Chapter 10: Insecurity

September 9, 1983, Chicago, Illinois

"When did you know?" Bianca asked once we were in my car.

"Thursday of last week," I replied. "Right after the KAL 007 news. But I was sworn to complete secrecy."

"Which makes perfect sense. How many layoffs?"

"I don't know just yet, but Mr. Spurgeon is targeting reducing the size of the team by a third."

"That would mean six layoffs, well, five after Jablonski shot off his mouth."

"Seven, actually," I replied. "I want to hire another data analyst. You have more work than you can handle and enough to keep you busy full-time for a year, even if there are no more requests, and the chances of that are asymptotically approaching zero!"

Bianca laughed softly, "Nice. Something your stats prof said?"

"Yes."

"Why seven?"

"I figure the correct configuration of the team, at least to start, is a pair of analysts for each asset class — equities, fixed income, commodities, and FX, plus two data analysts. That's ten, not including me. That leaves me with one open slot if I use Mr. Spurgeon's 'guidance' of twelve."

"'Guidance', right!" Bianca said with another soft laugh. "Sure."

"What? You didn't hear the air quotes?" I chuckled. "The new space will be configured for twenty, and I have to decide the layout next week."

"What are you thinking?"

"At Hart-Lincoln and Allen & Baker, they have what they call 'pods'. They're cubicles with a pair of L-shaped desks. That would allow easy collaboration between the analysts in each asset class while affording a bit of privacy. For the data analysts, I'm thinking of an office configured for four. We'd also have a break room and a small meeting room."

"Do you rate a secretary?"

"It was suggested as an option, but I don't think I need one. First, I don't receive enough phone calls or mail to justify it; second, every single one of us can manage the fax machines and copiers and make calls to the mailroom or whatever. And none of us have many outside meetings. I can use that slot for a data analyst instead. You'll be the team lead, obviously."

"That won't cause a problem when people find out you're the father of my baby?"

"I do need to disclose that to Mr. Spurgeon, but I'm positive it won't be a problem, given you've proven your worth to the firm."

"Not to mention the number of Suits banging secretaries, meaning nobody can really complain."

"I agree, but that's not a card I want to play unless I don't have another choice. We need more secretaries like Anna, who flat-out refuse to sleep with Suits."

"She slept with YOU!"

"I'm not quite sure how I'm supposed to take that," I chuckled. "But it's also the case that I wasn't her boss or someone with any actual authority. And if it's about sleeping with co-workers, not only did I sleep with you, but I fathered a baby with you!"

"True! But you know someone will claim favoritism."

"Which is what cost Paige her job. Fundamentally, Spurgeon Capital operates on favoritism. If Noel Spurgeon likes you and thinks you can make him money, you have advantages other people do not have. I'm the perfect example of someone who is useful to Noel Spurgeon, so he provides incentives to ensure I stay useful to him."

"Changing topics slightly, what was with your play on the Zaïre?"

"The fundamentals were such that a run on their currency would force their hand. My trade set the stage, then Mr. Matheson went all-in. I checked later, and more traders piled on, shorting the Zaïre. They're screwed now, and I bet you anything they devalue before Monday."

"Wait! YOU caused that?"

"In the sense that I saw the potential for a run on the currency and traded to force the issue, yes. It was only a matter of time."

"Jesus. How much will you make?"

"Between $200,000 and $350,000 for my fund, depending on how far they devalue. I really couldn't go in heavier than that. Matheson will probably clear $50 million, which will solve his fund performance problem. He could have made more, but there simply weren't enough Zaïre available to allow that."

"And you personally?"

"When all is said and done, between $20,000 and $35,000 in carried interest."

"$35,000 would mean you made my entire year's salary in a day! I mean, I see the overall Spurgeon numbers, but with you, it's real, if you know what I mean."

"I do, and there are times when I don't believe it myself. But I also understand now that the playing field is not level and that the average investor has no hope of earning returns similar to Spurgeon, even allowing for the difference in total investable assets. Fundamentally, I, and the other traders and analysts, have access to information that the average man on the street could never have, and it's all perfectly legal."

