Chapter 7

Monday found me back in the office where I located Beth set up in the next office, and that we now shared an assistant. Beth was a great organizer, and she still took care of my interests in the other companies and boards that I sat on. If either of us needed to have something either filed or typed, given Beth's new responsibilities, the new assistant would have the defined responsibility to do that. The assistant also filtered all of our phone calls to make sure that the person calling was one that we wanted to speak with.

After a cup of coffee, I took the first opportunity to meet with my new research team. We met in the conference room with Beth in attendance. After introducing Beth, and myself we went around the table so I could meet, Ken Banner, Sue Ryder, and Tony Vasquez. They all had different backgrounds, but all had a strong scientific leaning.

Leaning back in my big comfortable chair, I said, "We're an investment company and as a result, we need to look at the things that we want to invest in and determine if it's worth the risk of losing the money we'll put into it. Most of the time that will involve publicly traded companies that we can buy on the open market. Other times we will act as venture capitalists to support or fund an existing person or company to give them the needed capital so they can bridge the gap during growth or expansion."

"The third option is to fund our own companies or ideas so we can break new ground. As we play these alternatives, some will fail and some will thrive. Some will either make a lot of money, some money or they can lose money. I don't want you to think about your assignments in terms of profitability, cash flow or return on equity just yet. I want you to open your mind and say, 'What if?". What if we could make this a reality, what would it take to make it happen? Who would be the best person to lead the project? What school's research department could handle the project? This is all top-secret at this point, and I know that you've all signed NDAs and Non-compete Agreements.

"Beth will set up a meeting with John, our corporate counsel, to give you some training on what's important to remember and how to approach people when working on these projects. Any questions?"

Sue half-raised her hand and asked, "What's the project?"

"We're going to start investigating alternative energy sources. I'm not a tree hugger, but I can see the smog like anyone else. I can see the prices continue to rise and the public having to decide on what they need to give up to cover the rising costs of fuel. I'm looking for renewable fuels. There will be pros and cons for each so at this point we're in a giant brainstorm mode. What do you think are the best places to start?"

Tony said, "Solar, hydro and wind at the moment, are the three that seem to hold the most promise."

The other two were nodding their heads.

"Anyone else?" I asked.

There was no response.

"I guess I don't need you then since those are already being done. Before I fire you can you come up with anything else?"

Sue said, "Sir, I can see where you'd be disappointed with that answer, but as far as renewable energy those seem to offer the most promise. I think that there are tangents of each of those areas that we can look at. With the new technologies being developed, new things are possible every day."

"That's the attitude we're looking for. Currently, they're developing wind, and it will continue as the price of oil rises, but now it's not a big win due to the construction costs. I'll want to look at different applications, locations, and designs. Do any of you have a biology background?"

Ken said, "I guess that would be me. I don't know about the others. I specialize in plants."

Sue said, "I have some background in biology, but physics was my primary focus."

Tony said, "Physics here as well."

I said, "Tony, you're the wind guy. Sue you'll be my hydro expert. Ken you'll be the busy guy working on my solar ideas. Please take a couple of days to brainstorm ideas. After that, I'd like to meet with you individually to discuss your ideas. Keep in mind that I want to hear them all. I have a couple as well, so we'll take the opportunity to share and compare our ideas. Although I want you to take responsibility for your area, I also want you to work together. If you all know what each of your colleague is working on then when you come across something that can help them, the solution won't slip through the cracks. Beth, please schedule a meeting with John to go over confidentiality."

"Will do."

"Tony, I picked on you earlier, but I want you all to understand that nothing is off of the table until I say that it is. If I find out that you held something back because it was too outrageous in your mind then I'll fire you. Please don't leave anything out, because you think that it won't fly. If you come to me and you said, 'This idea would have cost a billion dollars, so I didn't think it was worth pursuing.' What would I say Beth?"

Beth lowered her voice and said, "My secretary could afford to fund that one from her bonus that came from the last stupid idea we turned into reality."

I wasn't expecting that, but smiled and said, "She wasn't the only one with a bonus of over a billion dollars. Let's change the way we live. It was nice meeting you all. Let Beth know when you're ready to talk about your ideas."

As we walked the short hallway back to the office I thought that I had never worked so close to Beth, just a door a way. My next thought was that it wouldn't hurt anything to put a door between our offices. John was in the same building and on the same floor, but his office was on the other side of the building.

Beth came in and said, "You're so unpredictable. I thought Tony would piss himself when you mentioned firing them all."

"Hey, and then Rich Little the great impersonator, showed up with the billion dollar bonus line. That was classic."

"I was having fun. Being in your shoes would have to be fun."

"I'll see if Darcy wants to sleep with you."

"I'd have to buy a strap on with a much larger insert than anything I now own."

"Do you kiss your children with that mouth?"

"You're no fun."

"I'm maturing in my old age."

