Chapter 4: Kindergarten

June 15, 1981, Chicago, Illinois

“I don’t believe it,” Nick said, shaking his head.

“What?” I asked.

“This memo says a chick is taking Dierks’ place. We’ve NEVER had a chick in the mailroom in the history of Spurgeon Capital!”

“Why is that a big deal?”

“Have you seen ANY women here except secretaries or in Personnel or Accounting?”

“Not that I’ve noticed, but I keep my head down and do my job. I believe that’s what I was told to do.”

Nick laughed, “If you haven’t noticed some of the smoking hot secretaries, I’m going to say you’re a fag!”

“Call me all the names you want, but I still have my job and Paul Dierks doesn’t.”

“A legitimate point. Once she finishes her orientation, Charlotte O’Malley will be your new partner. You’ll show her the ropes.”

“Will do,” I replied.

“If she’s cute, just do the minimum.”

“Why?”

“She won’t last. Some trader or money manager or exec will see her as ‘prime pussy’ and she’ll end up a plaything and become a secretary or assistant or some such thing. Can’t have the plaything working in the mailroom!”

“Seriously?”

“You haven’t heard the stories? Those guys go through slash like you’d go through tissues when you have influenza. And all girls here are fair game for anybody who makes the firm money. And they get paid back with gifts and jobs. You won’t find a guy on 35 who isn’t banging his secretary. And if he has a female assistant, it’s because he’s banging her, too.”

I shook my head, “All the more reason to keep my head down and mind my own business.”

“Have you heard the phrase, ‘crack and hookers’?”

“No.”

“That’s the shorthand version for how the traders and executives blow off steam.”

“Remind me to be somewhere else when they blow off steam. I never did drugs and don’t want to be anywhere near them. Prison has a way of interfering with improving one’s life!”

“When’s the last time you heard of some rich dude being busted for blow or hiring escorts? It doesn’t happen. Well, unless they get busted for SEC or CFTC violations.”

“I’ve heard of the SEC. What’s the CFTC?”

“The Commodity Futures Trading Commission, which is responsible for regulating futures and options. If you want to work in this industry in any capacity that touches money, stocks, bonds, or anything relating to them, you have to be licensed by the SEC and know the regulations backwards and forwards.”

“How would I learn?”

“The easiest way is to get the study guides they give to the new runners. The hard way is to try to read the law.”

“So how do I get copies of those study guides?”

“You’ll need a friend, but there’s no way to make one at this point.”

“Because I can’t talk to anyone. I’m curious; how do I get one of those runner jobs if I can’t talk to anyone?”

“Mr. Nelson will recommend you when it’s time. Don’t try to short cut it, because you’re likely to get in trouble.”

“But wouldn’t it make sense to try to get a leg up?”

“Oh, I don’t disagree with you. I just don’t know how to go about it without risking the ire of someone who could get you fired the way Dierks was.”

“What if I ask Mrs. Peterson from Personnel? That can’t get me into trouble, can it?”

“I wouldn’t think so.”

“Then I’m going to ask on my break.”

Nick and I got to work because we’d need to run the morning rounds before our new colleague finished her orientation. When I had my break, I went to Personnel and asked for copies of the study guides.

“Why?” the very pretty secretary asked.

“I want to get a head start. I figure if I know the regulations, that makes it easier to get a runner’s job when one opens up.”

“I don’t think anyone has ever asked for those before. Let me ask Mrs. Peterson.”

She got up and walked down the hall and came back two minutes later.

“She needs to check. I’ll let you know the answer later today.”

“Thanks.”

I went back to the mailroom just as Mr. Nelson left having brought in Charlotte.

“Kane, this is Charlotte O’Malley,” Nick said. “O’Malley, this is Jonathan Kane.”

We shook hands and I flicked my eyes up and down to check her out. She looked to be eighteen or nineteen, was cute, had nice curves in all the right places, and straight black hair which framed her face. There was no doubt in my mind that if Nick was right, some trader would have her bent over his desk very soon, or whatever it was they did.

Nick and I showed her the ropes and she caught on quickly. She and I had a chance to talk when we were sorting the afternoon mail.

“You from Chicago?” she asked.

I shook my head, “No. From a small town outside Cincinnati. You?”

“Bridgeport born and bred. A typical Irish Catholic family, though it’s all girls. I’m the middle one. You?”

“Only kid. How did you land this job?”

“My oldest sister, Candace, dated a trader a few years ago. They broke up, but she called him to get me this job.”

“What does she do?”

“She’s working at a diner in Bridgeport. How did you end up in Chicago?”

“My uncle got me this job. He’s friends with the Big Boss.”

“And all you could get was mailroom?”

“You have to start someplace. YOU took a mailroom job!”

Charlotte laughed, “True. It pays better than fast food and I really don’t want to wait tables.”

“No college for you?”

She shook her head, “I was sick of school and didn’t want to join the military. So it was find a job and get some experience. Did you consider the military?”

I shook my head, “I could never kill someone. Back home I hunted, mostly rabbits and deer, but people? No way.”

“What if someone attacked you?”

