Lemmings Off A Cliff

Lemmings Off A Cliff

"I developed a theory that most people lost money in stocks through ignorance of markets. I discovered many more reasons later on". Bill Wilson Co-founder of Alcoholics Anonymous.

CH 1

The sun was still more than hour away from rising when he arrived at work. Under the office lights, he could see his reflection in the windows as he sat down at his desk to turn up his speakers for the morning research call out of London and New York. Reaching over his coffee, he turned on the computer screen that sat prominently in the center of his desk. Staring into the black face of the infinite looking blank screen, he watched as a constellation of lights came into view. He marveled how stellar it was as the symbols on his screen emerged from the deep darkness while outside the stars were beginning to disappear in the predawn light. 40 floors below the street lights were starting to go off and were replaced by the headlights of a thousands commuters coming into the financial district to work.

When the lights in his screen finally became visible, he gazed into the deep space of the window to see what had happened during the night around the rest of the world. Like an astrologer, he tried to make sense of the alignments and shapes from the myriad of green and red symbols and directional arrows in his screen and from that information divine how the U.S market would react when it opened at 6:30.

The voices of the economists in London and New York came on the shout down to cast a story that tried to attribute reasons as to why the world was priced where it was and what did it all mean to the other 6 billion people on earth. As they spoke you could hear them working feverishly over their models searching for answers as to why something unexpected happened that wasn't anticipated by the model. The conversation would begin about what happened yesterday or last year or the last 20 years to lend credence to the validity of their case. It was all predicated on the belief that the more you talked about what everyone already knew the from the morning paper, the smarter you sounded. Their answer to the future was in the past. The logic of financial math and statistics was compelling but it was all very boring.

The goal was to stay within the consensus of all the other analysts on the street to avoid getting pick off by being outside the herd where the shorts would be waiting in the brush. Analysts and portfolio managers were talking about yesterday's data while this morning, the opening bell would be ringing in an hour bringing on an entirely new day and new era.

He moved into his private office to have his morning meeting with his partner. Sitting in their Brioni made suits of Australian wool, handmade silk ties, starched shirts and braces, fragrant with the smell of success, they chatted back and forth about what was on the calendar of new issues and how they would disperse the shares through their accounts.

This morning’s allocation was very important as Netscape was priced the night before at 14 but as the morning turned closer to the opening of the market, it was doubled to 28. As the one of the largest producers in the firm they had 25,000 shares to put into their accounts. Netscape would open for trading this morning. They didn’t realize it at the time but on this morning the world of investments would now be about the future and not the past. It would not be just about new technology but also fantasy and illusion. This new world would begin trading at 6:30.

The two partners reviewed the corporate assignments that they had been given and talked about the deal flow ahead. It appeared as if a dam was breaking opening as the long list now was dominated by small unheard of companies involved with the internet and the world wide web. The leadership baton for fast money had passed from the emerging markets to the internet. As the emerging markets sank in the east the new day rising in the west was the internet.

The meeting was interrupted when Marie, who was the head of the operations for the partners came in to tell John that his wife was on the phone and wanted to talk with him. He asked her to tell her that he would call her back when the meeting ended. A minute or two later she returned and said “she said she wants to speak with you right now”.

When she left, he turned to his partner and said “God, she is beautiful. She looks like she is right out of central casting. I knew it was a mistake to hire her. I can’t concentrate and sit there all day looking at her”.

“Careful boy, remember you are married.”

“So what? It doesn’t seem to bother you.”

He sat there for a few minutes before getting up and reflected on the argument with his wife the night before. His head was bent forward from the weight of the realization of the failure of his marriage. Looking down at his hands he saw a wedding band on one and his college ring on the other. The wedding band looked to him like a gold shackle. It should have been around his ankle.

The school ring etched with the University of California around the outer edge with an open book in the middle had the letter A on the first page symbolizing the beginning. Above the book was a bright star radiating beams of light while underneath it was a banner that read "Let there be light" There was no light in his life today. "What a contrast". he thought. "What happened?" Then with resignation visible on his face, he got up and went outside to his desk on the dais to speak to his wife.

No sooner did he say hello, when he was immediately entangled with his angry wife arguing about the disagreement they had the night before. Her voice came from out of nowhere on the phone and like bullets in an ambush she sprayed him with every invective and accusation she had loaded in her call. Collecting his thoughts he tried to tell her he had no time for this right now but she insisted that she would continue to call back if he hung up on her. With his blood pressure rising he stood at his desk engaged in a domestic squabble that was unimportant and irrelevant. He tried to make her understand that he was at work and could not have this kind of conversation in the office. With frustration he finally hung up on her still talking and as he walked back to the meeting his phone started ringing. He turned to Marie and said “next time let it go to voice mail. Don’t answer it”. He closed the door to his private office and continued the meeting with his partner.

A couple minutes before the opening bell rung on the NYSE, John put on the CD of Carmina Burana that he played every morning to clear his mind and get his heart going. "O Fortuna" was his anthem. The chorus of voices, the rapid tempo of the tribal beat from the pounding of the kettles drums stimulated the beating of his heart. The music coursed through his veins pumping his resolve to get focused and productive. The acceleration of the tempo and the rapid beat of the drum was an auger of what was to come when the market opened. The brokers in the office turned their attention to the end of the room where he sat and smiled from the energy that now elevated the mood in the office.

As the beat of the kettle drums pounded, the time turned to 6:30 AM, and as the crescendo of voices and orchestra rose, the market opened and rocketed Netscape up to a high of $75. It closed on its first day of trading at $58.25 which gave the nascent unprofitable company a value of $2.9 billion. It came to be called the “Netscape Moment” and it ushered into the world the dawning of a new industry. In June of 1995 the NASDAQ was priced at 902. It was a moment that had a 5 year lifetime.

Enveloped within a cacophony of ringing phones, traders shouting orders and the bustling of people walking quickly back and forth his phone rang again. Answering it, he was greeted once again with his wife finishing the sentence that ended their prior conversation an hour earlier. By now he was screaming at her and telling her that he would call her later but right now he was very busy. Undeterred, she launched into her complaint that he did this and he did that until once again he hung up on her. He fell back into his chair to collect himself. With the argument from the night before on his mind coupled with a deep realization that his marriage was a failure, he felt a great sense of despair and disappointment. He felt like a failure. It was not a feeling he was accustomed to. She was clearly not happy and by now John just wanted out. It was no longer a question of if but of when.

His partner started selling a little stock above $60 as the traders of the firm were looking for shares to fill orders from the institutional customers whose orders were unfilled. With an order book indicating buy interest at 6 times the size of the offering the demand for shares became so great that the traders were offering up a extra credit per share out of their spread for Nelson to sell them some his shares. With sales credit on the deal coupled with .06 cents a share commission and .05 extra from the traders it turned out to be a very profitable morning. It was like standing naked in a shower of oil after it spewed forth from the ground. You could feel the slick oil of money run all over your body.

Marie came forward and gave him the list of people who his partner had given shares of Netscape. Since virtually everything that had to do with the business went over her desk, she was called the "Chief of the boat". She saw everything in movement and made sure that any manual task was automated to allow the book of business to become scalable and managable. Any irregularity was immediately brought to the partners attention including problems that could have a negative effect on one or the other.

Looking over the list there were names and amounts that were given to people that John did not know. He walked over to Nelson and put the paper in front of him. Ignoring him Nelson kept his head bent forward talking on the phone. With his left arm extended he seemed to be pushing John’s conversation away and continued on talking to the trader. John returned to Marie’s desk and asked that she pull up the account doc’s on these clients and bring them to him to review. This was not a subject that was going away. It was one that came up many times in the following years.

At the end of the day the two partners sat down and tried to figure what happened. This was no novelty or another iteration of the personal computer; this was something different. To find a starting point to understand it they began with the word “communication.”

There are two elements in communication: form and content. The internet and web provided both: interconnected computers through which the world wide web created an information space at your fingertips. The form was any computer whose speed and ease could search through an unlimited number of servers containing content and deliver it right onto your screen. These two elements created communication with unimagined speed and information, previously constrained by the printing press and now flowed in unprecedented volume. They surmised that the flow of deals coming ahead on the syndicate calendar would be either content or infrastructure. The deal sizes would be small but the demand would grow exponentially.

CH 2

They worked for a small boutique firm, who for years specialized in investment banking for technology stocks, that quickly profited from this moment as more and more entrepreneurs received their funding from the VC’s down on Sand Hill Rd. 3000 Sandhill Rd became the mecca of money which drew the faithful to it seeking blessings and funding.

The Venture Capitalist's are the bankers of the future. Their experience and financial sophistication built many successful companies over the years. Those successes prompted investors to put money into their funds to have access to high risk startup's and to be guided by the vast experience of the general partners. Unable to determine for themselves whether a startup has a solid business plan and its growth is at a reasonable price, the investors saw these funds as the best way to participate in this new technology that held the key to making billions of dollars.
But now the investment business was changing. It became a high velocity game as prices of initial offerings rocketed to the stratosphere. Now it was a whirlwind of deals, connections, hype, money, luck and excitement which left no one unaffected by the trap of excitement and risk that lies within the game. The feeling of risk and reward is an intoxicating opiate as one quickly starts multiplying the rewards faster than they can arrive while the risks are rationalized away. The answer to investing successfully in this new world would no longer lie time in business school but on a green felt craps table covered in numbers in the casino's in Las Vegas.

A craps table like a market gets hot. Players crowd around it reaching over other players to place their money down to play. Money is just being throw down without consideration that a streak of bad luck will undue all the due diligence in the world. The smart players know how to avoid the junk bets and spread their money onto as many numbers as possible to get as close as possible to "true odds."

Whether it's oil wells, movies, stock or craps, they know most will bust but it is the few that hit that makes it pay. They are the ones that maximize their odds. The new portfolio for a craps table or a venture fund now consists of buying as many numbers as you can on the table and hope that the shooter can roll many as many of yours before crapping out.

As the chips pile up on the table, the sound of excitement rises to fill the room. Cocktails, high fives and cigars add to the fever. Cocktail waitresses circle the table and jump to players ordering drinks.

Just like on the trading floor, traders, bankers and portfolio managers get overwhelmed when a stock takes off. The cheers grow even greater as the money in the game keeps rising.

Piles of chips, up and down table indicate that this game is hot. The idea of leaving the table early is somehow lost in the excitement and illusion of money quickly changing hands during the game.

In a market like this, no one even notices when they accelerate past fair value. As the odds against them start to climb, new and higher valuations will soon appear from the analysts to sustain the fever necessary to stay in the game and pump the stock. The future will fix everything. God forbid that you leave early and have to explain to your disappointed investors that making only 2x or 3x their money is the smart thing to do. No one cares anymore about the principle of managing risks.

Chips are real money and so are shares. Money has simply changed form to make it less painful when you lose. Losing is part of the game. To mitigate it you take the odds the house gives you and hope that one or two of your numbers gets a long run to cover the ones that fail. You don't stop to analyze these numbers: you just cover 3 or 4 or them with chips. It is not the numbers on the table that are important: it is the ones on the dice that are.

The excitement of pushing chips around to cover as many numbers as possible masks the reality that now you are taking real time gains and losses. With a bad wager, you can't wait until next year for it to come back. It's gone. You can't sell your wager through another secondary and walk away with some of your investment. The house won't buy your position out. You can't take down your bet if you change your mind. It is win big or lose it all.

You are forced to deal with the consequences of your decisions. When the losing streak arrives the game becomes a continual capital call as you shove more and more out there in the faith that playing just a little longer will help you make it back. This time you will sell at the top, cash in an walk away. Investors would soon learn the similarities between gambling and investing from a hot stock market or a crap table rather than in a classroom.

VC money is the lubricant of the body of capitalism. The flow of their money becomes the pulsating blood that allowed the startups to create jobs and raise the standard of living. This blood also gives small companies working capital to put on their books to remove all debt in order to be properly dressed when sauntering down the runway before the eyes of ogling investment bankers. The hottest companies gather the most attention as they saunter down the runway with their big well rounded fees on their chests standing out.

Dressed in the thin scantily clad offering memorandums, they titillate the salacious imaginations of bankers and investors with lurid visions of unlimited wealth and fees. The slavish obsession over money causes people to salivate over the new companies. This deviant desire for wealth would eventually transform itself and become sex with money.

The feeling of sliding the palm of your hand over the curved and shapely sleek smooth skin of a Gulf Stream jet or gently rubbing the face of Ben Franklin between your forefinger and thumb on brand new hundred dollar bills has no equal.

Of all the capital sins only greed is inexhaustible. Rapacity becomes erotic rather than destructive as it seeks more. It never is satisfied. Rapacity creates a blindness to the change in one's perspective. It can arouse one to sit alone locked into your vault at home, rolling your fingers through a shiny cool pile of Krugerrands. When asked "why would one lock themselves in such a place to play with their money?" the response would be “yes, I can’t get out but then you can't get in”. It is the Faustian bargain that admits you to this play.

CH 3

The boutique investment houses quickly became besieged by investors looking to get shares of a company at the offering price. Quickly opening accounts in order to get in on the “deal” brought an enormous amounts of money to the partners.

Others contacted the companies directly requesting that they receive shares on the “friends of the company” list to get them at the offering price. One famous Hollywood entertainer ran down the list of filings every day and contacted the CEO’s directly to obsequiously coo about how much she admired the company and would like to be on the friends list. The returns on her investments caused one staid financial publication to list her performance as one of the most successful portfolio managers in the country. Performance consisted of using her highly recognizable name, get shares at the IPO price and flip them at 5 to 10 times the offering price. It was as easy as memorizing a song.

Swayed by the allure of famous wealthy people begging for shares, the atmosphere changed from investment to a carnival show. The new celebrities became the entrepreneurs who understood the potential of the web and with little capital created companies whose scalable businesses could generate billions of dollars in revenues in short period time. The executives and founders suddenly found themselves on the cover of magazines worth and worth hundreds of millions of dollars virtually overnight. The intoxication of the money coupled with the belief that it was all attributable to their own genius lead them to believe that they were invincible. Bankers, movie stars and politicians quickly lined up at their door competing to be the most favored sycophant of them all.

Revenues rather than earnings became the Holy Grail with investors. The belief that earnings would naturally follow revenues drove the stock prices higher and higher as revenue recognition became the math that generated the illusion of growth.

With stocks skyrocketing 5 to 10 times in price in a single day, the former world of investment management changed dramatically and catapulted VC’s and executives to the pinnacle of wealth and celebrity. Personal jets and not luxury cars became to the true indication of success. With magazine and newspaper coverage, they no longer had to wait for tables at restaurants and were on the elite list of party goers.

Not many investors really understood what these companies did. Nor did they care. It no longer mattered. Due diligence consisted of buying shares in companies that contained the words "ecommerce" "B2B" or ".com". "Bricks and mortar" companies had become the trading posts of today. Shopping became truly commoditized as prices on the net could undercut the higher costs of stores. Soon investors speculated that no one would bother to drive to a mall and walk into a store. No point any longer to go out dancing to meet a potential spouse. Now books, food, boyfriends girlfriends and sex was at your fingertips 24/7. Need a limo and a date? Just hit the search engine and be gone.

The zealous investors believed that for every share there were more buyers than sellers, so the rule was to buy it on the way up and sell it at the top. It was all about the web and with billions of people connected to it through the internet your profit potential was only constrained by your lack of imagination or access. You just had to find a way to get shares at the offering price.

