Saul Cohen’s office was in a small brown old building of almost colonial vintage that squatted cringing next to one of the tall Wall Street slabs checkered with glass, steel, and concrete—a nondescript new structure of the kind he had once heard Elliot Judd scorn: “I don’t intend to be put in a box like that until I’m dead. This city complains of vandals and they’re tearing down historic buildings to make room for that!” The new buildings weren’t even ugly; they were only boring, as inhuman as digital computers, and as cold.
But Saul Cohen inhabited the overshadowed little building next door. It was a dark, pleasant place, carved and ornamented, with aged woodwork and a brass-cage elevator that took him slowly but comfortably to the third floor. The office was small but homey and elegant—there was an elaborate Tabriz carpet swirling with vivid birds and animals, an Etruscan figurine on a wooden pedestal, and beyond a walnut rail fence with a swinging gate in it, an old man sitting at a huge antique desk in the corner.
Saul was the room’s only occupant; the secretary’s desk was unoccupied. There were tickers and a Quotron; phone wires were tangled on the old man’s cluttered desk.
Saul got up from his chair spryly. “Russ, my boy.” When the old man grinned, his eyes wrinkled up until they were almost shut. He walked forward to the rail, held the swing gate open, and shook hands. “How are you? Come and sit—come and sit.”
“I was hoping I’d catch you here this early. But if I’m taking up work time—”
“Nonsense. For you I make all the time you want. Sit.”
Saul Cohen was a crickety, bookish, gentle little man with a harsh simian face, tangled eyebrows, prominent nose, gray hair cropped close to the little round skull. His voice was rapid, scratchy, impatient. His expression, painted on indelibly, was that of a man who smelled something distasteful; it made his face seem a repository for the anguish of the ages. Hastings had never been able to look at that suffering face without seeing the old man as torment personified.
He took the proffered chair. “I need some wisdom.”
“That I don’t sell. Only stocks and bonds. I made a couple of good trades last week in your account and your father’s. Do you need cash? Is that why you come to me with such a long face? To ask me to sell your investments for cash?”
“Nothing like that.”
“I’m happy, then. But wisdom? The wisdom of a learned man cometh by opportunity of leisure: and he that hath little business shall become wise. Ecclesiasticus, thirty-eight: twenty-four. What can I tell you? I’m a businessman all my life. I’m seventy-six years of age, and I’m still working, only because what else do I know how to do? I never learned the wisdom of spending money, all I can do is play the game here. I own a seat that’s fifty years old, I bought it for a few thousand, and now it’s worth a small fortune—what can I tell you?”
“You can give me the impossible, Saul. A Wall Street education in one lesson.”
The old man smiled gently. He was a Wall Street gadfly, a keen-eyed gnome with a clever mind salted away behind his indulgent cracker-barrel philosophizing. He said, “Instant knowledge. What everybody wants nowadays. Ah, my young friend, you’ll never get that outright. But what you can get, if you’ve got the right brain, is two here and two there, to put together with the two you’ve already got, to make six. You’ve gone to work for the Securities and Exchange since I’ve seen you last.”
“That’s right. Word gets around, doesn’t it?”
“As I said, I keep in touch. Besides, I’ve known you since you were so young you’d be embarrassed to be reminded. I actually did bounce you on my knee. Naturally I’d be interested to follow your career.”
