Pit Bull

by Martin Schwartz

  In a rich patrician voice, John Marion explained the terms of sale, checked to make sure his phone crew and spotters were set, and called up lot 1. There was a whir and the spindle turned. Buttersworth’s The Mayflower Defeating the Galatea (oil on artist’s board, undated, $6,000-8,000), a 7-inch × 12-inch painting of two sloops racing in a rough sea, sailed into the lights. “Five, do I hear five?” The audience leaned forward en masse for a closer look, the young tweedies murmured into the phones, the currency conversion board began converting, and the spotters’ heads started swiveling. The room was suddenly filled with a nervous energy.

  “I have six, do I have seven?” proclaimed the rich patrician baritone. “Seven, do I have eight? Yes, thank you, eight. Now, do I have nine?” The bids kept coming, but I couldn’t figure out from where. This was nothing like the American Exchange. Nobody waved their hands or shouted; bidding was done silently and very inconspicuously. “Nine, going once…going twice…. Sold!” Thwack. John Marion whacked the top of the pulpit with a brass knocker that fit snugly into his right hand. The spindle whirred, the currency conversion board clicked, and before I could finish writing down the first sale, John Marion was well into the second.

  Cliff bid on a couple of pieces in the morning session. According to the “guide for prospective buyers” section in the front of the catalog, bidding was “by paddle,” but evidently that didn’t pertain to established pros. The Fresco-Palette paddle never left his lap. He’d wink, tap his nose, pull his ear, nod his head, tug his tie, or whatever, and John Marion’s keen eye would mark each movement. I was afraid to move at all. A wink, a tap, a nod, a tug, or whatever and Thwack! two or three hundred thousand dollars would change hands. It all began to feel very familiar to me: the phones, the numbers, the board, the bids, the confirmations of the trades, the speed at which money was changing hands. This was just a cleaner, more genteel Amex, and John Marion was just a better-dressed, more refined Frannie Santangelo. John Marion made his trades with a brass knocker while Frannie Santangelo made his with brass balls.

  At the end of the morning session we went out for a quick bite, but I was too nervous to eat. Most of the lots in the morning session had sold above the estimated prices in the catalog. “Gee, Cliff, do you think I’m too low?” I asked.

  “You never know,” Cliff said. “Sometimes you gauge it just right, and other times they run right by you. Let’s wait and see how it goes in the afternoon before we start changing our strategy.”

  We were back in our seats at 1:50 P.M. At precisely 2:00, John Marion climbed into his pulpit. Thwack! Lot 151, John La Farge’s The Aesthete (pen and ink and watercolor on paper, undated, exhibited 1898, $4,000-6,000) sold for $13,000. More than double the estimate; things didn’t look good, prices were high. The board clicked, the spindle whirred, it was a merry-go-round of American art as pieces were being sold at the rate of two a minute. They were moving faster than Mesa options.

  Twelve minutes later lot 176, Road to the Sea, whirred into view. It was time to get me a Hassam. We had it marked at $200,000, the upside of Sotheby’s estimate. “Do I have 150?” purred the rich patrician baritone. Cliff pulled his ear. “I have 150, do I have 175?” Art turned to scout out the competition. “I have 175, do I have 200?”

  “It’s the Greek,” Al whispered. Cliff nodded his head.

  “I have 200, 200, may I have 225?” There was a pause. “May I have 210?”

  Cliff looked at me for approval. “Go. Go. Give’m 210,” I whispered. Cliff winked.

  “I have 210, do I see 220? I have 220.”

  “The Duchess,” Al said.

  “Go,” I mumbled. Cliff tapped his nose.

  “I have 230. Yes, 240, may I have 240, please?”

  “It’s the Greek again,” Al said.

  Shit. I couldn’t let some Greek beat me. I was about to tell Cliff to go to $240,000 when I felt Audrey’s nails digging into my thigh. “Let it go, Buzzy,” she said. “It’s not that pretty, and there’s still two bidders.” Sonofabitch. Audrey was right. We watched as the Greek and the Duchess battled it out to $280,000. Damn, these auctions were tough. It was like craps. I hated to lose, but you couldn’t let yourself get carried away.

