MJCwriting.htm

BALLAD OF A STOCK BROKER

PART ONE: THE ARRIVAL

I.

He arrived one day wearing a conservative dark blue suit, with a matching vest. His hair was short; he had deep black hair, and a closely-trimmed beard with touches of grey in it, just enough to give him a sense of age. His eyes seemed very youthful; but there was also something heavy about his appearance, weighted, as if some tragedy hovered about him, something either about to happen to him, or something through which he had recently passed.

He wore clear, wire-framed glasses. His face was thin, giving expression to a rather delicate set of features. He looked quite cultured, quite sensitive, especially about the mouth.

He arrived one Spring day in 1981, asked Miss Roosevelt if he could talk with Mr. Raines. Harold Raines was the director of our company, A & E Investments, which was the largest investment house in Eugene, Oregon, managing money for local pension funds and for many of the wealthy families of Eugene.

He sat quietly in the vestibule as Miss Roosevelt announced the visitor to Mr. Raines. He sat there for about fifteen minutes. He sat quietly, writing in a small notebook which he had taken out of his briefcase. Later, as we came to know him better, we would be astonished by his ability to use every moment of the day for expression in his notebook. He wrote diligently, engrossed in his thoughts, surrounding himself with a kind of protective shell, an atmosphere of concentration which was impenetrable to the outside but also attractive and seductive, as if he were in a well-lit warm room, on a dreary wet night, and his observers were passing, peering in, yet unwelcome to enter his sanctuary.

Why I even noticed him was something of a mystery. I generally did not notice visitors entering the building. I certainly did not watch visitors closely from my desk, taking mental notes of their behavior and appearance.

Yet this man was different. I knew this from the beginning. In fact, I felt it even prior to his entering the front door of the building. I felt something profound (that word might not be correct), something unique, uncertain, mysteriously powerful, strange about him: I looked up from my desk, toward the front door. No one else in our office seemed to notice anything. I felt something drawing my concentration away from the charts of IBM and Bethlehem Steel I was studying, something resolute and consequential.

The door opened. He entered, looking thin but strong, shy but with an inner directedness. He looked, at the same time, uncomfortable in his business suit, and almost a model of a young businessman resolved to the art of financial conquest.

Mr. Raines made him wait for about fifteen minutes. Then he appeared, shook the man's hand, laughed, apologized for the delay. They went into the 'captain's' office. I tried to regain my concentration. I was the assistant technician on the A&E staff, chief assistant to Robert Raines, Harold Raines' elder brother. I loved my work. Yet something had disturbed my rhythm. I glanced often up from my desk, toward the 'captain's' door.

Ten minutes later the man re-appeared, thanked Miss Roosevelt for her help, and was gone.

Harold Raines emerged from his office soon thereafter and announced to the staff that he had just been visited by a 'local' who claimed to have designed a computer program to trade stocks and commodities. The program would analyze price trends and given buy and sell signals on the basis of that analysis.

Harold Raines liked to talk loud, liked to dominate the room with his style, his dominant articulations.

"He wanted me to hire him," Mr. Raines announced, laughing, shaking his head. "He thought we'd be dying to try his new product. He said he would be willing to test his system at our office if we were interested. Poor fellow, doesn't even have a business background. He studied English literature in college. Said he'd been traveling for the last five years, moving between jobs. Can you believe that he thought he could just walk in here and get a job, without any training, like we were all a bunch of fools, without any appreciable education...!"

Everyone laughed.

But there had been something about the visitor--even Mr. Raines had been impacted by him. His mind was not entirely clear as he analyzed the visitor . His mind was moving; his eyes shifted. His thoughts were colored by some doubt, as one often sees when a man is talking aloud but reasoning more with himself than with the approximate objects of his speculations.

"Did you direct him over to Wedbush's?" Candace Rivers asked. She was a striking blonde, 27-years old, who had taken a MBA at Stanford and who had worked with Merrill-Lynch in San Francisco for three years. She had recently married, and her husband's work had brought them to Eugene.

Raines chuckled. Whenever he looked at Candace he looked first at her face, then his eyes trailed down to her legs. Raines was in his early-fifties, was becoming sexually desperate, was forming a vigorous fantasy over Candace Rivers, the kind which often led a man to some form of foolish bewilderment or shame.

He chuckled, ran his eyes over her hips, down her legs: "That's all I need. Get that damn Jewett on my back again. If I send that nut over there I'd probably lose my best golf partner..."

There was a very strange, low-keyed humor in our office. We were supposed to be conservative people, with conservative tastes, totally trustworthy, and capable of looking after the hard-won millions given to us by our clients. Everything about us was low-keyed, conventional, stolid, reasoned. We could laugh of course; because we were social beings. Yet there was nothing idiosyncratic about us. Indeed, idiosyncrasy was tolerable, in our profession, only after a magnificent sum of wealth and independence had been secured. At that point, after that resolute amassing of material, one could pass from the stage of steady brokerage accountant to that of the gun-slinging entrepreneur.

II.

We had been taught, in Business School, to mistrust unpopular conceptions. We had not been taught to be reactionary; for we understood, and had so been instructed, that a new idea may become the next primary former of the world. That is, the new idea (unpopular conception though it may be) may become the next IBM; hence, it may lead to successful investment and to the possibility of an early retirement.

Still, and vitally: not every new idea was a good idea. The unpopular conception usually generated outlandish behavior which almost always testified to an unstable character, which character was not to be trusted in others and certainly not to be cultivated in oneself. That was a basic law, an essential truth, in my business education at Stanford.