The brokers at these investment houses found their phones lighting up with investors and executives in these companies willing to bring enough money over in order to get some shares of these new ipo's at any price. To increase their value to the investment banks they started borrowing heavily on their concentrated positions not only to be more important as a client but to buy the newest and best Gulf Stream jet. It was the smart bet as they would only have to pay the interest on the loan and they would continue to enjoy the continued rise in the stocks price.
When word spread through their clients that their broker had access to these deals their friends and family would call seeking a way to get into the offerings. The only way to control it was to continually raise the minimum size of an account. In the past it was a $100,000 minimum but soon the two partners raised it to $1,000,000. Using a 1% return on their assets, the two partners realized that $1 billion in accounts equaled $10,000,000 in revenue. Their earnings were rising as fast as the stock prices.

The infectious fever of thinking of more and more wealth started to spread through the investment houses and the people responsible for managing other people’s money became contaminated by the frenzy. Value managers caught "style drift" as they peppered their stodgy equities with shares of companies that had no real value at all. They feared the risk of not performing more than deviating from a long standing practice of buying companies at a discount to their business rather than an astronomical premium.

The number of investors didn't notice or care and they multiplied rapidly as they rushed forward on an unthinking course towards mass destruction.

Soon no one listened to the research call out of London and New York anymore. The Dow 30 had passed quietly from the front page of the news to the obituary page. Who needs chemicals or steel anymore when you can buy your pet food over the internet? Who really gives a damn about the P/E?

There was another benefit to this phenomena and that was the assignment by the bankers to incorporate an IPO company’s assets into the investment firm. The partners described this strategy as "scorched earth". The investment house sent them to secure all the financials assets and business that they could get from a banking client and monetize it. From stock plans to cash management to the holdings of the now wealthy executives had to come home to the firm in order for it to be the banker of choice for future deals. Their task was to leave nothing behind for the competition.

The two partners decided that one needed to stay in the office and work the deal flow to generate the necessary returns to attract the now wealthy executives to move all their stock to the investment bank and the other to harvest to money. Armed with spectacular returns the partners had the necessary apple to bring the money home.

Ch 4

John took over the corporate assignments and proceeded to set appointments with the executives of the now public companies to discuss the variety of services available to the extremely wealthy. Such services included strategies to hedge their current position or to sell and diversify out of a concentrated position into one that was more broadly allocated among a variety of investment strategies. The most popular was the ability to borrow up to 50% of the value of their holdings with no interest or principle payments. Get the money now and pay it off as the stock continues to go higher.

This was a process that required patience as these newly minted millionaires were not disposed to selling shares in a company that by virtue of their genius now made them rich. Their logic was simple. This investment made me rich. Why would I sell it? I will just get richer. The answer was always the same. But John came armed with the right response. Holding forth the tempting shiny red apple he let his investors taste the sweet flavor of leveraging a concentrated restricted holding. "You don’t have to sell it. Just deposit your shares in our account and we will loan you money on it" was the answer.

His first appointment from Kleron was the wife of the founder who held 2.2 million shares of stock. She managed all of the family’s money. At the time of their meeting she and her husband were worth $369,000,000. She was only 35 years of age.

Over coffee John proposed that she divest 20% of her holdings a year and invest her after tax proceeds into a variety of strategies to protect the wealth that she had gained from the spectacular rise in the company’s shares. She looked over the historical rates of returns and remarked “These are not very attractive returns.”

John took a second and decided to be very direct and said “but these are real returns. They come from a history of 80 years and are far more reliable returns than the mania and fantasy of the moment in the market right now.”
“Yes but why would I sell shares in my company at a $168 to invest in such a low returns?”

"To protect your wealth. Reduce your risk. My question to you would be why wouldn't you? You are worth $369,000,000. Where do you go from here?" This debate continued back forth for some time and it was one that John had done over and over again with many others. You cannot convince anyone to sell who believes this wealth is synonymous with a business that they created rather than just a function of stock market mania. Trying to argue with them about facts, they simply step aside and jump from one level of certainty to the next. Your failure to understand was simply a function of you trying to sell them something else which meant that you did not appreciate the true genius that they saw in themselves.

Finally, he said as he gathered up his books “Look. You are 35 years of age. You are worth a pre tax $369,000,000. You really have nothing further to gain here. What possible benefit is there to hold onto all of this stock?"
“Your right” she said. “I know your right but I can’t sell it right now.”

“Why not” he asked? “At a $168 it is too cheap right now. I will sell it later with when reaches the top”. The look in her eyes indicated that she was a true believer in her husband, the company and her ability to comprehend the source of the enormous wealth that she held in her stock account. There would no success in trying to reason with her. She saw the future with certainty and believed in that vision.

John stood up to leave but turned and looked at her and said. “Don’t you understand what is happening? This is a moment in history that has created this wealth for you. It has nothing to do with you or your company’s prospects and when that moment ends or you miss an earnings estimate, this stock will plummet to earth faster than you could ever realize. It is not something that is going to last no matter how fast your company grows.”

They parted on cordial terms. She said she wanted to talk to her husband about it and she would get back to him. As he got into his car he felt he would have been more successful in convincing her to buy more shares rather than sell any.

Marie called him on the way back to the city to tell him that he had to go to Seattle to see a CEO about some of the services the firm offered. John said “Been to Seattle before?’ “No.”

“Then you are going with me. I will need you to work with some of the officers on the stock option plans. Get a ticket. I will meet you this afternoon in Seattle at the Four Seasons lobby.

Ch 5

He was seated at a table in the far corner of the hotel having coffee when from the other side of the lobby Marie appeared. He chuckled to himself how odd it is that they are on a business trip together. It was something that he thought he would relish but he knew it wasn’t going to be anything but business. No one in the office or even his wife expressed any questions about them leaving for Seattle together. Perhaps it was the fact that he was her boss, was 19 years older and married that made the likelihood of something more happening seem so impossible. He felt a twinge of disappointment that he truly missed meeting someone so special like her when he was younger.

She entered on the far side of the lobby. He waived his hand and she walked towards him across the open lobby through the light pouring down from the skylight above her. Her smile radiated from across the lobby as she walked. She had the look of someone who was the happiest person in the world.

His eyes soaked her in her beauty just as they did the first time she walked into the office after transferring out west from N.Y. He could not get over how beautiful she looked. He found himself thinking that she was the most beautiful woman he had ever seen. The thought shocked him that he would think that was possible but he could not figure out why he felt that way.

She sat across the table and brushed her hair back over her shoulder as she looked at the bar menu. The way she perused the wine list and asked questions of the waiter, made it obvious that for a young woman of 25, her tastes were well cultivated and sophisticated. She chatted amiably while she asked about the subtler more nuanced flavors of a wine. Judging by the way she engaged the waiter in conversation she was comfortable and had confidence in herself.

Her shoulder length light brown hair was full and curled down her long neck with subtle blonde streaks throughout. She had hair like Rita Hayworth. Her hair was the kind that he called “pillow hair”. The thick, resplendent kind that would spread out over the pillow leaving her face to look up into the eye of the camera or the lucky admirer. Her wide smile nestled in between her gorgeous full lips released an inner beauty and spirit that emerged from deep inside her. She had large sensuous red lips. Her eyes were large and round and appeared to be like large pools with light radiating from them. Her personality and warmth emanated through those orbs and touched everyone she met.
Watching the animation of her face while she chatted about what a lovely city Seattle was, he thought about the day she first appeared in the office. When she walked across the long trading floor at 4:30 AM he looked up looked and said “Jesus who is that? One is his assistants said “that’s Marie. She just transferred out here from N.Y.”

She wore a brown 2 piece business suit which despite its modest and professional appearance could not hide the hourglass figure underneath. She was tall and with her long legs she walked with a steady stride which revealed her self-confidence.

Passing through the room she seemed to have time to greet everyone on her path and accept the gracious welcomes she received.

Even at the distance of almost a half of the trading floor, he could see that she was truly proportionate, poised and had perfectly shaped calves. The graceful symmetry she displayed in that brown suit was truly remarkable and the vision of her face seared itself into his memory.

It was later that day that they were briefly introduced but the conversation ended abruptly when John could hear his voice breaking nervously and stammering like a 16 year old boy. Sheepishly, he excused himself. Behind him he could hear the women commenting that they had not seen that side of him before. This would not be the last time she affected him like an adolescent schoolboy.

Riding out to Bellevue that evening for dinner with her he thought about how it came to pass that she came to the partnership. She was in the San Francisco office only a little while before Nelson called him into the office and after closing the door announced that “Marie is no longer working for Larry. I made her an offer to work for us.”
“No. She is not coming to work for us”. John protested.

Nelson was stunned “Are you crazy have you seen her background? I hired her to do some side work for us when she worked for Larry and I am telling you we cannot waste this chance to get someone as qualified as she is. Her background is computer science and accounting. She work at corporate in N.Y helping to automate tasks. She understands high volume transactions, reporting and accounting. We just can't grow our business writing out individual tickets anymore. We are hitting the ceiling due to obsolete processing of transactions. We need someone like her. If we are going to make a million dollars a year we have to have new ways of controlling and managing our asset base. You have got to see the future today John."

“I don’t care. She is not working for us. I cannot sit at my desk all day with her sitting in front me.”
“Then you have a personal problem because I made her an offer and she said she would let us know on Monday. This woman is smart and extremely capable of helping us get the right technology and reporting to scale our business higher. We are long past selling mutual funds here John. You got to get into the present here.

She is coming whether you like it or not.”

John found himself calling her on Saturday to see if she decided to work for them. He couldn’t wait until Monday. It was an impulsive call and made no sense to call her at home but he couldn’t wait until Monday. She was reluctant to have the conversation about her decision until Monday.

"I appreciate your call but I asked for the weekend to think about it. I really just arrived in San Francisco and I need to think through this decision."

John persisted in pointing the benefits out for her to get her to make a more impulsive decision but she deflected by saying that she would decide Monday morning.

"I will give you my answer on Monday. I do thank you for the call."

Hanging up he felt frustrated. He realized that the woman who could be coming to work for him truly made up her own mind and was not one to be easily persuaded. She was grounded, analytical and thoughtful. On Monday she accepted the offer to run the operations for the partnership and now weeks later they are here in Seattle for their first business trip together.

Seated at a table by the window with a view of the Seattle skyline in the distance Marvin let him have some time to describe his services but when a pause opened up the conversation he remark “I am not selling any of my shares. It is the best investment there is, Maybe, when we hit a billion in market cap, I will sell some but not now. We just went public and I didn’t put everything I had into this company only to end up owning IBM."

The conversation went back and forth. John continued to point out that "Marvin, you have 90% of your total net worth in Rhumba stock and by holding it you miss other opportunities and reduce your risk.”

Politely, Marvin dismissed the cautionary statement by putting down his fork and turning towards John with a friendly smile that was so typical of him, he said. “If I lost all of my money in this company, it would not change my life one bit.” Marie sat dumbfounded by Marvin’s objection. Sensing that the conversation was over, she started eating her lunch and gazed at the skyline of Seattle in front of her. When her attention returned to the conversation she was surprised to see that John had Marvin engaged again by explaining “you don’t have to sell any of your shares. You have $10,000,000 in stock. If you have such confidence in your stock then margin a million. We will loan you the money and use your shares as collateral. You keep your stock and leverage your position. Put it into our portfolio and get some distribution on the new IPO’s that are coming out.”

Marvin wanted to know what was involved in transferring some of the stock but was interrupted by John who said “You have to transfer it all Marvin. There are only some many shares to go around and you need to be “A” book client. Something under $5,000,000 is too small.

Marvin sat there poking his fork into his pasta and asked “Is it an aggressive account?”

“Oh, yes. Absolutely Marvin. This is not a widows and orphans account. We are not in these stocks for long term capital gains. We are in it for the money and when it hits the felt we pick it up our chips quickly.”

“Great, then send me the paperwork. I will margin a million to start. How do I get the shares transferred to you?”
John turned and asked Marie to come into the conversation and help Marvin with the transfer who, bewildered at this sudden change of events, professionally stepped into the discussion with wire and DTC instructions to open the open the account.

Marie got out of her chair and moved over to sit next Marvin. Marvin's face immediately revealed a smile as she talked to about him the transfer. It was evident by the expression on his face that he enjoyed her attention to him. She talked to him as if he was the only person in the room.

CH 6

To celebrate John arranged for a limo to take Marie and himself on a tour of the city at night. They slid into the back seat and as the driver put his foot gently on the accelerator she laid her head back in the seat and turning her face to him told him how surprised she was by the conversation at lunch. She had never seen anything like that before.

"What did you say that turned him around so much". She asked.

"I used the word leverage."

"Leverage? What is powerful about the word leverage?"

"It's an L word. It is my favorite letter in the alphabet. To say leverage you have to place the tip of your tongue to the upper pallet and bring your lips together for the v and gently exhale. Like a kiss. A very sensual letter to pronounce and a very evocative word to use. Far more evocative than say the letter H or P. "Leverage" is a word that arouses dark erotic fantasies lying dormant in your imagination. It makes more out of little. It can conjure up an illusion that makes your money larger. Makes you richer, more powerful and more important. Using other peoples money is power.

Like the other L words "lips, luxuriate, lewd, lascivious, luscious, licentious, lurid, leering, loving, liking, licking, lust and longing, L words are sensuous and tap into fantasies and desires that lie lingering below in your mind waiting for an opportunity to erupt. These are words that are filled with passion and feeling rather than meaning or thought. Eros rather than logos. "Leverage" brings the seductive delusion that the value of your portfolio is now calculated as "total market value" "rather than net equity value". With leverage, the margin now becomes your money. It is the power of "more."

He could see her taking in his comments but she gave no indication of what she was thinking. He liked that about her. She was smart, careful and took the time necessary to think about things and ideas that she was unfamiliar with. When she did speak her thoughts they were coherent, cogent and clear. This woman did not accept any BS nor did she give it.

"How did you learn to play with words and language like that?" She asked.

"I read the dictionary when I am bored." He answered.

"No really. Where did you learn so much about words and language?"

"Let me ask you what was your major in college?"

"Computer science with an accounting minor." She replied.

"I don't know anything about either of those subjects. I studied Comparative and English literature in college. That is really all I studied. Undergraduate school, Graduate school, I fell in love with books. I love books and language. If they had arms to wrap around me at night, I would never have gotten married. 'Words, words, words' says Hamlet. I love words. They help me to understand and interpret the world I live in. I look for poetry and literature everywhere. I certainly see it in you."

"I thought you studied business." She said.

"No. Nelson studied business. Can't you tell? He has all the depth of mirror. I just read books. Poetry, literature, drama and movies are the company I keep at night. I read all the time. Sometimes I read the same ones over and over again."

"I am not analyst. What I do in my job is read volumes of investment material that is barely understandable and hardly interesting and then communicate it's meaning and relevance to clients in ways that they can understand and relate to. I am in the communication business. I am the messenger."

"Then how did you did get into this business?" She asked.

"Oh, quite by accident. I was a graduate student and worked as waiter in an Italian across the street from the Transamerica Pyramid. One day, I had a table of 6 good looking secretaries in for lunch and I was entertaining them trying and get a date with one of them when this guy at another station waved me over to his table. He was about my age and extremely well dressed. Monogrammed French cuffs, silk tie, a Dunhill lighter on the table and the cologne he was wearing had the fragrance of money. I felt awkward standing there in my black bow tie, white shirt, and red plaid jacket with salad dressing on my sleeves and spaghetti sauce splattered on my shoes. I felt I looked like a circus clown. I said "can I help you sir?"

He said with a great broad smile on his face "you have a great line of bullshit! Have you ever thought about being a stockbroker?"

I laughed out loud. "A stockbroker! Jesus, I have never even had a savings account. I don't know anything about the stock market."

