He was reassured to learn that trading limits were established. Each contract could only rise or fall two cents from the previous day’s closing price. Each one-cent change represented $300 in the cost of the contract. So, if the price rose the daily limit of two cents per pound, he would be ahead $600 per contract. Conversely, he could lose that amount each day the price fell down the limit.
Sam also learned that there were different delivery months. It being March he would trade in May, July, or September cocoa, or distant May contracts in beans, which would be delivered more than one year from the time of offering. Under the advice of his broker, Sam had focused on “near May” contracts. He learned that speculators like himself would trade only up to a few days before the first of the delivery month and then settle their accounts, usually by selling their contracts, hopefully at a higher price. Only those accounts that actually used the cocoa bean, such as Hershey or Nestlé, would take delivery of the beans to meet their production needs. In essence, these accounts purchased beans ahead of time both to assure a steady supply and also to buy at the lowest price. Speculators such as Sam always “offset” their position by selling before the delivery date. Sam dreaded the thought of making a mistake and getting a notice from a warehouse in Philadelphia notifying him that 214 burlap bags weighing 140 pounds each were awaiting his final payment for delivery.
At 9:30 A.M. the next morning he phoned his broker.
“Hi, Sam. Look, I gotta be brief,” said Jim. “This is the busiest time for me. The London market indicates cocoa is selling from large liquidation accounts and gold is unchanged at $142.50.”
That was all Jim said. As Sam soon learned, the broker never made recommendations to buy or sell. All he did was state a few technical facts. Since Sam was at a loss to make any decision, he remained dumbfounded, creating quite a pause. The busy broker quickly jabbed:
“Tell you what, Sam. Let’s wait until the market stabilizes. Call me tomorrow, same time.”
At the barest audible affirmation sound from the speculator, the broker switched buttons on his phone, leaving Sam dumbly on the line.
That day in the bookshop, Sam went through the financial page of the previous day’s Wall Street Journal looking for facts in the multiple-columned quotations and otherwise found the paper quite interesting. The business outlook on world and national events was sensible and refreshing to Sam, who had been schooled along by whims of articulate but imbecilic academicians. Otherwise, his day was quite usual except for a more deeply ingrained expression of contempt on his face as he picked through a series of modern poetry for a customer.
Ten years before, Sam had written much poetry himself. He came to sit at the feet of the most famous of the “beats” and once read himself on a rickety pier over the Hudson River. While others thought his poems worthy that night, Sam felt depressed and continued to write mainly maudlin statements concerning the fact that one day he too would be dead, but as a rule he became less quick to call himself a poet when newly introduced to people. Once the bookstore was under way and substantial profits realized, Sam became less and less involved in the world of poems. Nineteenth-century French novelists intrigued him, especially those who either made or lost fortunes or spent their entire lives trying to get rich and famous. He also remained an avid student of biography, prizing the lives of those who achieved greatness through bold moves made at crucial times in their career. Other than these areas, books became mere merchandise to sell.
He stocked the newer poetry more as a sentimental link to his past than for business reasons. Those who were most interested in the stuff never seemed to be able to buy any of the slim paper volumes. They merely read the verse to themselves and left the books more soiled than they found them. Sam never bothered to chastise any of these poor customers. He understood them well. Besides, his business was becoming important in the neighborhood and he wanted to maintain good relations with these people. Already the grumblings about his being a “rip off” were getting back to him and he wanted to avoid a confrontation at all costs.
After a few days of calling his broker, Sam decided to buy one contract at the market price of 64:95 cents per pound. His broker told him the trend appeared upwards, but that if things “turned around,” they could liquidate and take only a small loss, more than compensating for it on the next trade.
Through the day Sam phoned Jim four times. He was careful not to say much on his side of the line, not wanting the book buyers to know he had become a speculator. As it turned out, May Cocoa closed at 65:10, just a few points above the point at which Sam bought it. While he knew he had made a good move, he didn’t bother figuring out his paper gain in dollars. He figured that one cent up, to a price of 65:95, would give him $300 profit, less $60 in commissions. Below that one-cent figure, he would merely take the ride.
The next day, at exactly 9:30 A.M., he phoned his broker. A strange voice answered. Sam was stunned. “Is Jim there?” he asked.
“No. Who is this? His train must be late. Call him back in a few minutes.” Then a disconnect. Sam was curious. “What kind of schmuck is this? Who misses a train when a market opens in thirty minutes?” came the inner logic.
He finally got through at 9:55 A.M. Instead of wasting precious time in anger, he listened to Jim’s news that gold was down $3. “All right, let’s liquidate at 65:10, the least,” said Sam. “That should be enough to cover the commission,” he thought.
As the day would have it, Sam was “executed” at 65:10. This gave him a gross profit of $45 but a net loss of $15 once the commissions were consistent, no matter how many contracts were traded. Whether you moved one, two, or multiple contracts, the commission remained at $60 per contract.
