Chapter 15: Get Used To Saying That!

February 22, 1983, Chicago, Illinois

"You'll see the financial statement on March 5th," I said, "but I had a big win on a currency play. Unfortunately, the terms of the trust don't allow currency plays, so the gains were limited to the money you have in the Cincinnatus Fund."

"I wish I could change those to give you a free hand, but the terms are ironclad. How much did you make?"

"Enough," I replied.

"You know I'm not going to say a word, and nobody else is here."

"Six figures," I replied. "If my other bet hits, I'll have made something like half-a-mil since January in my fund."

"Not bad."

"What the fuck?! Not bad?!" I asked with faux outrage.

Jeri laughed, "That's pocket change for my mom!"

"I call bullshit!" I chuckled. "For Noel Spurgeon, it might be, but he has at least thirty times what your mom has because her Foundation money isn't actually hers! Sure, she benefits from it because she controls where it goes, but she can't spend it on herself."

"She and my dad have large salaries, paid by the Foundation, and there are all manner of other advantages. Anything she does for the Foundation is paid for by the Foundation. Trip to Switzerland? Schedule one meeting to raise funds and the entire thing is paid for by the Foundation. Want to go to a nice restaurant? Take a donor, and the Foundation pays. And so on. And remember, the Foundation is tax exempt."

"Shady, at best," I observed.

"And yet standard practice for many charitable foundations. Is everything set with your house?"

"Yes. I'm waiting for the inspection, which will happen next week, then we close on the 18th. We'll spend the week fixing it up, then move in on the 25th. We're having a housewarming on the 26th, and you're invited, of course."

"Thanks."

"Did you vote today?" Jeri asked.

"For Mayor Byrne, though I think Congressman Washington will win."

We had to end our private conversation as Nelson, Gary, Allyson, and our newest member, Pete, who worked for Continental Illinois Bank as an underwriting specialist, arrived in quick succession. Nelson introduced Pete to all of us, and, as usual, Karl brought us all drinks.

"I take it we had a good week?" Nelson asked.

"We did. You'll see the financial report the first week in March, but the Bolivar bet paid off big."

"That's what I want to hear!" Gary exclaimed.

"Can anyone get into this fund?" Pete asked.

"I have a spot for you, if you want. If you give me your card, I'll send you the paperwork."

"What's the minimum buy-in?" he asked.

"$1000 for my Cincinnatus Fund. It's 'friends and family', so the usual rules don't apply, and it's 'one and ten' instead of 'two and twenty'. I assume you know what that means?"

"Yes, the commission and fee structure," Pete replied.

"And I have to wait for Residency before I have any money," Allyson groused. "I'll work for the last two years of med school and pay for the privilege!"

"Practical training, but you're paying tuition, right?" Gary asked.

"Yes," Allyson replied. "Four years of undergrad, then four years of med school, with the first two being classroom and the second two being clinical rotations. When I finish that, I become an Intern, which is what they call first-year Residents. That's when I start receiving a paycheck, but it's a pittance for the first year."

"What specialty?" Pete asked.

"I don't know yet, but I'm interested in Emergency Medicine. It's a relatively new specialty. Until very recently, the ER was staffed mostly by surgeons, with internists filling in when they needed help. The first truly modern ER was actually here in Chicago, at Cook County, and was called the 'Shock-Trauma Unit'. That was in the late 60s."

"What year of college?"

"I'm finishing my Sophomore year," Allyson replied.

Karl announced dinner, so we all went to the dining room to eat. Gary was enjoying his new position as Deputy Chief of Staff for Senator Alan Dixon, and things were going well for Nelson at the law firm. Jeri was still a year away from graduating from High School, and, as she'd said, Allyson was finishing her Sophomore year in pre-med at Loyola.

After dinner, we had dessert and coffee, then we all said 'good night', and the gathering broke up.

"Mind if I ask what happened with you and Clara?" Allyson asked as we got into my car. "I got her side, but I suspect it's not true, or at least not the whole truth."

I considered whether I should discuss it with Allyson, given they were sisters, and decided I could, at least in a general way.

"I called it philosophical differences," I said, "and I think that's the root cause. Fundamentally, she wasn't ready for a relationship with someone like me and was having real trouble understanding where I was coming from."

"You can be pretty intense in your logical, analytical mode, which you're in pretty much full-time."

"That was the source of the problem, really. Yes, she wanted an exclusive relationship with a direct path to marriage, and you know I'm not ready to make that commitment. What did she say?"

"That you didn't want to be her boyfriend, and you were doing your best to force her to break it off so you didn't have to."

"She totally misunderstood the conversation, which is, in and of itself, enough to have broken up with her. She was, in addition to not understanding, impatient, and, I think, a bit immature. And that's really all I can say about it."

"Too weird if I come home with you?" Allyson asked.

"Not from my perspective. You aren't seeing anyone that would preclude it, right?"