“Such as it is,” Hastings said, smiling. “My problem’s an odd one. I’ve picked up vague hints that something may be going on out of sight in the market. But I’m too new to this business to be sure of myself. The problem is—”
The old man held up a hand, palm out, and grinned, full of mischief. “We will wait to hear what the exact problem is. You come to me as a neophyte, and the opportunity to lecture is too great for me to pass up. I will tell you about this Street, and then you will ask your questions.” He settled back, steepling his fingers, with a deep breath and a manner that instantly identified him as an in-training long-distance talker. Hastings smiled fondly. Watching Hastings from the pained depths of his eyes, Saul Cohen said, “Do you read Freud? No? You should. Freud observed that Galileo removed the earth from the center of the universe; Darwin removed man’s uniqueness, and made him but a link in a chain; and Freud himself removed the illusion that a man is his own master. But most of us still cherish that illusion—and you see evidence of it here in Wall Street. Everybody thinks he can control his own destiny by working out a logical investment policy and making himself a millionaire overnight. They make a mistake, of course—they should read Freud. There’s no such thing as a logical man, there’s no such thing as a logical investment policy. The market isn’t any more logical than the men who make it. It operates out of greed, fear, rumors, hints, intuitions—and for your first lesson I can tell you that selecting investments by throwing darts at a list of stocks is the best method of beating the market. You see?”
Hastings began to smile, but Cohen shook a knobby finger at him. “I meant it seriously, young man—it’s quite true. It is a plain bare fact, beyond argument, that more people lose than win in the stock market. If you buy one share of every share listed, across the board, you’ll end up losing. To be specific, you’ll lose about seven and a half percent on your investment. Because in the end all we do in Wall Street is shift piles of manure from one corner of the barn to another, and we brokers charge a commission for the service of shifting it back and forth.”
“But facts like that don’t matter to the public. They see a stock start to shoot up, and they don’t own it, so they get greedy and they buy. Profit fever—they start to think of themselves as manly cannibals in this meat market. The fact is, they’re jackasses, following carrots on sticks. All you’ve got to do is keep them supplied with carrots.”
The old man’s face crinkled in an anguished smile, and he spread his hands in an ancient old-world gesture. “Guilt. In the old days society was work-oriented and success was a measure of denial, self-sacrifice, thrift, hard work, all virtues. Big money used to be the symbol of that kind of achievement—remember Horatio Alger? Wealth was a reward for courage and clean living and hard work. Now wealth is only a symbol of your ability in choosing an accountant smart enough to allow you to dodge taxes. Today money is a prize, not a reward. People play the market because they’ve learned you don’t need to work—you only need luck. They’re out to get something for nothing. They’re gamblers—and they feel guilty because deep down they know they ought to be leaning over a hot sledgehammer to justify all the money they’re trying to make. They’re hagridden with anxieties and guilt—and we’re back to Freud.”
He shook his head in pain. “The human race is the constant victim of congenital idiocy. I have pointed out for fifty years to my clients that a fool and his money rush in where angels disdain to tread—what is it after all but money? Money! Money is useless, literally and actually. If it wasn’t useless you couldn’t use it for money. You see? So money is an abstraction itself, but the stock market is an abstraction once removed—we don’t even work with money, we work with paper arithmetic. We print paper and call it stock, and hang it on the hook end of a line and see if anybody swallows it. Money? It’s not what you have that makes you rich nowadays—it’s what you owe.”
The old man took a breath and began to talk again, but one of his phones rang and he reached for it. Hastings sat still, amused and entertained. The old man’s surgical wit was a good counterpoint against his own feeling of dull lassitude; he enjoyed listening to Cohen’s darting rapier talk.
Cohen finished his phone conversation and turned back to him. “You want to learn about us—you want to learn what the stock market is. You can’t do that, you know—nobody
can say what the stock market is. The only thing that can be described is what it was. The only way to anticipate the market is to know how all the people in it are going to behave, and no man alive can do that—oh, I know the big portfolio houses are using computers to analyze the market and make forecasts, but no computer can give an accurate answer on the basis of incomplete inputs, and who can program a computer with every vagary of human neurosis that may affect the market tomorrow? It can’t be done.”
