Train Tracks

by Michael Savage

  Of course, his bliss was not to last. Somewhere within, a self-monitoring sensor began to signal alerts. “Can Adam have been created to watch numbers and make phone calls?” Then came this thought: “How real is a garden of numbers? Is this what you have been seeking all your life?”

  These questions were soon replaced by others more direct. “Do you really want to use your years watching numbers? Is sitting in front of a big board making buy and sell orders the best you’ve dreamed for yourself?”

  The answers came in a series of images rather than in words.

  Sam saw himself a gray-haired man, quite on in years, at the head of an oak dining table, surrounded by his smiling family. Even his smallest dependents were protected by the tapestry-covered walls, and Sam was the wisest elder of the tribe. “How I achieved my wealth would be immaterial to my heirs, even the occasional poet among them, so long as they are remembered in the will. After all,” the reasoning continued, “the money won’t be earned illegally, will it?”

  But then Sam also saw himself as a doctor, doing research in a lonely corner of a lonely room. Like so many Jewish men of his generation, somewhere within there was a latent healer. He had also considered devoting himself to becoming a serious writer who would write popular books about the right foods to eat, how to avoid being swindled, corruption in government, and even a series of instructional science books for children.

  While evaluating these possibilities, Sam glanced at the clock in his shop, then picked up the receiver of his phone to call his broker for the day’s closing price for cocoa.

  “It closed 1:75 for the day, Sam, at 65:00 even.” Sam was sickened. Had he waited a little longer that day, he would have profited by $300 more per contract, or $600 more for the day. “Oh, what a nervous fool I was,” thought Sam. “Damn, what if it goes up tomorrow again?”

  Jim interrupted this self-destructive sequence and asked Sam to phone him the next morning.

  All through that afternoon and evening Sam brooded on his quick sale. “That fucking moron of a broker” went the thought at one point. “If he hadn’t given me the wrong closing price on Friday, which made me sweat all weekend on a false assumption, I never would have sold this morning. Oh, that bastard.” He wondered if there might be a lawsuit in it for him.

  On Tuesday, Sam made no moves, or “took no position.” May Cocoa closed up by 150 points at 66:50. Sam counted the $900 he would have made that day and watched it fly away from the pockets of his mind. He now feared that the original estimate by the cocoa analyst of the brokerage house would become reality, and he would miss out on a profit of several thousand dollars in a few more days’ time. “What a bitch that would be,” he thought, “to get into a thing like this on my own, at just the right time, take just the right position, and fail to make a fortune because of a rotten electronic error.”

  The next day, after going up and down several times, May Cocoa contracts closed unchanged from the previous day, at 66:50.

  Sam went back to the original report of the analyst and studied it carefully. “It should go to 68:00 and encounter resistance at this level. If it breaks through 68:00, it will go to 78:00.”

  On Thursday, May Cocoa closed up 150 points at 68:00 cents.

  On Friday, it was down 50 points to 67:50 by two P.M., when Sam discussed the matter with his broker.

  “Well, it looks like it might be encountering the resistance level of sixty-eight cents predicted by our analyst,” said Jim.

  Sam asked him what to do. The broker did not advise the investor; he merely suggested—to avoid litigation, should he be wrong.

  “Well, look, Sam, it might correct itself to fifty-eight or sixty and then go up again to sixty-eight, maybe even further.”

  Sam said, “So I guess I oughta wait for it to turn around again and get in when it goes up.”

  Jim advised, “You know you can make money when a contract goes down in price, don’t you?”

  “No,” replied Sam, “I didn’t.”

  Jim explained the mechanics of taking a “short” position. It was the most difficult part of the operation, explaining to new investors how they could sell something they did not own.

  “Look, Sam, it works like this. Say you think the price of cocoa is going to go down. You sell X contracts of cocoa at a certain price, and then when it goes down you buy the same number of contracts to fulfill your obligation at a lower price. Your profit comes in by subtracting the price you buy from the price you sell it at.”