“I’d defend myself, my family, and my friends. But that’s different from invading some foreign country.”

Nick went with Charlotte on her afternoon rounds, and when I returned from mine, Mr. Nelson was waiting in the mailroom.

“What the fuck does Murray Matheson want with you, Kane?”

I shrugged, “I have no idea. Who is Murray Matheson?”

“One of Mr. Spurgeon’s fair-haired boys. He’s a currency trader. He asked for you, by name, to come up to his office on 35. Go see what he wants.”

“Yes, Boss!”

I quickly headed up to the 35th floor. I walked down a long hallway and found Mr. Matheson’s gorgeous blonde secretary.

“Jonathan Kane to see Mr. Matheson at his request.”

She nodded, “He’s expecting you. Go on in.”

I walked to the open door, knocked, then stepped inside and waited.

“Kane?”

“Yes.”

“You’re asking for SEC study guides?”

“Yes.”

“Do you know the first thing about stocks?”

I shook my head, “Not much. I know it’s buying ownership in a company, but that’s about it.”

“Then what the fuck are you going to learn from an SEC study guide?”

“The rules.”

“Kid, if you don’t know how stock trading or currency trading or options trading is done, you won’t understand SHIT. You have to go to kindergarten before you go to High School!”

“Yes, Sir.”

He pulled a thick, bright red three-ring binder from his shelf.

“Kindergarten and first grade,” he said, holding it up. “When you understand this, THEN you can move on to the blue binder. THEN you can read the black SEC binder and maybe you’ll understand. Tell me why I should let you have this.”

“Because when there’s a chance to be promoted, I want to be ready.”

“A real go-getter, is that it, Kane?”

“Yes, Sir.”

“Been in the mailroom two weeks and think you’re ready for the 35th floor?”

“No, Sir. I think I’m ready to learn what I need to know to move up.”

“And so you just waltz into Personnel and ask?”

“I figured the worst that could happen was they said ‘no’. You only get what you want if you go for it, so I did.”

“And what is it you want, kid?”

“To make a lot of money. A whole lot of money.”

“And what are you willing to do to make this pile of money?”

“Whatever is necessary.”

“If that’s true, you just might achieve your goal. Take this,” he said, holding out the binder.

I took it from him.

“Thank you.”

“Don’t thank me just yet, Kane. When you learn what’s in this binder, you come back and we’ll see just how well you understood it. But there are no second chances, Kane. Be sure you know it. You jumped into the deep and we’ll find out if you can swim. Now get the fuck out of my office!”

“Yes, Sir!”

I turned and left, retracing my steps to the freight elevator which I took down to the 34th floor. I went straight to Mr. Nelson’s office.

“What did he want?”

“To give me training materials.”

“How the HELL did that happen?”

“I went to Personnel and asked for some study guides so I could learn SEC regulations.”

“Just like that?”

“Nick mentioned licenses and I wanted to study so when the time came, I was ready.”

“And Matheson gave you the binder?”

“Yes.”

“Don’t blow it, kid. You just made the closest thing you’ll make to a friend here for the next five years. But no studying on company time, got it?”

“Yes, Boss!” I replied.

“Get back to work.”

“Yes, Boss!”

I went back to the mailroom and put the binder on the shelf over my work area.

“What’s that?” Charlotte asked.

“Educational materials. I’m not working in the mailroom forever!”

“You are today!” Nick declared. “And don’t forget it!”

“Mr. Nelson made that very clear,” I replied. “I’ll take the binder home and only study there.”

“That ballsy move paid off.”

“Thanks.”

“Just don’t fuck it up.”

“That’s what Mr. Matheson and Mr. Nelson both said.”

“What’s the big deal?” Charlotte asked.

“Up and out,” I said. “That binder is my eventual ticket to making a ton of money.”

“Don’t forget the little people when you get rich!”

I chuckled, “I won’t.”

June 19, 1981, Chicago, Illinois

The week had passed more quickly than I’d hoped. I worked hard during the days and studied the training materials at night. Mr. Matheson had called this ‘kindergarten’ and if that was the case, the learning curve was going to be a lot steeper than I’d imagined. I’d spent the previous four nights simply learning vocabulary, committing it to memory until I could repeat the definitions word for word without fail.

When I left the mailroom on Friday, instead of meeting Uncle Alec, I met Gudia in front of the building, and at her suggestion we headed to a small diner where I ordered a burger, fries, and a Coke, and Gudia ordered a chicken sandwich, fries, and a Coke.

“We can’t go to the zoo,” Gudia said. “I found out that it closes at 6:30pm.”

“Bummer. So then what?”

“How about we just check out North Michigan Avenue and Water Tower Place. We can get some ice cream at Frusen Glädjé.”

“Where?”

“Frusen Glädjé. It’s an ice cream shop that purports to be Swedish, but I don’t think it is. What was your normal ice cream back home?”

“United Dairy Farmers. It’s a local Cincinnati chain. Mostly they sell milk, butter, ice cream, and that kind of thing, but some of the stores sell snacks and gasoline. There’s a place in Cincinnati called Graeter’s which is really good, but I was only there once.”