He said calmly as he handed me his card "that doesn't matter. You get all the training you will need. Give me a call. I would like my manager to meet you." I met him and he thought I would be phenomenal. I guess he was right.
In the end they offered me the job. It was a simple decision to me. Either I take this job or stay where I was in graduate school and being a waiter on Montgomery Street.

Wasn't the dream I had when I left home to go to war and get an education. You can't imagine the reaction from one of my high school teachers when she found out that I did go onto Berkeley and into the investment business. She stood me up in front of the class one day before me kicking out and said "You know John, your kind of kid,up to be either the president of a large corporation or a lifer in a state penitentiary but whatever destiny you have, you are not going to fulfill it in this class anymore. Go to the office and don't come back.They wanted me out of that high school so fast they gave me a diploma with a cumulative grade average of 1.5. My algebra teacher told he passed me with 3 f's and a D because he was the only math teacher in the high school and he never wanted to see me again. I did better than my friends anyway."

"Your kidding. What were they like?

Oh dropouts, shooting dope and committing felonies to prepare for a career as criminals. Real Neanderthals and real dangerous. I knew I had to get away from them or I would have no future. I figured Viet Nam was safer than staying around with them."

She was totally unprepared for that story. There was no trace of that young man in the office or sitting before her. His past was well protected by his books and education.

She loved that about him. He was so unpredictable. To her, John was complicated and intriguing. He was the ultimate bad boy all right and she found that exciting. She hadn't met anyone back at headquarters on Park Ave like him.

He seemed to be a man of contrasts. His past was not at all like his present. To hear him tell it, his past was more reptilian than civilized. Literature was the path that took him from violence and darkness into the light.

He showed her his school ring. "See. See the star above the book and the light radiating out? The open book below has the letter A on it's first page. The letter A is the beginning of a new life, a new book and the banner at the bottom is my religion. "Let there be light". Around the outside edge was the name University of California. So much said so simply.

She would learn more about his contrasts later when she became more familiar with the ones that existed between his past and his present. He was far more complex and experienced than the boys she was dating. The way he would tell a story and tie it into something he had read. His ability to remember lines and passages he had read many years before was uncanny. The breadth of his knowledge was far ranging as he was very eclectic in his tastes. Sometimes when he recited a passage or a poem to her his eyes would tear and he would look at her and say "my God, how could someone write something so beautiful. I would give anything to write a line like that. How could someone read a passage like that and not have it affect you? I have to memorize it so I can take it with me wherever I go."

She liked these aspects about him. He was intimidating. He was a big man. He didn't intimidate her but she could see that he was a force to deal with. Not gentle and polished like Nelson. She thought, as they drove in the cab how remarkable it was that these two men would form a partnership that allowed them to become so successful.

She would have never guessed it judging him from the office. Unless you were close to him you would never know his love for literature. He loved to share his passion for books and quotes but it was too personal to make it a commodity and share it with everyone.

She knew he had been in the Marines. Sometimes his language and temper indicated that he was much rougher than he appeared. She could see some similarities in the two former Marines that she dated before moving west. She liked Marines. Their values and principles were clear.Their confidence in themselves was readily displayed. But she knew that they could be dangerous. That's what they are trained to be. She liked his edge but was not intimidate by it.

Looking into her face as the car and his heart started to speed up, John found himself lost gazing into her wonderfully wide opened eyes. Her hair spread out all over the headrest and her fully exposed face with her lovely smile revealed an inviting look. “God she is the most beautiful woman I have ever seen. So smart and good looking too”. He turned away as if he had been staring at the sun too long.

He couldn’t figure out why he found her so beautiful. Of course he had been with many beautiful women. How could he make a statement like that? He concluded that her look was accentuated by her nature. That somehow her beauty was animated and enhanced by the woman she was on the inside. Her interest in others, her smart and quick sense of humor and her love of life. That inner beauty radiated out through her eyes and smile. She was so genuine and authentic that when she spoke to you; you knew there was no agenda, no duplicity at all. If she had to be candid or direct she always found the most appropriate way to say it but she would say it, nonetheless.

There was something that was so electric about her but as he collected himself in the backseat sitting next her, he didn’t feel it was for him. When they returned to the hotel he walked her to her room and said good night. Long into the evening he fought another impulse to call her. If he did he knew that he would either risking trouble or be rejected. Either way he would lose. Her room was 12 doors away but he decided that is was best just to call his wife and daughter and go to sleep.

Coming into the office very late one day he looked exhausted. His face was tired and with his head bent over staring at the screen she could tell that he had something on his mind.

Marie walked over and asked "Are you alright?"

He looked up to her face and replied "No. My wife waited until 11 PM to wake me up to argue with me. I am lying in bed yelling to her that I have to get up at 3:30 to go to work. What the hell are you doing? But she knew when to attack. She is lucky she is not a man otherwise I would have beat her brains out."

Marie listened to him talk about his home life and the fractious relationship that had developed since he got married. It was a marriage that never got any traction.

"She said I am sorry. If she is so unhappy why doesn't she get counseling or move out?"

"No, my wife is happy being married and having a husband. It's me she can't stand. No, she is not going anywhere especially now that we have a daughter. She tells me I just need to change. What is the expression change or die? That is leverage"" "That's terrible. You look exhausted why don't you go home?" She said.

"Home? Are you kidding. If I go home to lie down in any room she will find a reason to vacuum it or to run some appliances. Do you know what I have to do when I need a nap? I stop at rest stop along the freeway. That's ok. I am used to it. How are you doing? How do you like San Francisco?"

"Oh it is wonderful. I played volleyball last night on the Marina Green with some people from the office and afterwards we went out for drinks and some dancing." Looking at her he remarked " I bet you don't spend much time sitting idle at the bar. Have you met anyone since you been here that you liked?

"Not really. Met a lot of great people but I am not looking for anyone."

CH 7

Nelson came around the corner talking with the head of the syndicate department.

He motioned for John to join in them in his private office for a meeting with Greg McCarthy who was the head of the syndicate desk and was directly responsible for the allocation of the IPO's. He wanted to inform them that they are going to get an increased share of new issues. He explained that the institutions place large orders and look for entry points in the aftermarket. Since a two or three million share offering is too small, the large institutions will get pieces on the deal and then scale in to fill their order. The problem is where does the trading desk get stock to sell to them? Most clients and hedge funds deliver their shares out to other firms and sell away over a competitor's desk. As the lead banker on the deal the institutional customers expect to get shares from the investment bank that took the company public.

Greg opened with the question "how much are you guys actively managing on discretion". Nelson said $300,000,000. I can go higher if I need to."

"And these are all real accounts? No hedge funds or DVP accounts."

"No, all retail brokerage. All the account paperwork is correct and approved and all the assets stay here".

John could tell that Nelson put this idea into motion. His instincts for opportunity were subtle and keen. Working inside with the bankers, analysts or traders he formed the necessary friendships to gain real time information on where money was flowing in the market. His lifeline was the shout-down system where over the speakers, the block traders would announce increases or decreases of purchases or sales from the institutional accounts indicating which direction the market or stocks were heading. He was nimble and quick on a trade. With the size of his blocks exceeding 100,000 shares he picked up every quarter or dime that the spread or trader would give him. He was a machine generating money in volatile markets. He became the heartbeat of their business while it was John who had the hand's to gather the assets.

Nelson was always on the phone with the desk negotiating price and number of shares to sell back to the firm. He loved trading and negotiating and he was good at both. He took the partnership deep into the bowels of the firm to find people who had a finger on a pulse to make a profitable trade. People who needed him as much as the partners needed them.

He was under no obligation to sell but with prices tripling or quadrupling on the day it went public it was foolish to hold all the stock and think that you could pick the top. Allocations to the partners on hot IPO's would now reach 100,000 shares or more depending the size of the deal. This increase in allocations was worth another $25,000 to $50,000 more each month.

After Greg left, Nelson and John walked out onto their private balcony overlooking the city. As they stood watching the sunrise color the orange of the Golden Gate Bridge with its morning light, they discussed the phenomena that they sensed had surrounded them. Leaning on the railing their quiet conversation revealed a lack of harmony between them.

They had been partners for 15 years and had enjoyed tremendous success together as they worked their way up to this 40th floor balcony. The money they made was beyond John's imagination. Nelson was the one with the vision to see that together they could turn two into three and grow their business exponentially. But Nelson began to believe he was the smarter of the two and John and his unsophisticated way of doing things was holding him back. Nelson felt he had exhausted what John could contribute to the business.

John softly said "We have done well together. We have come along way since we started. Do you ever take time to remember when we joined up and went out into the Central Valley to give that seminar on the bond market? 15 people in at a truck stop off of Highway 99. I remember you looked over the group and said "what we are going to do? I said "lets' just blow their fucking hair back and get to the city." Watching you unload the projector from the trunk of your Mercedes with all your charts and graphs at that truck stop was priceless. I wish I had taken a picture you. I miss the relationship we had back then. It was personal. It was fun. I valued our friendship."

"We have a business to take care of now. You get too sentimental John. You lose your edge."

John felt something in his stomach after that remark. He couldn't tell if it was sadness or anger but something was building inside him."

They turned their attention to watch an aircraft carrier heading by Alcatraz on its way to Alameda Naval Air Station for fleet week. With its decks empty of jets the long flat top look simply like a floating runway. It looked peaceful but the violence and explosive power of the ship was concealed as all of its jet fighters were below in the Hanger Bay. Imagining the immense power below the flight deck, John wondered would have to happen to ignite it and how devastating it's destruction would be. The crew, all in dressed in white was lining up to salute the city as it passed by. The Marine color guard stood at the center of the formation. The partners cast their eyes skyward looking for the Blue Angels who would be arriving soon.

Turning back towards to Nelson, John confronted him with the shares he was giving to friends who were new clients and had small accounts. Nelson was reluctant to have the conversation but John persisted. He wasn't in the mood to tolerate the usual evasiveness of his partner when confronted with some of his habits. Nelson didn't like people knowing too much about him or what he did. To him an equal partnership was always a 51-49 split. His concern with John was his constantly probing him about his affairs and getting into things that he didn't understand.

He countered that John was interfering with his strategy to penetrate some of the wealthy people he met at his club. "these are important people and if you weren't living down on peninsula you would be helping me. You tell me you are busy taking care of your mom, your sister, your wife and daughter. You need to make them understand you have career to take care of. This is not a job."

"Don't give me that crap. You are just looking for another rung up the social ladder. You are a sycophant. You are giving profits away at the expense of our clients. "Call the 'the Hammer' up and tell him you had to reduce his allocation of Netscape because you have a wealthy friend from Junior League."

You are using their money to buy yourself admission to some social black tie affair. This is our clients money. You know what I am talking about? I am talking about the foundation of our business. Call "Dr. Bob" and ask him if he minds giving up a share of his allocation so you can get your picture on the social page standing next to someone who is important. He is too sharp to bullshit and you know he places no value on "social status". Clients are not last months new best friend but the ones who have stayed with us through thick and thin. What about them?"
"He responded tersely "This is business John. It is not personal it is business."

"If you got your well groomed head out of your ass once and awhile you would know that business is personal. These are real people. Not the waxed kind that you slide by at your parties."

"If you are so interested in what is going on around here you should be here for the morning call. I work out at everyday at 2 AM with my trainer and at my desk by 4 AM everyday and I am here until 5 PM. You just stroll in when you feel like it. What about your responsibilities. Don't you think that you have to put clients or your team ahead of your personal life? You treat this as a job and not as a career."

"It is a job. You are spend all this time here because you have no kids, no family to take care of and you sleep alone because your wife is off with her girlfriend for 6 weeks in Central America. I would get out of bed to at 1 AM to if I was sleeping alone all the time."

Nelson backed up as John leaned into his face. He told him that now he has to waste his time keeping an eye on him but Nelson wasn't worried. He knew the systems and John would not know where to look. What bothered Nelson was the fact that John would not have known about this unless Marie had pointed it out to him.

Recognizing they were partners Marie saw no problem in disclosing reports that inadvertently shed light on either partners way of doing business but that was not the way that Nelson saw it. John was not astute nor a detail person but his staff knew and respected his strengths and when he wanted to know something about his business they quickly responded with documentation and explanations. Nelson knew that giving John too much information was not good idea. It was better he figured to keep him in the dark and out of the office.

Ch 8

The next two years John and Marie spent 10 hours a day together, 5 days a week. They became very close friends. Even with a air of propriety it was obvious to the office that there was something going on between them. They often spent time together just talking about their the view the world and what they have in common. John was surprised to discover how interesting she was to talk to. Her quick wit, New York style of conversation made her made engaging and she had a very analytical way of looking at things.

She was a real handful as a conversationalist for a girl of 27. Out of that lovely mouth of hers you could tell she was a true New Yorker. Take no crap from anyone. Take no prisoners. She was competitive with men out of her nature rather than her politics. Matching wits with her was dangerous. With a drink or two in her a man needed a double cup to be safe from injury. Her sarcasm was well honed in N.Y.C. What stood out the most was her self confidence and the knowledge of who she was and what she could do. She was as comfortable with athletics as she was with tools and machines. She told John that her father gave her own Makita drill one year for Christmas. She would prove many times over the years she was on the team that she could do anything.

John's friends would ask him "how can you talk to together about so many things especially since you are so much older than she is. Doesn't the age difference ever come up? John would reply "No not really. You see Marie is very mature for her age and I am not."

Other than an occasional flirting comment or gesture there was no open display of affection for quite awhile. It was flirting but it could not go further as they preferred keeping their personal life private. John wasn't looking for another woman to solve his marital problems and if he was looking for a young good looking woman just to fool around with there was no shortage of them in San Francisco but his affection for Marie started to pull him over that line He knew that the answer to his problems would not be young woman looking to have a family when she is ready. He thought he could keep from revealing his true feelings for her hoping that somehow a clear path would open before him allowing to avoid bigger problems. He never counted on the possibility that she might be in love with him.

Keeping his deeper feelings for Marie to himself did allow him to be more open about himself. He could talk to her without any other motive than to share with her his life and learn about hers but she could see him light up when he came by her desk. As she smiled back at him she began to admit to herself that her interests in him were beyond merely being a good listener and companion. But the likelihood of their having anything but a short affair seemed off the table and not a good idea.

Since she answered his phone and overheard his conversations everyday she knew something about everyone he had contact with including his family. She was well aware of the problems he had with his wife and the difficulties they had together. Along with his wife, daughter and mother with dementia he was the conservator for his sister who was afflicted with Down's syndrome. Outside the office his life was a full one. But she also aware of how he took care of the people in his life. His friends and family were important to him and she liked that a lot. It was a quality that she believed was necessary to have the kind of husband and family that she wanted. Family was something that she took very seriously.

This intimate proximity of working so close drew her attention to him more and more as the time passed. Their life in the office was very public and routine and John never allowed his conversations to cross over to her personal life outside the office. He knew she had one and with no real prospects of being in her romantic life, it was better to stay on the outside of it. He didn't want to hear about the men she dated.

In spite of the distance though John knew that from the first day he saw her walk into the office that he was in love with her. He knew that to try and take their relationship to another level would entangle her into a fight and problems that she didn't deserve. He didn't want to contaminate her life with his problems. He thought that if he truly loved her he would leave her alone.

Ch 9

He came to work one morning and told her over coffee that he was moving and leaving his home. He described how he walked into his house the night before after returning from a business trip to New York and was greeted by irate and angry wife in the entrance way. Standing there with his bag in hand and his coat over his arm she berated him in a loud and angry fashion that drew their daughter out of her room. The 5 year old girl watching her mom escalate into a hysterical rant caused her to run to her father and beat on his legs with her fists to protect her mom. John looked down at the little girl, crying and punching his legs and realized that somehow he had become a monster. Someone to fear and not to love. He turned and walked out the door.