Even though he lost, Sam felt good. May Cocoa closed down, the limit by the end of the trading session, at 63:10; and he congratulated himself for having made his decision as early in the day as he had. At least he had “felt correctly” about the day’s trading.
As the days went by, Sam watched May Cocoa close lower until it was down to 58:00. The analyst at the brokerage house filed this report.
“Fundamentals remain unchanged. Demand remains high while production is lower than anticipated. The 58-cent level remains a good entry position. If the price breaks 68 cents it should go to 78 cents.”
The next day, May Cocoa turned around, and went up the limit to 60:00. The day after, it closed up 150 points at 61:50. That afternoon Sam decided to buy. He phoned the broker at 3:10 P.M. and told him to place a market order. Jim advised him that a pool of 310 buyers remained at the close of day and that even though Sam wanted to buy two contracts he might not find a seller.
At eleven A.M. the next day, Sam phoned to find out if his orders had been executed. Jim told him yes, he had gotten two contracts for him when it opened up the limit, at 63:50, but at the moment the price was down to 61:75. It seems that buyers now outnumbered sellers.
Sam was nauseous. Each contract was off 1.75 cents, or $515 each, for a total paper decrease of $1,030 plus commission, of course.
Jim did not console him. “Look, stay in touch. This could close down the limit; at 59:50 we may have to make a decision.”
Sam was aghast. He said to Jim, “Wait a minute. I thought the trading limits were two cents in any one trading day. How the hell could I buy at 63:50 and see it go to 59:50 in one day?”
Jim explained to him, “It can fluctuate two cents up or down from the previous day’s close, in any one
day.”
Sam felt like cursing at Jim. “What kind of schmuck buys up the limit on a day when the price bounces down the limit one hour later?” He was sick to calculate that four cents down on each contract would mean he lost $2,400 in one day!
Jim told him to phone back at three P.M. and hung up.
Sam was in agony. Instead of seeing the price go from 63:50 to say 78:00, and making $9,000 in a few weeks, he might lose that amount in a few days. The thought suddenly occurred to him that for everyone who made a profit there must be at least one person who suffered a loss. The world became grim for him. The old hatred for capitalists rushed back upon him in a red wave.
At three P.M. he learned that things were not quite as bad as he feared. May Cocoa closed down 150 points at 62:00, and his worst fears were mildly tempered.
Jim told him to relax that weekend, it being a Friday afternoon, and to phone him at 9:30 A.M. on Monday morning, when they would make a new “battle plan.” Sam asked Jim what was influencing the cocoa market. The broker explained that fundamentally cocoa remained strong, but that it was being traded like precious metals, gold, silver, and platinum, by nervous investors who were reacting to world events. Each time gold went down in price, cocoa seemed to follow. When it went up, cocoa did likewise.
Jim told him, “These are crazy times, we’ve never seen anything like it.”
Sam asked for a key to events that might occur over the weekend and that might influence the opening price on Monday. Jim said, “Well, if they start shooting again in the Middle East people will rush to gold, and cocoa should go up as well.”
Being Jewish, Sam quickly retorted, “Well, I’d rather take a loss than see them shooting at each other.”
Jim did not believe that.
Through the remainder of the afternoon and into the evening, Sam quipped to his girlfriend, Joanne, how adept he was at losing money. He felt bad about the 1.5-cent drop in the price of cocoa, which in dollars represented a paper loss of $1,030, plus commission. He reminded Joanne several times how good he was at investments: “Who else do you know who could lose $1,500 in a few minutes?” This form of self-effacement was characteristic of Sam during his poetry days. With his successes in the book business and the continual ego bolstering provided by Joanne, who had observed his trait over the years and decided it was not “honesty” that motivated Sam when he chose to bear inner truths to his friends, but a genuine need to be hurt, where hopefully, pity would follow. The sweet warmth of maternal hugging that followed his every childhood upset had made him like this.
Now that he had hurt himself, at least on paper, he resorted to self-derision, hoping for reassurances, which, in fact, followed from his soul mate.
“Oh. Come on, Sam. Don’t be too hard on yourself. First of all, you haven’t even given this enough time to see if you’re gonna make or lose. Second, even if you do lose money, it won’t matter to me at all.” These magical woman words had their effect on Sam’s expressive face, giving to Joanne her encouragement to go on. “Sam, you must learn to detach yourself from your ability to make money. You are separate from whatever you can do.” He nodded, she drove further, now slightly conscious of the thoughts he had taught her to believe he was thinking. “Sure,” she said, “I love your ability to make it in this rat race of a world, but that’s not the only reason I love you.”
In such a way, Sam bore his initial mistake. He was still baffled by the drop in the price of cocoa and decided to listen very carefully to the news that weekend, to know exactly what to do Monday morning. If tensions grew in the Middle East, God forbid, he would keep his futures; if a truce were announced, he would liquidate and take a loss.
