Chapter 1: I Suspect You're Right

While this story was inspired by actual persons and events, certain characters, characterizations, incidents, locations, and dialog were fictionalized or invented for the purposes of dramatization.

January 23, 1983, Chicago, Illinois

The adrenaline rush had made me slightly light-headed and nauseated, but I recovered quickly and picked up the phone, which had clattered to the floor when I'd dropped it.

"Jonny?!"

"Sorry," I said. "I dropped the phone. I'm not sure what to say."

"I've made a real mess of things," Bev said, "and I don't know what to do."

"I'm not sure, either," I replied. "Let me think about it, please."

"You promised you wouldn't tell anyone!" Bev said frantically.

"I won't. Let me call you in a few days, OK?"

"But I can't talk if my parents are home!"

"Then we need to find a way to talk soon. Figure something out, please."

"I will."

"It's OK to call me at work to arrange a time to talk."

"Thanks for being here for me, Jonny," Bev said. "I'll call you soon."

We said 'goodbye', I hung up, and took some time to take stock of the situation.

I had given my word to Bev, and my word was my bond, but given my mom's relationship with Glen, I wasn't sure I could keep the information from her. I had no idea how she'd react, but no matter what, I couldn't let her marry Glen without knowing he'd not only slept with Bev but was also Heather's dad.

I did some quick math in my head and thought back to what I knew. Glen had started at Goshen in August 1980, Bev had become pregnant in September 1981, and had given birth in June 1982. My mom had started working at the High School in July 1982, had met Glen at some point after that, and they'd had their first date around the beginning of October 1982.

On the plus side, that meant Glen's relationship with Bev had been over for a year when he started seeing my mom. That was, though, the only plus I could see. He was a teacher, he was something like thirty years older than she was, and he'd gotten her pregnant. I had to assume the circumstances were as Bev had said — that she'd been on the Pill and had taken it religiously.

A thought crossed my mind that I actually couldn't trust anything Bev had said about what had happened from the time I told her I was moving until, well, I actually wasn't sure I could trust anything she'd said about her relationships. That concerned me, and before I could move forward with her, we'd have to sit down and talk. In a sense, I didn't care about who or what, but lies and deceit were a massive obstacle to overcome.

Thinking further about it, though, it might be the case that Bev hadn't actually deceived me. If she'd been positive that Bob Leahy was Heather's dad, then the only thing she'd done with regard to me was conceal that she'd had a relationship with my mom's future fiancé. If Heather weren't in the picture, that wouldn't matter so long as the relationship wasn't continuing. Ultimately, who Bev had sex with was her business, not anyone else's.

As I analyzed the situation further, I felt Glen had to suspect that Heather might be his, as I was positive that my mom would have told him about what had happened. I tried to think about how I would respond and considered my reaction to the fact that Huifen might have been pregnant. If she had been and had chosen to have the baby, I would absolutely have stepped up and taken responsibility. What that meant would have been negotiated between Huifen and me, with the best interests of the baby paramount.

But what if one of the other girls turned up pregnant? With very few exceptions, they weren't monogamous, and I wasn't expecting them to be, as I sure wasn't. If one of the girls who hadn't made a point of saying she was only sleeping with me discovered she was pregnant, it would be far more complicated. And the more I thought about it, the more I realized that Glen might suspect, but couldn't know, because it was entirely possible Bev had been with other guys. Again, that was her business, except with regard to naming Heather's dad.

Of course, she didn't have to name him and could simply forego child support, but I wondered how her parents would react to that. She was living at home, and her parents were paying for school, and that put her in a position where they could pressure her. Following the same path my mom had followed was not easy, and I had no idea if Bev had friends who could take her in and how she would make ends meet while raising Heather and trying to finish her degree.

In the end, everything depended on what Bev chose to do, and I could only offer suggestions and support with one caveat — I felt strongly my mom had to know. And that presented me with a dilemma of which 'right thing' to do — honor my relationship with my mom or my word to Bev. Doing both would be possible if Bev either allowed me to tell my mom or told my mom herself. If that didn't happen, I'd have a tough choice to make.

Despite my conversation with Bianca earlier, I begged off being together, as I simply wasn't in the mood.

January 24, 1983, Chicago, Illinois

On Monday morning, after breakfast and a shower, I put on one of my new custom shirts and tailored suits, along with a red 'power tie', as Beth called it. I checked myself in the mirror on the back of the bathroom door, then went downstairs.

"WHOA!" Shelly exclaimed. "That suit is amazing!"

"Thanks."

"If you walk into a bar, every chick in the place will be ready to drop her panties for you!"

"That already happens!" Bianca interjected. "Well, at a university dormitory or party!"

"Now all he needs is the American Express Card and Rolex!" Shelly declared.

"I applied for an Amex card," I said, "but the $5,000 watch is going to have to wait until I make a lot more money than I do now, and I'm not sure spending that kind of money on what amounts to a fashion accessory makes sense! My Casio does just fine, and with a metal band, it doesn't look out of place."