Marie was stunned to hear of the encounter. She had an expression of horror that his wife would put on such a display in front of their daughter. John explained that that was her usual way of confronting him.

He had gone to New York to talk with a friend who had been divorced and remarried to hear his experience. Over lunch he found Tony saying that he had changed over the years he was married but his wife treated him the same. John thought to himself "yes, everything in my life has changed over the last 12 years but she still treats me like she did when we were first married". Now standing in this doorway he realized that there are two people necessary to make a marriage work and she wanted no part in changing the way she dealt with him.

Later that night he called Marie from his home office downstairs. Looking out the window into blackness of the backyard he heard Marie's voice tremble when she said " I love you". Now the cards were on the table. In that instant he knew he had to make a decision. Either he told her how he felt about her or get out of her life one way or another. To tell her he didn't love her, would send her away and to return the words "I love you too" would mean he would have made a decision that would alter the course of his life. He told Marie one day that she was an impact player. Her presence on the field alters the course of the game. Now with her declaration of love she impacted his life. He knew he would pay any price to be with her.

Her words sent an exhilarating shock through his body. It was like water to a thirsty soul. He hesitated for a few seconds to absorb what she was saying. He wanted to believe it so badly but he was afraid to bring her into his life. He could not believe she could feel that way about him. He broke the silence when he quietly said "I love you too, Marie. I have since the very first moment I saw you." With that statement his knew his life changed forever. He was committed.

The next day they decided to leave the office and head over to Lands End for lunch and to have some privacy. After getting some sandwich's, they went to the edge of the cliff overlooking the Golden Gate Bridge and talked about how they felt about each other. John was nervous and unsure but Marie was confident and calm. John noted that her stability and clarity of mind was not an affectation but integral part of her character.

He couldn't stop talking. He was trying to rearrange all the upheaval of his feelings to anticipate an outcome. Was this right? Would this work? Where will it go? The differences in ages and background were complicated. Was she sure this is the right thing for her? Could she possibly be really in love with me?" "where can this go"? His mind was busy trying to figure out what was the next step. He searched for certainty to get his balance but it was not forthcoming. To break the pressure, he said to her jokingly "how do I know you are not in love with me because of my money?" Instead of laughing she countered "because if it was money that I wanted, I would have fallen in love with one of your clients."

Seated next to each other in the bench, Marie began to wonder how much longer was he going to talk. How could he be so aggressive at work and not have the nerve to lean over and kiss her? What the hell does she have to do?

John kept talking because he was nervous. Nervous about how much he loved her. Looking at her sitting next to him he wondered as he did everyday what would it be like to kiss her. To press his lips against the soft red cushion surrounding her mouth. He leaned towards her and she came to him. He was not aware of how the kiss felt but of the exhilaration that took over his body and imagination. The very thought of this woman in his arms after two years of being next to him almost everyday for two years was unimaginable. He fell into her kiss and embrace and knew that somehow beyond all reason, understanding and calculation that they were in love.

She looked at his face and could see that his eyes had teared up. she asked "are you alright? Is everything ok?"
He turned to her and said "oh it I am just a little sad that I had wait 48 years to truly love someone and for them love me. God I feel like teenager. But I am grateful that it did happen. I am grateful that it was you. Are you ok?"
"Well I am little taken back that I am in love with my boss, who is married, has a daughter and is 20 years older than I am but Yes, yes I am very happy. Now shut up and kiss me again."

CH 10

The NASDAQ hit 1570 in 1997. A mere 50% gain since Netscape went public. As the market exploded so did the income of the partners and their marriages. Nelson had moved into the city to take up an affair with young girl in the office. John had moved out, bought another home and was dating Marie.

John and Nelson were having breakfast in one of the private dining rooms on the 41st floor. Sitting atop this tower of finance, they had a corner room with floor to ceiling glass to gaze through. It was so clear the deep blue sky was infinite. There was blue sky everywhere. The glass was so clear that you felt as if you were sitting outside. Their view spanned from the Golden Gate Bridge to the San Francisco Bay Bridge, north to Napa and far out to sea.

The bay was busy with boats and ships coming and going under the bridges. Alcatraz sat prominently in the middle of their view. With it's massive concrete walls and buildings, the prison looked like it grew out of this island of rock. It appeared impenetrable and immovable. It was a formidable edifice but it was empty and decayed now. It was just ruins sitting there having outlived it usefulness. Now it was just crumbling from its age. John thought about how ironic it was that the famous Predator's Ball was held there by the junk bond kings right at the top of the leveraged buyout market.

The table was covered by white linen tablecloths and napkins and waited on by waiters wearing tuxedo trousers and starched white jackets with the company logo on the lapel. The two men talked about the many new IPO's that were coming onto the syndicate calendar and how to manage their book of business to maximize the opportunity before them.

Nelson as usual was impeccably dressed. He wore a navy blue Brioni suit. The double Windsor knot of his tie was perfect. His nails were well manicured and the custom made gold eyeglass rims were elegant and simple. Clasped in his hand was his Mont Blanc pen with which he was writing down notes from the morning trading call.

John remembered how Nelson took him to buy a new suit one day. He had tired of the 3 piece single breasted suits that John wore every day.

"You are not in the Marines anymore. It is time you got out of that uniform you wear and into some nice clothes."
He took him to a fine men's store and searched through the suits until he found a couple that he liked. He told the clothing consultant to bring one of each in John's size. He came over and removed John's suit coat as the consultant spread them out on the hanger next to the mirror. John stood there looking at himself in the mirror when the consultant came up from behind to put the jacket on him. Immediately as Johns arm disappeared down into the sleeve, he felt the smooth soft silk lining that went all the way down to the cuff. The weight of the coat was light and the broad shoulders of the double breasted jacket add to his physique. As the jacket slipped on and the consultant adjusted the shoulders, he reach around and buttoned the upper button of the double breasted suit. Standing and looking at John's image in the mirror, he said with a broad smile "you look really great in that suit". John stood transfixed on his image in the glass and returning the smile he said "I do don't I. Let's get some more of these suits out but I will take this one". From that day forward he realized that Nelson was preparing him for the successful future they had ahead of them.

In the past when they were together they expressed interest in each other but that had all been replaced by the talk of business. It seemed as the color of their hair changed to gray over the years so did their friendship. Everything was measured in money now. Friends, clients social life and status. They had become separated.

Nelson was buying a large lot in Marin to build his Xanadu while John was discovering during his divorce that everything was about property and assets. Even the children. Their lives were so different.

They were quiet as they ate their breakfast. John watched Nelson as he clutched his fork like a dagger and stabbed the prongs into his steak to cut his meat. It struck him as odd that someone so polished, sitting with manicured nails and French cuffs would hold a utensil that way.

His manners were meticulous. As an only child with an absent father and loving mother he was taught all the refined ways of propriety. He and his wife spent 5 years after college backpacking around the world. He ended up in South Africa and took a job as a mining analyst to make enough money to return the states and get a place to live. His wife worked as a fashion model. After returning to the States, Nelson got hired as a broker while his wife continued to model but starting out once again, they had to work at night as catering waiters to make enough money to save for a home.

His upbringing was in a great contrast to John's who grew up as child of a Marine Master Sergeant. John laughed to himself as he looked around the dining room to see that he wasn't in the mess hall or staff club anymore. He saw different parts of the world from looking at the backpack on the Marine in front of him during the force marches and patrols he had to do while he served in the Marines.

The tension between them entered in and out of the conversation. As Nelson went on about how he was the driver of the team revenue he thought that he was entitled to a larger piece of it. He even suggested that the name of the partnership be named the Williams group. John had to remind him that he didn't work for Nelson and owned 50% of the revenue and assets. He protested that over the many years that they had been together that who generates the most business had changed many times. It was just Nelson's good fortune that because of the size of their business and the nature of the trading that he was writing the most tickets. Of course he didn't see it that way.

John went on to suggest that they simply split the book in half and each go their own way. It seemed like an amicable way to resolve their problems. Their income would remain the same and the total assets would be cut in half. He was surprised when Nelson declined to do that and the reasons for his position would not become apparent for another couple years.

John began to change the subject by discussing that a friend of his had transferred to San Francisco to be the CEO of an internet company. The founder had reached his maximum capacity on his management skills and needed a seasoned operating executive to prepare the company for an IPO. Lunch had been scheduled for the later that day and he asked Nelson if he wanted to go.

Nelson never cared for Johns friends and replied "No thanks. I have some good friends from Tiburon, who invited me to go sailing with them later this afternoon and afterwards we are going to a reception at the Museum of Modern Art. You go. He is your friend."

CH 11

Returning to his desk John saw that he had a voice mail from the wife Kleron's founder who wanted to talk with him. It had been six months since they talked and when calling her back he noticed the stock was now trading at $16: down $153 a share from its top price. Scrolling through the news he could not find any changes in their growth rate nor any sales by her husband. She was still long 2.2 million shares. He remarked to himself "there's another one who stepped off the curb without looking. Sell at the top my ass."

When she answered his call she said to him. "I wish I had listened to you the last time we met. You can see our stock has dropped quite a bit. I would like to schedule another meeting with you discuss your earlier proposal". A date was set and John had to get off to answer another call.

At the end of the day he walked over to ePathways to see his friend Collin who had invited him over to have coffee and meet some the executives. Collin walked him around the office to meet the various executives and stopping last at glass enclosed office sat the Chairman and founder of the company. Collin left them to talk and the two men sat down to get acquainted and discuss ePathways future and how John's company was best prepared to deal with the offering.

John asked him to meet for lunch and was casually dismissed by the chairman who felt he had heard it all from other brokers and already knew what his options were going to be when the deal got done. He made it clear that he wasn't interested in selling and reinvesting as the business he created was worth a fortune. The conversation was quickly shut down as John produced a pitch book explaining how to reinvest his money into a growth and income portfolio. The chairman sat there impatiently and finally said "I am not going to do anything at all and once we go public I don't intend to sell any shares."

Undeterred John asked him how many shares did he have. Dave answered 2 million. "Now you know you are going to be locked up in that stock for at least six months before you can trade. Even then I doubt the bankers would let you sell anything but a few shares. I think is more likely you will not be allowed to sell a lot until maybe a secondary offering is done. That is typically when the VC's and executives are allowed to sell large positions. That means unless your company does really well it is not likely you can get out of any of your shares for at least a year."

The expression on the chairman's face clearly indicated that no one had told this information. He said he had made commitments to invest in some other companies and would like go on their boards now that Collin was on board. He had other ideas to start more companies and it was obvious to John that this guy imagined he was clearly grasped the internet phenomena.

He didn't know that he had only one half of what is necessary to be successful. He understood the business alright but what he didn't know was that Wall Street determined what that growth was worth. He would learn that engineering is not a synonym for investing.

John leaned forward across the table and looking directly into his eyes produced once again the flavorful apple for which all doubters of the laws of prudence can't resist and said "well if my firm is the lead manager, I could arrange for to borrow against your shares. And with lending there is no filing required. You just simply deposit all of your shares into our firm and we can loan you up to 50% of the value of the stock. It is as easy as signing a marker at a table."And with that he offered the chairman a bite.

"Why do I have to deposit all of my shares with your firm?"

'Because we want to get more banking business and if we are your primary bank then you get leverage and so do we."
"Can I get some money before we go public?" He asked.

"Perhaps but we would have to be the lead banker and the bankers would have to give approval that in fact this deal is going to get done otherwise we are loaning on an illiquid asset and in the investment business liquidity is the first law of life. Let's say for today the answer is yes."

"My question for you is going to be: with 100% of your total assets in one stock and a loan outstanding on it, you are going to need to invest in a diversified portfolio and get some trusts and estate planning set up. I will have one our trust lawyers join us for lunch. We will set up a date and I will bring all the papers if the firm is willing to loan you money before you go public." "I would need at least two million."

"If the deal is priced around 20 that is $40,000,000. I am sure that can be arranged."

"Maybe more?"

"Of course. We can discuss it at lunch when I get one our estate and trust attorney's out here from Boston".
He seemed well pleased and was eager to have the meeting. Lunch would be when they got closer to IPO.

Ch 12

What do you do when you are a staid New England bank with too much money and not enough growth? You buy a west coast investment bank underwriting technology and internet stocks. The banks back east were eager to capture the enormous fees that were being generated and get access to the new wealth that was being created. Banks founded on Plymouth Rock came to the San Andreas Fault in bunches to compete for acquisition of the technology boutiques that dotted the west coast. Lacking experience, market share and risk appetite they kept the current management teams in place and bankrolled the investment banks. With senior partners getting cashed out of their equity in their own company the culture changed dramatically. Now the investment bankers were playing with someone else's money and the game accelerated to a fever pitch.

Banks, like the whales at the casino table the banks came and bought who they wanted and what they wanted. Rather than buy into individual deals they bought the table. They are used to being the house with the odds deeply in their favor. All of their financial and analytical resources went in to this decision to take over an investment bank. Their calculations were complete. The models worked. The future was gilded in fees and deposits. Companies make more money than people. The numbers added up and now by owning John's firm they would become a player in the internet business.

IPO's were getting done more rapidly. Now companies with no sales were syndicated based on future sales rather than future earnings. It took imagination to see any solid foundation to what was being sold to the market. These new companies needed capital to make acquisitions to demonstrate rapid growth. Organic growth was left to the vineyards in Napa. Once a company got an IPO, the secondary was not far behind. If a company couldn't earn money fast enough, you just printed your own in the form of more stock certificates, sell them to hungry investors and go buy the growth of another company.

With the firm's partners now no longer risking their own capital, controls and due diligence went out the window. Analysts continued to raise expectations and stock price forecasts without any constraint.

Like everyone else Nelson and John started investing into private startups and venture deals. With the connections they had developed they believed they had the access to the better deals floating around. They began to believe that being smart and connected made them successful. Why wouldn't it work for investments too? Everyone was selling to everyone else now. Entrepreneurs were selling to investment professionals who in turn sold them to institutions and investors.

The partners poured millions of their own money into the phenomena called the internet and consequently ignored the principles of investing that had been the foundation of money management. When talking with prospective clients, they could give them confirmation that they too saw the same opportunities as their clients and have put their own money at risk. Clients felt reassured by knowing their broker put his personal imprimatur on these IPO's and startups.

Climbing into their seats on this roller coaster gave analysts only a view of the deep blue sky above them as they were being pulled up ever higher to toward the sun and the unseen zenith. Pushed back in their seats they were unable to see how high they had climbed until the time came when they started back down on the other side. Pressed into their seats by their anxious firms to keep the companies happy about their prospects, analysts were loath to put sell recommendations on companies with sales under $1,000,000 that increased 6 fold in a single day.

After the takeover, one of the bankers from the east introduced himself and asked John if he saw any differences between the bank and the investment house.

"Yes I have. I saw it at the banquet dinner last night." What difference is that" he asked.

"When you bankers eat, the meat is prepared and you use silverware."

Ch 13

John and Nelson argued more and worked together less as their incomes rose. For Nelson, it meant luxury travel and wealthy friends. For John, it meant expensive lawyers and alimony.

Somehow throughout all of this Marie remained in John's life. She seemed to be unaffected by the sudden changes and her love for John deepened as they continued to date. They had known each other for three years and had been dating for one.

John could not stop staring at her during the day. Her wide eyes and upward sweeping eyebrows captured his attention throughout the day. She was aware of his attention and to intensify it she would make suggestive gestures or comments to him.

Their affection for each other grew like everything around them but in spite of the intense emotions it didn't seem to have a future. John had not filed divorce papers yet and Marie was getting frustrated with John trying to protect Pat's feelings rather than hers.