“So, ice cream?”

“Sounds good. I made a bit of progress on our master plan for world domination.”

Gudia laughed softly, “I was thinking ‘rich’, but world domination sounds good to me! What did you do?”

“I got the first training manual on stock trading. I’m having to learn a whole new language. I’m just on learning vocabulary right now. But there’s information in the vocabulary words, such as the types of ‘orders’ or ways to offer to buy or sell stock.”

“You don’t just buy or sell it?”

“You could, and that’s called a ‘Market Order’. It’s an offer to buy or sell a set number of shares of stock at whatever price the seller is offering. You can find out what that is by calling a broker and getting a ‘quote’, which he gets from someone who’s called a ‘Specialist’ or ‘Market Maker’ who keeps what’s called an ‘Order Book’, which lists ‘bid’ and ‘ask’ prices — what someone is willing to pay versus how much someone wants for shares they want to sell.

“But you can also make what’s called a limit order, which says you’ll pay no more than a certain amount or sell for no less than a certain amount. The ‘Specialist’ or ‘Market Maker’ adds those to his ‘Order Book’ and tries to match them up. When they match, the trade is executed. You can set a timeframe for the order — good for a day or good until canceled.

“Then, you can complicate things by issuing what are called ‘Stop’ orders. Basically, you can set a price and if the stock reaches that price, then your trade becomes a market order and is executed. So, say you own shares of IBM which you bought for $80 and are trading at $100. You could set a ‘Stop’ order at $95 to lock in the $15 of gains. Mostly it works, but if the price falls quickly, you might execute at a lower price than $95. That’s just the trigger. You can do the same thing when you’re buying, which means you’ll pay up to a certain amount for the shares you want, but no more. That might mean your order is only partially filled.”

“So any program I wrote would need to take those things into account, obviously.”

I nodded, “And that’s just some very basic stuff. There’s something called a ‘Short Sale’, which basically means you sell stock you don’t own.”

“That sounds like something you should go to jail for!” Gudia protested.

“I know, right? But what happens is the stock broker you use borrows some shares for you to sell, and charges a fee for that service. The shares are borrowed from big investors and banks who lend them out to make money.”

“Why would you do that?”

“Let’s say you see IBM trading at $100, and you think the price is going to drop. You sell the shares at $100, and when the price drops to $80, you buy the shares and your profit is the difference between what you sold them for and what you paid for them. Basically, it’s a way to make money when the price is falling.

“What I described before when you own the shares, is called a ‘Long’ position, as opposed to a ‘Short’. With a ‘Long’ position, you make money when the price goes up; with a ‘Short Position’, you make money when the price goes down. There are restrictions, though, for example your short sale can only execute if the price goes up after you place the order. That’s called the ‘Uptick Rule’ and it’s meant to prevent a group of investors from purposefully driving down the price by selling short.”

“That seems like a surefire way to make a fortune!”

I shook my head, “It seems like a surefire way to lose everything. If you think about it, the price could rise, and keep rising, such that you had to put up more and more money because of a ‘Margin Call’ — a demand to ensure you have enough cash to cover the losses — until you ran out of money. If IBM goes to $200, you’ve lost $100 per share!”

“Holy crap!”

“And that’s where ‘Stop’ or ‘Limit’ orders come in. You set a buy order at, say, $105, so you only lose $5 per share.”

“And this is the simple stuff?”

I chuckled and nodded, “Yes. That’s sort of basic stuff that an individual who wants to buy stocks does. I skimmed the manual before I started studying and found all kinds of warnings and caveats about how the ‘retail investor’ has almost no information, and by the time he can act on it, the stock price has already moved.”

“But I thought insider trading was illegal!”

“It is, but I don’t know the detailed rules. That’s in one of the future manuals. For now, I’m trying to learn the mechanics and the terminology. There’s a whole bunch of stuff that goes on behind the scenes, and it’s all in this manual. Basically, the ‘behind the scenes’ stuff is called ‘clearing’ and ‘settlement’ and involves paying for the stock and receiving the shares, or surrendering the shares and receiving payment.”

“Are there a lot of computers at your company?”

“Some. Mostly Apple IIs to run something called a ‘spreadsheet’. I don’t know much more about it than that. The traders mostly have a machine on their desk called a ‘Quotron’ they use to get quotes and information. I think the best way to describe it is like an oversized calculator with green characters. Some of them have something called ‘Telerate’, but I don’t know the differences between the machines in how they work or what they’re used for. That second one looks more like a computer. There’s another one on a couple of desks that’s different, but I’m not sure what it is. It might just be a different model or something.”

“Could you find out more?”

“Eventually. I really can’t ask any questions at this point. I need to learn everything in this 250-page training manual before I do anything else.”

“250 pages?”

“Yes, but that includes things like diagrams, sample stock tables, sample company balance sheets, a glossary, and an index. There’s a second one which is about the same size which deals with other kinds of things such as options and futures, and then there’s the regulations manual which is twice as big.”

Gudia laughed, “Doesn’t that figure? The government rules are more complicated than the actual things you have to do.”