Cohen showed a gentle smile, his face a labyrinth of creases. “This on the phone was one of my oldest clients, a lady who’s been with me forty-one years. We’ve seen a lot together in that time. I almost feel we were around to see the first bulls and bears gather beneath the buttonwood tree on the old Wall Street, where all this madness got its start. I do remember some of the panics after the war—the First World War, that is. I moved into this very office in nineteen-nineteen, and I’ve been here ever since. Of course I have vivid memories of Black Thursday. October the twenty-fourth, nineteen-twenty-nine. The big fellows had gone to the well once too often, and confidence was cracking all over—you’d be amazed how many of us did see it coming, and got out well ahead of the crash. I was out of the market entirely by the end of September, and then I just sat back and watched. You could hear the bear traders’ artillery start to rumble, and the news spread like wildfire—the specialists on the floor were forced to execute whole notebooks full of stop-loss orders at a rate so fast it dumped millions of shares on the market. I was in the arena that day, and you couldn’t believe it. The floor was flooded up to my eyebrows with paper that got cheaper by the minute. Everybody decided to sell, and of course when that happens, there is no market any longer—no such thing as a market, just a junkyard, a dumping ground. And as prices go down, people who hold stock on margin are forced to sell into the new lows to pay off their margins, and that pushes prices down even faster. Once a crash starts, you can’t stop it. Of course, we all pretend Black Thursday was the big one, there’ll never be another like it, but it can happen again, and it very well may. On the twenty-eighth of May in nineteen-sixty-two we had a crash with a paper loss of twenty-one billion dollars in one day’s trading—that was double the loss of Black Thursday, it was the greatest dollar loss of any single day’s trading in the history of Wall Street. There was nothing your SEC boys could do about it—there never will be. And in the meantime we’ve got stocks selling at a hundred times earnings, new issues skyrocketing within twenty-four hours of going public. Do you know what ‘one hundred times earnings’ means? It’s like buying a building for one thousand dollars and being forced to rent it out at ten dollars a year. But people go right on buying it. They’re just crazy. All the golden, beautiful paper profits don’t produce a single new tangible object. There’s no creation here, no productivity, no material advance—only inflation. And now, with our foreign exchange snarled up and our domestic financial policies all out of line with this rate of spending, there’s a very good chance the entire international monetary system will collapse.
“Add it all up, and what do you get? You could easily have a stock-market debacle like nobody’s ever seen before. You’ll see Dow-Jones drop to ground zero. It’ll be like Weimar. The world economy will crumble to powder. It’ll be a blight, a disappearance.”
The old man’s smile was sly. “I paint a grim picture, no? It’s only one side of the coin, you know, but you need to be aware of it. On the other side, what can I say that you don’t know? You can get very rich very fast here, everybody knows that. Right now two new millionaires come into existence for every hour of every working day, did you know that? Six thousand new millionaires in this country every year. Most of them do it in the stock market, and most of them will never get around to spending the fortunes they make. Like me. They don’t enjoy the money—money’s just a symbol of victory down here, nobody actually uses it. There isn’t time. That’s a shame, isn’t it?”
The wistfulness of his tone made Hastings smile. Saul Cohen shook his head. “It makes odd mathematics, I know, but you will find there are more horses’ asses than there are horses.”
“That happens everywhere, Saul—not just down here.”
“We exaggerate it. Take the basics, which nobody stops to think about. A stock is selling at X dollars. Why? What makes it worth X dollars today and X plus two or X minus five tomorrow? The value of a share depends not on its real worth but on what one fool thinks another fool is willing to pay for it. Most often that judgment comes not from rational appraisal but from whispered tips and floating rumors that have less reliability than a tout’s tip at Aqueduct. And the euphemisms, I ask you. Does a broker ever admit the market is falling? No. It makes readjustments, it eases, it makes technical corrections, it retrenches. It never falls.”
“Wall Street’s got no monopoly on rose-colored glasses. When did you last hear a Pentagon general admit we hadn’t won the war in Vietnam?”
“What are you, Russ, a cynic or an optimist?”