I thought about our visitor ,off and on, for several days after his first visit. There was something powerfully idiosyncratic about him. That's what had moved me: a sense of his profound difference from everyone else in our office, from nearly everyone I knew. As well, that is what had muddied Mr. Raine's sense of complacency. For with it (the recognition of the god/demon Idiosyncracy) came inevitably the most fertile and fatal question: Is this the Good Idiosyncracy or the Bad one? The Idiosyncracy which leads to heaven and good fortune and glory; or the hellish kind, which leads to loss of face and spiritual degeneration...?

I knew the man would return, I knew it as I knew that I would marry my wife the first time I saw here. There are some things in life one knows immediately, through some extra sense which is akin to sight, but a power of sight generated in the mind itself, not in the eyes, which provide the engine of rational thought. For the knowing generated through the mind's eye is not, as it were, rational at all, not subject to the laws of cause and effect, not repeatable for ever in a laboratory setting. The sight which knows upon sight is immediate and deep and irreversable; but it is not repeatable, consistent, nor subject to causality. It is more like lightning, to be sure, than like pins struck by a rolled ball. It cannot be studied really, or predicted with any real accuracy. It occurs. It cannot be denied. Then it is gone.

III.

The man re-appeared about three weeks after his first visit. His name was Michael Fox. We would learn that later. He appeared and spoke with Miss Roosevelt again. I was meeting with Robert Raines and our technical staff in our regular Monday morning meeting. Again I felt his presence before he actually appeared at the door. He wore a different suit, light brown tweed. He looked quite handsome, quite serious, with his black hair combed back, exposing his broad forehead.

I could not see him when he returned to the vestibule to wait for Mr. Raines.

We were discussing the technical condition the markets. Every Monday morning we studied weekly price charts to determine price trends and to predict possible movements in the market. We had a staff of three technicans at each meeting, plus Candace Rivers to provide a fundamental view. Olive Reed was a secretary who kept minutes of each meeting, and provided Mr. Raines with his copy of the minutes by 1:00 Monday afternoon.

We studied 3'-by-3' charts which Robert Raines had analyzed using large colored magic-markers, marking primary trends in bold lines, secondary trends in broken lines. Red was the color of the up-trend, which was traced from low-to-low made by the stock or index (the charts covered a period of twenty-five years). Blue was the color of the down-trend, traced from top-to-top in the price performance of an issue.

We were discussing the performance of the Dow Jones Utility Average when Mr. Fox's foreshadowing occurred. It was truly very much like the literary foreshadowing--and I would recognize this foreshadowing later as something very humorous and somewhat errie when I learned Michael Fox's name (although, of course, many will insist that it is merely coincidence).

Robert Raines was insisting that the Utility Average was topping, insisting on using a bold blue projection line, for he felt the most recent high made by the average was a primary top; that the recent decline, which had been followed by a minor rally, was indeed the beginning of a major reversal; and, as he put it: "I believe the fox has entered the barnyard. The chickens are about to scatter."

Of course one would think it rather odd of me to proclaim some presentiment of the relation of his expression ("the fox has entered the barnyard") and the name of Michael Fox who had visited our office some weeks before, of which visit Robert Raines was only peripherally aware, and of which the other members of our "Technicians' Club" had certainly no more than a passing interest, and of which (his name) all of us were still in utter ignorance. In fact, however, as he uttered the phrase the image of Michael Fox entered my mind, as it were, forcing itself into my cognizance, as if he were again opening a door and again subtly announcing his presence.

I lost my concentration for a moment, this image coming in so unexpectedly; the talk proceeded around the table, with some agreement with Robert Raines' conclusions, some questions being raised (no one disagreed 'publicly' with Robert Raines). When it became my turn to speak, I heard the front door of the office open, and, looking back from our conference setting near the back of the office, noticed Michael Fox standing at the reception desk, speaking with Miss Roosevelt.

It was quite clear to me, from the very beginning, that Michael Fox would come to work with us. I did not know how exactly, or why. I do not give myself immense credit for possessing a psychic nature; however, this I knew: I knew he would persist until a door was opened to him. I knew that he and I would become friends. I knew that I liked him. I knew that he was more special than any of the other men in the room, possessing a special kind of knowledge, personal knowledge, gained from pain perhaps, or from a gift given in a most uncommon manner, not gained from hours spent in classrooms or pouring over corporate profit tables or charts of price performances. His knowledge was larger than stocks--you could see this on his face. He seemed as if he had stepped out of a much larger historical epoch, perhaps the Renaissance, being many things at once, many characteristics wrapped together, sublime and horrific at the same time, as Michelangelo's churches are both mystically inspiring and laced in a curtain of fear, impish shadowings, horrible annunciations.

I excused myself from our meeting for a moment, returning to my desk for information I had forgotten. As I retrieved my file I glanced toward the vestibule. The man was sitting quietly, writing in his leather-bound notebook. He was totally absorbed. He was waiting again, this time even longer than he had been forced to wait during his initial visit. Perhaps Mr. Raines was growing weary of his visits.

I returned to our staff meeting and dutifully echoed the consensus that the Dow Jones Utility Average had, indeed, topped; we discussed support levels; Robert Raines was pleased. In fact, the performance of A&E Investments had, for the last two years, trailed the market performance significantly. Robert Raines, Chief Technician, had seemed to lose his timing skills (which can be fatal for a technician). His recommendations had been seriously flawed. He was in a slump. He reminded me of a baseball player whose hand-speed had left him, quite mysteriously, at a certain age. He still saw the ball. He still understood the game clearly. Yet, when the pitch came, when his mind uttered the unutterable command to strike the enigmatic sphere, his hands did not respond with the same alacrity which often distinguishes youth: his instincts (a rather unmanagable concept) were deserting him.

