Also, the principle of buy and hold presupposes a mature market whether applied to equities or to partners. In a different time one might have assumed that most people who participate weren’t rash, ignorant or crazy. In the year 2000, when every supermarket checker and fry cook had an online trading account it was easy for anyone of middling substance like me to take on the confidence of an elder statesman. While in 1998 I might have been buying shares of AT&T or Johnson & Johnson whose prior owners might have included retirement funds and college endowments, in 2000 I could buy shares of a new technical incubator company that were previously owned by a Hollywood talent agent whose considered reason for selling was for a down payment on a Lamborghini. Conservative money managers would no doubt consider him a greater fool than me. I had a feeling of opportunity probably akin to that of a young capitalist in perestroika Russia at the awakening of the free markets. To those without vision who said at the time that the 2000 tech market was chimerical, I would say, “What isn’t?” In 1999 the NASDAQ shot up 86 percent from January to December. Meanwhile some old-schoolers wondered how Cisco ($12 billion in sales and $2.1 billion in profit), for its fiscal year ended in July, could have a market capitalization as big as Exxon Mobil and Wal-Mart Stores combined ($350 billion in sales and $13 billion in profit).
There was a simple retort to the few remaining investment Luddites: Cisco and its techno-kin companies were growing at rates not seen since the beginning of the industrial revolution and one could no longer compare them to any classical model. History was simply not a useful guide. Cisco had a mere $183 million in sales and about $40 million in profit in its 1991 fiscal year. Analysts predicted that by 2001, one decade later, its sales would be close to $25 billion and its profit better than $4 billion, a hundred-fold increase.
One didn’t need to be a financial analyst. Investing in the market just required a willingness to understand and embrace the logarithmic nature of the rate of advance of technology. As proof of my point, the relatively conservative investments that I had made were bearing plump and delicious fruit. My JDSU had me worried when I bought it at $192, but it split again in the beginning of March and was now selling at $124 for a split share. I had made about $8000. Qualcomm, which I had purchased at $612 only a month earlier, had risen smoothly to $736 and then split at four for one. The diluted shares quickly rose to almost $200 and because of the leverage of my margin purchase I was up a quick $10,000 on just this one trade.
Trying not to be giddy, I decided that if the market were to show any signs of weakness, I would pull out my profits and buy a ten-year CD for Caleb’s college fund. God knows how much Yale or Stanford would cost in 2016. Although I believed that in the long term the tech revolution would continue to buoy the market upward, I also considered that the market might get ahead of itself. I resolved to remain vigilant.
I bought True a small lapis pendant on a gold chain. Other than her wedding ring I had never bought her a single piece of jewelry. I had gotten her sweaters and a bicycle and flowers and other things, but jewelry was off our radar. For my taste those baubles had once seemed too small and too expensive. I saw the pendant in the window of an antique store on Montana Avenue when I was walking by. It was in an Art Nouveau style, which I knew True liked, and was striking with a shiny black background. It was a nice feeling to know that I could afford it. I walked in and asked the clerk to gift-wrap it without even mentioning the price ($600), as if I were some movie star or CEO. In return for my diffidence I was treated discretely and deferentially. It was exhilarating.
I presented my gift to True at breakfast the next day. She opened the box and her face lit up. I helped her put the chain around her neck and she streaked to the mirror in the front hall.
“It’s gorgeous. It’s just gorgeous.”
“I’m glad you like it.”
“This isn’t about anything, is it? I mean you didn’t do this because something’s wrong.”
“Of course not.”
“You’re not doing this because you’ve taken on a mistress?”
“You are my mistress.”
“I know this was expensive.”
“It’s all relative.”
“To what?”
“How much I have and how much I love you.”
“And…”
“I love you a lot, and we’ve been doing well in the market.”
“Well, I didn’t do anything. You did all the work.”
“Yeah, my back is a little sore.”
“I am a little worried. If you’re doing well, then you should put that money aside for our future.”
“I will. I am.”
“You swear.”
“Of course I do.”
That was my plan. To put the money aside for our future. No matter how much I made in the market. I didn’t want anything to change. I wanted to continue working. I wanted True to be able to continue teaching or raise Caleb or both if she chose. I just wanted the security to be able to make decisions that weren’t driven by money. How much money would be enough? We are not talking Malibu beachfront property and Ferraris. Just enough to know that things will be covered and that Caleb will never have to take care of us in our old age. I had a rough figure of two million, which could then be put into tax-free bonds and annuities. I didn’t mean to stay in the market long term. I never had the hubris to think that I could win forever. A bull market can’t last indefinitely. And that was why it was so important to act right away.
Peter Lynch, the celebrity fund manager and investment guru who drove the Fidelity Magellan fund to angelic heights, advised individual stock investors to buy businesses they understand. If your supermarket chain gives you better service than the other markets, perhaps you should buy some of their shares. If you think General Motors has a good-looking new lineup of cars, buy stock in GM.