"No chance! I'm having too much fun to want to be tied down! I can do whatever I want and don't have to answer to anyone except myself. You have the same general idea, which is part of why you aren't in an exclusive relationship. Kristy really surprised me."

"Me, too," I agreed. "But I can see her point, given she's positive Jack is Mr. Right."

"So if you met Miss Right, you'd be exclusive?"

"If I was sure? Yes. It would be illogical and foolish to do otherwise. And isn't that how it works? You stay single until you find the person with whom you feel you could spend the rest of your life."

"Logically, that makes perfect sense, though most people don't think about it in that way."

"Most people are controlled by their emotions, not logic," I replied. "Or maybe it's better to say that their emotions often override their logic."

"I've seen that with girls making really bad relationship decisions."

"I think it's generally applicable and that irrationality wins out over rationality in many, if not most, cases."

"Such as?"

"To use an example from something going on at work, the price of gold and silver had run up too far, too fast, in relation to everything else going on in the economy, and all the signs are there for a major correction. The average investor only sees the price going up and believes the price will always go up, which is not true. It's similar to what's called the Gambler's Fallacy — that a number is 'due' to hit on the roulette wheel. While it's true that all numbers come up with equal frequency over an infinite series, it's not true over a limited series. Given nobody has infinite funds, statistics don't actually matter beyond understanding the odds of a specific bet."

"I remember a question from my stats class in High School about flipping a coin. If you flip heads nine times in a row, what are the chances the tenth will be heads?"

"Fifty-fifty, like every other individual flip, as the coin has no memory."

"Exactly. But a lot of people disagreed because they were thinking about the overall chances of flipping ten heads in a row, which is something like one in a thousand. So what do you do when you notice stuff like that?"

"I sold gold and silver contracts for forward delivery. If the price drops as I expect, I can cover those sales contracts by buying immediate delivery contracts at market. Basically, I make the price difference minus the cost of the contracts, which is minimal because they're both at market. And the best part is I only have to put up a tiny amount of capital."

"But you could lose, right?"

"Only if the price continues to go up through the end of May, which is unlikely. If the price doesn't fall by mid-March, I'll make another investment to cover by buying a matching call for May delivery. But every single indicator points to a fall, and enough others have begun effectively shorting gold and silver that it's a lock at this point. The herd basically went where it had to go, and I was one of the first to take advantage of that. The retail investors, that is, the general public, will mostly take a bath."

"How much will you make, in general terms?"

"For silver, $5,000 for every $1 change in price, per contract; for gold, $1000 for every $10 change in price. The reason for the discrepancy is that gold is about thirty-five times more per ounce than silver, and standard contracts for gold are for 100 ounces, whereas a silver contract is 5000 ounces."

"Pretty impressive for being twenty."

"Thanks."

"And it's not the only impressive thing!"

I chuckled, "The feeling is mutual!"

When we arrived at the house, Shelly let me know that there was mail for me, and I was happy to see that I'd received my American Express card.

February 23, 1983, Chicago, Illinois

"Same time next month?" Allyson asked as we got out of bed on Wednesday morning.

"Assuming neither of us is in a relationship, yes," I agreed.

"I doubt I'll be; you might?"

"I don't have anyone in mind," I replied, "but I'm not ruling it out for the reasons I gave last night."

"That's a change of attitude," Allyson said as we got into the shower together.

"It's really more a matter of allowing for the possibility than actively seeking it out."

"I'm going to guess that means things are not going well with the girl from back home."

"She's not in a good place, and I'm not sure there's anything more I can do to help her and restore our relationship, and I simply can't put my life on hold indefinitely."

"No, you can't."

We finished our shower, dried off, dressed, and went downstairs to have breakfast. After breakfast, I drove Allyson to Loyola, then headed to the office to begin preparing my morning analyst report.

The first thing I checked was precious metals, and I saw that the short volume was increasing dramatically, and that meant the entire professional market was sure the prices were going to break, and soon. If they didn't, it risked a short squeeze, which would drive the prices higher and create even greater spreads, which would eventually fulfill my prediction. I had until the end of May, so I wasn't worried about the short squeeze.

I wrote that section of my report, then looked at interest rates, currencies, and government debt instruments and updated my analysis, though there was nothing major to report with anything other than the precious metals. The world environment was relatively stable, with the usual low-intensity conflicts in Africa, Central America, and South America. The one area that did concern me was the Middle East, but there was nothing of note to add to my analysis.

Once I completed the report, I printed it out and put it on Mr. Matheson's desk, then began revising my recommendation for the Nexis system. I finished it just before lunch and gave it to Mr. Matheson, who promised to read it so we could discuss it on Friday. I had a quick lunch at my desk, then Anna and I went to the gym for our workout.