When he finally managed to swing the ball was resting in the catcher's mitt. He had struck out. This made him doubly sensitive to criticism, for he was still at the stage of denying reality, denying the fact that he had struck out, inclined to find his chief adversary not in his own tarred judgment but in the variable loyalty of his colleagues. He was more pleased with the concensus that his interpretation of reality was correct (that the DJUA would decline) than he was concerned that our collective interpretation may not be correct and may continue his personal slump and the company's underperformance against the S&P 500.

IV.

A&E Investments was the oldest investment firm in Eugene. It had originated in 1878, when the earliest pioneer Raines family had achieved some manner of fortune in fishing, boat-building, and, later, in gold-mining ventures. The family began by investing its own monies locally, especially investing in the wood-products industry, as well as with area grass seed farmers.

The Eugene National Bank became the Raines family foundation stone. Edgar Raines, eldest son of Thomas Jefferson Raines (the pioneer), opened the bank in 1878, with monies earned through his father's vigorous, insightful investments. Edgar Raines inherited from his father not only his father's fortune but also his 'nose' for opportunity. Edgar Raines consolidated power in Eugene, buying out (a nice phrase for breaking the bank of) two smaller banking concerns in the small town. Edgar continued his father's dominance of west coast ship-building. He built a wonderful mansion on the Pacific Coast, outside of Coos Bay, and cultivated a magnificent Japanese garden on the grounds. A fire would ravage the mansion in 1905; he would rebuild the mansion two years later, only the economic depression of the early 1890's had eaten substantially into his personal wealth: the rebuilt mansion was more modest than the first (which had had 27 rooms, with a art gallery including art work shipped directly from Europe). The new mansion was a 'small' country house, with 16 rooms, a swimming pool, no art gallery. The Japanese garden was preserved; and still exists to this day, although now it is maintained as a state park, as the Raines family was forced to sell the land during the economic crises of the 1930's.

Edgar Raines had three sons, the eldest of whom, Dayton, was killed in Europe during World War I. Benjamin Franklin Raines, the next-in-line, became primary heir of the Eugene National Bank (controlling share-holder); the youngest son, Milton, called Milo as a boy, later opened A&E Investments as a 'spin-off' from the bank. Milo was energetic, well-liked; he considered himself to be, primarily, a salesman.

"The real basis of investment is good friendships," he would say. "You have to be trusted so that friends will give you their money to invest. A bad salesman who is a good analyst is almost worthless. A good salesman who is a bad analyst is not worthless; he is only somewhat limited."

Milo became a leading member of the Eugene society. His brother, Ben, was less social, more solitary, given to bouts of depression and drinking, probably to fight the depression.

Milo became a member of the City Council when he was 33 years-old. When he was 38 years-old he was elected to the State Senate. He married a beautiful debutante from Portland, Olivetta Barnes in 1924. They had a daughter, Laura, in 1925. Two sons were born to the Milo Raines family: in 1927 (Harold) and 1929 (Robert).

Financial difficulties struck the family in the 1930's, due partly to mismanagement by Benjamin Raines, and more generally to the economic crisis of the times. In 1934, Benjamin Raines committed suicide in his garage, shooting himself with a 12-guage shotgun. Family control of the Eugene National Bank slipped away. A buyer from California bought up the outstanding shares and purchased the Raines' Family interest well below its worth. A&E Investments remained an independent venture. Milo Raines was a lucid businessman. He supplemented his income with shrewd real estate ventures. His wealth grew; his prestige was even anointed with a move to nominate him for the US Senate during the war years. The attempt to unseat the incumbent republican senator led to broken fences within the party hierarchy. His star lost its ascendency. He later resigned as State Senator to concentrate on his business interests and be close to his family.

V.

The second visit of Michael Fox with Harold Raines lasted longer than the first visit. Significantly longer. This time he had brought with him a large portfolio, which he carried in to Mr. Raines' office. The meeting lasted nearly an hour.

Harold Raines did not emerge from his office after this second visit, cajole his departed visitor, visually caress Candace Rivers' slim legs while responding to her coquettish supplications.

In fact, I waited for his door to open. Our meeting had adjourned. We had decided that utility stocks had been played out. I watched his door. Nothing happened.

I took this to mean that the visitor's second visit had helped to stir within our manager's uncertain brain even more questions about the legitimacy of an uncommon vision. Afterall, profit sheets had grown scarcer. Investors grow wary of experts in a field of no experts who underperform the field.

I did not think about Michael Fox again, until that Wednesday, when two workmen in dungarees and with carpenter's tools appeared and began to remake the small workroom behind Miss Roosevelt's desk, which had, until that time, housed a work-table, a xerox machine, a light-table for layout, and some bookshelves for S&P 500 reports. The xerox machine was removed; the table came out; a desk was taken in; a built-in work-counter was installed.

This went on all afternoon.

We all wondered what it meant.

Of course, I knew what it meant, immediately. It's not that I am especially psychic, generally. I knew that Michael Fox would come to work with us. So, when his 'office' was quietly prepared--a tiny little room, unbecoming to any man of importance--I knew what it meant. Eventually, I told Bert Camden, a squat man with a bald head, who had worked at A&E for several decades, that the 'office' was obviously for the strange visitor whom Harold Raines had scorned so widely just a week of so earlier.

Camden couldn't believe it. He tried to suppress his laugh. He had a habit of displaying disbelief by raising his right hand to his mouth and squeezing out a laugh between his tightly pressed fingers--a practice which was, when one first came to know the man, rather charming, but which, over time, as one became familiarized with other irritating habits of the man, leant to the squat, dumpy character only an air of silliness and a lack of dignity.