"Sure, but it's knowing what to do with that information, right? I mean, otherwise, every analyst could be doing what you do."

"That's part of it, but it's also the self-confidence and strength of character to actually do it. It requires a willingness to take risks, knowing that you could fail. Right now, I can work with a net; doing that in the future will be more and more difficult."

"Why?"

"Because I use a number of techniques to ensure I don't lose big, but those same techniques limit my upside. I'm confident in my abilities, but I'm also at a point where I have to ensure I don't take any big losses because that would ruin my chances in the future. Once I have a track record, I can make more significant moves and not be as aggressive about backstopping my trades or use much more complicated plays. That would increase my returns, and I could survive a miscalculated trade or one where some outside event made the data irrelevant. KAL 007 could have done that. Of course, it can go the other way, too, such as anyone who was holding the wrong contracts right before the oil embargo."

"How Spurgeon's dad made his fortune," Bianca observed.

"Yes. And remember, he was a college professor who saw the data, made a bet, and turned his $2,000,000 inheritance into $50,000,000. That shows the power of options — a tiny amount of capital can control a huge position."

"And if he had been wrong?"

"Then he'd have lost a chunk of that money. He used call options, which meant he didn't have to make the trades if the price went down. He would simply allow those options to expire unexercised."

"Explain how he settled. He wouldn't have had the money to purchase the oil represented by those options."

"He sold them to the predecessor company of CITGO — Cities Service Company. They operated refineries and were more than happy to buy the options from him and exercise them to get cheap oil they could refine into gasoline and sell that at inflated prices."

"Ah, that makes sense. Back to your currency trade — when will they devalue?"

"Given the run, I think they might have to do it this weekend. Once Mr. Matheson and other traders in London, Tokyo, Hong Kong, and Paris started selling, the handwriting was on the wall."

"Could you do that again?"

"Under the right conditions, yes. We made a bet on the devaluation of the Philippine peso, which hasn't paid off yet because they had the currency reserves to withstand the immediate pressure. That won't last forever, and I expect them to devalue by the end of the year, but on their terms, not forced. And that's why I chose the exercise dates I did."

"How does defending a currency work?"

"If a government has sufficient foreign currency or gold reserves or can raise interest rates, they can defend their currency, either by purchasing it on the FX market or attracting capital inflows with higher interest rates. In the end, though, nearly any currency that has a formal peg can be forced to float by the market. That's going to happen to Australia, and probably by the end of the year. That one will likely be forced."

"Why doesn't anyone else see this?"

"They do. I had already seen movement with the Zaïre. Somebody else figured it out before I did, and it was that move that caused me to make mine immediately and ask Murray Matheson to start the dogpile. Whoever that other trader was, and I can find out, was likely someone with limited assets who was hoping someone else noticed. It's the same thing with the Bolivar trade I made earlier in the year, though we were first there. On the Philippine peso, we made a long-term play."

"Is there any way I can put my money into your fund rather than the Spurgeon Select Fund?"

"The only requirement is that the retained portion of your bonus goes into Spurgeon Select. Any other contributions can go to any fund."

"I'm going to make that switch, then."

"You'll make more money in the main fund," I countered. "Are you sure?"

She took my hand, put it on her stomach, and said, with a knowing smirk, "I am not uncertain!"

I chuckled, "Nice. How are you feeling?"

"I feel fine. I mean, I'm only about two months along. Fortunately, I haven't had any morning sickness, and that's the main thing during the first trimester."

"You'll have to clue in the ignorant guy, but when do you start showing?"

"Sometime after the first trimester. I wear loose-fitting blouses to work, so nobody will notice until around the middle of the second trimester. The only question is, do I say anything before people ask because it becomes obvious?"

"I have no idea what the protocol for that is. I mean, our housemates and my mom know. I think it's up to you to decide what to say and to whom. I suppose I should tell Violet."

"So she can ask for a baby?" Bianca teased.

I chuckled, "First of all, Keiko would never agree, but even if she did, I don't think Violet having a baby is a good idea."

