Chapter 15: A Pretty Steep Investment

August 26, 1981, Chicago, Illinois

On Wednesday Lily joined me for dinner as soon as her parents left for their date night.

“What day is your birthday?” I asked.

“October 13th,” Lily replied. “What day is yours?”

“November 3rd,” I said, glancing at the calendar I’d hung by the door. “Your birthday is on a Tuesday.”

“Yes. I’m not sure what the old lady has planned, but it’s always something.”

“Your eighteenth should be special,” I replied.

“Fat chance! And anyway, they changed the drinking laws, so it can’t be like it used to be.”

“We could still have 3.2 beer in Ohio at eighteen, not that I drank much beer. What about your friends?”

“We’ll do something on the Saturday after. Mary and Elizabeth are planning something, but they haven’t said what. What’s for dinner?”

“Chicken. There are a pair of breasts under the broiler right now. I’ll steam some corn, and I have some coleslaw. Very simple.”

“Nothing wrong with that! The three times you’ve cooked for me have been great, even if the meals were simple to prepare. Things don’t have to be overly complicated to be good. Sometimes the best things are simple — walks in the rain, a gorgeous sunset, a hug.”

“Is that a request?” I asked, holding out my arms.

Lily quickly moved to my lap so we could cuddle, something she very much liked to do, and something which I, to my own amusement, found myself enjoying immensely. We’d done nothing more than exchange some soft kisses in the past, but somehow those simple kisses were exhilarating in a way I wouldn’t have expected. I wondered if I could ask her on a date once she turned eighteen, or if that might cause problems with her parents; problems I wanted to avoid because I very much liked the apartment and location. That said, I didn’t think asking Lily would cause a problem.

“Do you think your parents would let me take you on a date after your birthday?”

“I’ll be eighteen so they don’t really have a say,” she replied.

“I think that might technically be true, but you’re living in their house, and I’m living in their garage apartment, so their opinion matters, at least to a point. And given that you plan to go to UICC and live at home, you need to stay on their good side.”

“What I didn’t count on was another four years of intense parental supervision!”

“Consider it a trade-off. Room and board plus tuition in exchange for following their rules. Are they THAT onerous?”

“Would you accept a 10:00pm curfew?”

“Have you talked to them about changing it once you turn eighteen?”

“My mom is pretty unreasonable. I told you why.”

“So talk to your dad, work out a new time that you can live with, and then have him suggest it to your mom.”

“Sneaky!” she said with soft laugh. “You deserve a proper kiss for that!”

She sat up and moved her lips to touch mine. I felt hers part, so I gently slid my tongue forward in search of hers. When they met, Lily moaned softly and our tongues began a very enjoyable slow dance. We French kissed for about a minute before Lily broke the kiss.

“Whew,” she breathed, then cuddled against me.

Lily’s pulse was racing and she was breathing heavier than normal, and I wondered if, perhaps, that had been her first French kiss. It had been very clear that she hadn’t dated, but my experience with Bev had shown that dating wasn’t strictly necessary for an intimate relationship.

My thoughts were interrupted when the timer rang. Lily reluctantly moved from my lap and I went to the stove and turned on the burner to steam the corn. I checked on the chicken and was happy with the color, so I turned off the broiler and adjusted the oven temperature to keep the chicken warm. I quickly set the table, and about ten minutes later, took the chicken from the oven, put one breast on each plate, got the coleslaw from the fridge, and then got the freshly steamed corn from the stove. I didn’t bother with serving dishes, and just set the pot on the table with a slotted spoon.

“This is very good!” Lily said after she ate a bite of the chicken.

“Thanks!” I replied.

We both ate, and when we finished, Lily helped me clean up. When we put the last dish away, we went back to the couch and kissed and cuddled for about thirty minutes before she had to go back to the house. I walked her to the door, we exchanged a nice kiss, and after I watched her go into the house, I settled down with The Wall Street Journal.

August 28, 1981, Chicago, Illinois

“Mr. Nelson wants to see you,” Nick said when I returned from my morning rounds.

“OK,” I replied.

I returned my cart to its normal spot, put the outgoing mail in the bin, handed one courier packaged to Nick, and then went to Mr. Nelson’s office.

“You wanted to see me, Boss?” I said from the door.

“Come in, close the door, and have a seat.”

I did as he asked, then waited for him.

“This is your probationary review,” he said, handing me two sheets of paper. “Sign both. One copy is yours. One is mine.”

“Am I supposed to read it?” I asked.

He laughed, “Yes, but you’re just signing to say you received it. It doesn’t mean you agree with it. But if you object to a single word on that form, you’re a first-class idiot!”

“I know some girls who would say that I am,” I chuckled.

“Don’t we all?” he replied, laughing and shaking his head.

I signed both pages and handed one back. I read through the form and was extremely happy — I’d scored 5 out of 5 on every rating, and the comment section was glowing. I was surprised by one item — the salary box showed $7.00 per hour, which was a larger raise than I’d expected.

“This is not an objection,” I grinned, “but the salary is higher than you said it would be.”