It made him grin. “Both. I’m as inconsistent as the next guy. But my job doesn’t include indicting investors because they’re horses’ asses. It’s my job to enforce the full-disclosure provisions of the law. Truth in securities—if there is any such thing. See that nobody manipulates prices. Investigate unusual activity, weed out fraud, nail manipulators. That much I can do, Saul. But I can’t keep people from making fools of themselves. That’s up to them.”
The old man twinkled. “You’ve always been earnest, Russ. But from the champing-at-the-bit look on your face, I doubt you’ve learned the limitations of your power yet. You’re in the most frustrating of professions—they’ll give you a tough job to do, and then they’ll prevent you from doing it. Why? Because the private interests have strong lobbies, and the public doesn’t. If you don’t move fast enough, you’re accused of lying down on the job, and if you do, you’re accused of ruining the whole financial barrel just to get at a couple of rotten apples. How can you win? The best you can do is avoid losing.” The smile was more pained than ever.
Hastings said, “Maybe that’s enough. That’s the world we live in. Nobody tries to win wars anymore, either. You just try to keep from losing them.”
“You’re incorrigible,” Saul Cohen snapped. “All right, then, you’ve got something on your mind. You came to Delphi to consult the oracle, and the oracle has monopolized the conversation. I apologize. What can I do for you?”
Hastings shifted his seat and examined a fingernail; he said, “I believe in intuition, Saul, I always have. And my intuition tells me there’s something stirring in Northeast Consolidated.”
An eyebrow went up; the old man didn’t smile. “Elliot Judd’s organization. Is that why you’re interested?”
“That may be why it attracted my attention.”
“What sort of hints have you found?”
“It’s hard to pin down. There’s a bit of activity, people buying the stock, quite a few Canadian orders and Swiss numbered accounts.”
“But nothing’s happened visibly, has it? I’ve watched the stock—I don’t recall seeing anything queer.”
Hastings said, “If anybody’s maneuvering in the dark, he’s being discreet. But there are dummies buying into it. I want to find out what they’re after and who they’re fronting for.”
The old man rearranged the wrinkles of his face into an agony of thoughtfulness. “I’m not sure I can help. Of course, the market for NCI is so broad, anybody could put half a million dollars into the stock without forcing it—they’re trading twenty, thirty thousand shares a day. So unless there’s a massive manipulation, you won’t see it reflected in the price. And anything less than massive would not be to anyone’s advantage.”
“I thought you might be able to tell me what I ought to be looking for.”
“To know what to look for, you must first know why you’re looking. What do you suspect?”
“Nothing—everything. I don’t know.”
“Do you have any rea
son to believe someone might challenge Elliot Judd for control? One of the large stockholders, perhaps? Someone who thinks Judd isn’t running the company as well as it should be run? Any indications of a proxy war shaping up?”
“Nothing like that.”
“Have you asked Elliot Judd?”
“No.”
“Why don’t you?”
Hastings said, “I don’t think I ought to upset him unless I’ve got something concrete to show him.”
“It could be a fight for control from inside, you know. If one of the top men in the company wanted to take it over, he might use dummies to buy stock for him, to avoid alerting Judd. Or it might be an outsider.”
“A raider.”
“He’d have to be big. Very big. A Howard Hughes would have trouble buying control of NCI.”
“There are other ways to get control of a company. You don’t have to buy it.”
“Hard to do, with a strong company,” the old man said. “Has it occurred to you there may be dummies buying the stock on behalf of an insider who knows something exciting is going to happen within the company—something that will raise the price of the stock? A new contract, perhaps? An oil discovery?”
“NCI doesn’t deal in oil very much. And as far as I know, they’re not getting ready to announce any big news. That’s what intrigues me. Somebody has a reason to buy big chunks of the stock through front men, and all the reasons I can think of are the ones we’ve just ruled out.”
“Then either one of your assumptions is wrong, or you’ve missed something.”
“Sure,” Hastings said. “I was hoping you’d spot it for me.”
“I’m sorry, my boy. I’m only a broker, not an oracle, after all.” Saul Cohen began to smile; his telephone rang.
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