"I was teasing, and honestly, I think you might be surprised."

"OK, let me modify that — she's moving in the right direction to be able to care for a baby, but I'm not convinced she'll ever be able to make a baby. She made an effort with me before Keiko and simply couldn't get past the mental block caused by memories of seeing her dad raping her older sister, aided and abetted by her mom."

"I can't even imagine," Bianca said. "I probably shouldn't have teased you about that."

"It's OK. Going back to work, there is one other thing — Mr. Spurgeon promised I'd be sponsored for my Series 30 license, most likely next year."

"The last piece you need to be able to go out on your own."

"Minus the additional hundred million or so in AUM," I chuckled. "That's actually the harder part! And convincing the money to come with me."

"Can Noel Spurgeon stop that?"

"Not formally, but he certainly could use his position to encourage the money to stay with Spurgeon. And, honestly, I'm making a ridiculous amount of money already, and he's providing the opportunity to make even more."

"Sure, but why pay him when you don't have to?"

"I understand the argument, but unless something happens to force my hand, I'm happy to stay, learn, and become extremely wealthy."

"I know it's against Spurgeon rules to disclose your comp, but what kind of salary bump?"

"Double. The bonus potential won't change until next year. But I've already had a discretionary bonus this year, which is over and above my potential bonus."

"What will your income be for this year?"

"Not including retained earnings, around $150,000."

"Jesus! We are SO getting a nanny when the baby is born!"

"I figured that was going to be the case. Are you assuming a live-in nanny?"

"Swedish au pair?" Bianca teased.

I chuckled, "Again, Keiko is very tolerant, but that might be a bit much! I figured we'd use Keiko's room as a nursery once we're past the 'wake up every two hours to eat' stage. Well, assuming Keiko's chemo is finished by then."

"What do you think?"

"I think if we haven't found a marrow donor by then, we're looking at a worst-case scenario."

"You asked how I was feeling; how are you feeling?"

"I'm OK. I worry about Keiko, but the situation isn't dire just yet, and the chemo has her leukemia under control. Noel Spurgeon arranged for a friend in Tokyo to coördinate testing, which means we'll have a much better chance of finding a suitable match."

"Would you have to go to Tokyo for that?"

"I'm fairly certain they could fly the donated marrow to Mayo. That will be inconvenient for me, but not nearly as much as trying to spend months in Japan."

"How would you handle work?"

"I have no clue at the moment. I'll cross that bridge when I come to it."

We arrived at the house, I parked in the garage, and then we went inside. I let Keiko know I was home, then went upstairs to change and returned to the Japanese room to sit with her.

"The Chinese food will be delivered at 6:15pm," she said. "You, me, and CeCi. Deanna is working, and Bianca and Juliette are going out."

"OK. How was your day?"

"They're all basically the same," Keiko replied. "I can't really do much because I can't be around people. I wish I could take classes, but that's not possible. I did check into correspondence courses, and Loyola does have a program, but it's mostly for prisoners and the military."

"Do you think they'd make an exception?"

"I asked. I'm supposed to hear next week. I did point out that I'm basically a prisoner in this house!"

"I wish there was something I could do about that," I said. "You do spend time outside, right?"

"Yes, of course. Every morning I sit on the deck. But that will be tough during the winter, and even if I have a fire in the fire pit, there won't be much sun many days."

"I think we need to figure out things you can do besides stay home and go to the hospital. What if tomorrow we go to a forest preserve? We should be able to walk, just the two of us, and find a spot where we can relax without anyone near us."

"I'd like that! How did the meeting go today?"

"Overall, pretty well. One of the older analysts objected, and Mr. Spurgeon fired him on the spot."

"Wow! He can do that?"

"It's his company, so he can basically do whatever he wants. My employment contract with Spurgeon makes it clear that my employment is 'at will', which means Noel Spurgeon doesn't even have to give a reason to fire me. And, in a sense, that analyst saved me one decision. I still have to decide whom to keep and who to let go."

"I would hate having to do that."