"I'm glad to live out here in Nevada with you. Do you have a few minutes to let me in on your plan?"

"Sure come into my lair, so we can talk."

We found the couch, and I started to tell her my ideas. I ended by saying, "I'm excited about testing my hypotheses and to see if there are enough connected dots for my ideas to work. If not or maybe in addition, I'd love to see some very new ideas that are beyond mine. Usually, necessity is the mother of invention. I hope that in this case the need to satisfy my desire to come up with a new and better, renewable energy source is enough to inspire new inventions."

Beth sat quietly for a few moments. She looked up at me with a small tear in her eye, and said, "You do these things that can and do make people very rich. However, when you look past the money there's something else. There's cost savings for the public. There's a benefit to the environment, there are people who we paid a fair, no, a good wage to do the work for you. Unless someone is a hater or a selfish idealist, there isn't anyone that can't approve what you've done or want to do."

"I've never thought that for me to win, that everyone else has to lose. There are business people out there that live by the motto, 'Get all you can; can all you get; sit on the lid, and poison the rest.' I say treat others the way you want others to treat you. It's the golden rule and not that hard to do."

"I wish the government would think about my kids and future grandkids when they make decisions instead of thinking about pet projects that waste money so that they can get re-elected."

"I spent all that time in Washington. Most, but not all the congressmen mean well, but they see everyone else getting projects, so they think that they need to get their share for their people. Instead of working together for the good of the country, they work for the good of their state or region. To get what they want they have to give the others what they want. In the end, they spend an excessive amount of money on crap. They spend our money on things that were never meant to end up being a part of a government that our forefathers set up to defend us as a country."

"And they're really the only ones that can make the rules or change the rules to fix the problem."

"Rome and all other great powers, eventually found that the idea that you can cater to a small segment of the population at the expense of the masses, would soon lead to ruin. Whether it's France before Bastille Day or the fall of the Roman Empire, those in power must make decisions for the country as a whole or it will fail."

"I wish it were different, but that seems the way we're headed."

"Beth Overstreet for Senator. That sounds nice, would you like for me to fund your campaign?"

"Why not William Britton for President and you can fund your own damn campaign."

"I can hear the first press conference now. Britt, do you really have a wife and a sex slave living with you? Do you mean my sex slave or my wife's sex slave? We know you're super rich, but please tell us how you made your first million. My grandfather dropped a bet for me on the Dolphins back in seventy-two when I was in elementary school. Next question? Have you ever done drugs? Not today, but I prefer American grown pot to the imports that put hard-working Americans out of work. One last question, do you have any children? I know of two children. One is with my landlord from college and the other is with a lesbian couple in Florida. There might be others, but I'm not aware of them."

Beth laughed and said, "I guess we better start looking for someone without all the skeletons in their closet. I'd be afraid when they asked me, 'How did you first meet your largest donor? When he was twelve, he took naked pictures of me and my husband."

"We're horrible people. Oh well."

"I'll set up meetings with John and I'd like to attend those meetings when you get back with them. Your ideas are big and life changing. I want to see what else they come up with."

"I do too. What else do I have on my calendar now that I'm back?"

"Karen wants to get with you regularly to discuss investing strategies. They have a weekly meeting of the Advisory Committee and she would like you in on that meeting. You have three other boards that you're on, and they meet monthly. Other than that, you can do whatever you want. It sounds like you have it pretty easy."

"I don't want to sit in on the meetings, because I don't want everyone looking to me for advice and direction. Can I meet with Karen and let her be the idea person and the direction person?"

"I'll set up a meeting to discuss it and work out the details."

"Thanks. What else do I need to know about?"

"Now that we're out here, John wants to scale back on the sixty hour weeks and spend more family time. He wants to take the kids to Yellow Stone for a week and then rent a cabin on the North Rim of the Grand Canyon. That means that I'll be on several vacations."

"Who'll give me a kiss with my coffee, or crawl under my desk when I need a blow job?"

"Well our assistant could do it, if you think it's worth a few million in a sexual harassment settlement. Karen or Lilly would be a better choice if your WIFE is too lazy to take care of you."

"You're no fun."

"Poor, baby."

I had my people call down the hall to Karen's people, and she agreed to meet with me for lunch. We wanted privacy, so we had lunch sent up to her office and we sat at the conference table in her office while we ate.

"Beth tells me that you want me to sit in on your meetings with the Investment Advisory Group."

"I think that they're your ideas and that if there are questions then you'd be the best person to answer them."

"Karen, in theory that makes sense, but just like Craig ran Freedom Trucking, and was the face of the company, you're the face of Technical Investors. Your face is so much prettier than Craig's is. You've the degrees and the investing background so you'll be the person in charge and 'calling the shots'. I know that I could throw you under the bus if things go in the wrong direction, but I wouldn't do that to you.