  Seven minutes later, lot 190, Theodore Robinson’s Summer Hillside, Giverny, went for $475,000. Too rich for my blood, but the cover girl was still well within Sotheby’s estimate, and that was good. Three minutes later, lot 196, William Merritt Chase’s Shinnecock Landscape, went for $300,000, a full 50 percent over Sotheby’s estimate. That was bad. “Damn,” I said under my breath. “Hampton money, don’t worry,” said Al. “It’s a sentimental buyer. They overpaid. Get ready.”

  My heart was pounding. 201, 202, 203. Thwack! Click. Whir. “Lot 204, Maurice Brazil Prendergast’s The Garden, watercolor on paper,” chanted the rich patrician baritone. “140, may I have 140, 140, may I have 160? Thank you, 160, now 180, please. May I have 180?” Cliff nodded. “180, thank you, now 200, may I have 200? I have 200, 220, please.”

  “It’s that Philadelphia gallery,” Al whispered. “Could be for themselves, or for a client. I can’t tell.”

  “I don’t give a shit who it’s for. This baby’s mine. Go, Cliff.” John Marion looked at Cliff. Cliff nodded.

  “220, may I have 240?” There was a pause. “A fine Prendergast, may I have 230?” John Marion was looking to the back. “Thank you, 230, now, 240, please.” He came back to Cliff.

  “Still Philadelphia,” Al said. “No other bidders.”

  Cliff looked at me. I looked at Audrey. She nodded. “Go,” I said. Cliff tugged his tie.

  “240, may I have 250?” The catalog was open on my lap. I buried my head in my hands and looked down at the Prendergast. It sparkled back up at me. Please, Pleeease be mine. “240. Going once…going twice…. Sold.” Thwack! I bolted erect. I mean, this was the biggest rush I’d ever had in my life. I leaned over Al and hugged Audrey, shook Al’s hand, turned around to shake Cliff’s hand. It was like when Hayes and I used to do the mashed potatoes. The people in the seats behind us were congratulating Audrey and me. Not bad, for $240,000 (plus Sotheby’s vigorish of $24,000) we were in the club.

  Thwack! Holy shit. I’d forgotten that we were still in the auction. Lot 206 had just sold, and Frieseke’s On the River was on the block. Audrey gasped. “It’s gorgeous.” She had missed the previous night’s exhibition and had never seen the real painting before. “Get it! Get it!” she ordered.

  Well, I was a good marine and now I had my marching orders. “I have 240, may I have 260?” Cliff started twitching and tugging. “270, now 280, may I have 290?” “Get it! Get it!” I said. Cliff was bouncing around, pulling various body parts like he had Tourette’s syndrome. “Once…twice…. Sold!” Thwack! That was it, we owned On the River. I could feel people slapping me on the back, congratulating us on another fine buy. This was unbelievable. $290,000 (plus $29,000) and $240,000 (plus $24,000). I hadn’t spent this much money so fast since I’d bought the co-op.

  Six months later, Fresco and Palette came to see me. “Buzzy,” they said, “we have a proposition that might interest you. We have a major collector who wants to buy your Vonnoh. He’s willing to pay $700,000, which we think is a very good price for a Vonnoh.”

  “Me too,” I said, since we’d paid $400,000 only nine months before. A 75 percent profit in nine months made sense to Audrey and me, so we sold Jardin de paysanne to the major collector, and it now hangs in the Musée Americain in Giverny, France.

  Over the years we’ve sold a few other paintings through the Fresco-Palette Gallery when the price was right, and on one level, good art has to be considered as an investment, a commodity to be bought and sold just like any other financial instrument. Sotheby’s and Christie’s know that, and thousands of dealers like the Fresco-Palette boys know it. They’re the ones who make the market. But on another level, art goes way beyond just being an investment. I know who’s owned a painting before I bought it, unlike a bond, or a security, or a future,
and I like to know where it’s going if I sell it. The difference is emotional, moral.

  My paintings are guests in my home. I wake up with Ernest Lawson, I dine with Frederick Frieseke, I read with Winslow Homer and Childe Hassam, I sit with Maurice Prendergast, William Glackens, and Mary Cassatt. As my mother knew long ago, they teach me things that I could never learn in Eddie Cohen’s basement, or on the floor of any exchange, things like civility, humility, and humanity. They teach me that making money is not the most important thing in the world. They make me a better person.