I wanted to take Camden by the shirt collar and pull the collar up over his ears, whenever he let out his stupid, pre-teenage response to the presentation of unexpected information, to tell him that he had behavior patterns which were unworthy even of a fourteen-year-old, let alone of a man of nearly fifty years of age. He was the kind of man that other men (and some women) liked to persecute, to bully, even men who were sensitive, not prone to brutality--he drew out in nearly everyone that sinister characteristic which sought to inflict pain on the one who desired pain, or, at least, deserved some form of pain, for his absenceof dignity demanded some just response: in fact, to humiliate the man was itself an act of justice, a reaction to an inciting nature for which the world rightly hoped, as this nature was so flawed as to require some form of castigation.

Yes, in my mind I tore his collar, kicked him in the pants, pushed him over a squatting colleague who had slipped behind the plump Camden in order that I might upend him for his excessive tastelessness. In fact, I walked away quickly, as Camden announced to his fellow workers that I was certain that the change in office structure was to accomodate the man with no business experience who had so generously offered to teach the office staff about investment.

The next Monday Michael Fox came to work with us. There was silent shock in the office. Nearly everyone felt it inappropriate, perhaps an act of desperation. Many took it as a personal affront, a threat to their own position in the company.

Too, there was in all of this something seductive. Something unheard-of had been done, whether as the result of desperation or perhaps of mad genius, a state (either that of madness or of genius) which none of us had ever given Robert Raines credit. Everyone sensed in the appearance of Michael Fox an end of something (a rather uninteresting 'thing', to be totally candid) and the beginning of something new, which promised to be unimaginable, perhaps great, possibly tragic.

I say that we all 'sensed' this: that is my way of saying that I sensed it, and others, at some later time, alluded to it, or spoke of it as one might speak of the effect on a isolated tribe of indians when the first white man wandered in to their village carrying a rifle and a pocket-watch, speaking of the New World of which he was the harbinger.

Robert Raines did not announce to the office directly, personally, his decision to employ someone totally unqualified--as he had earlier personally derided the suggestion Michael Fox had made to him for precisely the same result.

Later, when he sent a memorandum to all employees announcing that Mr. Michael Fox had requested to work in the company as an 'intern', without pay, in order to come to understand more fully the brokerage industry, and that Mr. Raines, after considerable thought, had approved his request, there was some ebbing of the quiet professional outrage in the office. However, there remained in the 'office consciousness', whether consciously recognized or not, an understanding that something more than merely a non-paying internship had been bestowed upon the 'usurper', even if this were the true condition of his appearance. People sensed that the key to the city had been awarded to someone about whom no one knew a single thing.

VI.

For days Michael Fox worked quietly in his office, approaching no one, speaking only in passing. In fact, he was given the cold treatment, something which he had seemed to expect. He made no effort to break the ice. He seemed to be totally self-involved, so conscious of and busy with his own work, that he did not even notice or gave no credence to the 'professionals' moving about him with such legitimate seriousness of purpose.

This could have lead to even more resentment on our part, except for the fact that he seemed to have a sincere, sympathetic nature. He did not create oppositions in the office. Where there was resentment, he merely neutralized the resentment with a soft, detached response. His serious devotion to his own work generated an attractive power in him. We wanted to know more about him.

His 'office' was essentially a tiny little cubicle beyond the reception area. We would have to go out of our way to visit him. He had a desk, a work counter, which ran the length of one wall. He brought with him his own computer. It was not a computer with which we were familiar. It was called "Gatestone Computer": we later learned that he had built it himself, with the help of a friend who had studied computer science at the University of Wyoming. It was a hybrid computer (or so he later told me), with significant internal memory to allow for intensive mathematical analysis at high speed.

He had written the software. No one else had access to it.

A colleague of mine at A&E, a fellow technician, Garland Jeffries, who had studied at MIT, later told me of an office Christmas party at which David Raines, oiled with martinis, described, to Jeffries, Michael Fox's second (and successful) visit to the office. Raines was very cheerful in telling this story. This was at a point at which he was taking credit for having had the 'genius' to hire Michael Fox. The stock of the company had risen dramatically, in no small part related to the hiring of Michael Fox; and Raines, thoroughly friendly with drink, energetically recalled:

"I left him waiting out in the vestibule. I really didn't want to speak with him. I was a busy man, of course. He had no qualifications. You know, there was no real reason for me to even consider hiring him, even to meet with him that second time. In fact, there was no firm in this town, or even in this state, that would have spent more than about two minutes to tell him to go back to school and come back when he had some worthwhile qualifications! But I agreed to listen to him one more time. He brought with his his portfolio, which contained mounted charts illustrating his Buy-Sell Differential, historical charts relating the precision with which his indicator measured movements in stocks and in indexes.

"He hung these charts on the wall, used a pointer to explain his system, methodically indicated to me each buy and sell signal given by his analyzer. He showed me print-outs of a summary sheet he kept each week, following 111 stocks, as well as indexes and commodities.

"I tried to humor him. I had work to do. He sensed that he was making no progress. He stated, almost angrily: 'I will work for you as an intern, for no salary, with the understanding that I won't earn a penny from you unless I outperform every other analyst and broker in your office! When the first year is up, if I prove the worth of my system, and outperform everyone else in your office, then you will pay me retroactively a salary that is at least equal to the lowest paid analyst in your firm!'

"I was thunderstruck. Not many men would have given him a chance. You know, things have changed. Now, everything is college. It used to be that a man, given an opportunity, could prove himself--could be self-educated, could prove himself, and make his own fate through ability alone. I've got nothing against formal education. That's the way we do it now. But this man was so sure of himself, so confident--I just felt I owed it to him, and to myself, and even to my society to give him a chance. Because there is something ultimately healthy in the idea of proving oneself by performance alone. Of giving someone a chance who, for one reason or another, has been dealt a few less cards than some of the rest of us...!"

