and working as a designer of industrial shock absorbers at a small manufacturer. He began by betting on what he thought were undervalued companies, and he lost money.

He found success after a friend gave him a piece of advice: Forget the fundamentals. CIS doesn’t scrutinize earnings reports or parse central-bank statements.

Instead, he keeps his ears open in chat rooms and his eyes glued to bid-ask screens, on which he monitors the market’s appetite for its 300 most heavily traded stocks. If there’s one basic principle, he says — repeatedly and slowly, as if instructing a child — it is this: “Buy stocks that are being bought, and sell stocks that are being sold.”

Two years after learning to follow the momentum, CIS says, he’d made 80 million yen day trading on the sly at the office. In late 2003, he quit the salaryman life to work the market full time.

Since then, there have been more than a million trades, CIS estimates. Early on, he held most positions for just seconds at a time, making hundreds of moves each day. Now that he has more money, there’s no choice but to hold positions longer, because shifting such large sums in and out of the market influences prices.

When CIS isn’t betting on stocks, he’s gaming elsewhere. He plays low-stakes mah-jongg most afternoons after the market closes and is ranked in the top 99.94 percentile of 3 million players on a site called Ten Hou, where he plays under the name CISCIS. And if it’s not mah-jongg, it’s poker or blackjack, online and sometimes in person.

Many of the day traders in CIS’s circle can be considered wealthy, especially after the bull market of 2013. But CIS is on a different level. How he managed to build a fortune of such size is a subject of much speculation among his peers.

Maybe it’s the simple fact that he doesn’t get rattled, says Masahiro Kawata, a trader who plays mah-jongg with CIS. Then there’s his single-mindedness. CIS doesn’t seem to regard trading, or amassing money, as a means to anything. Trading is the point. Winning is the point.

With Japan’s market returning to form — the Nikkei dropped about 5 percent in the first eight months of 2014 — many day traders who struck it rich last year are getting out. Who wants to spend day after day glued to computer monitors if you don’t have to?

It’s not a sentiment CIS shares. As of late summer, he was flat for 2014. Nevertheless, he thinks he can hit 100 billion yen in assets by the time he’s 60.

“If you just consider compound interest, it should be pretty easy,” he says. “But who knows? Maybe I’ll get an ulcer and have to stop. Or maybe I’ll find something more fun to do.”

The full version of this Bloomberg Markets article appears in the magazine’s November issue.

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