  After several years at the co-op on Park Avenue, I was elected to the board of directors for the building and soon after that, I was made president. I had just taken office when I got a call from a man who’d lived in the building for over twenty years. “Mr. Schwartz,” he said, “may I come see you?”

  We sat down in my living room. “Mr. Schwartz,” he said, staring down at the floor, “things have not been going so well for me. I’m sure that over time, I’ll be fine, but for now, I’m afraid I can’t make my monthly maintenance payments.”

  At first I didn’t know what to say. I couldn’t believe that anyone who lived there wouldn’t be able to pay their maintenance fee. Legally, I could have him declared in default and eventually forced him to sell out to meet his debt. That’s what the board had said it would do to me seven years earlier, but I was a street kid from New Haven, I wasn’t a member of the club. When they have the power, they skewer you; when you have the power, you show humanity because you’ve been skewered and you know how it feels.

  “Look,” I said, “you’ve been here, what, twenty-five, thirty years? Take your time, get your affairs in order, and don’t worry about your maintenance fee. I’m sure that you’ll be able to work out of this and be able to pay it eventually, and we’ll carry it for a reasonable period of time.”

  He was very relieved and as he got up to leave he paused a moment to look around the room. By that time, the art on the walls was worth more than the apartment. “You have a very fine collection,” he said.

  “Thanks,” I said. “We like it, and it’s nice to have hanging around, you know, just in case something happens.”

  Big Shots Make Big Targets

  When you’re trading, it’s important to have your guns on. You can’t be wandering around the Street unarmed, and if you don’t know the terrain, you’re going to get killed. That’s why I spent so much time working on my methodology and reconnoitering the floor of the Amex with my friend Hayes Noel before I started trading. Unfortunately, I forgot this rule on one of my trips to the Windy City.

  In the spring of 1987, Audrey and I were six months into collecting art and we were having a ball. When Al Fresco and Cliff Palette told us that for a reasonable donation they could get us an invitation to the opening of the Windy City Museum in Chicago, I grabbed my checkbook and pulled out my pen. The founder of the museum and his wife were major collectors of American Impressionists and the opening of their museum was going to be one of the big art events of the year. It was black tie all the way and muckety-mucks from the art world would be flying in from all over. I sent off my check and shined up my alligator shoes. I was going to the ball.

  We checked into the Drake Hotel the night before the opening and since I had nothing to do the next day, I decided I’d go over to the Merc and visit with my clerk, Debbie Horn. For the past five years I’d been one of the biggest individual traders in S&P 500 futures, but I’d never been to the S&P futures pit and I figured it would be fun to watch the boys trade. I took a cab over to Wacker Drive, Chicago’s equivalent of Park Avenue, and got out at The Chicago Mercantile Exchange Center. I looked up at the twin forty-story towers clad in granite and thought to myself, I own this place!

  I strode up to the membership desk. “I’m Marty Schwartz. I’m a member. May I have my badge, please.”

  I expected the girl at the desk to snap to attention when she heard the name Schwartz, but instead, she gave me a blank stare and said, “How are you spelling Schwartz?” Well, what did she know? She wasn’t part of the action. Wait until I got to the floor. Then we’d see some heads snap.

  I walked onto the floor sporting my Armani suit, my Bally alligators, my shiny badge. Holy shit, the place was huge! It was as big as a football field and I had no idea where to find Debbie. The market was open and everybody was moving at a frantic pace, running this way and that. It looked like Grand Central Station at rush hour. I needed help so I tackled the first runner who came by. “Hey! I’m Marty Schwartz! Where the hell’s the S&P futures pit?”

  “Hey! Who cares! It’s over there.” He waved aimlessly at the crowd and kept moving. I started to make my way across the floor. Raised octagonal platforms with steps descending toward their centers were all around me. These were the pits. People were yelling, waving their arms, frantically giving hand signals, trading by the “outcry system.” Palms in to buy, palms out to sell, fingers waggling bid or offer prices. “Six bid for ten!” “Give me a quote on June bellies?” “I need September lean hogs.” I was in meats. I kept wandering.

  “What’s the offer on the forward Swiss franc?” “Thirty deutsche offered at eighty-five.” “What the fuck’s going on with the peso?” I was out of meats, into currencies.

  “Eighty bid for five Junes!” “Ten Septembers offered at ninety-five!” Finally, something sounded familiar. I looked up at the screens.