Of course, it was absurd to think that Michael Fox had been dealt fewer cards than the rest of us. That Harold Raines wished to look at Michael Fox in this manner was not surprising. In fact, both of the "Raines Boys" were notorious social snobs, dedicated to the notions of social Darwinism, that is, the fervent belief that cream will inevitably rise to the top of the society. An implication in this was, of course, that they, Harold and Robert Raines, were indeed the cream (others, again by implication, being the dross matter).

In fact, the budding genius in Harold Raines firm was never, even after his performance over the first year far outdistanced the other broker/analysts in the office, considered by Harold Raines as a 'social equal' of the other 'educated' broker/analysts. He remained, in Harold Raines' mind, a gifted underling with a special 'computer' skill (he was never Harold Raines' protégé).

Harold Raines would eventually pay Michael Fox a salary to keep him from leaving the firm; but, in terms of social status, Michael Fox was never treated as an equal, was never welcomed in to the bosom of the family. It's not that he lacked social grace--in fact, he was charming, gracious to a high degree, much more so than any other of the Harold Raines' group. Harold Raines, despite his protestations, despite his claims to a liberal view of hiring policy, felt threatened by Michael Fox--that was, in fact, much of what attracted Harold Raines to Michael Fox--because he knew that Michael Fox (for the lack of a better phrase) was better than he was, more knowledgable, more insightful, much broader and deeper in his understandings. We all came to understand this.

Michael Fox was very well read. He had studied James Joyce and Herman Melville and William Faulkner. He had written five books, which he had not even tried to have published, novels and prose-poems. He was not pedantic, but had a creative mind which could grasp an issue instinctively, dissect it immediately, and recognize the most logical creative solution to a problem, even before others had recognized the essential principles inherent in the problem.

He was a 'natural'. I saw this in him almost immediate (I say 'almost': in fact, I saw it immediately, for when I speak of that strange something--mystique perhaps--which I felt immediately upon seeing the man I am speaking of the natural quality of Michael Fox, natural genius if you will). He understood himself, worked on himself, sought himself thoroughly. From this search he had gained a power which was not a power of the personality, rather it was a power of the soul, that inner nature which had either combined intuition and intellect, or had eschewed both for some power even greater than the other individualized natures.

VII.

I was really the first person in the office to approach Michael Fox. No, that is not true. Candace Rivers was the first person to approach Michael Fox. After nearly a week of his silent virtue, Candace Rivers entered his office with a cup of coffee and talked with him for about ten minutes.

It must be understood that Candace Rivers was the queen of the office. A tall beauty, from a very good family in San Francisco, blondish, with a pre-eminently curvaceous body, a charming wit, a tenacious intellect--she was every man's fantasy in the office. She was the kind of woman men dream about marrying: rich, classy, beautiful, proud. She would have been a queen had we still been living in the land of courtships, kings, conquests: a Shakespearean bakery.

That she approached Michael Fox first was significant, especially in light of what would develop between them. She found him attractive, for whatever reason. Partly, he was an outsider. You could feel this his entire time with the firm. He did not really want to be a part of the firm, compete in the prosaic political savageries of the office, climb the ladder toward Harold Raines' posterior, seeking more light perhaps but in a very unbecoming, even absurd, manner, considering the destination at the farthest extremes of that ladder.

He was there testing himself, testing his creation. He liked having the smallest office in Western civilization. He liked being tucked behind the receptionist, stuck in the closet with no window. He would not leave this office, even after Mr. Raines offered him a private suite on the second floor.

Candace sensed something remote about Michael Fox, as we all did. Women from wealthy families are never so bored as when they are surrounded by men from their own class. Men either furious with preference, thoroughly spoiled by an illusion of their invincibility, or those totally void of fire, limp and listless and educated for civilization (with the small 'c').

Michael Fox was still wild (names mean something, afterall). There was something remote, untamed, even dangerous about him. Also something indifferent to her, not hostile surely, but not supplicating either. The men in the firm would have given a year's pay to undress Candace Rivers, to lie beside her, enter her, evoke from her all her treasures for a full night. Michael Fox was almost shy with her, not because he did not like women, or was inexperienced with women, but because he did not share the dream of so many men which placed the highest laurel around the thigh of Candace Rivers. And this made her intrigued by him.

Candace Rivers was the first to visit him, taking with her a cup of coffee, descending into his vortex for a moment. His chasm. She emerged from his office, smiling, almost blushing, as she caught the eyes of her fellows. She obviously had been charmed by him. This was a side of Candace Rivers (the 'charmed' side) which we had not seen before, much softer, more vulnerable.

This charming of the queen increased both the mistrust with which Michael Fox was viewed in the office, by his betters, but also the aura of the man. In a few moments Michael Fox had wrested from the 'beauty by the lake' a hidden personality of which the general world had no inkling existed.

Usurper. This would be his title, even from the beginning; this would be the thought that lay half-hidden in the minds of my comrades-in-numerical-analyses: like a musical theme it would appear, this accusation, vanish, re-emerge, in a slightly accentuated, expanded phrase, as if it were forming a figure eight, at the center of which stood both the man, Michael Fox, and the judgment, the Usurper.

I was the second person to visit Michael Fox in his office. On the south wall, on a work counter, he had the computer he had built with a friend. Above the computer, on a wall of tack-space, he had hung a 22x16" Dow Jones Industrial Chart, as well as smaller charts of stocks and futures he was following. He was sitting at his desk, pouring over the daily newspaper, accumulating quotes for the day.

He looked up as I knocked on his door.

"Hi," he said. "Come in."

There was a chair near his desk. I introduced myself, welcomed him to the firm.

He smiled.

"I'm only here on a sort of trial basis," he said. "But I'm enjoying it. It's very interesting for me."

"I see that they gave you the smallest office they could find."

He smiled. There was no sense in him of having been slighted.

