Chapter 12: Irreconcilable Philosophical Differences

February 17, 1983, Chicago, Illinois

Later on Thursday, I ate at my desk, and at 2:00pm I left for an appointment with Doctor James Darmody for a physical and to get my blood type. The physical was routine, and it actually took longer for him to take my medical history, which I basically had to do from memory, as I hadn't seen a doctor since I was born, having received my vaccines from the nurse at the Clermont County Health Department. When the exam was finished, Doctor Darmody promised that his nurse would call with the blood type on Friday afternoon. He also suggested I have a test for sexually transmitted diseases, and when I consented, as Tina had suggested, he had the nurse draw blood and said they'd call with the results.

I returned to the office with a clean bill of health and an appointment to see Doctor Darmody in a year's time. I finished my workday, then headed to Violet's for dinner, my math class, and finally, coffee and pie with Violet. As usual, I walked her home, then drove back to my house in Rogers Park. I had about ten minutes at home before Keiko arrived, and at her request, we went right up to my room.

"Have you ever been bathed?" Keiko asked.

"By my mom when I was little."

Keiko laughed softly, "I meant by a lover?"

"Showers, but not baths."

"It's a traditional Japanese ritual. Your tub is not like ones in Japan, but it would do. May I bathe you before we go to bed?"

"Yes. What can I do for you?"

"I very much like when you pleasure me with your tongue! Would you do it both before and after?"

"I'd enjoy that!"

"Then let's begin with you in the bathtub!"

February 18, 1983, Chicago, Illinois

"Will you give consideration to a request?" Keiko asked as we got into the shower on Friday morning.

"Yes, of course," I replied.

"Would you allow me to move into your house instead of living in the dorm? I would pay rent, obviously, and help around the house."

"Do you mean into my room?" I asked.

Keiko smiled, "That would be my preference, but I'm only asking about a room. There is one free, right?"

There were two, actually, given the master bedroom was large enough to have my computer table there, in addition to my other furniture. I also had two requests — Deanna and Keiko — and I was actually considering Deanna's. Agreeing to either, or both, would move me along the path Bianca suggested, though if neither of them were permanently in my bed, I'd still have options. I did, of course, have to consider how it might affect my relationships with Clara, Haley, and others, but I had at least five months to figure it out.

"There is," I replied. "Do you need to clear it with your parents?"

"I'm sure they'll say 'yes', because they treat me as an adult."

"Then I'll think about it, and I have an open mind on the idea."

"That's all I ask!" Keiko declared.

As was normal for mornings after someone slept over, we had a quick breakfast and I drove Keiko back to Loyola, then headed to the Hancock Center. My morning was normal, though I took an early lunch and went to the gym early so that I could attend the Nexis demo at the University of Chicago.

I met Johan Maus, the pre-sales engineer for Nexis, and he spent two hours showing me their system, which I felt would be a great complement to the Bloomberg system. The one thing that was missing was full access to the Wall Street Journal, but it was possible to do topic searches that returned issue numbers, which would let me find articles in the papers in the archives that I couldn't find now. The system wasn't inexpensive, but the fees were lower than what Dow Jones charged for their system, and had more publications available.

"How do we get your boss to look at this?" Johan asked when we finished the demo.

"I need to write up my analysis of the system for my boss, and if he agrees, we'll take it to Mr. Spurgeon. My boss, Mr. Matheson, usually listens to my advice and analysis."

"Could I talk to him?"

"You could call, but you'll do more harm than good, assuming he even takes your call. I think your system will be very useful, and I know how Spurgeon Capital works."

"My boss is going to insist on contacting the decision maker."

"Who will ask why you're bothering him, if he'll even take your call. Seriously, let me handle it or you'll lose the deal. If you want to have your boss call me, I'll tell him the same thing. I'll present my analysis to my boss next week and we'll take it from there. That's the only way it will work."

"I'll relay that message to my boss. Call me at the end of next week."

"OK."

We shook hands, and I left UofC to head back to the Hancock Center. Anna let me know that Mr. Matheson wanted to see me, so I went to his office.

"Shut the door," he said.

I did and stepped closer to his desk, but didn't sit, as that was the protocol.

"First, congratulations!"

"On?"

"You obviously didn't hear the news! The Venezuelan government caved and announced a devaluation of 50%. The new official exchange rate is just over 8 to 1 and it'll climb from there. I closed out our positions, as there is no need to be greedy!"

"May I make a phone call?" I asked.

"I ordered Steinem to close out that position for you. Normally I wouldn't, but we'd discussed the play, so I felt justified in doing so, and it's within the rules for internal funds, as I'm your manager."

"Thank you."

I did a quick calculation in my head, and with the severe devaluation, I'd made a shocking amount of money for my fund. If my math was correct, I'd made something on the order of half a million dollars for myself and my fund. In one trade. It was mind boggling, and more than double what I'd considered the 'extreme' possibility, as nobody had predicted a doubling of the exchange rate in one fell swoop.

"You just figured out you made well more than $400 grand on that trade, didn't you?" Mr. Matheson said with a knowing smile.

"Uh, yeah. Not all mine, of course, but mind boggling."