  Open

  High

  Low

  Last

  Chg

  June

  286.50

  289.30

  286.50

  289.15

  +2.65

  Sept

  288.60

  290.90

  288.40

  290.60

  +2.15

  Dec

  290.50

  292.25

  290.40

  292.20

  +1.70

  I’d found the S&Ps.

  Debbie wasn’t hard to spot. There weren’t a lot of women on the floor of the Merc. She started to introduce me around and much to my delight, heads began to snap. It was like Billy the Kid had come to town. “Hi.” “How ya doin’?” “Nice ta meetcha, hearda lotta boutcha.” “This your first time at the pit?” “Wanna do some trading?”

  What could I say? I’d been blasting the S&Ps like nobody else for the last five years. I was the quickest draw in the west, and now the boys wanted to see me in action. “Sure, let’s go.” I moved next to Debbie. According to the rules, I wasn’t sanctioned to trade in the pit, so I’d have to place my orders through Debbie and her clearing firm.

  The market was really hopping and immediately I realized that I was in trouble. I’d forgotten to strap on my guns. I had no charts, no Quotron, no moving averages, oscillators or stochastics. Here, everybody was getting ready to draw on me, and I was standing out on the street naked. The only feel I had for the market came from the shouts and the hand signals coming from the pit, and I could hardly understand them. From what I could hear and see, the market was going up, but it seemed to be cresting. “Twenty bid for five,” some pimply-faced kid across the pit from me hollered. “Come on, Schwartz, you here to look, or you here to trade?”

  Fuck you, touchhole, I muttered under my breath. A lousy five lot. “Debbie! Let’s whack this punk. Fifty! Fifty offered at twenty!” If he was going long, I was going short.

  A chorus rang out across the pit. “Sold! Sold! Twenty bid for fifteen.” “Twenty bid for ten!” “Twenty for twenty more!” “Hey Schwartz, give us some more.” “Yeah, c’mon, New York. Show us what you got. Twenty bid for twenty more!” “Schwartz, ya wanna try some Septembers? Sixty bid for twenty!” Damn! What the hell was going on here?

  The next hour was as painful as an hour can get. Stubbornly I persisted on going short, but I was firing blanks. The market never looked back. When I was down $90,000, I covered and called it quits. As I crawled out of the pit, one old trader yelled to me, “Hey Schwartz! Come bac
k again! You’ve been taking our money over the phone for years! We like to take yours in person!”

  I went back to the Merc in 1989, but I declined to trade. I’d learned my lesson. Don’t get in a shootout if you’ve left your guns at home. The markets are no place to be trying to impress people. The only way to impress anybody is to stay on your toes, be consistent, and trade within your means. Between my donation to the Windy City Museum and my trading, being a big shot in Chicago had cost me $100,000.

  11

  Going for the Gold II

  The most commonly asked question on Wall Street is, “Where were you on October nineteenth?” On Monday, October 19, 1987, I was long and I was wrong. If I had it to do over again, I’d still be long, and I’d still be wrong.

  It was the roaring eighties. Ever since Paul Volcker bailed out Mexico in August of 1982, the market had been on the rise. During those five years, the Dow Jones Industrial Average had climbed from 790 to over 2600, a gain of 230 percent. In the first nine months of 1987 alone, the Dow had risen 650 points, or 33 percent. Wall Street was like Pamplona, everyone was running with the bulls. I was up $8 million for the year, and making money was so easy that only a fool would think it was ever going to end.

  I was up to my eyeballs in stocks and getting bigger. I was so confident that I took Audrey, Andre the tennis pro from Westhampton, and Gaby, his wife, to Paradise Island for the Columbus Day weekend. The markets stayed open on Columbus Day, but a lot of the Mediterranean types, the Jews and the Italians at the Amex, took the day off. It was the Northern Europeans, the Wasps and the Irish over at the Big Board, who kept the market going on Columbus Day. But in eight years, nothing had changed. I still couldn’t take a vacation. While Audrey, Andre, and Gaby sat out under the thatched bar at the Ocean Club drinking piña coladas, I got on the phone and started trading. “Buy me another ten thousand Tenneco. What? You think Tenneco is going to be taken over? Then buy me another twenty thousand. Buy! Sell! Hold! Audrey, what time does the casino open?”