"What will you be doing, anyway?" I asked. "Are you managing an account?"

"No, not really. In fact, I'm sort of shadowing the office portfolios. I supply Robert Raines with a weekly report on all of the stocks in the office portfolios, with trading recommendations on each company. I've developed a computerized trading system; and I'm trying to show Robert Raines that this system will work."

I looked at his charts on the wall. The charts were different than any technical charts I had ever seen. One axis indicated the price of the issue. The other axis illustrated a "buy-sell differential", which he called BSD. This traced a pattern of momentum in terms of buyers and sellers (the light line was buyers; the dark line was sellers). The BSD 'forces' (he called them forces of nature) traced a mirror image of buying strength as opposed to selling strength (he would also call them day and night).

I asked him to explain the charts to me.

He became quite excited as he spoke, standing at the chart, indicating points on the chart of wilting buyers, of sellers gathering strength. In spoke of larger trends, formations he called 'up-squares', 'down-squares', 'gaps', 'triangles'. I did not understand the charts of course. On first look there was no order or logic to the charts.

I looked somewhat dumbly at him.

"I've written an article on the indicator. Would you like to have a copy?"

Of course, I took the copy. I liked him. He was not stuffy in the least. He was not full of pretense, or of the language of business school analysis. He had created his own indicator. He seemed to understand it intimately; and to be perfectly willing to share his information. (Sharing of information and systems is not the rule in this business. We tend to be guardians of our systems much as a journalist or the detective is the guardian of his source.)

I again welcomed him to the firm and thanked him for the article.

The article I was given I will reproduce here in its entirety. It is a key to his approach to stock timing and selection: he is essentially a mystic, one who looks for some profound principle underlying all of life, applying that profound something to the phenomena of stock permutations.

His system (his Buy-Sell Differential) essentially sees in all phenomena a dualistic motivator: dark and light, night and day, right and left. This 'two' is the motor of life; and, as such, must also be the motor of stock behavior. His Buy-Sell Differential (BSD) depicts the struggle between buyers and sellers in the market, portraying the strength of each in a struggle for supremacy.

Michael Fox was a poet, more than he was a stock analyst. That is, his power of insight was derived from a poetic eye, not from some fascination with business.

I should say something about the two main divisions in the stock analysis business: the fundamentalists and the technicians. The fundamentalists tend to make recommendations for stock purchase or sale on the basis of an in-depth study of a company's balance sheet. They may emphasize cash flow, or percentage of debt to capitalization, earnings growth, price-earnings ratio (price of the stock as opposed to earnings) in order to determine as issue's 'value'. You would buy an issue when it was undervalued, and sell an issue when it was overvalued.

Technicians, on the other hand, are the mystics of the market. A true technician does not even consider a company's balance sheet. Technicians study only the performance of an issue in the market, asserting that a company's fundamentals are reflected in the price behavior. Patterns of market behaviors are the key to a technician. Whole systems of geometries have been built up to measure behavior in the market, which systems themselves become the basis of buy-sell recommendations.

The 'fundamentalists' of the market tend to be accountants at heart. The 'technicians' tend to be the personalities, the cult leaders, the flaming stars. On a national level, technicians seem to have their moment on the stage, being 'number one' for a time, making predictions which largely come true, developing cult followings which they almost inevitably disappoint when their 'magic' begins to fail them.

Inevitably, the technicians seem to ultimately be led to the 'teachings' of one of two great messiahs of technical analysis, Elliot or Kondratieff, each of whom developed treatises based on a study of cycles in nature. Patterns of behavior in nature is presented as the law of nature, which, in turn, is reflected in price patterns in the markets. There is a subtle distinction here: patterns become a law reflected in the patterns. The mystical, the shifting, the imprecise, subtle, and shadowy becomes absolute. In this, almost inevitably, lies the tragedy of the technician. The map becomes more real than the territory. Almost all 'superstar' technicians (there may be two or three on a national scale each year, made and later exploded) come eventually to embrace the 'law of death' in the market, to become fixated with the darkness, the night, of the market, insisting on the law, the map, even when the territory changes, becomes day again. There are cycles within cycles, afterall. Much as Narcissus, technicians often end mesmerized by the sophisticated systems they create, or study and embrace, not fully understanding that the system is a picture of reality; reality is not a picture of the system. Recently, such personalities as Robert Prechter and Joe Granville have most gloriously performed all the requisite stages of this mythology, staring into that dark mesmeric hole of 1929, holding to the steady dogmatism that history repeats, and everything exists is measurable cycles.

The technician tends to be surrounded by an aura almost tragic. The technician tries to time the markets--that is, he wrestles with Time. He wrestles with God's angel, wrestles with death (the extinction of Time), seeking to wrest from God's emissary the laurel reserved for the heroically worthy.

The fundamentalist tends to be more patient, to endure market corrections with less emotion, with more trust in the positive evolutionary nature of Life. Great fundamentalists, like Warren Buffett or John Templeton, are unique and successful and creative in their fundamentalism. They tend to be positive God-fearing men, whose patience and insight pays great dividends.

Of course, most market analysts are neither 'true' technician nor fundamentalist. They are a little bit of each, having dabbled in each side, totally committed to neither, more dilletante than anything else, more skilled at following the recommendations of others, claiming them as their own, than they are at paving new trails. These tend to be the victims of the last book they have read, the last report the company has filed, the last rumor they have heard. Both victim and recipient. For these truly can profit when the last report is so popular that many people feel inclined to believe it, supporting it with their investment power. In investments, it does not matter if you are right. What matters, really, is that you are on the side of the teeter-totter which is down and is coming up. The weight of the position is all that matters.

