Chapter 39: I Smell a Rat!

February 20, 1984, Chicago, Illinois

"You've had a complicated life," Kayleigh observed. "Mine has been simple."

"Is that a problem?" I asked.

"I think 'challenge' might be a better word. May I be direct?"

"That is my preferred style. I tend to get right to the point and prefer others to do the same."

"You having a baby with your friend gives me pause," she said.

"Let me ask you this — if I was a single dad because Keiko and I had a baby before she got sick, would that be a problem?"

"It would be different, I guess. I'm not condemning you, but I'm pretty conservative and traditional."

"I was born to a single mom," I replied.

"Sorry," Kayleigh said. "But that was because your dad died, right?"

"They weren't married. Mom got pregnant at sixteen. My dad didn't live in Ohio. They met and created the necessary conditions for me to be born, though she never saw him again because of his work and the plane crash."

Kayleigh laughed softly, "I've never heard 'created the necessary conditions for a baby to be born' used as a euphemism for having sex!"

"I once teased my mom that she had performed the necessary ritual to invite me into her life without using birth control."

"Wow!" Kayleigh exclaimed.

"I also called it 'sending a message to the stork'."

"Cute. What church do you attend?"

"None. We had a Shinto wedding, and Keiko had a Buddhist funeral. I don't believe in God. I'm going to guess you're Catholic?"

"A safe bet, given I'm Irish-American, despite not having red hair and green eyes! Did you ever go to church?"

"I've been to several weddings and a funeral, and that's it. My mom attended a church she describes as Baptist when she was little, but stopped going when my grandparents kicked her out of the house for getting pregnant."

"Church is going to be a problem, isn't it?" Kayleigh observed.

"I know enough about the Catholic church to say that my views are completely incompatible. I realize I'm jumping the gun, but if going to church as a couple, having a church wedding, and raising kids Catholic are all important to you, we've hit a major roadblock."

"Breakfast to having kids together in less than fifteen minutes? I'd say that's jumping the gun!"

"What I said before about me being direct is absolutely true, and I'm also extremely practical. Doesn't it make sense to address what might be a serious impediment as soon as it's discovered?"

"Maybe, but don't you think getting to know someone is important?"

"Yes, and with most topics, I believe compromises or accommodations could be made that would likely satisfy both parties. Religion is different."

"You sound like the attorneys I work for! 'Satisfy both parties'?"

"I don't write legal briefs, but in a way, what I do is similar, in that I write analysis documents which lay out the case with regard to a specific decision to be made, weighing the pros and cons, and suggesting a course of action. I tend to approach life analytically, analyze risks and rewards, and develop a way forward. The legal advice I receive from Nelson Boyd is like that — he tells me the pros and cons and suggests a plan, but it's up to me to implement it or not."

"I'm probably jumping into a pool of alligators here, but how does that work in a romantic relationship?"

I saw shades of Haley, Teri, and Rachel Kealty in Kayleigh and decided it was best just to answer similarly to how I did Haley, but with perhaps a bit more tact.

"Even when love or romance, or however you want to phrase it, is involved, we still have to make decisions based on our assessment of the situation. I've heard 'love conquers all', but I'd suggest the divorce rate shows that to be a falsehood. If you fell in love with someone with whom you had nothing in common, how well would that work out?"

"Not very, I suspect."

"So, however important feelings are in your decision, you have to take other factors into consideration. Well, you could ignore them, trust that love does conquer all, and hope for the best. To me, that seems like a surefire way to crash and burn. In fact, I'd posit that you'd be much more successful with someone with whom you had a lot in common, especially a common worldview and common goals, than someone very different with whom you were in love."

"I hadn't thought about that, but you're probably right."

"So, doesn't it make sense to deal with the elephant in the room?"

"I suppose it does."

"How often do you attend mass?"

"Every Sunday morning since I was a baby, plus holy days."

"And you confess, go to communion, and generally agree with the teachings of the Catholic Church?"

"Yes. It would be silly to go if I didn't agree with what they taught."

"I have a friend who goes to church regularly but says she disagrees with quite a bit of what the Catholic Church teaches. I have other friends who disagree with some doctrine or other, as well. So, I don't think it's silly in general. I mean, I'd call myself a Democrat, but I don't agree with everything in the Democratic Party platform, and there's a good chance I'll vote for Reagan in November."

"If I disagreed with what the Catholic Church taught in a significant way, I'd stop going. It sounds like we've hit an impasse because I get the idea that you have zero interest in attending church."

"My ability to compromise is limited, but going to church on occasion and even having my kids baptized are not out of the question. On the other hand, a church wedding is out of the question because I couldn't make the promises required to have one. And being OK with my kids being baptized does not mean I would keep quiet about my beliefs. So I can compromise some, but given what you've said, I'm not sure it's enough."

"Probably not," Kayleigh agreed. "A church wedding is important to me."

We finished our breakfasts, and once I'd paid the check, we walked out of the restaurant.