"Well, you certainly look the part of a high-flying stockbroker!"

"Which will mean nothing if I don't actually make money for Spurgeon!"

"Are you going to change before class?" Bianca asked.

"I actually mentioned to my new friends in class that I would probably be in a suit when I came to class if I don't change. I actually didn't think about it this morning until you just asked. I'll probably start taking a bag and changing into more comfortable clothes. That said, Violet will appreciate seeing me in a suit because I told her about them. She was curious about what they'd look like. Anyway, I need to go."

"You start earlier now, right?"

"Yes," I replied. "7:00am so that I can have my daily 'analyst report' on Mr. Matheson's desk before the opening bell at 8:30am Chicago time."

"What goes into that?"

"I'll explain later, OK? I don't want to be even thirty seconds late for my first day!"

I left the house, got into my car, and drove into the city. I parked, then instead of getting into the freight elevator as I had every day for the past nineteen months, I climbed the stairs to the lobby, then got into one of the regular passenger elevators. When I reached the 29th floor, I stepped off the elevator, walked down a short hallway, and used my keycard to enter the office.

"Morning, Rich," I said to the overnight trader who had started at 10:00pm the previous evening. "Anything of note in the markets?"

"A relatively quiet night," he said. "No big movements in Asia or Europe."

"Any news that happened overnight?"

"Italy sentenced twenty-five Red Brigades terrorists to life imprisonment, but that was basically expected. Otherwise, not much."

"OK," I replied. "Let me get to work on my daily analyst report."

I put my lunch in the fridge, started a fresh pot of coffee, then went to my desk. I turned on my Bloomberg terminal and my Apple II, hung my suit coat on a hanger, which I hung on a hook on the cubicle wall, then sat down to begin work.

"Morning, Jonathan," Tony said, sitting down in his chair.

Paige would be in her orientation for the morning, something I was very happy not to have to do again.

"Morning," I replied, not even looking up from my Bloomberg terminal.

I'd looked over a dozen reports Tony had written to get a feel for the style and tone, then pulled up the Bloomberg News service. It was extremely handy and made me instantly wish for the ability to search the Wall Street Journal, Barron's, and Crain's the same way I could search news articles on Bloomberg. I was aware of a service that might provide that, but I didn't know enough about it.

With no major news events, there weren't likely to be huge currency fluctuations for the day, so I looked instead at future risks. The ones that stood out were the ongoing Soviet military intervention in Afghanistan; the labor unrest in Poland and the continuing imposition of martial law; the conflict between the Sandinistas and Contras in Nicaragua; Cuban regulars fighting in the Angolan Civil War; the concerns over the runway being built in Granada; and the serious drought in Ethiopia, combined with insurgencies.

None of those specific conflicts would have any major bearing on precious metals or major currencies, and at the moment, none of them looked set to escalate. I decided on a format for my report which would grade the global climate in four areas: war risk, trade, economy, and political stability. Each would receive a letter grade from A-F, though I'd need to work out some system for making those decisions. For my immediate report, I'd just write prose.

As I was gathering information, I noticed an offhand comment in the article about Nicaragua about the Venezuelan economy, and I decided to dig in further. The Bolivar was a strong currency and was, in effect, the benchmark for Latin America. Venezuela had significant oil reserves, though they were heavier grades, rather than the 'light, sweet' crude of Saudi Arabia or the 'West Texas Intermediate'. Venezuela also mined significant amounts of bauxite, the main source of aluminum, as well as coal, gold, and iron ore.

All of that was a sign of a strong economy, but there were serious mismanagement problems, especially in the nationalized oil company Petróleos de Venezuela, S.A., or as it was known, PDVSA. That, combined with the oil price slump, indicated potentially rough economic times ahead.

Of course, 'slump' was relative, as benchmark oil was trading at $90/barrel, but that was down from $141/barrel at its height in 1980 following the Iranian revolution. Venezuela's reserves, being heavier, traded at a discount to that.

The more I researched, the more I saw that the Bolivar was overvalued, and at some point, possibly soon, the government would have to devalue it, and if they didn't, the market would force them to do so. Their ability to raise interest rates to counter pressure on the currency was limited, as was true for every central bank.

While I'd been researching, Anna, the pretty blonde Swedish secretary for the team, arrived, followed by the two assistant brokers, Kent and Lee, and shortly after them, Norman Monroe and Harry Foulks had come in. All of them had said 'good morning', and I'd replied without even looking away from my work.

I typed my report, looked up the current rates of exchange for a dozen major currencies, as well as the spot gold, silver, and platinum prices, and then wrote my first ever daily recommendation — short the Bolivar. I reviewed the report, printed it, and then took it to Mr. Matheson's desk and put it in his 'In' box.