Marie would begin to ask where were they going. She wasn't in a hurry to marry but she began to question whether not it made sense for her to be involved with a man that did not want to get married. A man who had already lived through this part of his life and felt he was too old to have more children. She knew how much she loved him but she decided that he needed to answer her questions.

John could not gain any equilibrium or answers. His partnership was showing signs of breaking, his divorce magnified his guilt and disappointment over the failure of his marriage and now Marie was becoming disenchanted with his intransigence. She even had approached him about her dating again. He didn't know what to do or which way to turn. He knew he loved Marie more than anyone else in his life. His relationship with her was unlike any he had had before. They were friends for two years before they became involved. Quite unusual for a man who once described his single life as "a long term relationship for me was a three day weekend". His doubt about remarrying was more about his inability to understand why a woman of her caliber and beauty would want to marry a man 20 years older, divorced with children and her boss.

That question kept nagging at John. He raised that concern with a friend who asked "You tell me how smart she is, how deliberate she is and how secure in herself she is and yet when she tells you she loves you: you don't believe her?

CH 14

John was late picking up his daughter from school. Nelson objected to him leaving early to pick her up. Once again he felt obligated to lecture John on the importance of being at work. Personal matters were to be dealt with later. In vain John tried to explain that he only had Wednesday's and weekends to be with her. That this divorce was shattering her and at 7 years of age she had to see her family break up. "You need to explain to her what the priorities are here. You pay Pat a lot of money to take care of her. She is just going to have to understand." Nelson protested.

"Remember Nelson. 'No man is an island.'"

"What the hell does that mean?" He asked.

"Never mind". John let it drop and walked away. He couldn't understand how such a bright guy like Nelson could fail to comprehend the obvious but this wasn't the time to try and explain it to him. Maybe his knowledge of relationships came from his experience of taking care of a cat while his wife was in Central America with her girlfriend.

Later that night as John brought Rose home they sat in the car before her house. She was quiet and pensive. The silence in the car was chilling.

"Dad, aren't you ever coming home again?" She asked.

John turned his head and looked out the window into the darkened front yard. What do I say? he thought. His heart was breaking realizing his decision was impacting his daughter so much. The pain she felt inside was palpable. He could feel it sitting there next to her.

After some consideration he turned to her before speaking. Her blue eyes were moist and wide open. Like a pools of water he could almost see himself looking back at him. He didn't like what he saw in his reflection. He looked at the dimple in her chin and remembered when he first saw it. Then when he could hold back no longer he said.

"If I don't come home can I still be your dad?"

"Yes." She answered.

"Then I am not coming home."

They sat in car and after a few minutes he walked her to the door. Pat opened the door and after Rose went inside she asked him if he would like to come in for a cup of coffee. He was surprised that she invited him. It would the first and last time she would do so.

Sitting at the kitchen table across from each other she asked how was his evening with Rose and filled him on some scheduling details of the week ahead. They chatted amicably with John puzzled about the civility she displayed to him. It was obvious that she was hurt. She never thought he would leave. Her eyes were puffy and her face looked strained. She talked about the difficulty she was having watching her family break up. She thought that maybe they should try again. Looking at him she asked "don't you ever miss your family? Don't you miss being home?

"Yes I do. I have many times." He answered.

"Then how do you deal with it?" She asked.

"I sit and think about what it was like living here and the feeling goes away. 12 years is enough. I am afraid that if I came back and things reverted back to the way they were that I might not get out again. It was the hardest decision I have ever made in my life. It is not what I wanted. I could stay and be unhappy. I see that in marriages but I kept repeating over and over to you that you could not treat me the way you did and expect me to stay and take it. Having Rose was your hole card but you overplayed your hand. Now we will be co-parents and do the best we can for her. " His remarks ended the conversation and he left.

CH 15

On July 16, 1998 the Nasdaq hit 2000. A double in 3 years sent reverberations through portfolio's. Now a diversified portfolio consisted of Intel, Dell, Microsoft and Cisco sprinkled with pixie dust of AOL, Netscape, and a variety on ecommerce, B2B, .com companies. From search engines, to emails, to retail, to bandwidth providers the world of investing in technology was growing faster than the industries it was devoted to. Everyone talked about tech. Valuations continued to move violently and movie stars continued to supplicate themselves in an effort to be relevant and make more money. Everyone wanted "tech". Sensing the forces of stress under the foundation of the market John wondered if the word "tech" would end up being a derivative of "tectonic."

Marie and John were having dinner when she told him that she could not continue in their relationship since he was so unwilling to consider getting married and having children. It was unfair to her that he was committing so much of his time and effort on Pat while she was waiting for him.

He knew that it was pointless to plead his case in an effort to keep her. He was not that selfish and indeed he wanted the best for her even if her future didn't include him. He knew he was not going home with Pat and would eventually get around to filing. He had met with a lawyer who advised him to file for his own protection but he was unprepared for he knew would be more arguing and hysteria with Pat.

"Is there someone you are seeing?" He asked.

She was insulted that he would think she was capable of seeing anyone while being in love with him.

"No. No I am not. What do you think I am? I am not interested in that right now. Right now, I am hurt and I love you with all my heart but it isn't right that I wait for you since you don't want to get married and have children again. I know your reasons and for you they make sense but I am 28 years old and they don't make sense to me.

You can't seem to understand that your marriage with Pat is not going to be our marriage. This will be our marriage. These would be our children. The happiness that we will have will be based on our relationship not yours and Pat's. I know all the reasons you have and you don't stop to consider that I have thought about our age difference and that you have a daughter but you are my choice. Being married to you is more important than our age and background. It's not the problems we will have that is my concern but it is how we deal with them together that is important. But right now I am not part of your decisions and we are not dealing with this together.

You are my friend. You are the man I love and want to marry. You are the man I want to be father of my children. I know you love me. I see it in your face everytime we are together but I have to move on and let you finish what you started."

Sitting in the restaurant she started to cry and excused herself to go home. He sat there in a fog. He could make no sense of anything. He paid his check and left for his one bedroom apartment down the peninsula.

Seeing her at work the next day was agonizing. All day he watched her and marveled about how beautiful she was. In spite of her sadness she kept up her attitude. She laughed and joked with the people she worked with at the office. She did not let her emotions ruin her day. Each person she spoke to knew that for that moment they were important to her. Her tears would appear at night when she was home.

The weeks that passed were so difficult. Trying not to call her to ask what she did the night before or whether she was seeing anyone made the office intolerable. He heard that she was going out with someone in the office. Of course, he could no longer talk to her about her social life. When he discovered who the guy was John wanted to go and shove his head into his terminal. He thought leaving for awhile would be a better idea.

CH 16

He had to get away. Far away so he called a travel agent and booked a trip to Europe. He had never been along the Mediterranean so he booked a two week trip for himself to Venice, Florence, Rome and Paris. Cities like that seemed a perfect place for distractions. There would be lots to see and do and the activities would help him get over the split with Marie.

He was wrong. With all the things to do he did very little except think about Marie while he was in Europe. He spent his evenings in movie theaters and spent the day taking trains around the city to pass the time until his return home. Food was tasteless, attractions were boring. And art? Art doesn't do much for a man who has lost his soul.

He discovered he took his restlessness with him wherever he went. He called the office a number of times to talk with her but though she was cordial she stood far back from the conversation he wanted to have with her. After awhile the calls became less frequent because he always felt worse when he hung up not having satisfied his urge to tell her he loved her and in his confused mind try to sort out what he needed say.

Returning to his hotel room in Paris he sat alone in his room weighted down with the conflict that he loved Marie and no matter how little sense it made to him he wanted her in his life. He knew too that he didn't leave Pat to get married to anyone but he was certain that he would not return home to her.

Taking a notepad and pencil out of the desk drawer he made a list of his reasons why he didn't want to get married and have children with Marie.

1. I am 20 years older and she needs a younger a man who is more active.
2. I am past my sexual peak while she entering hers.
3. The performance problem is already showing up and how will I satisfy a beautiful younger woman?
4. I failed in my marriage and I can't take another failure.
5. I failed my daughter. What if we get divorced and I fail more children.
6. I don't want to drag a young woman into a combative divorce with my ex wife and a step parenting life.
7. I am afraid that down the road she will find someone else. I am not 30 anymore.
8. The future is dark and uncertain.
9. I am afraid to make the commitment.
10. I would be having children in my 50s.

On the other side he wrote "I know I love her. That is a fact that will not change. I have never loved anyone so much in my life". "I know she loves me. This is what she wants."

There before him were the reasons he was going to pass up the opportunity to marry Marie. They didn't look as big sitting there on the sheet of paper on the table. They lacked the forcefulness of his imagination. Separated from each other, written down in simple sentences, he took them one at a time rather than all at once and considered what each one represented.

Looking over the list many times he tried to get some grasp of where he was in this place in his life. This made no sense. He told himself many times that he would do everything possible to be with her yet he could not get over the line. He was afraid to reach too far. This is not how he anticipated his life to be at this age.

Finally, after reading his list many times he noticed how each one was a statement of his fears. He had 10 reasons for not going further and just the three in favor. He said to himself. "These are all my fears. Is this what I have learned in life? I am letting fear make my decisions for me? That is no way to live. Either I take the risk or I lose her.

He reached over and called Marie. Speaking softly into the phone he asked her if she would pick him up at the airport and have dinner with him. "I need to talk with you."

"We have said everything already."

"No we haven't. Will you please pick me up and go to dinner with me?"

She did and for one more time they went to sit and talk about the improbable and yet seemingly inevitable marriage that awaited them.

The table became quiet and they changed the subject to talk of how everything was changing so much. Tumultuous was the word she used. Witnessing the break up of John's marriage. The unexpected love that she had for him. The irreparable division between Nelson and John. So many years of success together and yet they encountered an element that started to destroy the business they created together. Then there was Rose who tumbling around inside a drum was becoming more detached. It seemed like everything was falling apart. She sat there for a few minutes reflecting on all that was happening around them and to them. "Are you sure you want to take this risk?" She asked.

"Yes. I would risk everything to be married to you. What am I saying? I am already risking everything to have you. I am going to take "The Road less Traveled" as Frost would say.

"Here, I brought you a couple things" and he reached into his pocket and handed her a card and gift wrapped present "This is how I feel about you Marie."

It was a poem that read:

The Maze
I sit amid a maze walled in
by my desires sitting here
with me is this love I have
someday if I ever get out I
would like to give it to you I
don't know how I got here for
it's certainly no place to be
Though you are just on the other side of the walls
you are still many miles from me. So if you love
me little and are tired of waiting about you might
try to find your way in and help me to get out.

"Did you write this?" She asked.

"Yes and I finally found the first occasion to share it with someone."

Her eyes filled with tears as she read it and as she stared at the last lines he gently pushed the little box across the table. There was no doubt what this was as she recognized the silver box and blue ribbon from his favorite jewelry store.

"Yes I do want to take it. Will you marry me Marie?"

She was silent.

"Come on now. You gotta give me an answer. Your dad will be in couple days" He teased.
"Are you sure this is what you want?"

"Marie, I don't care if this is only lasts for 6 months. I want to be with you every minute I can."

She laughed and said "yes, I will marry you." She said this as she leaned across the table and let him enjoy her wonderful kiss.

That evening on his way home he remembered a conversation he had with his friend Veronica a couples back. He sat in her office puzzling over all the possible options outcomes that could result from his feelings for Marie.
Impatiently, she said to him "you act like you are in control of everything. For all you know you might end up leaving Pat and marrying Marie. John laughed as he remembered how he jumped out of his seat and said to her. "that is the most ridiculous thing I ever heard. Why would I leave my wife and daughter and marry a woman young enough to have children?

Veronica looked straight at him and said "you are the kind of guy that believes if he thinks about the future long enough that he will be able to predict what will happen. You have never been right once about anything happening since I have known you.

CH 16

November 1999 saw the Nasdaq 3028. It ended up 85% for the year. The Dow managed 25% and the S and P 19.53%.
By now every market analyst and pundit was going on record calling for a major correction of 20%. They used history to explain how the market has behaved in the past and how prior movements would predict future events. When asked if they shorted the market or were in cash the answer was always no. "I think it has a little way to go before we see a major correction." Like everyone else they wanted to squeeze out every dollar. No one wanted to be left behind. Most importantly no one wanted to be wrong on camera.

The market kept climbing. Skeptical investors, like players at the hot craps table, were starting to put more money down on the "Do not Pass line" betting against the shooter. Call it shorting the table. Logic like: "it can't keep going up", "this streak can't last forever", "I got a feeling this thing is going down" or "I think we are going to have a correction, was the depth of these short predictions and were simply based on an understanding the principles of gravity: that which goes up must come down.

Rather than using any fundamental analysis, you assume that the observable phenomena is sufficient to make investment decisions and that you are smart enough to see the top in the market.

Market forecasting has two extremely difficult hurdles in order to be successful: Not only do you have to be right about "what" is going to happen but you have to right about "when" it is going to happen". To the investor glued to their TV screen, pundits simply had to provide a confirmation bias to a mind that mistakenly assumed it had done all the due diligence necessary by thinking about the pundits comments during a commercial break. Failing to get that confirmation bias you simply change channels, investor newsletters and friends until you find one that does. If you want sunshine but rain is in the forecast you turn the channel to the weather show in Dubai.

Tested measures of value had long ago been squeezed out of the market. Rational thought descended down into intuition and ultimately to hunches and amorphous feelings. Hunches and feelings lie deep in the dark subterranean unconscious and are dominated by impulses and appetites. Premature ideas, insufficient information and irrational thought become the guide to modern portfolio management in order to achieve the high returns the sirens promise in their call. Everyone was guessing that "up" was the only direction as the market continued it's move outside the box of history. No one noticed that history isn't linear. Paper mache timelines in grade school are not representative of how history moves. It is not that simple.

To hedge themselves in the face of the Nasdaq juggernaut, analysts were careful not to call a top. Fearful that investors would sell early and leave money on the table they continued to predict that a correction "would occur" but only after it ran up a little more. With such equivocal conviction some investors returned once again to bet against it only get blown out by the continued streak. Eventually, the upward trajectory of the market squeezed some of these shorts out of the game as they covered their short bets and went long. Others licked their wounds, covered their losses and waited in the bushes for another attempt to go short.

John received two calls from clients dissatisfied with the returns in accounts. The first complained that John advised selling 25% of his CSCO holdings and the stock had gone up 30% for the last 3 months. He continued complaining about how much money he lost because John told him to sell. John pointed out that initially CSCO was a 2% allocation of his portfolio and with the NASDAQ going up it was now at 25%. It was prudent to sell some off. He went further to point out that the stocks that replaced it also went up. None of this mattered. You told me to sell 25% and the stock keeps climbing. Close my account and send it to the discount firm and I will manage it myself.
The second called in that morning asking why John didn't buy a stock that gone up 45% today? None his stocks were doing that. Why didn't you that?

Patiently and with silent contempt John explained that he didn't know the stock was going to go up 45% in the morning. Before it did it had nothing to recommend it. The client said his golfing partners broker owned it and wanted John to close his account and transfer his funds to the other firm.

At the end of the day John received one more phone call. It was from the Kleron husband and wife. Their stock was now at $8 and the question became "What do you suggest we do?" John brought in a colleague to discuss putting on a collar to limit downside. The husband asked do we have any upside? John said yes "you get up to 20%" but your downside is locked in at a 10% loss which doesn't sound like much but looking at the downward trajectory it will be a home run when it hits $4 or $5 a share. The trend is not your friend right now."

Much grumbling occurred and the two of them decided to think about it further and get back to him.

Epathway's filed for an IPO and lunch was scheduled with the Chairman to meet one of the company's lawyers to discuss trusts, tax planning and diversification.