"Thank you for breakfast," Kayleigh said.

"You're welcome. I enjoyed the conversation even if it didn't lead where I believe you wanted it to lead. Unless I'm totally missing something, I don't think asking you out again will change anything."

"No, I don't think it will," she said.

I walked her to the L, then we said 'goodbye' and climbed separate steps as I was going north, and she was going south. Forty minutes later, I walked into the house. I took off my winter gear and went to the kitchen to get a cup of coffee.

"How did it go?" Bianca asked.

"About the way you would expect with a girl who goes to mass every Sunday morning."

"The kiss of death."

"Pretty much. The compromise Teri suggested is basically the hard limit, and I'd really prefer not to have to compromise in that area because I could see it going badly down the road."

"I think your friends bear that out. Nobody is religious or goes to church except on special occasions, if even then. I think Teri is the exception, but as you say, she offered a compromise that you could accept, if it came down to it. I assume you won't see Kayleigh again?"

"We agreed a second date would be fruitless. It wasn't wasted time, though, because thinking about a possible romantic relationship helped me order my thoughts further. I'm still not sure what to do, but I feel as if I'm getting closer to at least figuring out a way forward, even if I don't know the destination."

"Before I forget, Esme and Katy are coming home for Spring Break in late March. They want to visit, but I wasn't sure how you felt about that."

"They're welcome to visit, so long as they aren't expecting to pick up where we left off, so to speak."

"I don't think so. I certainly didn't get a vibe from Esme that said that was the primary reason, though I'm positive they thought about it."

"Sure, but so long as it's not the primary reason, it's cool. I mean, I do know how to say 'no', but I don't want to end up in an uncomfortable situation."

"I totally get it. Deanna said she'd be ready whenever we are."

"Then let's go upstairs and get naked!" I said with a grin.

"In my dreams!" Bianca replied. "Well, maybe not for about six months."

I refilled my coffee mug, and then Bianca and I went up to Deanna's combination studio and bedroom.

"I hear you're ready for us," I said.

"I am! Let me turn on the space heater because otherwise, it'll be a bit chilly with the ventilation fans running. You can get undressed, and I'll help you pose."

Deanna turned on the space heater and moved it so it would keep Bianca and me from getting chilled. The two of us undressed, and Deanna moved us into the position she'd described — me standing just slightly offset from Bianca, with Bianca's hands on her baby belly and my hands on top of hers.

"Perfect!" Deanna said, stepping back and looking us over.

She moved to her easel, picked up a pencil, and began sketching.

"Do you have a name for this painting?" I asked.

"No. I don't usually name my classwork. I was thinking, though, that I could do a companion piece to this. Would you two agree to pose with your baby? A similar pose with Bianca holding her and you with your arms around both of them? I could call the series Nuclear Family even though it's not, actually. But nobody has to know you aren't married."

"I'm game," I said. "Bianca?"

"Sure."

"And then maybe a third one when she's a year old?"

"Again, I'm fine if Bianca is," I replied. "Where would you display them?

"At a show at school, but then if you want to hang them, that's fine."

"There's plenty of room in the condo," Bianca suggested. "We could almost make it a gallery. I don't have a problem with anyone seeing the paintings, though it might make some people uncomfortable. Jonathan, I have an idea if you're game."

"What's that?"

"You plan to display your collection of Deanna Haight originals, which could go in the common areas, but we could turn the spare room into a gallery for more intimate works that would make someone like Keiko's grandfather uncomfortable."

"You've seen the Japanese erotic art, so I'm not sure that's a problem," I chuckled.

Bianca laughed, "I was thinking more of the fact that it's you and me naked and with a baby that was conceived after you and Keiko were basically a couple. And what would your mom say?"

"I actually have no idea what my mom would say. We never discussed art or nudity or anything like that. I know her parents would likely have strokes, but I don't know how she'd react. I guess my only concern is giving up the spare room."

"Short term, though, right? CeCi is planning to move to California when she graduates."

"True. Work it out with Deanna because we'll need lighting and maybe a piece of furniture like they have at the Art Museum — those cushioned benches?"

"Cool," Bianca replied. "Deanna, have you started the design?"

"I spoke to my friend Natasha, the interior design student, and we're working on a theme. I'll have something to show Jonathan, at least in terms of colors and an overall concept, in a week or so."

About an hour later, Deanna said we could get dressed, as she didn't need us to pose to begin painting, but would ask us to come back when she was ready to complete the final details.

"Jonathan, given you don't have plans for the afternoon, I could do the initial sketch of you in the Japanese room."

"That's fine with me," I replied. "What should I wear?"

"Your kimono if you're willing."

"I am."

"Then meet me there in about fifteen minutes, OK?"

"Yes."

We did that, and once again, once Deanna had the basic sketch, I changed out of my kimono into sweatpants and a rugby shirt and had lunch with Bianca, Juliette, CeCi, and Deanna. The rest of the day was quiet, and I was able to relax in the Japanese room and continue reading Les Misérables.