Our firm is, I would guess, 95% composed of the middle nature, more hard-working dilletante (are these contradictions?) than anything else, certainly not rife with genius. Before Michael Fox appeared, the only real unique thinker in our firm was Robert Raines. He, however, like a boxer who had achieved success early, had become, with time, confused. His star had passed. Now, almost punch-drunk, like an alcoholic truly, drunk with and addicted to the drink of the geometry of his love, he moved in a slow state, with instincts no longer valuable, with insights muddied and non-communicable.

VIII.

To say that the essay which follows created a stir in the office is a significant understatement. After reading and re-reading it over the weekend, I circulated copies to my colleagues on Monday morning and received quite astounded responses.

As I have already asserted, I was impressed by the new man in the office. That I went out of my way to be a sort of emissary from him to his betters is also true, for I wished to help welcome him into our society. Also, I felt the essay I had read over the weekend proved without a doubt that he was to be a boon to our office. He had a very personal knowledge of his own system. If the system he had created had any contact with reality (and I instinctively knew that it did), then we had assumed a very estimable knowledge into our midst, at no cost to the company, at least in the beginning, and with little egotistical debit, for his personality did not seem to ring with self-conceit, as is often the case when knowledge and an ability to manipulate the world are combined inside some body and made prescient to a collection of viewers, who respond with kudos and help to generate a sense of exaggerated self-worth.

[INSERT]

PART TWO: THE SECOND IMPRESSION

I.

Michael Fox, through the local publication of his treatise on the day-night cycles of stock prices, established himself in the eyes of his colleagues as that, a colleague, someone with whom an intelligent discussion of the markets might be both appreciated and enlightening. It is true that he also represented a further threat to those in power in the office--especially to Robert Raines, with whom a rivalry was already developing, even if it was not as yet manifest.

The first to approach him concerning his article, after myself, was, of course, Candace Rivers. First I should report my own discuss with Michael Fox. In fact, I asked him if he approved my sharing his ideas with the other members of the firm. There is, in this business, a serious decorum: many ideas are guarded. Membership in selected groups of good minds is often requisite before secrets are shared. Certainly no others in the office would circulate ideas, however abstract, randomly among their fellow professionals, either from fear of scorn or theft or misunderstanding; perhaps the greatest fear of all was that some social-political order might be broached by such candid distribution of genius. This might result in the silent political rivalry so common in professional environments, and quite often lethal.

The office was frightened of ideas. Yes, this is true. Not that we were frightened of old ideas. We all read a great deal about the revolutionary thought of the markets, systems which had transformed market understanding. We were historians in that sense. New ideas, as is often true to an historian, are, by the fact that they are new, are either useless or threaten old truths to which the historian has devoted his life.

"Of course," Michael Fox replied. "Share it with anyone who might be interested."
"How long have you been developing these ideas?" I asked.

"Oh, I don't know. Several years."

"At school?"

"No. I studied literature in college. Shakespeare, Melville, James Joyce. I developed an interest in the market much after school."

He looked so young in many ways. The closer I sat to him the younger he looked, even with his graying hair. His features were sharp, thin.

"How old are you?"

"Thirty-four."

I laughed.

He smiled. "Did you think I was older?"

"I don't know," I said. "You look about twenty-eight. You feel about forty-eight."

He laughed.

"Where did you grow up?" I asked.

"In Wyoming," he said. "My father worked in an oil refinery in Sinclair, Wyoming. My mother was from a long-established family in southern Wyoming. I grew up there, went to college in Laramie, down the road. I studied literature, graduated in 1974."

"What did you do then?" I asked. It was all very natural. He was drinking a cup of coffee. He showed no reticence in speaking. He was, in fact, very natural in his behavior, his mannerisms. I have known other people from the Rocky Mountains:. His telling me he was from Wyoming did not surprise me especially: I knew there was something special about him, almost mythological.

"I went traveling. I spent time on the West Coast, in California. I was quite alienated from society. I moved from job to job. I wrote several novels. I lived in a cheap hotel in Los Angeles for two years, writing. Then I went back to Wyoming, and spent about two years living in the Red Desert, herding sheep."

That seemed almost unbelievable to me.

"They still herd sheep in Wyoming?" I asked.

"Oh, yeah. In southern Wyoming they do. It's mostly Basque sheepherders, who don't speak English. I worked with two Basques for awhile. I had a sheep-wagon; they shared one. We worked together. Sometimes we ate together. At night I would sit in my wagon, writing, using a kerosine lamp. I think they thought I was crazy."

Somehow we had veered away from his document on stock cycles. I had this mental picture of him sitting in a sheep-wagon at 10:00 at night, writing a philosophical novel. There was absolute silence and space in this vision. It was the height of the romantic, especially for a city-boy like myself (a suburban city-boy). I could hear coyotes in the distance. I could even see a repeating Winchester carbine standing by his writing table, in case the coyotes came in to challenge his dominance. In the distance two Basque shadows jabbered in their native tongue, drinking probably, with sheep-dogs crouching at their feet, perhaps dueling over a rabbit bone.

In fact, it felt almost superficial to me to insist on discussing stock cycles. It seemed somehow mundane. I was in the presence of a man whose experience was somehow larger than the sum of its parts--and to insist on discussing the sum of the parts (the Present) seemed to me unworthy.

While I was talking with him, Alice Roosevelt entered his office and told Michael Fox that Mr. Raines would like to talk with him. He excused himself. I rose from his desk, to leave--but I saw his notebook lying on his desk. I should have walked away. I realized that to pick up his book would be an intolerable invasion of his privacy. Still, I had watched him writing in his notebook with a sort of maniacal insistence; and my curiosity was piqued. I looked around to make sure I was alone. I opened the book to the first page, and read:

ßThe extreme natures make an epitome out of showers. Considerable light tones which

evoke grand larcenies and stimulate wild venues from which consolidation of prices are made.