Frankly, despite my newly minted expertise, Qualcomm and Cisco were difficult businesses to understand. Qualcomm made chips that had something to do with cell phones and communications. I knew that cell phones needed their chips. Cisco made routers. I knew routers are required for the internet, but I couldn’t tell you why one router was better than another or that another company wouldn’t come along and make a better router than Cisco and take away their business.
JDSU was another story. It built fiber-optic cabling for high speed data connections. Having swallowed up a dozen smaller companies in the last year they were the largest fiber optic company by far. As the internet continued to explode, the inevitability of the need for more bandwidth that could only be supplied by a new infrastructure of fiber optic cabling was a simple model to understand. Copper phone lines were incapable of handling that inevitable volume of traffic. Nobody else had the technology or the capitalization of JDSU. Everyone would have to come to them.
JDSU had traded as high as $137 after its last split. It was backtracking a little bit now and selling in the high 120s. This was clearly a good time to buy. With fifty thousand dollars invested I could control eight hundred shares.
I didn’t want to make this big a step without informing True, though I was concerned that discussing it with her would make her uneasy. I would need her to cosign the withdrawal. I asked in bed that night. She had a book out and was preparing for her class the next day.
“I want to invest some more.”
“Okay.”
“I want to invest fifty thousand from the account.”
“You mean fifty thousand besides what we’ve already invested?”
“Yes. I think we’ve done really well, but this is a good chance to get some money to put aside for Caleb’s education.”
“What if we lose it?”
“I don’t think we will. But it’s possible we could lose some. There are risks.” Full disclosure was important and it helped to bind my own anxiety.
“That’s a lot of money.”
“I know.” True doesn’t respond and I fill the dead air. “But I wouldn’t do this if I didn’t think it was a good
thing.”
Another long pause and then she replied.
“Can I think about it?”
“Sure. But I do have my eye on one stock and timing is important.”
“Okay. Just let me think about it in the morning. Will you take Caleb to preschool? I have to meet with a student before class.”
“Okay. Do you want to know more?”
“No. I trust you. I just want to think about it tonight.”
In the morning Caleb woke me up by jumping on the bed and giggling. True passed through the bedroom already dressed for school.
“I’m off. I want to beat the traffic. And Caleb needs breakfast.”
“I want a waffle,” said Caleb. The world started to come into focus for me.
“What about what we talked about last night?” I asked, hoping she hadn’t forgotten.
“Okay.”
“Okay what?”
“Okay do it. I trust you.”
“That’s all?”
“I don’t know anything about the stock market and I guess that’s because it really doesn’t interest me. Half the faculty can’t talk about anything else but how much money they’ve made in the market and sometimes I do feel a little jealous. I think you have better sense than any of them and I think you’ll do fine.”
“Do you want to know any more about it?”
“Just shower us with money. I have to go.”
“I need you to cosign a check from the nest egg account.”
“I have to go.”
“I might want to buy today.”
“I’m late. Sign my name. If you give him a waffle, make sure he eats fruit.”
I can sign her name pretty well. I have probably done it a dozen times, always at her behest. True gave me a peck on the cheek, picked up Caleb for a big hug and a smooch, then grabbed her briefcase and disappeared out the door.
I made a toaster waffle for Caleb and put a cut-up orange on a plate. I also made him drink his milk. I had raisin bran. While Caleb waited for me at the door I pulled the Wells Fargo checkbook out of the desk and wrote a check for $50,000 to Seymour Schein Investments, signing first my name and then, using a cancelled check with her signature as a crib, signed True’s name. I took Caleb to preschool and drove from there to the Seymour Schein Investments office in Century City where I deposited the check in my trading account, handing it to the woman behind the desk as if I handed out $50,000 checks all day. In turn she acted like she received them all day, scanned the bank code in a little reader and then entered the amount into her computer and gave me a receipt.
When I arrived at work I closed the door to my office and pulled up Schein on the computer screen. The Wells Fargo check had already been credited to my trading account. I searched for JDSU and found that it was trading at $125. That was a midpoint in its trading range from the last week, but overall it had trended down from its $135 plus range the week before. The stock was slightly depressed. The stats gave no indication why it was down but there is a tidal rhythm to stock prices.
My fear at that moment was that I might have hesitated too long. The trading day in New York was already half over. The ticker showed it selling at $126¾. I could buy it at market, which is ten dollars under yesterday’s trading price, or I could try to eke out a few more dollars by specifying a good-until-cancelled lower price. If I was a day trader turning over huge volumes and making several trades a day, a dollar or two saved would be important. As a mid-term trader it wasn’t as crucial. Nonetheless I decided that since it was True’s and Caleb’s money and I shouldn’t be cavalier with it, I put in a good-until-cancelled order for 800 shares at a maximum of $122, a healthy, perhaps wishful, discount off the current ticker price. I half-expected it never to go down that low. Then I waited, trying to pay attention to my several messages from clients.