"I have an income of ten billion a year. I'll write up a contract between you and me and have it witnessed and notarized that says if you follow my instructions and stand behind them as your own, I'll stand behind you. If you have to resign because of performance of the investments, I'll pay you a billion dollars."

"Billion with a B has a nice ring to it."

"I don't want to have to pay you for failing, but you'll be getting the credit for the strategy. If you want to talk to me all night to get ready for a meeting, I'll coach you, but when you walk through the doors, they'll be your ideas and your orders."

"Yes, Sir. I'd like to have the contract you discussed, because I'm not sure about timing the market like you're suggesting."

"Buy, buy, and buy for now. The people are getting excited about what Reagan is doing, and they're going into a feeding frenzy. Buy, medical, technology, new retail, buy anything that's high growth."

"When do we flip over to become bearish on the market?"

"When the market tells us to. Now, I think it will occur in around six to twelve months. Today the S and P 500 Index opened this year at just over two hundred. Today it stands at two-fifty. When it gets to three hundred then that would be equal to fifty percent growth. We have already had a twenty-five percent jump in the first eight months of this year. Does that sound like a crazy plan?"

"I don't want to miss it or jump in too early."

"Start buying puts when it gets to two-ninety and then keep buying until the market peaks and starts to fall past two-ninety."

"I have all of my licenses, but explain the bearish strategy you want to employ."

"When we trade in stocks the goal is to buy them at a lower price and sell them at a higher price. That goal never changes, buy low, and sell high. We can also borrow stock from someone else and sell it today. If we sell a hundred shares at fifty dollars a share, then we put five thousand dollars in our pocket. The person that we borrowed the stock from will need us to pay it back at some point so we'll have to go into the open market and buy shares to give back. If we could buy them in the open market at a later date for thirty dollars a share then we'd have to pay three thousand dollars and we could keep the difference or two thousand dollars."

Karen said, "That's selling short and has unlimited risk because if the stock goes to a thousand dollars a share then it would cost us a hundred thousand dollars to buy it back and we'd lose ninety-five thousand dollars."

"There's unlimited risk in selling short, there's also interest paid on the borrowed stock, commissions on the buy and sale transactions, and I'd expect that the brokerage firm will want to hold most if not all the money from the sale to make sure you have it when it comes time for the purchase. All of those are negatives, but the transaction is open-ended meaning you could sell and then buy it back the same day or two years from now."

"That's why you're looking at options."

"Exactly. When you buy options, you're entering into a contract. If you own some land and we put together a contract what you are saying, is that at some point I'll sell you this land for a hundred thousand dollars. We sign the contract. It has a price and a date. I have to complete the transaction by the end of a certain time. I can't write a contract today and expect you to hold it for me for ten years. Thirty days to six months is common. If we don't close the contract then you keep the deposit and you keep the land.

She was nodding so I continued, "So let's say you owned a hundred shares of IBM, and it was trading at fifty dollars a share. I think that it will go up in price to a hundred, but I don't have or don't want to spend five thousand dollars to control the stock. We'd agree via a contract that says I could buy the stock from you for whatever price. It could be fifty, forty-five, or fifty-five. There would also be a specific time to execute the contract of a month to a year or two. I'd have to pay for the contract on a per share basis. If I thought the stock was going to go to a hundred in the next three months, I'd buy a contract that was good for at least three months. It would cost more than the one-month contract and less than the one-year contract. Let's look at the following example; If I bought the contract at the strike price or purchase price of forty-five, then the stock would already be in the money, because I could buy the stock from you at forty-five and sell it today for fifty. Since it has intrinsic value of five dollars a share, and it was a three-month contract, it may cost me seven dollars a share or a two-dollar premium to buy it so seven hundred dollars to control a hundred shares instead of five thousand if I just were to buy the stock. If it went to a hundred, I'd make the growth or five thousand dollars minus the two dollar a share premium so I'd make forty-eight hundred dollars on a seven hundred-dollar investment. That's a six hundred percent return on the seven hundred dollars. If I simply bought the stock it would have been a hundred percent return."

"So we can use the contracts to leverage our investments and get a greater return."

"Yes. We call the contract that allows us to buy a stock from someone a "Call Option" because we can call the stock away from the other person. We can also buy a contract where someone agrees to buy the stock from us at a certain price. Using the same stock at fifty dollars a share, we could buy a contract called a "Put Option" that we could sell or put the stock to them at a predetermined price. If we bought a contract at forty-five dollars then they'd have to buy it from us at forty-five dollars a share. They'd be happy to do it today because they could turn around and sell it for fifty. Therefore, we may only have to pay a dime or a quarter a share. Ten to twenty-five dollars a contract, but if the stock dropped to twenty-five dollars a share then we could sell it to them for forty-five dollars a share and buy it for twenty-five so we'd make twenty dollars a share on a twenty-five cent investment. That's eighty to one on our money."