I had a bit of trouble concentrating on my workout routine because Anna was wearing shorts and a tight white T-shirt that showed off her athletic figure even more than the stylish clothes she wore in the office. If bringing me candy and brownies on Valentine's Day had tempted me to make an exception to my rule, her long legs, tight butt, and firm breasts made an even stronger argument. Added to that were blue eyes, blonde hair, and a winning smile, and she was the complete package and the epitome of the stereotypical Swedish girl.

We finished our workout, showered separately in the segregated locker rooms, and after we'd dressed, we headed back to the office. There was a note from Mr. Matheson asking for an interest rate analysis and comparison with historical trends, though the challenge was that the market intervention by Paul Volcker was unprecedented since the Federal Reserve had been formed in 1913. Before Volcker's intervention, which took the Fed Funds rate to 19%, the highest it had ever been was 12.5% during the Oil Shock.

The rate currently stood at just over 9%, and the question I needed to answer was how quickly the Fed would ease and how far. Based on historical trends and the performance of the economy, I didn't believe the rate would return to the historical norms of 3% to 5% for at least two years and possibly much longer. The market agreed as interest rate futures were predicting rates between 7% and 10% for at least the next eighteen months.

My take was that there was a significant risk that the Fed had eased too quickly and that inflation would return, causing a rise in rates to soak up the excess money supply. Just before 5:00pm, I handed Mr. Matheson an analyst note that predicted rates would average about 8%, plus or minus a percent, for the next year, and that beyond that, my prediction was purely speculative and would average around 6%.

I left the office at 5:00pm and headed to Violet's for dinner. As I drove, I thought about our relationship, and the fact that no matter what happened, I ran the risk of causing Violet some amount of distress. If Bianca, Shelly, and Lily were right about how Violet felt about me, and I suspected they were, then I had to somehow find out if Violet was able to have an intimate relationship with me, or anyone, for that matter. I wasn't sure what to say, but I had to say something, and I felt it had to be before I became serious with anyone else.

"Hi!" Violet exclaimed when she opened the door.

"Hi!" I replied.

We exchanged a quick hug, then went to the kitchen to have dinner at the dinette table. As we ate and chatted, I recognized an opportunity to raise the topic.

"What happens when this semester ends?" Violet asked. "You won't be taking a class."

"We'll still see each other," I replied. "We'll just have to work out a schedule."

"But it won't be as often," Violet said, sounding sad. "I like having dinner with you, but I guess that's going to stop because you aren't taking classes during the Summer and only a Saturday class in the Fall. I just wish it could stay like it is now."

"About the only way that could happen," I replied, knowing what I was saying was fraught with potential problems, "is if we were a couple."

"You mean like boyfriend and girlfriend?" Violet asked nervously.

"If you wanted. I'm already spending more time together than I spend with any other girl. I like you, and I believe you like me, too."

"I do," Violet said quietly. "But you would want to ... you know?"

"That is something couples do, eventually, at some point in their relationship."

"I don't know..." Violet whispered, shaking slightly.

"I understand," I replied gently. "We're friends, and I hope we remain friends for the rest of our lives, but when I eventually have a steady girlfriend, that will limit how often I can see you."

Violet looked as if she were about to cry, but I'd felt I had to at least put the idea forward, because one of her fears was warranted — that we wouldn't spend as much time together in the long run unless there was some kind of change to our relationship. In my mind, it really was a binary choice — friends or lovers, with the latter implying a lifetime commitment.

"You think about doing that with me?" she asked, her voice just above a whisper.

"I did, obviously, when we first met," I replied. "But once you told me what had happened to you, I only saw you as a friend. That's not to say I don't find you attractive because I do, but given what I know about you, it wouldn't be right to think about you that way."

"But you just asked if I wanted to be your girlfriend..." she protested. "And you said it's something couples do."

"Violet," I said gently, "do you think I would ever intentionally do anything to hurt you?"

"No," she said. "I know you want to protect me and help me."

"Then I hope you'll understand that I asked because I care about you. I've made mistakes in the past where I should have said something and didn't, and I didn't want to make those same mistakes again."

"Bev?"

"Yes. I didn't talk to her about some very important things, and it made a complete mess of our relationship. I knew this would be a difficult subject for you to discuss, but I couldn't repeat my past errors."

"I don't know what to do," Violet said.

"And that's OK," I replied. "I'm not involved with anyone in a way that would change things between you and me, and I don't expect to be before the end of the semester. You have plenty of time to think about it, and if you think it would help, see a different counselor. For now, we can just continue the way things have been since the semester started.

"Thank you," Violet said, sounding relieved.

The ball was now squarely in her court, and all I could do was wait and see. That gave me time to work with the advice Shelly had given me. I'd done the first thing — speak with Violet, or at least broached the subject. I'd see Keiko on Thursday evening and Deanna on Friday and discuss each of them moving into the house. Then, it was a matter of seeing how things went with Haley and Teri and considering if I should ask Anna out, despite my concerns about her working at Spurgeon.