Mr. Nelson nodded, “Given the turnover, I convinced Personnel we needed to make sure you had an incentive to stay. I didn’t think you were going anywhere, but I don’t want to take the chance.”

“Thank you,” I replied.

That raise meant that after taxes and my investments, I’d be taking home nearly $900 a month, and it meant I could easily send my mom more than I had originally planned. She’d object, but given how much she had sacrificed for me, it seemed to me the least I could do.

“Go see Murray Matheson. He asked to see you.”

“Yes, Boss! And thank you again!”

“You’re welcome. Keep up the good work!”

“I will!”

I left his office and went up to 35 to see Murray Matheson. He saw me at his door and waved me in.

“Kane. I hear you passed probation today.”

“Yes, Sir.”

“What’s the ‘uptick rule’?”

“When you sell a security short, there must be at least one trade at a higher price before your short sale can be executed. If the stock continually falls, your short sale will never be executed.”

“What’s the goal of a short sale?”

“To profit when the price of the security declines. It’s the opposite of a long position, where you profit when the price of the security increases.”

“What’s a ‘locate’?”

“Asking a broker to find the shares necessary to borrow so they can be delivered on the short sale.”

“What happens if a stock can’t be located?”

“Then the short becomes ‘naked’ and could result in ‘failure to deliver’.”

“What’s the major risk of a short position?”

“The stock price could increase, theoretically to infinity, resulting in potentially catastrophic losses. Your losses in a long position are limited to the cost of the security you purchased; in a short position your loses are potentially unlimited because there is no guarantee you could ever buy the shares at any price. Conversely, your gains in a long position are, in theory, unlimited, while your gains in a short are limited to the value of the stock, minus the fees, should it go to zero.”

“What’s a ‘margin account’?”

“Basically a loan whose proceeds you can use to trade securities.”

“What’s a ‘margin call’?”

“If the value of the collateral in the account falls sufficiently such that you no longer meet the requirements, additional cash or other collateral has to be added to the account to bring it in line. If you fail to meet the call, the broker is permitted to sell assets of his choosing to bring the account in line. The order of sales is usually specified in the brokerage agreement, but it doesn’t have to be.”

“Do you know of a recent example of a failure to meet a margin call?”

I nodded, “It was in Appendix C of the notebook — the Hunt brothers nearly destroyed Wall Street last year.”

Mr. Matheson laughed, “Not quite, but damned close. What happened?”

“They bought silver futures contracts on margin in an attempt to corner the market. Despite their purchases, the price fell, resulting in a violation of their margin requirements. They were asked for $100 million, which they didn’t have. A bunch of banks stepped in to provide the necessary line of credit to unwind the position.”

“Yes, but what caused the price drop?”

“COMEX creating ‘Silver Rule 7’ in response to their accumulation of silver futures, increasing margin requirements.”

“So who nearly destroyed Wall Street?”

“COMEX.”

“Why?”

“According to the analysis in Appendix C, because the price of silver was so high that Tiffany’s took out an ad bitching about the high price of silver.”

“What’s the lesson?”

“Changing regulations can wreck an otherwise valid trading strategy.”

“What did the Hunts do wrong?”

“I’m not sure. They basically had the rug pulled out from under them.”

“There’s the lesson, kid — trust nobody. The exchange blindsided them with the rule. Can you think of why they might have done that?”

“Somebody in the government pressuring them to do it, I guess.”

“Another lesson — the government can take it all away from you and there is nothing you can do. They don’t even have to do it themselves. Remember those lessons.”

“Yes, Sir.”

“I’m impressed, kid. You actually read and understood the appendices. Most people don’t. Ready to learn about futures and options?”

“Yes, Sir!”

He took a blue binder from his shelf and handed it to me.

“Study, and this time, let me know when you’re ready. I won’t ask to see you next time. You don’t get ANYTHING by waiting for it to come to you. You got the first binder because you asked.”

“Sorry. I was going to speak to you soon.”

“Carpe diem, Kane!”

“Yes, Sir!”

“Get out of here!”

I nodded and went back down to 34 feeling pretty good, but also realizing that I should have gone to see him sooner. I wanted to be perfect, but my quest for perfection had resulted in an admonishment. I put the binder on my shelf, then went back to work until it was time for my lunch break.

“I passed my probation,” I said to Rachel when we met for lunch.

“Congratulations!”

“I also passed my first test with Murray Matheson.”

“Very good! So, when do you move up to runner?”

“One step at a time,” I replied. “I think I’d like to be mailroom supervisor first, which I have a chance to become in May or June when Nick graduates from law school. That gives me a fallback position if something goes wrong.”

“You mean you could apply for similar jobs at other companies?”

“Exactly. A backup plan, if you will. I don’t expect to need it, but given that I have no other applicable experience I can show on a résumé, it makes sense. I mean, there isn’t a big call for the kind of manual labor I did back home.”

“It certainly seems as if things are working out for you.”

“So far, so good,” I replied.

“Would you like to play mini golf again tomorrow?”

I nodded, “I would. Same time?”

“Yes.”

We finished our lunches and headed back into the building. The afternoon went quickly, and I biked home, showered, and dressed for my date with Gudia. We’d agreed to meet at Connie’s for pizza because school had started the previous Monday and she didn’t have her car on campus. I took the L to Chinatown, and walked to the restaurant from the L stop.