Immediately I wondered if maybe I should have just bought it at market price. What if it shot up to two hundred in another two weeks and then split again and I never bought in? My parsimony could cost me thousands. What if there was a piece of unexpected good news about JDSU on the ticker? It would climb from here and never get to $122 again. I logged into my account intending to mend by cheapskate ways, but at the very moment I logged in, my email dinged with a message from Schein. Its header was “Order Filled.”
I navigated to my account and saw that indeed the buy went through at $121 7/8. The good news was that I had owned it even cheaper than I had hoped. The bad news was that the stock had been moving downward so quickly that there wasn’t enough of a pause on the way down to peg it at my $122 price. There were two and a half hours left in trading today. During that eternity I watched the stock travel down to a truly frightening $114 at noon and then move incrementally back up until at the closing bell it was $122¼—up twenty-five cents from purchase. Most importantly it closed while on the move up. That momentum was likely to continue at the opening of the market tomorrow.
But I tempered self-congratulation with humble resolve to be content with what fortune brought.
Chapter 13
The quality of the morning light in Santa Monica is defined not only by the stillness of the air before the sea breeze kicks in, but also by the angle of the sun. Fine particles of dust float undisturbed to subtly refract and reflect the golden early sunshine. I especially like the way it filters through the window onto Caleb as he eats granola with milk and peaches at the little table. I watch him from the kitchen where I engage in one of my favorite child care rituals—making him a sandwich for lunch. This is one of Caleb’s several favorites—cheese and cranberries on whole wheat bread with a daub of sweet honey. I slice it, place it neatly inside a clear plastic sandwich bag and add it to his lunch box along with carrot sticks and a cup of yogurt.
I hustle him into the Volvo and take him to Jefferson School, collecting a sweet smack on the cheek before leaving him. It’s Thursday and True will pick him up later. It is two hours until the thrift stores open, and I kill about an hour at Starbucks near the marina. Bicyclists tend to congregate there because of its proximity to the bike path, and I look forward to eyeing athletic young women in Lycra shorts. Of course it makes me horny, and that makes me think of Angela. I should wait for her to call. I know that if I can be patient there will be a voicemail in her little girl voice asking me what I am up to. I try not to call. It is better if I wait. I dial anyway. And then Angela’s receptionist comes on the line.
“Westside Accounting Services. This is Stacy.”
“Hi Stacy. It’s Mitchell. Is Angela available?”
“Hi Mitchell. I’ll see.” I hear Sex in the City in Stacy’s tone when she answers. Even though she’s just eighteen and a student, I think Angela tells her saucy details about us. I imagine Stacy now holding up the phone to Angela, wiggling it and grinning, silently mouthing my name.
Angela has probably also confided to Stacy that Angela’s ex-husband could never get her to orgasm. In fact, in the last year of her marriage, Angela’s husband couldn’t have an erection unless they went to a sleazy motel and watched porn first. Their marriage counselor essentially threw up her hands at the problem. Angela and Mr. Limp-Dick separated a year ago.
Since meeting me, Angela has been singularly orgasmic. Which is to say that she has one big orgasm, and then, like a drunken john, she flops over, panting and spent. I, however, need to work harder for my orgasms. I would say my average with Angela is the same as the median outfielder’s batting average. But Angela is tall and sleek and athletic and beautiful. She does crunches at Gold’s Gym for at least two hours a day and her stomach is flat like a teenager’s, her butt is delectably tight, and she has firm, natural apple breasts.
“Mitchell. Don’t you have other, important things you should be doing?” she teases.
She made the initial contact to me online from Match.com. Frankly, I was surprised. In her picture she was hiking with her dog on a trail at the top of Mulholland Drive. She had a bright smile. Her bio said that she likes the outdoors, Disney Hall
and ethnic restaurants. What she neglected to mention is that she is clinically, pathologically, irretrievably passive-aggressive. It was a mistake for me to call first today. I will pay.
“I mean sometimes it is disturbing to me that you are so available.”
Why do I subject myself to this transparent aggression? I think you can guess.
“I could try to make myself less available if that would please you.” I sensed she liked it when I parried.
“I would always want you to be honest with me.”
“Would you know?”
“With you, Mitchell, I would know.”
“Do you want me to bring anything tonight?” I ask, desperate to neuter the course of talk.
There is a long pause. As if to imply that she had forgotten, but I know her game. She hasn’t forgotten. Space in talk is power for her. It is, however, my kryptonite. She out-waits me without half trying.
“It’s Thursday.” I can’t keep myself from saying.
“Of course I know it’s Thursday. It’s ‘big O’ day. I have it on my calendar. There’s an ‘O’ there. It’s a big one.” She is drawing me in with her charm preparing to land the sucker-punch. I try to forestall it.
“Do you want me to pick up something on the way over?” I often choose ingratiation as a weapon. There is some paradoxical power in that. I know already that she’ll give me dinner, and she likes to take care of everything herself. Afterward we will together satisfy her needs and perhaps mine.
Some Books Aren’t for Reading Page 11