As a result of heavy wine drinking at a friend’s house Sunday evening, the investor overslept on Monday morning. He jumped up at eleven A.M., startled by the time, and phoned his broker. The analyst told him cocoa was moving up and down, changing every few minutes. Sam decided to sell, rather than risk a loss, should the futures contract close down for the day. He told Jim to sell whenever the price was at least half a cent higher than his purchase price. Jim repeated the instructions carefully. “So you want me to sell at a price of 64:00.” Sam repeated the order. “Yes. I bought them at 63:50, and I want them sold at 64:00.” The order was confirmed and the conversation terminated. After placing the receiver back on the hook, Sam settled back in bed. He felt good. He assumed he would take a profit on the two contracts. As Joanne opened her eyes, Sam smilingly reassured her. “Don’t worry. Everything will be all right. I’ll probably make at least $300 today, less commission, and we’ll get back in whenever the trend upwards looks stronger.” Joanne lightly patted Sam’s hand and returned to her dreams. Sam felt wise. He estimated he could make several hundred a day just by buying and selling; a few phone calls each day, and he would become a very rich man.
As he tossed the figures over in his mind, an alarming thought occurred to him. He grabbed the phone and dialed a familiar number.
“Jim. Hello. This is Sam. A thought just hit me. I can’t get a price of 64:00 today. A two-cent increase over Friday’s closing price of 61:75, assuming it goes up the limit, would give me a maximum of 63:75. Only 25 points more than I bought it at.”
Jim satisfied him. “Relax. I just found out that the closing price on Friday was in error. It actually closed at 63:25, not 61:75 as I told you. You know how those dumb clerks are. Come Friday afternoon, and they run home for the weekend leaving things hanging.” He continued without interruption while Sam fought a sickness in his stomach not apparent since those high school days when he learned that he had failed an important exam. “Besides, you make out OK. Your two contracts were just executed at 64:00, so you profited on the transaction.”
Sam asked in an uneven voice, “But where is the price now?”
“Well, it’s gone down and up so fast, but right now it’s down to 62:50, so you’ve done OK. Look, phone me when the market’s closed and we’ll make a new battle plan.”
“Well,” Sam thought, “a mechanical error. Oh well, I made some money on this anyway. I knew my instincts were good for investing. Look at this. Even with a mistake, luck stayed with me. I sold just right. It’s now lower. Who knows where it might fall.”
With these comforting thoughts, Sam snuggled against Joanne and settled back for another half hour of sleep. They would have time over a slow breakfast to discuss Sam’s new victory.
At the bookstore, later that day, while looking through a new selection of paperback books just received from a trendy West Coast publisher, he was arrested in his meanderings by a new title about Kabbalah. He flipped the pages, enjoyed the layout and line drawings, and examined the rear cover for the promotional blurb. He read, “Somewhere there is an Adam within each of us in need of restoration, in exile from the Garden . . .” At that moment, Sam, elated from discovering his newly found powers in the financial world, felt like that Adam within himself. He was one, united within himself, in complete control of his universe. No longer wishing for another time, another job, another girl, Sam was all together. Fleeting but strong images of his maternal grandfather who’d died before he was born rose up from within Sam’s breast. He had only heard stories about this man, whom he was named for, from his mother. With great respect in her voice, the woman had often described her father’s great wealth. Though he had owned several key downtown blocks of Toronto real estate, at his death his new heirs were denied but a few thousand each by a former wife and her children.
Sam was in many ways supposed to take up where the wealthy grandfather had left off. If this had not exactly been said to him, it had been implied. He bore the man’s name, both in Yiddish and in English, was told that he looked remarkably like him, and often felt, even as a child, that one day he would be like the grandfather from Toronto whom he never once saw. That moment, in the bookshop, reading those words about the lost Adam within, “in need of restoration,” Sam felt his grandfather’s presence within his body. His own self-image was altered to accommodate the feelings. Sam felt broader in the chest, more powerful, more simian in posture and deeper in voice.
Sam felt other changes. In the short while since he had become totally absorbed by his new reality, he was no longer tortured with questions about his adequacies as a man.
Threatened by a growing healthy son, his father had chosen the most sadistic of attacks to control the boy, all in the name of “fatherly love.” The man was, of course, blind to his motivations, yet a keen observer would have noticed the small man’s tendencies years before. When his boy was just five or six years old, he often told him about the farmer who lifted a newborn bull over his head every day. “This way,” he would explain to the boy, “the farmer was able to lift the animal when it became a bull. By lifting it as it grew a little more each day, the farmer was able to keep up with the bull’s growing size and weight.”
Like the fabled farmer, he would prod the boy, from time to time, just to make sure his son stayed on the right track.
All of these thoughts and gripping feelings had mysteriously disappeared when Sam began his speculations in cocoa futures. Now his fears could only be activated by a falling price, his triumphs on a rise. The speculator was no longer preoccupied with his obsessional questions about himself nor anything but his investment. For the first time in his adult life he could honestly say he was happy.
Train Tracks Page 9