“Hi!” Gudia said. “There’s a wait, but I put my name in. Probably about twenty minutes. We can order our pizza right away, though.”

“Hi. Sure. Whatever you want.”

She smiled, ducked into the restaurant, and after two minutes, came back out.

“All set.”

“I passed my first quiz with the currency trader,” I said as we left the restaurant.

“That’s excellent. You got the next notebook, right?”

“Yes. And I passed my probationary period today as well.”

“Then we need to celebrate! I’d buy you a drink, but neither of us are old enough?!

“Actually, I know a bar in Bridgeport where you could buy me a beer, if that works.”

“How?”

“My friend Stuart’s uncle owns it. He’s a Chicago cop and he’ll serve us so long as we don’t cause trouble. I have a business card Stuart gave me to use if his uncle isn’t there.”

“Cool! Pizza, then beers!”

The wait to be seated was just over twenty minutes, and when we sat down at our table, we ordered small salads and drinks, and had just finished eating the salads when our Chicago-style deep-dish pizza was brought to the table.

The pizza was delicious and when we finished, we split the bill, left the restaurant, and headed to the bar. Stuart’s uncle was working and remembered me, so we had no trouble ordering two glasses of Old Style.

“Would they let us order liquor?” Gudia asked.

“I have no clue. I can ask Joe, the guy behind the bar who greeted me. That’s Stuart’s uncle. Do you want something else?”

“No, I was just curious.”

“Then I’ll ask Stuart when I see him tomorrow rather than take a chance of pushing things.”

We drank our beers then walked outside.

“Now what?” she asked.

I shrugged, “I don’t have to be up too early. Did you have something else you wanted to do?”

“The first IIT movie is next week. I think I told you they’re showing The Blues Brothers.”

“You did. Let’s plan on that for next Friday. What about tonight?”

“How slow are we taking things?” she asked.

“I thought you liked it slow,” I teased.

Gudia laughed, “I do, but I meant the time it takes before we get there.”

“You remember I’m seeing other girls, right? And that I’m not ready to be exclusive with anyone?”

“And I’m not ready for the inevitable confrontation with my dad which would come if I insisted we become a couple.”

“Then I’ll leave to you to decide what you want to do.”

“That’s not an easy decision because it means you might be with other girls, and I’m not sure I can deal with that. It’s one thing to date, it’s another thing to share you with other girls in an intimate way.”

“Then I think it’s pretty clear that I should take you back to IIT,” I replied.

“You can just walk me to the L, and we’ll go opposite directions. It’s safe for me to walk from the L to the dorm.”

“If you’re sure,” I said.

“I am.”

We walked to the L station, paid our fares, and climbed steps to separate platforms. I chose not to board the first northbound train so I could ensure Gudia got safely onto the southbound train. She did, and less than ten minutes later I was on the L heading for my apartment.

August 29, 1981, Chicago, Illinois

“You’re getting better,” Rachel said after the first nine holes of mini golf on Saturday.

“Thanks.”

“I’ve been thinking more about our conversation at the Greek diner.”

“It’s a pretty tough chasm to bridge,” I said.

“I know. And I’ve had conflicting advice from my sisters. Rebecca says it’s impossible to overcome that difference. Elizabeth says that we could compromise if you were willing to simply refrain from criticism. I probably shouldn’t tell you what Mary said!”

She blushed when she uttered that last sentence.

“She’s sixteen, right?”

“Yes,” Rachel said laughing nervously. “And she’s the troublemaker! She said,” Rachel lowered her voice, “that you were hot and I should... ‘convince’ you to come to church!”

I couldn’t help but laugh, “An interesting method of gaining converts!”

“I told her it was a bad idea.”

“I say this only to be silly, but perhaps I chose the wrong sister!”

“You!” Rachel squealed, slapping my arm.

“Sorry.”

“You do like to push the edge of the envelope! But you’ve also been a perfect gentleman.”

“Thanks. Shall we continue playing?”

“Yes.”

We finished the second nine and turned in our clubs, then headed towards the bus stop.

“Can we continue the conversation?” she asked.

“Yes,” I replied.

“Do you think you could refrain from criticizing the church?”

“Would you be able to compromise on birth control? And ignore what your church had to say about it? I mean, after marriage, of course.”

“I suppose I can’t say ‘no’; if I did, it wouldn’t be much of a compromise, would it?”

“There’s a real difference though — for me, it’s simply not saying something; for you, it’s doing something your church says is a sin. I think you have to ask yourself if you could live with that.”

Rachel sighed, “The problem is, I like you a lot.”

I smiled, “Normally, I wouldn’t call that a problem!”

“Except in this case, it’s what’s causing my consternation.”

“Can you explain why birth control is forbidden?”

“Because sexual relations are intended for procreation. If there is no chance of procreation, it’s simply for pleasure.”

“Hang on a second! Sex is SUPPOSED to feel good. Are you saying that it’s improper to enjoy sex? And that if there is no chance of getting pregnant, you can’t have sex at all?”