"Spurgeon Capital made about $80 million on that single trade. That's one of the biggest single-trade gains in firm history. You'll be comped for that, by me, personally, if not by Noel Spurgeon."

I was still trying to wrap my head around the fact that I now had a net worth of close to $250,000, though that was before taxes, and it wasn't completely liquid, but that didn't change the fact that in less than two years, I'd turned $800 into close to $250,000. And that didn't include the money I'd made for Jeri, Violet, and my other investors.

"Thanks," I said.

"Everyone who is successful in this business has their one big score, often early on. You make that one right call and that's your seed money. There are long odds against another call that big, but you now have enough working capital to play the game. Remember, you don't swing for the fence every time. Singles, doubles, and triples pay off just fine, and provide the steady gains you need to beat the hurdle and make more money in a year than most people make in a lifetime. You understand what I'm trying to say, right?"

"Yes," I replied. "This was a 'black swan' event, and you can't count on those occurring. Hell, my projection had a devaluation of about 10% as the target, and nobody anywhere predicted they'd do what they did. Even the most extreme projections were 25%, which I felt was possible, but highly unlikely. What Venezuela did makes sense, because it alleviates the pressure, but unless oil rebounds, the Bolivar is going to devalue further."

"Would you make another play?"

"It would make sense to set up a regular rotation of shorts of the Bolivar, but you're never going to find counterparties. Nobody is going to take that risk."

"I agree. There's no market for shorts at the moment, and nobody is buying Bolivars except at an extreme discount, which is 50% over the official exchange rate."

"To be expected."

"Exactly. On to other topics. First, how was the demo?"

"I'll write an analysis and recommendation and have it to you by Tuesday, given Monday is a US trading holiday, but the short version is that I believe it would provide significant value. Dow Jones is more limited and more expensive."

"Why?"

I smiled, "Because they can. They have exclusive access to what are called 'full-text searches' of The Wall Street Journal and they are charging the price the market will bear. It's called 'capitalism'."

"Smart ass!" Mr. Matheson replied. "Get me the analysis and we'll take it from there."

"Will do."

"The second thing — Jennings is out as of the end of the day. We're already looking for her replacement."

"What qualifications?"

"Smart and with a knowledge of fixed income. Jennings had that because the business professor she worked for at UofC is researching the high-yield bond market, something a friend and competitor at Drexel is calling 'junk bonds'. Know anyone?"

"My circle is mostly in college or working for the city in some capacity. Smart people, and some with the right intelligence and analytical skills, but no knowledge of the bond market. Well, I know a few lawyers, too.

"Lawyers are like cockroaches, they multiply and survive, no matter what. Anyway, just for your ears, Jennings is being terminated under the terms of her probationary period, but Spurgeon is offering her a payout in exchange for a release."

"No surprise there. But I'm sure you and Mr. Spurgeon both know she could still go to the Feds."

"That won't be a problem."

He said it such that I had no doubt Noel Spurgeon had some connection to someone who could make a complaint go away, or at least allow it to be resolved quietly.

"Anything I need to do?"

"No. Tony covered both fixed income and equities before, so he'll handle it until we get someone. I can't afford for you to lose focus on currencies and precious metals. Still feel confident about your analysis?"

"What I wrote in my portfolio analysis report last Monday still holds. I'll update it Monday, but I can give you a preview if you like."

"Go on."

"The peso is continuing to strengthen as predicted, so the long position there is paying off. The spread between gold and silver spot prices and futures is even bigger, because retail purchasers are piling in. I don't see how that house of cards doesn't collapse in the next week. One of the big longs will liquidate to realize their profits and that'll cause a snowball of people trying to get out. We'll be able to close out our positions seriously in the money."

"I agree, obviously. Anyway, Personnel will call Jennings around 4:30pm."

"OK. I want to start typing up my notes from the demo before the end of the day."

"Good job, Kane. I mean that. You'll hear from Noel Spurgeon soon, I'm sure."

"Thanks."

I returned to my desk and sat down, still trying to wrap my head around what had happened. My original thoughts were that I'd make around $50,000, but I'd made close to five times that. And if the gold and silver markets did what I expected, I'd have another fifty grand on top of that. Where I'd expected to come out with between forty and seventy grand, I'd have close to a third of a million. I pushed that out of my head, brought up the word processor on my Apple, and began typing my notes.

Just before 4:00pm, a nurse from Doctor Darmody's office called to tell me that my blood type was A+, which meant it matched my mom's, and coincidentally, Heather's. I was also clear of any sexually transmitted diseases. I thanked her, and returned the handset to the cradle.

At 4:30pm, Paige's phone rang, and she got up and left the office. She didn't look upset, so I assumed she had no idea they planned to terminate her. Tony came over to my desk as soon as Paige had left the office.

"Kiss of death," he said quietly. "The 4:30pm call on Friday from Personnel never ends well."

I had to be careful not to reveal what I knew, as I didn't want to get into any trouble or be seen as anything other than a team player.

"It sounds as if you saw this coming," I said.