February 21, 1984, Chicago, Illinois

Tuesday started out fairly typical, and after I completed my analyst report, I evaluated what moves I might make. In the end, I decided against investing in Delta Data Systems Corporation, as there simply weren't enough available shares at a price I was willing to pay, and Joel Steinem wasn't able to find any counterparties who would sell me call options. That didn't surprise me for a small OTC stock, and just Joel Steinem calling several brokerages in New York to inquire about options had caused the asking price to go up a few cents.

The only way that play would make any sense was to buy a huge block of shares from an insider, and a brief check by Joel Steinem indicated there wasn't any selling interest by anyone with a large block of shares. What had looked like a good idea simply didn't pan out. I did make a note to follow the lawsuit to see what happened, then continued looking for other opportunities.

The market was in turmoil, and the DJIA was at a nine-month low. Inflation appeared to be rearing its ugly head, and that indicated that the Fed was likely to boost rates, further depressing the stock market. President Reagan was jawboning them to cut rates, but that was unlikely because Volcker was an inflation hawk. On the positive side, the budget deficit had decreased, though our analysis was that that decrease was mostly due to accounting tricks and other sleights of hand.

The one sector where there was a lot of activity was petroleum, with Mesa making a bid for Gulf after Gulf had won their proxy battle with T. Boone Pickens, and Texaco had finally agreed to acquire Getty after defeating a bid by Pennzoil. I had closed out my position once the Texaco deal was announced, as so many deals had fallen apart that it would be easy to lose significant money by staying in that position or taking on a new one in the sector.

Another interesting battle was Rupert Murdoch bidding for Warner Communications, but that appeared to simply be greenmail, and it was our assessment that Warner would buy back Murdoch's shares at a premium over what the market was offering. If that happened, it would be a private transaction, so there was no way to cash in on it.

My prediction of a bad year was being reinforced on a daily basis. The one bright spot was the Nikkei 225, though I had gone long on several speculative stocks in January, along with the move on Hawaiian Airlines. If those panned out, I might eke out a 20% gain, which would easily beat the street but not be anywhere near typical Spurgeon returns.

As I browsed news stories, I saw some possible plays – going long on General Foods and shorting Bethlehem Steel. I worked through the numbers and the news stories and decided both were possible plays. I picked up the phone and called Joel Steinem.

"I need 100,000 shares of General Foods at no more than 45, and I need you to find me a borrow of 100,000 of Bethlehem Steel for a short."

"OK. Let me work."

"Thanks."

About an hour later, he called back.

"All set. You should see both trades on your terminal. Goldman lent you the shares at the usual 10 bips a day."

That was about 0.3% per month, and I expected to be able to cover by the end of June, meaning I'd give up about 1% in fees.

"Perfect. Thanks."

"Which little birdie whispered in your ear on those?"

"Just trading the fundamentals. I could probably short the entire steel industry except for a few specialty steel manufacturers and come out ahead."

"You decided against Delta?" he asked.

"It doesn't make any sense. If I was a retail investor, I'd buy a thousand shares and have a tidy return. But I'd need a million shares to make it worth my while, and as you said, they just aren't available at a price I'm willing to pay. Thanks for the legwork, even though it didn't pan out."

"You're welcome. I'm here if you need me."

"Thanks."

I hung up, checked the trades in the system, then continued my research. After lunch, I went to see Murray Matheson.

"Do you know a John Margolis at Lakeview Partners?" I asked.

"An M&A guy who does IPO advisory as well. Why?"

"He seems to have some kind of competition with Mr. Spurgeon over art."

Mr. Matheson laughed, "That he does. It all started when Noel bought that series of paintings in the main conference room. Margolis had made an offer, and Noel basically outmaneuvered him to purchase them. About six months later, the same artist had another series of paintings, and Noel bought them before the show. Those he has at home. It's been a running thing with Margolis, and I think Noel actually has a dealer letting him know when Margolis is interested. They had a bidding war over a Matisse a few years ago that Noel won. How'd you meet Margolis?"

"He was at an art show on Friday night where my friend Deanna was displaying some of her work. She showed four paintings she made on commission for me that'll be hung in the Research office later this week. He saw they had red dots on them, indicating they were sold. He offered to pay five times what she'd been paid if she'd sell them to him, and she let him know they were going to be displayed here. He assumed Mr. Spurgeon had bought them and offered Deanna a premium to get early access to her next show before Mr. Spurgeon. She accepted because it was an easy promise, given it wasn't Mr. Spurgeon, it was me."

Mr. Matheson laughed again, "Nice. I wondered why you hadn't asked for any art from the firm's collection. What style of paintings?"

"Abstract, with purple tones similar to our logo color. There are four, which she calls Bull Market, Bear Market, Gold Market, and Silver Market. They're actually pretty cool. I was going to hang them myself, but Tony pointed out that the building rules require a building engineer to put the fasteners on the walls."