The Chairman was suffering through the naivete of the investment and legal professionals when Nelson showed up. John introduced him to everyone but the conversation quickly shifted when Nelson found out the chairman lived in Mill Valley and was a cyclist. With an expected windfall of $40,000,000 Nelson found his new best friend. Off they went for a ride while the attorney and John finished lunch.

With assets approaching $1.5 billion dollars the two partners were each earning over $100,000 a month. The business was moving along with John bringing millions in new accounts while Nelson provided the nimble trading and access to the IPO's. The division between them widened resulting in Nelson no longer wanted to have meetings but instead flew in private plans to Napa and Hollywood.

John meanwhile used the money to buy a new house, spend time with his daughter and prepare for the wedding with Marie.

When the pathways IPO went out the stock was big news. At the time is was the largest IPO valued at $24 a share for a $108,000,000 deal with $800,000 in revenues. A year later they came back for more money at $116.75 with a $300,000,000 secondary offering. A bond offering was in the works to raise more.

A Secondary Offering is where enough liquidity is created for the institutions to fill their allocation and for the venture capitalist and some insiders to get out. VC's don't buy retail they buy wholesale. Keeping enough stock for public relations, they pull their investment out. It is traditionally the smart thing to do. But when you buy and sell in the same market, you end making a killing getting out but pay that premium for the next deal as valuations increased. When the market is going up it is the rising tide which lifts all boats. All things being equal you end up cashing out a VC firm down the street and overpay for a new start up. It is like buying and selling a house in the same neighborhood.

Good for his word the Chairman deposited all of his shares and borrowed $2,000,000. At a meeting between the partners and staff it was announced that from that point Nelson would handle the account while John was left to handle all the other executives.

CH 17

Standing in the hallway waiting for the ceremony to start the wedding organizer asked John if he was the father of the groom.

"No. I am groom" he replied. She feigned embarrassment and apologized. But John didn't mind. After all, he was going home that night with Marie and not the wedding coordinator so why get bothered by what she thinks?

When Marie appeared she was breathtaking. Her brilliant white gown gave her the most angelic look. Her hair was up and her long neck with a single strand of pearls held the most beautiful face John had ever seen. Once again he could not believe how beautiful she looked. He had long since ceased wondering whether or not she was the most beautiful woman he had ever seen. Now he knew in his heart that she was and was thrilled with idea that she would be with him as his wife. He would often tell her that God made her just for him.

Walking down the aisle with Rose all dressed in white seemed to erase the ripped seams and tears that had occurred in her life. Each moment of that afternoon was encased in love and happiness protecting it so it would last forever.

CH 18

The second meeting the partners held in the morning was to discuss the Chairman's request to boost his loan to $40,000,000. The value of his stock approached $300,000,000 and he had purchased properties, art, investments in new startups and a new Gulf Stream. By now he was invited to dine at the White House, Hollywood parties, photo shoots for magazines and stories about him in the newspapers. His celebrity status combined with investments in so many startups made him ubiquitous. Interviews on the radio about the evolution of the internet entertained thousands of investors.

He had leveraged a concentrated single stock position. He was unwilling to pull some chips off the table or buy some other numbers. His game was to continue to press his winnings. His confidence in himself was boundless and was kept inflated by Nelson who had become his constant companion, counselor and beneficiary of his fame. He quickly arranged for the loan to be increased and announced it at the meeting the two of them had that morning.

Nelson sat in the chair at the end of the conference table wearing a yellow shirt with a white collar. He had light gray braces with red spots and his suit was light tan.

John pressed him for an answer as to why he was buying xyz at $330 a share. "We bought it at $15 on the IPO, sold it for $150 and now you are buying it back." Nelson's response was curt bordering on contempt and he snapped "I talked with an analyst yesterday who is a consultant to XYZ and he assured me that tomorrow's earnings are going to exceed expectations."

"What consultant. What could some consultant know? He is probably right out business school? How would he have access to the earnings? You don't even know this guy and your buying back a stock that went up 600% on it's first day trading. Are we becoming investors here? Are you buying all this bullshit? I think you are mistaking a bull market for brains. You don't know what you are doing but worse, you doing it with someone's else money. You sit there dressed up like an easter egg and pretend that you are some giant hedge fund manager."

Nelson's response was contemptuous and dismissive. "You don't know anything about these kind things. Why don't you go back to the peninsula and just cash your paychecks."

John sprung from his chair like a Doberman and in a second pushed the blunt tip of his extended finger into the handmade French silk tie until it hit his sternum. Face pressed up into his partners face he warned “Don’t you ever talk to me like that. You do that again I will throw you through this fucking window and watch you make a stain on the sidewalk. Do you understand me? Do you believe me?”

His partner’s eyes were wide and with a gasping voice replied “yes.”

"Your arrogance is going put us into trouble when this party ends."

"I am moving money into a some market neutral hedge funds. You are no longer running the investments by yourself. If you are so confident in your abilities why don't you talk to clients when they call. I get tired of you avoiding Bob's or Richards calls. You won't take Bob's calls anymore. You refer to Richard around her as the "Hammer" because he asks you logical questions that you can't answer. You don't talk to Bob because his questions are like scalpel and cut away the bullshit answers you give him. Don't you see that they know something is going on with the way you are trading. Do you think they became wealthy without reading their statements?

Are you too busy taking care of David? Why don't you tell them that? Tell them that riding around with a bike buddy is more important than the clients they have been for 20 years. You should get another seat for your bicycle because the one you have is up your ass. Better yet get one big enough so you can put your head up there too."

"You are not managing any money. You just handed us a $100,000 trading error and I won't stand for it anymore. You are careless and it costs us money". Nelson countered.

"You just remember I don't work for you and I am calling clients to give them some options. You get in my way you won't be standing at all". Returning to his desk he saw that the NASD and the SEC had halted trading in Kleron at $5. Accounting irregularities was the only reason given in the story. It was over for the Yin's now. The stock was not marginable and the institutions would sell quickly to get it off their books before the close of the quarter. It would open for trading again in 18 months at zero.

"The hell with them' he thought and picked up the phone to talk to clients about the hedge funds.

CH 19

No one saw it coming but the NASDAQ hit the top at 5024 on March 9th 2000. From this pinnacle there is no more mountain to climb. From 900 to 5024 in less than 5 years and the frenzy still could not stop the rapacious appetite for more. Analysts and market watchers were adrift in a small boat with a hurricane at their backs. Unable to see the stars in history to determine where they were they simply pulled out their market performance chart and expanding PE's theories to argue Nasdaq 6000. Placing a ruler aside the dots of the past and draw a line along the recent trajectory to the upper right quadrant of the chart constituted a good forecast. It is going higher is the only conclusion. The market just had to get through it's anticipated correction before the next leg up.

Everyone still planned to sell at the top but soon the investors in the front seats of the roller coaster cars would breach the summit and stare at the ground below. Hurtling down the other side of the roller coaster so fast you can't get out even if you had the courage to do so.

The bank owned firm had given hundreds of millions of dollars out in restricted stock loans. Unaware of the habits of the newly rich all of the money ended up in illiquid investments. You cannot meet a margin call by selling your house on the phone. Art, private equity, venture deals and start ups don't trade on the NYSE and so when the Nasdaq had it's much anticipated correction of -39% in later 2000 few could meet the margin call. No one was lining up at the cashiers cage to settle their debts.

CH 20

Later that night when he took Rose home, Pat came outside and approached the car. She had been crying and accusing him of abandoning his daughter by remarrying. He stayed in the car and refused to be engaged with her in this argument. He kept pointing out that Rose was in the car and for Pat to put her anger aside rather than allow her to witness this display. She hurled every invective and accusation she could think of. Giving no thought about her impact on her daughter she tried to get the door open to prevent him from leaving.

Pat started beating on the window. Climbing up on the hood screaming that he couldn't leave. John gently tried to move the car out of the driveway. Jumping off the hood Pat quickly ran behind the car in an effort to block it. Rose still in the car sat silent and terrified by the encounter.

Pat was long past the point of reason and for the sake of his daughter John got out of the car to give her a chance to demonize him for getting married and vent some of her anger. Shouting that she would never abandon her daughter and bring another man into her life was the kind martyrdom she sought. In her mind she was all sacrificing but given the chance to tear John down in front of her daughter somehow seemed okay.

In his defense John shouted back "My life is going on without you. You can take your ostrich approach to life but it is not the way I am going to live mine. This is my daughter and if you don't get a grip right now I am calling the police. You already had child protective services out her for running over Rose's foot with your car. You either stop right now or I will file a complaint and move to have Rose given to me."

Pat was in real pain. So much so she could not handle it without going into complete hysteria and irrationality. Watching her made John feel all the worse. He wanted to believe that he had no intention to hurt her but intentional or not his actions did just that. The violence of the yelling prevented anyone to be able to separate the issues and see what was truly happening in the driveway that night. The confluence of so many feelings coming together in a turbulent whirlpool made it difficult to avoid getting sucked down into a state of mind, where screaming angrily back at her was the only way to communicate.

Throughout all of the melee was the 9 year old girl sitting in the front seat. Her frightened face, illuminated by the lights of the dashboard, hoping that somehow this will all come to an end and her dad would come home but until the storm exhausted itself, she was just a casualty of the inability of her parents to seek some solution that put her first. She knew without speaking that he was not coming home again.

Each of them were so well intended in the beginning when she was a baby. She was such a beautiful girl with a dimple on her chin and saucer like blue eyes. She brought temporary respite but not enough to patch the cracks that were occurring her family.

Like banshees howling in the dark of the front yard the fighting escalated and intensified for more than an hour. It kept rising so high it seemed that it would never come down. When Pat's anger blew itself out she was left with crying and reaching for Rose to take her inside. John got in the car frustrated once again that Pat seemed to always put on this display in front of her. He thought the reason for it was: if she couldn't get him back herself she would to it see that daughter would see him as she did. What was it they said in Vietnam? "We have to burn the village to save it."

Marie came home and saw John sitting in chair reading. She came over and joined asking "How was your time with Rose?"
John recounted the fight that night that occurred in Pat's driveway. She was horrified and her beautiful eyes began to tear up.

"My God. I am so sorry. How is Rose? Is she okay? That poor girl". She looked away to regain her composure but the tears in eyes could not stop flowing. "Is she okay. Have you spoken to her since you got home?"

"No" he replied. Pat would answer the phone and she would continue where she left off with Rose sitting at the table eating dinner. I have a couple days until I get her again. I will talk with her then."

"Do you think you should talk to your lawyer?"

"No and what could he do? Take her to court? Have Rose dragged through the child custody investigation system with her hysterical mother. No, he would tell me that we settled without going to court and it is smart to avoid settling differences there under any circumstances short of physical harm."

"It is funny when you get married. It is all blessings and angels. 'Holy matrimony' but when you get divorced there are no priests and angels around: only attorneys. That is when you realize that marriage is a contract and everything including the children are property to be fought over and shared but it is easier to split a house in half than a child."

"But don't you think that we should do something to protect Rose? I am worried about her. It breaks my heart to see her caught in between you and Pat. I wish she could just come live here with us."

They sat silently together on the couch. She noticed the book in his lap and asked:

"What are reading? Moby Dick? Haven't you read that before?"

"Yes is my favorite book. It is my 6th time."

"What is it about the book that you like so much?"

"Ahab. He is my favorite character in literature. Strange as it sounds I see him as kind of an everyman character. There is something about him that is in all of us.

There he is with his broken body. Standing on a whale bone peg leg. His body, all stitched up and spliced back together after his first encounter with Moby Dick and bearing a scar down the length of his body after he was struck by a lightning bolt. I feel like that sometimes. I feel like that now."

"I don't see you as broken. I think you are just fine". Marie interjected.

"We all can't be like you. The rest of us are all made of some broken pieces. We are patched together like Frankenstein and Ahab and sometimes we become monsters and madmen. What is missing is the all consuming catalyst that unleashes power and destruction. For Ahab it is Moby Dick but the whale is a metaphor for any object of obsession. For me it is you. You are mine.

I have moments where I am blind to everything about me. I was blind about you. I would have done anything to be with you. I still feel that way and no amount of pain or hysteria could keep me from being with you. I sit and think to try and rationalize how we fell in love and end up getting married to understand what happened but I can't explain it. You just came out of nowhere and the last thing I ever thought I would do would to remarry and have more children. But I just had to have you and the journey to have you, had to lead me and I am afraid Rose too through hell to do that. I see events like this in my personal life and now I am seeing it happening in the market. Breaking up is becoming the order of the day. Things rupture and burst.

Marie snuggled closer and said "it is amazing to hear you talk of books and movies and see how they explain our lives. It is like a play isn't it?"

"Yes it is only now I think it is about poetry. I am thinking about Yeats poem "The Second Coming". The center cannot hold any longer. I love the line in the poem that so captures the times "The best lack all conviction/ while the worst are filled with passionate intensity". Reminds me of my partner.

This is the way I come to grips with the world around me. This is how I understand things. Otherwise I would just be an angry, violent and confused man. Next to you literature is everything for me. I still don't understand how a comparative literature graduate like me got into this business in the first place. Maybe someday I will write a book about it.

CH 21

Nelson invited John to lunch with a one of the professionals who recently joined the team. He was drunk and sitting in the sunlight at a table with white linen, porcelain plates with sterling silverware he looked out of place.
Nelson opened the lunch by telling John that he had made a deal to sell the business to another firm. "We would receive $6.5 million. John your cut would be $2.5 mm, Barry would get a cut and the staff will be bonused out the by the partners". Then he added that "John, you would have to give up half of your book to Barry.

The proposal was presented so neatly that he knew that Nelson had him before the conversation began. He was not invited to be part of the decision. His input was not necessary. It was done and John's part would be either yes or no. It was Nelson's way of getting rid of John and bring in someone at half the price.

"You skipped over the part where you went behind my back". John inserted.

His first reaction was anger followed by a deep sense of disappointment. He knew there was nothing to discuss. Nelson had seen to it that all John had to do was give and answer of yes or no.

If Nelson wanted out there were so many other opportunities to split up gracefully. Now he understood why Nelson was unwilling to simply divide up the accounts and go their separate ways. He now represents himself as having $2bn rather than one. It was not about the revenues it was the size of the ephemeral assets that made him bigger than he actually is. It was leverage again.

It was also apparent that Barry and likely everyone on the team knew about the move to a new firm before he did. Nelson learned over the years that John was unpredictable and hard to control. He was willing to escalate a conflict into a fight. He was combative and unafraid of bringing in management if needed. Keeping him in the dark and out of the loop was the only way to stage this departure and ultimately his exit. Later one of the staff confirmed that Nelson had instructed them not to say anything at all about changing firms.

"I have another thing to tell you and that is the name of the group is the Williams Group. I have handled all the negotiations and the deal. You just sign the papers and you get your check."

"Now I know why you never wanted to split up the partnership. The book is bigger and consequently so are you." John said bitterly.

Nelson went on about the extraordinary deal he made and how it would benefit John. As he talked John quickly examined his options. He could stay at the firm, let Nelson resign and then refuse to go. Nelson would get his check but John was certain he would be able to keep most of the $2 bn at the firm. The revenue from the book was more valuable than a signing bonus. The second was to take the check, land at a well capitalized firm and decide what to do later.

Their accounts were down and losing money fast as Nelson kept trying to find a bottom on the internet stocks believing he could trade them. Buying stocks at $300 and refusing to sell at a 50% lose was his weakness. The roller coaster was in a deep dive down the other side now and headed straight for the ground. All you could see from your seat was the ground rising up fast to meet you. The thrill is gone as the terrifying reality of envisioning yourself crashing head first into the ground comes into view.