  Sam was confused and Jim went further in his explanation.

  “Let’s say a farmer has a crop of corn due for harvest in a couple of months. There are a certain number of wholesalers who want that corn but must make arrangements well in advance. Since prices go up and down during the months before harvest, they usually buy at what they consider to be the lowest possible prices. Now, assuming they think the price will go up from the price a contract is selling for on a specific day, they will buy at that price. If you have reason to believe the price will go down, at least for a while, you sell those bushels of corn and buy them at a lower price, at some later time. You profit by the difference between the price you sold and bought. It’s the same as buying low and selling high in anything, only the sequence is reversed. You sell first and buy later, hoping the commodity is lower in price when you finally buy it.”

  The mechanics finally fell together in Sam’s mind.

  Since he believed the price of May Cocoa had arrived at a peak, at least temporarily, he told the broker to sell four contracts for him at 67:50. The broker repeated the order, asked him if he knew it would require an additional $460 in margin payments, and wrote out the ticket for Sam’s account. Sam was sure he would make a bundle this time, and wanted to make up what he had missed by selling too soon.

  On the way to the bank for the additional funds, Sam counted in his head the profits he would make.

  “Let’s see, for every cent cocoa goes down, I make $300 per contract. On four contracts, that’s $1,200 profit for each cent. If it goes down to 62:00, I’ll buy at that price and make 5.5 cents per contract, times $300. That’s $1,650 times four, or $6,600. If it goes as low as sixty cents, I’ll make $9,000. Then I’ll buy four more contracts and wait for it to go up, making $1,200 for every one-cent change.”

  On Monday, May Cocoa closed down just 20 points. Sam did not feel too good about the small downturn, as he was banking on at least 50 points or a half-cent decline. He comforted himself by counting up how much he had made that day.

  “Let’s see,” he figured to himself, “at $300 per one cent, or per 100 points, that’s $3 per point, per contract. So since it went down 20 points, I made $60 per contract or $240 for the day.”

  On Tuesday, May Cocoa showed a steep decline, falling down the two-cent limit from the previous day’s close to 65:30. Sam added up the $2,400 he made that day and allowed his long-suppressed dreams of wealth to fly freely from his brain. “Oh, how fantastic,” he thought, “I’ve finally found myself. I always knew I had it for business. Who wanted to work all these years in a company and hope for some schmuck position with a stupid title. Ah, I’ve got it now. I’ll just keep the bookstore for the hell of it and make a few calls each day and live real well.”

  While the investor was mentally redecorating his study in his apartment, having the most sophisticated electronics installed, should he deal with several brokers and need a separate line for each, a guilty thought broke throug
h his ego-defense system. “All this money and you spend it on yourself? You don’t think of giving something?”

  Immediately, Sam placated his god with a fully equipped medical center for the hill tribes of New Guinea. He would also give the clinic a good doctor, a nurse, and an anthropologist, should they want one. Placated by this offering, the god resumed his other business, leaving Sam to his redecorating. Now a perfectly designed sound system, then an expensive antique-tufted leather couch he had seen seven years before (it cost $6,000 at the time!) for the occasional visits by his broker, who actually liked Sam, not just for the size of his account but because he was a really good person, and on and on.

  On Wednesday by 1:30 P.M., May Cocoa was down 150 points to 63:80. Sam quickly counted the $1,800 he made and was gunning for a real killing, and was sure the contracts would continue to decline to the sixty-cent level, at which point he would buy eight contracts to fulfill his short position, and then buy ten more to profit on the rise in price.

  Everything seemed right. The situation in the Middle East was growing calmer each day. A truce had been signed on one front and negotiations were to begin on another. The nervous speculators were no longer as frightened by an unstable world and were selling their gold. As gold came down in price so did other precious metals and cocoa, which had been treated like a metal by investors who were running from paper money. As the broker put it to Sam that day, as he wrote on the ticket to sell four additional contracts, “Well, Sam, I guess you’re wise. Cocoa is acting like cocoa again, and it’ll probably continue to fall awhile before it turns around.”