"Once she started in on you, I knew she was not long for the firm. Especially with your call on the Bolivar. Pretty fuckin' cool."

"You're in the main fund, right?"

"At the max, since the day I started," Tony replied. "My wife didn't like the fact that a big chunk of my paycheck was going there, but after returns of twenty-eight percent or better for each of the past four years, she's not about to bitch. Not to mention the mortgage at historical rates rather than the current 'take it up the ass' rates from banks and S&Ls. And then there are the bonuses."

"Your comment to Paige about doing her job and letting the money roll in was right on target," I said. "There are things here I don't like, but show me another place where a twenty-year-old can make the kind of money I've made in two years."

"Legally? No place. That's why I work here. The only other place to make this kind of money is drugs, and as Don Corleone said, it's a dirty business and all the politicians and judges frown on it. Some frown on securities professionals, but they're in the tiny minority."

"A friend of mine who works for Congressman Washington was bitching about the money we make and the taxes we pay, and I told her to take it up with her boss because we're following the rules and regulations Congress passed to the letter."

"Damn straight!" Tony declared. "Anyone who even sniffs around an SEC violation will find themselves out on their ass, if not in prison like Jack Gilham."

"Front-running in unmonitored accounts," I said. "He got greedy."

"I've seen it happen twice in four years," Tony said. "I know I'll see the report on Monday, but how much did you clear on your currency trade?"

"Personally, about a quarter mil."

"Holy fuck!"

"Spurgeon Capital cleared north of $80 million on that play."

"Bonuses are going to be at the top of the range this year; Paige should have kept her fucking trap shut."

Mr. Matheson came out his office and called the team to the conference room. Tony and I joined the traders Harry Foulkes and Norman Monroe, the assistant traders Kent Vandenberg and Lee Warren, and Anna in the conference room. Only Rich Chamberlain, the overnight trader, wasn't there.

"Paige Jennings is being let go," Mr. Matheson said. "She simply didn't fit in. We're looking for a new analyst with fixed income experience, so if you know anyone, let me know. Tony will cover both equities and fixed income until we hire. We aren't heavily into any government securities at the moment, so he can handle it. Jonathan will keep us abreast of currency and interest rate movements, which might affect fixed income.

"And speaking of him, we need to thank him for his analysis, which helped the FX Desk clear $80 million today when the Bolivar was devalued by a whopping 50%. Let's put that new money to good use, starting on Monday. There's $80 mil just waiting to be invested."

I received congratulations and slaps on the back from all the guys, though Anna simply smiled. I was disappointed that I hadn't been able to work out with her for the first time, but that would happen on Monday. The meeting broke up, I went back to my desk, and a minute later, Naomi came in with one of the security team to box up Paige's things. They were still working at 5:00pm when I left the office and went downstairs to meet Jack, Kristy, and Lily.

"Any inside scoop on why Paige Jennings was let go?" Jack asked, as neither Kristy nor Lily had arrived when we met in the lobby.

"She didn't appreciate the culture," I said. "Work that out for yourself."

"Left-wing female? Not sure why they hired her in the first place."

"I'm pretty sure Murray Matheson is asking himself that question. Did you hear about the Bolivar?"

"No. Why?"

"They devalued by 50%, effectively doubling the exchange rate."

"How much did you make?"

"Spurgeon capital made $80 mil, my Cincinnatus Fund made about $400 grand."

"I meant you, personally."

"About a quarter mil."

"No shit?"

"No shit."

"Dinner is totally on you!" Jack declared.

I was happy to buy dinner, but what I realized was that I could very easily fall into the trap of everything being about money. In fact, the reports that were published by Spurgeon not only made it all about money, but were intended to create competition to be the biggest earner. That was fine, so far as it went, but I didn't want it to define me outside of work, or even inside, though I couldn't do much about that.

"I think I can afford that," I replied with a smile, "but please don't share those numbers."

"Mum's the word," Jack replied. "If I didn't have a reason to study all that material before, I sure do now."

"Hi!" Lily said, coming up to us.

She and I exchanged a quick hug and kiss, and a minute later, Kristy walked in.

"What are we doing tonight?" Lily asked.

"Dinner at Star of Siam?" Kristy suggested. "Then we could see Lovesick, or there's a jazz concert at Loyola."

"What's the movie about?" Lily asked.

"A psychiatrist falls in love with a patient and is visited and given advice by the ghost of Sigmund Freud. It stars Dudley Moore, Elizabeth McGovern, and Alec Guinness, who played Obi-Wan in Star Wars."

"Sounds good to me," Lily said. "Jonathan?"

"I'm game if Jack is," I replied.

"Oh sure, put it all on me!" he chuckled. "Sure, why not!"

We had a great dinner, and I covered the bill, which led to a question from Kristy.

"I made a very successful trade," I replied. "Jack decided I could afford dinner for everyone."

"How successful?" she asked.

"Very," I replied.

Kristy cocked her head, then nodded, and let it drop. When we left Star of Siam, we headed to Oberweis for ice cream, then to the theatre to see the movie, which we all enjoyed. After the movie, Jack and Kristy took the L while Lily and I walked back to the Hancock Center to retrieve my car.