"I don't relish it, but I'll put together a set of objective criteria, and I'll review their analyst reports for the past year. With Bianca's help, I'll also develop some kind of performance rating system that I can use to evaluate them now and in the future."

"I assume Bianca is safe."

"She is, and not because she's having my baby! In fact, I'll hire a second person for her team and eventually a third or fourth. I think, in the long run, there is significant value to be had by using computers to do high-speed data analysis. Right now, I'm thinking I need to eliminate six more analysts and hire one data analyst."

"Ellie?"

"I want her to graduate. We're supposed to get together in the next week or two so I can begin teaching her. She has two more years of school after this one."

"Bianca didn't finish," Keiko observed.

"That's true, but computers are different. And she's taking night classes the same as I am."

"Jonathan?" CeCi said from the door to the Japanese room.

"Yes?"

"Deanna asked me to mention she left a note for you on the fridge about a show in Evanston next weekend. She's going to have six pieces there. She wondered if you'd escort her to the opening on Friday the 23rd."

"She asked me," Keiko quickly interjected. "I said I didn't mind."

"Then I'll do it," I replied. "Will she be home at a reasonable time tonight?"

"Yes," CeCi replied. "She's coming straight home from work. Sophie and Ivy have plans."

I chuckled, "Same professor or a new one?"

"Not a professor. They met a well-to-do guy at an art show, and he's more than happy to shower them with gifts in exchange for their attention!"

"Which they are all too happy to give!" I grinned. "If we're still up, I'll speak to Deanna when she comes home tonight; otherwise, in the morning. Did Keiko tell you Chinese was being delivered at 6:15pm?"

"Yes! I'll be in the other room to give you some privacy."

"Thanks."

"You see how she looks at you, right?" Keiko asked once CeCi had left.

"Yes, but she and I both know I'm married! She's never once, even on our Friday dates, done anything even slightly inappropriate."

"I wasn't accusing either of you," Keiko said quickly. "I was just making an observation."

I wondered about that, and perhaps I had misjudged Keiko's feelings about CeCi going out with me on Friday evenings.

"Are you concerned, Keiko-chan?"

"No. I probably shouldn't have said anything."

"But you did, and I think that means there's at least some concern on your part."

Keiko sighed, "But not what you're thinking."

I considered for a moment and nodded, "You're unhappy that we can't go out together. It's not about CeCi, specifically, but about the fact that I take CeCi on Friday nights, and Violet and I go to sporting events."

"Yes," Keiko admitted, sounding sad. "I'm sorry."

"For what? Telling me how you feel? I want to know, Keiko-chan, and I don't want to do anything to hurt you."

"I haven't been a very good wife to you," Keiko said, sounding sad.

"I'm the only one whose opinion matters on that, and I say you have. Being a good wife has zero to do with having sex or going on dates. What matters is we love each other and agreed to spend our lives together. Nothing else is guaranteed."

"That's not guaranteed, either," Keiko said quietly.

"Yes, it is," I replied. "We didn't make traditional vows, but they say 'until death do us part', and there is literally no way to know when that will be. Remember what I said about my dad? And about my friend Paula? And my mom's friend's husband? Nobody knows when they'll die. Not me, not you. So, yes, the only thing that is guaranteed, and what makes a marriage, is a promise to love each other and be together."

"You really believe that?"

"I do. When I said I loved you, I meant it. When I said I wanted to marry you, I meant it. I still do. That means that if it's a choice between making you happy and going out on Friday nights, then it's an easy decision. If the amount of time I spend with Violet is causing you to feel neglected, I can fix that."

"No, I couldn't do that to Violet," Keiko said. "She needs you."

"And so do you."

"But what do you need?"

"I have you, Keiko-chan."

The doorbell rang, signifying that our food had arrived.

"We'll finish this later," I said as I stood up.

I went to the door, paid the young man who had brought it on his motor scooter, then brought the food to the dining room table. I called CeCi, then got plates, bowls, and spoons from the kitchen, though no forks, as all of us could eat with chopsticks. We shared the hot and sour soup, beef with pea pods, and chicken with broccoli amongst the three of us, along with large portions of rice.