  Sam speculated that between the ups and downs, he might make eighty to ninety thousand in only a few weeks. His was a true euphoria those ninety minutes between 1:30 and 3:00 P.M., when trading closed for the day. At exactly 3:10 P.M. he phoned Jim for the day’s closing prices. “Well, Sam,” began the voice, a bit quieter than usual, “your four contracts were executed at 63:80 and closed at 65:50, up 20 points from yesterday.”

  Sam was nauseous. “What!” he exclaimed. “How could it go up? It’s been going down, why the sudden turnaround?”

  Jim explained that like the times these were, volatile markets and predictions were not as simple as in more stable days.

  Sam considered buying eight contracts in the morning. “While I’ll lose 170 points on four, I’ll have made 200 points on four.”

  He asked Jim what to do. Jim told him to wait for the opening price. Gold was down, things had cooled off in the Middle East, and cocoa was bound to be sold off in the morning, therefore coming down in price as a result.

  After a nervous night of sweaty palms, fears of a coronary, which were dismissed as foolish for a young man, and acquiescence to a Valium at four A.M., Sam woke at 9:30 A.M. to phone the broker. He was told that the London cocoa exchange indicated selling from large liquidation accounts and a falling price. Jim told him to get some sleep, not to worry, and to phone him in the afternoon.

  Sam, feeling less pressured, got back in bed and resumed the relaxed sleep the drug had brought for him, interfering with nervous impulses to his muscles. In such a counterfeit restfulness, the investor drifted off to a pleasant series of dreams.

  Just before awakening at 11:30 A.M., Sam saw a large white bird of prehistoric proportions out flying with two bird companions of the same species. Over an estuary in an African setting, they each dove for long thin fish, which was very scarce. Sam felt an unlimited strength in his breast and wings. As if he could fly by flapping them endlessly. Suddenly one of his bird companion’s feet was clamped in the mouth of a hippopotamus. Sam dove to his rescue and pecked the hippo until his friend was free. The three large white bird friends soared over a beach where hundreds of schoolboys, dressed in little blue shorts with shoulder straps, were pouring buckets of those delicious fish into machines shaped like hippos, which consumed the fish by the thousands, their bones spilling from an opening in the side. The bird and his friends swooped down on the boys, who scattered in fright, and consumed the delicious fish while the mechanical hippos clanked on and on, denied their food, until the village elders appeared from afar with shotguns. The three birds easily escaped and gained great altitude looking down on the fading scene.

  Sam awoke and waited a moment before calling his broker. By habit he analyzed his dreams each morning. This one, he thought, was particularly easy. “The fish were obviously money—money, which was being wasted by being poured by stupid boys into those machines. I was a bird of prey because my new powers in business give me a feeling of freedom.”

  Sam had it partly right. He failed to realize that he was a little boy pouring his hard-earned capital into a shredding machine.

  Cocoa was trading very slowly and the price remained at 65:50.

  When Sam phoned his broker again, at 3:10 P.M., he learned that a flurry of trading had occurred in the last thirty minutes of the session and May Cocoa had closed up a hundred points at 66:50.

  Positive that the price would come back down, Sam decided he would wait another day to act.

  May Cocoa opened up the limit on Friday at 68:50. Buyers greatly outnumbered sellers, and only sixteen contracts would be traded that day. One thousand contracts per day was the usual number traded. At the close on Friday, the price had stayed at 68:50 and a pool of 643 buy contracts remained unexecuted. Sam decided to place his buy order then for eight contracts. Better he should limit his losses than let them run. Jim explained that although he would submit the order to buy eight contracts at the market price on a “good till canceled” basis, the large pool of buyers were ahead of him and his order might not be executed.

  “You mean I might not even be able to get out at this level of loss?” he asked.

  Jim treated the new investor brusquely. “You might have to wait eighteen days to get out if no one wants to sell.”

  Sam came as near to cursing the broker as possible. “But you never implied this. You never told me I could not get out when I wanted,” he yelled.