Nelson had a tragic weakness which is fatal in a portfolio manager. His inability to admit that he was wrong. He never apologized or admitted anything. Perhaps that is why John reasoned he was getting drunk most of the time. By now he refused to take any client calls but Dave's. His lack of character now replaced the practices and experiences he gained over the years. Since he had none he was rudderless. Like everyone else in the market, panic and not control became the guiding investment principle.

Clients were calling to tell them to get them out fast. Given the speed at which stock prices were dropping the traders widened the spread, lowered the bid and showed interest in buying only a couple hundred shares to maintain the appearance of liquidity in the market. Large shareholders like Nelson had to hit bid after bid all the way down to a deep discount just to get out. In some cases there were no bids at all which meant that no one was going to buy any shares. You were strapped into your seat and could not get off the ride.

More and more companies disclosed missing numbers, cooked books and failure to meet the expectations of the analysts. Epathways announced an SEC investigation into revenue recognition problems which took the stock to .25 cents per share. The evaporation of Epathways share price left the Bank with loan of $40,000,000 with only $500,000 in equity.

John could see Nelson's timing with this move was good and his move down the chess board boxed John into a corner. The new company was a European bank that wanted to get into the investment banking business and was paying large signing bonuses for large producers like John and Nelson right at the top of the market. John also knew that his firm was in trouble as the Bank was getting becoming unwilling to pump more money into a money losing business. Realizing that the losses on the millions they loaned on stocks would hit their earnings hard, they pressed to get something back on these loans.

From experience John knew that if he was right about his firm going bankrupt or if it failed to meet it's capital requirement the policy would be just to lock the doors.

Unable to get inside John would not have the records needed to get the accounts. They would be locked away for sometime and without them he had no value on the street. Nelson knew this. He also knew he needed John to help get those accounts over the new firm. He didn't say it at the table but once the assets came over he would jettison John from the group adding his reduced cut to his own. "When will I meet the manager?" John asked.

"You won't have to. I took care of anything. All you need to do is sign for your check."

"Do you mean he is going to give a check for $2.5 mm and not even interview me."

"I told you I took care of everything."

"I bet you did". John said.

There was more thing that Nelson wanted him to do. The firm had a margin call on David. They wanted their $40mm back. His stock is now at .25 cents a share. He had negative equity in the account of $39,000,000 mm. John needed to give him the news as Nelson was his best friend. He said Dave was working on some deals that would make them all rich but Nelson thought it would better if he didn't make the call.

CH 22

"Dave. The bank has a margin call on your loan."

"They want the whole amount? Are you kidding?"

"Yes all of it. You have 24 hours to pay it or your account will locked and they will sell out your holdings.
"I have another call. I will call you back."

"Yea, sure give me a call back."

John felt no sympathy for him. He was kicked out of Eden and could wander through the desert for all he cared. He had buried money into so many properties and illiquid investments on the belief that the stock would only continue to climb. Borrow money from the stock to make down payment on a house, jet or car and then borrow the remainder from a bank and really leverage your money. To compound matters Nelson had seen to it that Dave's account continued to make an outstanding profit in a down market by giving him large slices of the IPO's that were still being syndicated. Of all of the teams accounts, only Dave's account had a positive return in a year when the rest of his clients lost 37% or more.

Dave's next call was to Nelson. In minutes Nelson was on the phone trying to get extensions on loan but to no avail. As accounting scandals and bankruptcies of the more familiar internet companies were happening almost daily, the Bank was quickly scrabling to get control over it's loans and call them immediately. The former CEO and founder of Kleron was now on trial for fraud. He would not be the only one that would stand trial and go to prison.

"The NASDAQ composite index shed 355.61 points, or over 9 percent, to 3,321.17, its biggest one-day decline on record. At one point during the trading session, the NASDAQ was down 411 points. The index lost over 1,000 points this week and is now off more than 34 percent from its record high set March 10 - well beyond the 20 percent decline Wall Street sees as the beginning of a bear market." CNN

Situated now in another bank which just purchased another investment banking firm the "Williams Team" as it was now called, was settling on their second day in the office. Documents to clients necessary to transfer their accounts had been mailed out. The "team"" was busy on the phone calling clients to answer their questions. Since no notice was given in advance the questions were numerous and expressed real concern given the move and the rapid decline of the market. Suddenly Nelson was called in to meet with the manager. He was informed that a court injunction ordering them not to contact any of the former clients of the Bank had just been issued.

John was confused by the court order as it was typically the practice of the industry that brokers do change firms and take accounts with them. However, upon a discussion with Nelson and the assistants he discovered a letter to clients of their former employer informing them that their accounts were being moved to the Switzerland Bank and that their new account executives "The Williams Team" would assist them in exercising and selling their options.
"You took the stock option accounts and sent out this letter? It has your signature on it. That is why the court stepped in and put an injunction on us. Don't sit there and tell me you don't understand what they are doing. You took their accounts. We don't have a relationship with these people and this company was never assigned to us. Now we can't call anyone unless our clients return the transfer form back to us. You think you are quite the CEO. You couldn't lead a lemming off a cliff."

Their assets peaked at $2.25 bn while Nelson was selling the book of business. On the day of the move it was at $1.5bn and declining rapidly. This court order would most assuredly take it much lower very quickly. Meanwhile the stock purchased $300 was now under a hundred along with the entire portfolio. When number of transfers were counted the total in assets was $750,000,000.

John feared that Yeat's had written the "Second Coming" for them. The "blood dimmed tides" were indeed loose and "everywhere the ceremonies of innocence" was drowned. He wished that he had finished graduate school and taught literature somewhere." Everything was unraveling.

They could no longer stay in the center any longer and the centrifugal force from the market was spinning them out above the atmosphere where this no air. Dropping double digits for a few years sucked all the oxygen out of the market. Big and small everyone would all suffocate.

Nelson called a meeting to announce that he and his wife were going to Mexico for 10 days. The teams Christmas dinner would scheduled the following week.

CH23

Barry and John headed over towards the hotel at Union Square for the Christmas dinner with the team when Barry asked him if he knew anything about a lawsuit.

"What are you talking about"? John asked.

"I overheard Nelson on the phone with Tony and he was discussing a lawsuit filed against us."

"Filed by who?" John asked impatiently. "What do you know?"

"I know it was Dave who filed it and he is suing us for $100,000,000."

"You can't be serious." His blood pressure was rising rapidly and in his state of mind all he could envision was "I am going to pick up that little shit of a partner of mine and strangle him until his tongue bursts. Let's get to the hotel and find out what the hell happened."

Nelson arrived late and very drunk. It was obvious to John that there was no point in talking to him. He was senseless and stupid. No doubt he did not want to have a conversation with anyone that night. Perhaps he thought he would sober up in Mexico and find it was all mistake. He was so drunk that he could hardly stand up.

John left in disgust and in the morning Nelson headed for Mexico.

The next morning he went to see the manager. Sitting before his expansive desk and loud personality John got right to the point. "I understand that I am being sued. Is that correct?" he demanded to know.

Surprised by the question, Tony sat up in his desk and said "yes."

"Who by and for how much?"

"You are being sued by Dave Hollins for $100,000,000."

"How long have you known about this?" John asked leaning forward over Tony's desk.

Tony backed up from the menacing look he was getting "About a week."

"A week and you, as my manager didn't think it was important enough to tell me about this?" John asked incredulously.
"Nelson knew. He said he would tell you."

John's face took on a puzzled look and he asked "He did? What makes you think he would do that?"

"Well you are part of his team" Tony answered.

"And you believe that? Are you normally so gullible and complacent when you write checks for new brokers?" You believe everything he told you without checking for yourself? You sit in here and give me $2.5 mm and not even ask me one question about myself. Over the 20 years in the business, I traveled to the same firms as Nelson and it doesn't occur to you to see if you have all the facts? If I treated a client so cavalierly, I would be sued and fired. You don't even know who I am or how many years we had a partnership and you just believe what he tells you."
He quickly adopted a worried face. "Did he lie about the size of your book of business?"

"What did he tell you?"

"He said you had $2bn in assets and did $13.6 mm in production."

"Yes that was true but now we are at $750mm and our assets and production are heading to the floor. Did you bother to read the injunction that prevented us from contacting clients after we got here?"

"No. He told me that the manager just didn't like him and filed suit because he left."

"He told you that? You can't be serious. You believe that? You mean a federal judge is going to issue an injunction because someone doesn't like us. Have you had counsel in discussing this suit with him".

"Of course. We have to provide all of you with counsel."

"Do I get my own lawyer?"

"Well no, he will represent the three of you."

"No way. I want my own counsel. Your lawyer is there to cover your ass and not mine. Besides I want as much distance I can get from Nelson's case. This is his best friend that is suing us and since you seem to take everything he says as gospel, I don't want to associated with any of you. As far as I am concerned he is a liar and a fool and you have displayed a complete and egregious unprofessional disregard for an employee that I have ever seen in 20 years in this business. Tell the firm lawyer not to contact me. I will have mine get in touch with him."

"I will deal with Nelson when he returns but from now on my lawyer is going to be all over you and your counsel. I don't intend to be tarnished by Nelson, his best friend or you. I expect to my lawyer to be included in every discussion and meeting involving me and this lawsuit."

Nelson sent the staff out on an errand and said he wanted to brief us on what was going on with the lawsuit. He started by assuring both of them that he had everything under control and was constantly in touch with Dave who briefed him on the strategy.

Nelson told John that "Dave was not suing us. His lawyers insisted that they had to include us but the suit is really against the bankers and capital market group. We have this under control and you don't need to do anything or say anything."

John got up walked over to his desk, picked up his copy of the suit and threw down in front of Nelson and said."Really. You can't read English anymore? Let me help you. That is my god damn name on the front as a defendant. It is addressed to my home. Those big numbers mean $100,000,000. Do you seriously believe that he is not suing us?" John said angrily.

Nelson defended himself by saying "I am telling you he doesn't want to hurt us he just wants the Bank to forgive his loan. I am going to his Christmas party and discuss it with him."

"You are going to his Christmas party and discuss the details of this suit with him! Where do you draw the line? Does your wife agree with this? Joh demanded to know.

"No she is upset. She is not going to go. But she doesn't understand these things." He replied.

"Oh and you do. You get a B.A degree and spend time traveling around the world with a backpack and somehow this is something you understand? If we were talking about fabric or handmade shoes, I would defer to you but we are talking about Dave hiring lawyers to sue us for not advising him to sell his stock to protect his wealth and now that he blows it all and there are no more jets and houses for him to buy, he wants us to pay for it. Honest to God, he is as dishonest as you are. Barry and I are getting our own lawyer and you better hope to Christ that they don't call me to testify against you."

CH 24

The market continued its dive and the assets shrank with every down tick. The $300,000,000 trading account lost 80% of its value and the total assets declined to $150,000,000.

The roller coaster was still heading straight down towards the ground. In 2001 the nasdaq had dropped 92% in the last 3 years to 1114 before the track turned away in another direction.

To John this was another story. Another movie one in which you could anticipate a disastrous ending. He had seen this story before but it was someone else who would die the at the end. He wrote in his journal about what he anticipated would happen.

"In this market everyone was long past self restraint and it could be only changed through destruction. You know the unseen agents of destruction are inexorably getting closer and carry with them the volatile packages necessary to blow everything away in order to start over again. Equilibrium will return someday. The end is no longer a question of "if" but of "when". Only the body count is missing.

The last scene in the movie of"The Bridge on the River Kwai" is how this will all end. There amidst an endless canopy of the jungle, the commando's make it to the bridge to place the explosives among its pilings. The detonation of the explosives in the morning when the train reaches midspan of the bridge shatters the quiet of the jungle sending a black cloud of thousands of screeching birds off into the sky. The explosions blast into splinters the finely engineered bridge, sending the steam engine with its train of soldiers headlong into ground. When the smoke clears, all you can see littered around the wreckage are the bodies of dead Japanese and British soldiers. The steam engine exhales it's last hot breath and becomes a dead relic of the war.

In the silent aftermath of destruction there is only one voice left to explain it all. From the hillside, overlooking the devastation the only voice of reason you hear is the doctors loud lamentation at the end when he cries "Madness," Yes it is all madness. I don't understand anything anymore. Good night. I am going watch the movie again tonight."

He knew this would be his fate. Being out of control was a feeling he recognized from his past. And like his past, being out of control carried consequences. Those consequences today would not be long stays at places like Alcatraz or living on the margins of society but the incineration of billions of dollars and the fear that he would lose everything and have to start over again at 53 years of age.

The rapid tempo and loud thunder of the kettle drums did not show any signs of calming down. The constant ringing of phones, meetings and business trips would not quietly come to rest. Moving millions in and out of the market daily fed an appetite that was hungry for trading activity. Trading volume poured money into the firm from the spread. It fed the institutional salesman and their large transactions. Eating at the same table where the banking and syndicate departments gorged themselves with their giants fees were the two partners whose importance in the firm rose with their income. The glass trophy's around on everyone's desk in which were encased the cover of a company's Initial Public Offering memorandum would soon live up to their names "Tombstones."

A letter arrived informing John that a new lawsuit had been filed in which the team was no longer listed as defendant's. Dave had hired a new team of lawyers who felt a more direct attack on the bankers was the shortest route to winning the forgiveness of the loan. Trying to argue that Dave ignored advice to diversify his assets might not prove a winning strategy since he had met with many brokers from other investment houses. The narrower focus of the new suit removed people and testimony that could appear unexpectedly as Dave was not a credible witness.
It was a clue that even his lawyers thought that Dave was a bit disingenuous in his sworn deposition but with a possible win or settlement on a $100,000,000 they were going to continue to control the outcome as much as they could. Since the crash of the NASDAQ left few assets with any real value anyway, it bought him time to argue his case. Regardless Dave continued to stay in his mansion and refused to sell any of his investments.

John and Barry continued to retain their own attorney to protect them because they were now entering the phase where it was going to be everyman for himself. Lies would no doubt be uncovered as the contrast of the testimony could not more stark. The amount of money lost was too great for the bank to let go and for Dave, a loss meant a return to the pedestrian life he lead before: being a general contractor.

John finally left the team. It seemed pointless to stay any longer. There was nothing left that had any value. No assets and certainly no friendship with Nelson. No amount of sentiment or nostalgia could repair the extensive damage done to their friendship and business. Neither had respect for the other and the resentment over what happened would linger for years. Instead he and Marie gave birth to a second son.

Sitting at his new desk in his empty office he looked out over the city wondering what was he going to do? At 53 with two infant boys and an 11 year old daughter he realized that 20 years of building a career was now lying like the Kwai bridge shattered on the ground. They team split $55,000,000 in assets. John's cut was $25,000,000.

Imponderable questions like how was he going to continue to pay the settlement with his ex wife now that he was making less than what he owed her was overwhelming. He had to provide for a young family. Palliatives like he was still young or still had his career gave him little encouragement. The biggest pain he felt was from the fork in his back that Nelson used at breakfast many years ago. He now understood why Nelson clutched it in his fist like a dagger.

Nelson stopped John in the lobby as he walked out of the office to be deposed by the banks lawyers and said "I just gave my deposition. They are going to call you next. You won't be long. Maybe 20 minutes so relax. I have talked it all over with Dave. I got this under control with them so you don't need to worry. They are just interviewing you as a formality. Trust me. This will end fine."

Sitting at the conference table with the two attorneys they opened with some brief questions about the timeline and circumstances surrounding John's being introduced to Dave.

After being introduced the attorney's explained the nature of the suit against them and how they were there to represent them in arbitration. John explained that he had retained an attorney and wanted all documents and communication to go through them. Since this was not a deposition John went without counsel to help them familiarize themselves with the players and time table. The lawyer on the left took the lead and said "When did you first meet Dave?"