I checked my watch and saw that I had about ten minutes before he arrived, so I poured myself a cup of coffee and used that time to review my own portfolios. I decided to move out of a few positions, so I turned on the IBM terminal, signed on, then entered the trades I wanted to make, which would be executed by either Mr. Steinem or Mr. Jackson when the market opened. I also entered an order for my Cincinnatus Fund for puts on the Bolivar, where a small amount of capital could control a huge position.

Mr. Matheson came into the office and walked past without acknowledging anyone. But five minutes later, my phone buzzed, signifying the intercom was open.

"Kane, get in here!" Mr. Matheson growled.

"On my way!" I replied.

I got up and went to his office.

"Two things," he said. "First, I need to know how to use this Bloomberg machine. Second, what the fuck? Short the Bolivar? The single strongest currency in Latin America? And one of the most stable in the world?"

"The analysis backs it up," I said. "They're going to have to devalue or default. Either they'll do it voluntarily, or they'll be forced to do it. They don't have any room to raise interest rates to defend their currency. The only thing that could save them now is increased oil prices, and the commodity reports say that's not going to happen. In fact, the price of oil is likely to decline significantly, to a small premium over pre-1973 prices."

"Your report disagrees with every other analyst report I've seen, both ours and independent analysts."

"I'm sure that's true," I replied. "But may I make two points?"

"Go on."

"First, as I said, the data backs it up; second, somebody has to be first, and you yourself told me being first is the way to make serious money."

"Would you short the currency? In your own account?"

"I sold two standard April Bolivar contracts and protected them with call options in my Cincinnatus Fund."

Call options meant I had the option of buying Bolivars at a specific price. If the Bolivar was devalued, as I expected, I wouldn't exercise the call options and would buy at market. If, for some reason, the Bolivar strengthened significantly, then I'd exercise those options to cover my short. I'd pay a few percent for the privilege of protecting myself, but I felt the Bolivar would devalue significantly.

"Two hundred thousand Bolivars?" he asked with a raised eyebrow.

"My worst-case scenario is I lose a few percent to insurance; the upside is potentially huge."

"You're that sure? The loss would amount to almost the entire amount of your special bonus."

He was right. I was betting around $7,000 to make anywhere from five to ten times that amount in three months. And, if the devaluation was even more severe, it might be as much as fifteen to twenty times.

"It would. I am in no way uncertain. I, as they say, put my money where my mouth is."

"How'd you twig to this?"

"A comment in an article about the Contra insurgency in Nicaragua mentioned that oil-dependent Latin American countries were suffering with the lower oil prices, which are down by more than a third from their 1980 highs. They specifically mentioned Pemex, but I know Venezuela is dependent on oil exports, so I did some research. You have my analysis, and you'll see my trade on your screen when you sign on. It's your call."

"Jesus, Kane! It's your first day!"

"So I should put my wingtips up on my desk, drink coffee, and flirt with Anna?"

He laughed, "No! But telling me to short a strong currency less than an hour after you started your new position is gutsy."

"Isn't that what you pay me for?"

"It is," he replied with a smile. "I'll order lunch, and you can show me how to use the new terminal."

"OK."

"You found the Bolivar, so find me other currencies that might be in the same boat and which haven't weakened yet."

"Will do."

I went back to my desk and began my research. Just after the markets opened, I received trade confirmations for the trades I'd entered earlier and updated my portfolio spreadsheets to indicate the changes. I had to create a new formula for the protected short I'd created in the Bolivar, but that didn't take much time away from my research.

At noon, Mr. Matheson called me in for lunch of breaded steak from Ricobene's, and I explained how to use the Bloomberg terminal and gave him the 'cheat sheet' I'd created that listed the important key combinations and sequences he would need.

"This is a real game-changer," Mr. Matheson said when we finished.

"When I used it this morning, I began wishing for a way to search the Wall Street Journal. Heck, even an index of Journal Articles would be helpful. We have back editions in the archives, but they're kind of useless without an index. The only way I'd know where to find something is a reference in a research report or analyst note."

"There is Dow Jones News/Retrieval, but when we looked at it two years ago, it wasn't very good. It was also expensive, at something like $2.50 per minute, plus a monthly fee, plus phone charges."

"I've heard of another service," I said, "but I don't know anything more than that it exists. There's a company that offers the ability to search all federal court rulings, and at least some state rulings, called Lexis. They also have a service for journalists called Nexis, but I don't know anything at all about it except that it exists."

"How did you hear about it?"

"My attorney friend told me about Lexis and how his paralegal uses it. It works similarly to our Bloomberg terminals but uses IBM terminals. It can be used to search for anything in federal or Illinois court cases. He mentioned the same company has a similar service for newspapers."

"Do me a favor, check to see if Dow Jones News/Retrieval has changed their pricing model and has more information, and also look into the service you mentioned. Get pricing, and maybe arrange for a demonstration. If you think it's worthwhile, let me know, and we'll figure out what to do from there."

"Will do. Did you move on the Bolivar?"