  “Look, kid,” said Jim, “I don’t make the market. All I can do is submit your order, which I’ve done, and hope that it’s executed.”

  Switching tones the broker told Sam to forget about cocoa for the weekend and enjoy himself. He advised, “A good baseball game on TV, bowling, even a little sex,” and asked Sam to call him on Monday.

  Sam did not get “executed” on Monday. As he learned over the weekend by staying glued to the portable radio, the Egyptians violated the truce in the Middle East, and heavy shelling was reported by both sides. Only twelve contracts were traded, while a pool of 1,089 buy orders remained unfulfilled.

  By Wednesday afternoon Sam learned he was still trapped. The price was now at 74:50, he was losing $300 for every one-cent rise per contract for a total of $2,400 per one cent, or $4,800 each day the price closed up the limit. Frantic, he smelled a fraud on Jim’s part, guessing the broker was in collusion with a floor trader. Then Jim gave him the horrifying news that at least explained the unprecedented rise in price and the refusal to sell on the part of so many speculators. A report from Ghana, which would be mailed to him that day, indicated a smaller crop than expected. Wholesale buyers were grabbing every pound of cocoa they could get in the seventy-cent range, and keeping all contracts they had bought at lower prices.

  Sam considered leaving the country with the remainder of his assets. Margin calls began to come in with each morning’s mail. Each day cocoa closed up the limit, he was required to add $4,800 t
o his account or face liquidation. By Friday he had added $14,400 to his account, mainly from cash sources that could not be shown in a bank transaction. The paranoia of bringing $4,800 to a different agency each day and requesting a cashier’s check made out to the famous brokerage house required four tranquilizers daily to keep the speculator from breaking down.

  After one more torturous weekend, he learned that at last he was out. His eight contracts had been executed at 80:50 each.

  He dreaded the arithmetic that followed. The four contracts he had originally sold at 67:50 each were fulfilled at a loss of thirteen cents each, for a dollar loss of $3,900 each or $15,600. The other four contracts, which he sold at 63:80, were bought at 80:50 each, for a loss of 16:70 cents each. At $300 per one cent, per contract, Sam had lost $5,010 each or $20,400. All told, Sam’s investment in cocoa futures contracts had cost him $36,000, less the few hundred he had made on the first few trades.

  After the loss Sam was a changed person. That is, he reverted to a former self. The fallen ego could only pick up where it found itself and that was where Sam had been about ten years before, when he was a struggling poet. Not unexpectedly, he began to think and feel as he had during that time. He now hated all capitalists and capitalism and believed those in poverty were the only people capable of understanding life for what it is. He felt somehow ennobled for having gone through such hell and, in a way, was somehow more content with his life than he had been before his investments crashed.

  But it was not always clear in Sam’s mind that he was better off for having lost than gained. In the days following his loss, he would lie in bed each morning running through the figures. The profits he would have made, had he not sold those first three contracts, soon gripped him like a fetish. Had he only held on to them, he would have been ahead over $28,000. Cocoa was at its all-time high. Every few days Sam would phone a different commodity broker at other companies, introduce himself as an investor just in town from Honolulu, and get the closing price for cocoa. It was still closing up each day. Oh, how it hurt him those mornings when the figures would rudely gallop across his mind. His pain traced the following thoughts: “Why didn’t I keep those contracts to sixty-eight and then seventy-eight as the analyst predicted? Oh God, I know it was a mechanical error that gave me that low closing price, but why didn’t I have the faith to wait and see if the price was really turned around? Every rule in the book told me to ‘let my profits run and limit my losses.’ I did just the opposite. I limited my profits and let my losses run. Oh God, oh God damn it! All my life I waited for a lucky shot like this. I even picked the area on my own intuition. Then to invest, just at the right time, to see the contracts rise over thirty cents each in a few weeks’ time. Oh God, why did I sell them? Why did I fail? Oh, if I had only waited. At last I would have done something right that was really big.”