"I met him January 1998."

"No that can't be possible because Bill didn't meet him until March when he introduced you to him."

"That's not quite how it happened. I met Dave through my friend who was the CEO in January. I met him once after that. Bill didn't meet him until the lunch we had with Dave and one of our trust lawyers in March."

"What meeting are talking about? What trust lawyer?"

"Barry and I brought an attorney out from the bank's headquarters in Boston to discuss trusts, estate planning and how to use those vehicles for diversification of his concentrated position in the company."

"How did this meeting come about?"

"It came up when I went over my pitchbook with him in his office in January. I told him it would necessary to have ideas of how to structure his holdings for estate purposes."

"What is a pitchbook?"

"It is a book that explains all the various services we provide like restricted stock sales, restricted loans, diversification and hedging strategies."

"Where did you hold this meeting?"

"In his office."

"Where is the pitch book now?"

"I don't know. I left it on the conference table in his office when we went to lunch?"

"Can you get me a copy of this pitchbook?"

"Certainly."

"Then you knew Dave for a couple months and you introduced him to Nelson and not the other way around."

"That's right. Just ask Barry. He was not at the first meeting but he attended the meeting with attorney and he will remember my introducing Nelson to Dave."

"The deposition lasted 2 hours. Upon returning to the office Nelson came by and asked him why did it take so long. John just looked and said you know. "Lawyers get paid by the hour not by the transaction. They just took their time going over details."

After Nelson left, John reflected on the fact that his testimony was going to uncover a lot about what happened that was yet to be revealed.

John was subpoenaed to be deposed under oath by Dave's lawyers. Nelson had gone first and was leaving as John walked into the office. Quickly moving through the preliminaries of a deposition Dave's lawyer went over the same timeline about when did Nelson introduce him to Dave.

John's attitude was clearly confrontational. In spite of the attorney assuring him that he no longer was the focal point of the case, John remained adversarial. He strongly resented being associated with the people in this case and told the attorney so. But he kept his opinions about the individuals involved to himself. He knew he was not there to make the case against Dave but to allow the attorney to learn what he knew about the situation which was little based on the questions he asked. It was clear to John that the attorney was uninformed rather that incompetent. John felt that if you have to represent the guilty party you better get a lot of outside corroboration or your case is going out the window.

The attorney expressed that he understood how John felt but it was necessary to take his deposition. He asked "Ok? Can we go on and get this done?" John nodded and the attorney started seeking confirmation of the timeline he had established.

Once again John had to correct the attorneys understanding of the timeline by talking about how he was introduced to Dave 3 months before Bill even met him. The first contact was Johns and Bill did not meet Dave until the meeting with the trust lawyer, Barry, Dave and John at the lunch. It was clear that this Nelson clearly had a strategy in mind as Dave's lawyer had the same story as the banks. But it was just that: a story.

"Are you telling me that you introduced him to Nelson?" John took that question as indicating that Nelson had given him the same story he gave the banks attorney's.

"Well, you are going to depose Barry. You could call the attorney from the bank or ask the CEO of the company when he introduced me to Dave but that is the timeline. The CEO introduced me to Dave and the management team in January when he joined the company. Nelson came in months later."

"Describe for me your introduction to him?"

"He recounted the whole history of his meeting Dave and when he reached the part about the meeting in Dave's office discussing the firms services for high net worth clients it altered the conversation."

"What pitch book? What is a pitch book." he asked surprisedly.

As John explained what it contained and where he left it. He could tell by the attorney's face that this information was not something he was prepared for. The timeline of John meeting Dave first was bad enough but the fact that in between the first meeting and the meeting with Nelson, John had indeed discussed options with Dave.

The attorney quickly got up and went into a glass enclosed office and made a call. John and the attorney's could clearly see that he was having a serious and excited conversation with someone. The expression on his face and the strain in his neck indicated that the conversation was about something unanticipated that came up in his deposition.
When he returned, his questions went back the very first meeting John had with Dave. John once again described the information it contained and how the responsibility of the team was to present these options to executives of the firms banking clients. He further went to tell Dave's attorney that prior to meeting with Nelson and the trust attorney, Barry and John gave a presentation of their services to other officers and employees at their at the company's headquarters. Though Dave was informed and invited to the meeting he did not attend.

Dave's attorney went over some the details about the lunch with the trust attorney then wrapped up the meeting.

CH 25

For the first time in many years things were very quiet around the office and with the team. It was no longer connected to the business they all remembered. The streets were no longer crowded as the numbers of financial people no longer found their firms growing as much and now they dug a Maginot line to keep from losing more ground. The number of clients shrank as a complete loss of value overshadowed the disappointment that somehow they would get out at the top.

On September 11, 2001 following closely on the descent of the stock market another unexpected event occurred which altered the position of an entire nation. Watching a plane fly over the N.Y harbor it likely never occurred to anyone that other than it was an odd flight pattern that something horrific was amiss. An astute trader with objectivity and dispassion might ask himself "what would happen if by chance that plane flew into a building?" Immediately he would short airline stocks, hotels and destination resorts. If he had a hint of what was to come he would just short the whole market and find cover.

People on the streets and in the buildings watched and wondered "why is that plane flying so low over the harbor and heading towards lower Manhattan.?" No one watching could imagine the enormity of what was about to happen or the bizarre circumstances that brought that jet over the harbor. Their fears were constrained by the faith that soon a corrected flight pattern would start or that somehow disaster would be averted. They were completely unprepared for that faith to fail them.

When the first plane crashed into the high floors of the world trade center and set the building on fire it was soon apparent that the horror of reality quickly superceded imagination. The financial center lower Manhattan now became the epicenter of a giant displacement.

The Twin Towers, like giant antennas which sent and received the signals and orders of trade around the world was cut in half by fire. The severance of those antenna cut off the necessary information and data to feed American industry and the collapse of the buildings created a giant burial mound for the victims and businesses that died there. Meanwhile, sitting just blocks away at the NYSE, where the heart that pumped the blood of trade, saw money evaporate in the hot dust that shrouded Wall Street. Investors now confronted two terrifying monsters. Vulnerability and fear of the future. Loss of life and money were visible on the news and faces everyday.

The images of the Twin Tower's collapsing over 100 floors into dust on the street created a new metaphor that described the new world after the markets fall: a world without America. This unexpected event brought down the closure of all the security markets. Confidence in the markets and personal safety were gone. Personal and corporate life seemed tenuous and uncertain. Liquidity dried up. Ruin and chaos was seen everywhere. Everyone was on alert but no one had any idea of what to look for or what the future would bring.

The destruction of the Twin Towers coupled with the closure down in the heart of Wall Street of the NYSE left people fearful and exhausted. Everyone knew what to expect when it reopened the following Monday. A selling panic was expected as people would stamped to hit a bid. Any bid to get some money out of the market. The exchange would do it's best to maintain an orderly market but the desperate desire to get liquid would dominate the trading. The NASDAQ moved quickly down to 1100 before the orgy of panic and selling subsided. A 92% decline in less than 3 years.

CH 26

Many of the boutique investment banks were either closing or merging into larger ones who remained well capitalized. The parking spaces in the garage underneath their building fairly emptied as the idea of paying $4800 a year to park your car became an extravagance rather than a necessity. There was little reason to be at work at 4:45 AM anymore as the banking calendar and the research calls were shrunk to match expenses with revenue.

All that was left for the former partners was the arbitration case coming up against their former employers. Dave continued to live in his mansion and though he sold some small assets to cover his expenses he seemed righteous and determined not to repay the money he borrowed from the bank. Newspaper interviews continued to portray him as a victim. Cropped pictures of him in his living room did not give a true picture of the size of the fireplace and the artworks on the wall. His wife divorced him and moved by east with their daughter. Other than Nelson who continued to cycle with him no one had heard from him in a long time.

The arbitration was the first time John had seen him in some time. Walking into the room Dave kept his distance as his attempted tepid handshake was not returned. He no longer had that look of fire in his eyes. Sitting quietly along the wall waiting to be called, John felt soiled by this whole affair. The little cheat and his best friend advisor, sitting together gave the procedures the smell of corruption. The two weaklings whose whole concerted effort this day would be to warp the truth were like "two self centered invalids consoling themselves for the loss of hope". John only had to wait a few minutes before he was sworn in to testify. The banks lawyers had him go over the timeline of their meetings and the conversation about the pitchbook but Dave's attorney quickly moved to go over his understanding of the history of the meetings between the two men.

Once again John testified about how he met Dave and the conversation in his office. Dave's attorney quickly referred to the pitchbook he had in his hand and challenged John's recollection of the conversation. John repeated that advising clients was his primary role on the team and his responsibility was to provide these services to banking clients and he had provided them to Dave. The attempt to discredit John's testimony was failing in light of his recollection and memory of conversations with Dave. He focused on the details of where they sat, how Dave looked and comments he made in their discussion. He said in spite Dave's deflections, he continued briefing him on the importance of these strategies. "I am certain of this because what you don't understand is, I don't make any money off of loans on restricted stock. I get paid when people diversify."

Finally, in frustration the attorney took another approach. So you are testifying that you made him aware of these services but as his primary advisor did you ever advise to sell some shares and diversify?

John answered calmly and said "yes I do."

He seemed surprised and asked "You do? Do you remember what you said and where when this conversation took place?"
"Of course. We were walking back from lunch at Hawthorne Square towards the waterfront. It was a sunny day around 2 PM and as we approached the corner to cross the street to his office, I turned to him and said "You know Dave you are worth $300,000,000. You have all this money.Why don't you sell some of it."

"What did he say in return?"

"He didn't say anything. We just stood there looking at each other."

"Then by his silence, you concluded that he wasn’t interested in doing anything. Is that correct?"

"Yes, that is correct but when he sold $40,000,000 worth of stock and instructed us to wire it to his personal bank account was when I knew for sure he wasn't interested."

There was a brief pause and before John was dismissed the attorney asked.

"I understand you were in the Marine Corps?" John was startled by the question as he failed to understand it relevance. That was so long ago "Yes I was."

The attorney said "Thank you. That's all we need of you." and returned to his table.

The arbiter ruled against Dave's suit with the words "extreme prejudice." Unbeknownst to John, the banks attorney's located other teams from competitors who had the same meetings with Dave. Dave gave these meetings simply to try and borrow more money and get bigger slices of IPO's. The number of perjured statements both in the deposition and the hearing were too numerous to count. Over all the appeals Dave was never to win one of them. No point along the way was challenged. He continued to press his case in the media but he is no longer living in the mansion.

CH 27

Days later, seated back at his empty desk, John reflected on what had happened. Before him was an unread copy the Wall Street Journal containing stories on yesterday's news. The message light on his phone was unlit. His shout down system was not connected. His idle hands kept busy by arranging the glass tombstones on his desk into different size pyramids. As his fingers moved the blocks of cold glass of the tombstones, he gazed out his window and watched the cold fog blow through the skeletal structure and colorless gray towers of the San Francisco Bay Bridge. He observed that it didn't matter which side of the window you were. It was cold and gray everywhere.

He wondered how could he have missed seeing what was coming into to his life? The signs were all there but he was unwilling to see them in order to extend the moment of his success. He thought about how finite and small his perspective was about the world around him and how his objectivity was absent in the face of his contentment.
Looking in any direction allowed him to see only a small fraction of the world around him. Looking at 10% of the world meant the other 90% was going by unnoticed and yet hundreds of choices and decisions, big and small were thrown in front of him everyday. He based his decisions on the assumption that he had all the information and understood what it all meant.

He could see that now but to make so many wrong decsion's after all the years he had been in the business was difficult to accept. He thought it ironic that for all his education and experience he can become more knowledgeable but not wiser. He laughed to himself when he remembered a remark that friend had said to him that he had reached a stage in life where he was educated beyond his capacity to think. The humor of that memory was quickly replaced by regret.

He now knew that for the remaining 90% that he didn't see, he needed some faith in something to make decisions and to understand the world he lived in. Life was rational and purposeful all right but that only gave him part of the picture. Literature and art was another part of it. Religion was another. But he knew deep down inside himself that ultimately it was his intellect that he truly had faith in and now it's inadequacy helped cast him down to the ground.

He sat there questioning and examining all the major decisions he had made over his life. His choice of Nelson, his first marriage and even whether he should have stayed in the Marines. He worked his way back through his life looking for events that set him in this direction. If only he had done that or done this that somehow it would have made the critical difference and the unhappy events in his life today would not have occurred. The idea of all of this being a result of his decisions and actions was imponderable. He wanted to say he was unlucky or was a born loser but ultimately he concluded that his life was the sum of his decisions and not bad luck or fate.

Sitting there reflecting on these questions, he admitted to himself about what he really wanted. He laughed to himself as he thought "It isn't faith I want: it is certainty. With certainty there are no consequences as you already know the outcome and make the right choice. But there is no certainty to be found anywhere. Everything was uncertain and each unknown outcome that he could imagine carried with it fearful consequences if he made the wrong choice.

There was one element that was missing in his musings. The attraction of risk. He ignored the role of risk in his life because if he thought too much about the consequences of losing; he would avoid taking any. He joined the Marines in time of war, built his career on the stock market, gambled on college paying off, married, had children, divorced and remarried at 50. Without taking the risks he could still be in Portland or married to Pat and not Marie.
Nelson was gone. Took his money and left the business. Now without the partnership and the large asset base it had, his value on the street was severely diminished. He had nothing that he could count on. Without a book of business, no one wants you. You are no more valuable than the new salesman cold calling all day to sell preferred stocks. John thought "I am living "The Death of a Salesman."

He saw his future in the older brokers in the office, who lived beyond the peak years of their careers. Older brokers are politely moved to a corner desk someplace on the floor and live out their book. As they get older, so do their clients until one day, both are gone. John at only 53 wondered what relevance did he have anymore? Is he the modern "Willie Loman"? He was no longer relevant and like Cookie's dog he thought he should just be taken out into the woods and shot in the head. But that was fiction. The only thing that really mattered to him now was real: supporting his family.

He knew understanding was not going to give him his money back or light up his phone with calls from investors looking for a new broker. He regretted every wrong decision in his life. He had a wife, a daughter and two baby boys. "What am I going to do now? Jesus how is this all going to turn out?" "I owe Pat $120,000 a year and now I am only making $60,000. The math was not looking good. As he sat and retraced all the decisions he made that brought him to this place in his life his inescapable conclusion was to get to work.

These were the questions he asked sitting alone in his office. He was 53. Too young and too broke to retire, too old to search for a new career. Jobs offering 50 year olds $1,000,000 a year aren't lying around waiting to be picked up. Now he knew he just had to get to work to see what the future might bring rather than try to forecast it. He knew he could not go back to the past and there was not much time ahead of him to dream about a future. What would he do? he asked himself. "How will all this turn out?"

His phone rang and he picked up a call from an old friend asking about how he was doing.

"I don't know really" he answered. "I am here. I feel like I am walking around Dresden, Hiroshima or lower Manhattan. Shells of destroyed buildings with rubble all around me. The streets are empty. No one is left. I can hear the last burst of breath from the steam engine in "The Bridge on the River Kwai."

"Yes. Yes, I know." John remarked. "I am completely self absorbed and morbidly dramatic. I read too many books and watch too many movies." They chatted for a while longer until his friend asked. "I gotta ask you. How are doing handling two baby boys at your age?"

John laughed and said "do you know every night, I lie in bed listening them wail and cry while I calculate my cash burn until I am on the street and I ask myself the question. "What in the hell was I thinking when I decided to get married again and have children in my fifties? Then my wife steps out of the shower and I remember!"