There is a debate in the highest heavens: rudimentary obligations to achieve grace and to

deliver the mutinous creed. Unbeknownst to the many. Cataloging the martial influences,

beseeching the golden wheel to achieve a gratuity of form which will overmanage the extremes.

Consecrators of the failed moment. The tempest is given to the one who can understand it,

tame it or maim it, professing something logical (the tamer/maimer) as the source of the wind's

momentum, saying nothing about the motivator who lives inside the wind.

I was shocked when I read this. I was shocked because I had expected to see something totally logical: notes about certain stocks, certain technical formations that issues were making. What I found, instead, was something totally foreign, totally unrecognizable. Yet, absolutely intriguing. Had I found something synthetic, some recognizable article discussing chart patterns of IBM, I would have been disappointed. I had already built up, in my own mind, this new person as somehow different than the rest of us. If any of the rest of us had kept a notebook of imagery, it would have been very concrete, mundane data concerning our business. It would have made sense, it would have been recognizable. None of us could have written the poetic description above; nor could we decipher it. I did not believe it was without meaning. I was reminded, when I read it, of poets such as Milton or Shakespeare, from courses I had taken in college; when I read their poetry I knew that it meant something, but I was not able to gain access to it. It was as though the poetic mind did not allow a commonplace vision to transcribe its meaning. The poetic mind, it seems, is a different sort of beast, describing in what seems like imprecise images a very precise picture which can be clarified only when one gains access to the elements which compose it, much as does technical analysis of stock trends: one cannot understand the geometry until one conquers a fundamental knowledge of the abstractions.

I did not read on. Somehow I knew that he and I would become friends. He was very open, much like the landscape he described (the Red Desert landscape), or at least the landscape I imagined when he talked about herding sheep on the open plains. (I have driven through southern Wyoming. I found it to be rather frightening: all space, hostile winds, little water, desolate, isolate, stoic, like an archaic land, somehow still existent but never knowable, like the land it was, the land which had destroyed the dinosaur--given birth to it, and then had condemned it to a dry eternity.)

II.

The article, "Metaphysics In the Market", which I had circulated among my colleagues, marked the beginning of the rise of Michael Fox to a position of power in our office. I had, by the way, given a copy also to Robert Raines, my superior in the Technical Analysis sector of our company. He had almost immediately given a copy to his brother, his superior. When Miss Roosevelt had asked Michael Fox to step in to Mr. Raines' office it was in response to his (Harold Raines') quick perusal of the essay.

It is quite odd that it was Robert Raines who first approached his brother with proof that the intern might be more than a mere gopher - -for, over time, it was the same Robert Raines who would see in Michael Fox a dangerous usurper and would undertake to saboutage Michael Fox's position in the firm as a young star on the rise.

Another indication of Mr. Fox's ascendency was exhibited by his companion for lunch that Monday. Candace Rivers entered Michael Fox's narrow grounds shortly after he returned from Mr. Raines' office. At noon they left the office together, moving down the streets toward lunch. This was certainly more intimacy than the dear Ms. Rivers had shown any other man in her year with the firm. Nearly every man, at one time or other, had asked her to lunch. Had anyone succeeded (Harold Raines, of course, could 'order' her to lunch, for a business discussion, at which time he would gaze at her breasts, and talk abstractly about love and the desires of middle age), it would have been taken as a victory quite prestigious and lucrative in the quest of office status. It would probably have led to a 'rising star' status in the office, perhaps even to a promotion, all else being equal. For Candace Rivers was the great white goddess, the blonde queen who could grant gifts, merely through a smile. Anyone who succeeded in touching her heart was obviously blessed by the gods and would be rewarded in this life and in any life to come.

The fact that she went to Michael Fox and asked him to lunch was not lost on the rest of us. He had begun the conquest which was only mythological to us, was only dream, fantasy. And he had done it through immobility in some way: he had merely sat at his desk, like a dark star turned within, drawing the brightest suns and moons toward him, displaying even disinterest from a distance, while displaying a charming simplicity and friendliness when approached, drawing one closer and closer, to the point that one did not even notice that the dark star was drowning one with his silence.

Michael Fox was invited to attend our next weekly meeting of technicians. He sat quietly, took notes, spoke only when he was spoken to--this impresses people to no end. Had he come forward with opinions on trends for issues being discussed he would have no doubt alienated the well-educated men and woman with whom he sat in discussion. That he knew his place was an indication, to them, of his good judgment, and, let it be added, of their own keener judgment.

When he was asked, point-blank, for an opinion on certain issues, he demurred: "I'll have to run data and determine a trend-reading on these issues." He took a list of stocks, and several commodities, and assured everyone that he would make copies of his readings to circulate among the staff.

On the surface he acted quite rightly submissive. Below the surface, however, and I believe I could read him more truly than the others, he was bored. He was more comfortable writing his poetic discourses, or reviewing charts on stocks in his tiny little cubicle than he was discussing intangibles with a series of stuffed shirts, each of whom seemed devoted to the charthouse witticisms and plays on words which, as a way of life, stemming I am sure from the great lead of the master wit himself, Louis Rukeyser, seems to permeate our profession.

During our meeting, Candace Rivers, on several occasions, tried to draw Michael Fox into a discussion of the momentum of the market. She seemed even more lively than usual. There was a flush in her cheek. She seemed to laugh very easily, and had difficulty taking her eyes off of Michael Fox. This was noticed by all. Something new had come in to our office. Love was blossoming. At least, love in the heart of Candace Rivers was making itself apparent to the world.

III.

Michael Fox and I came to be fairly good friends over the next few months. His recommendations on certain stocks, both long and short, had proved to be uncannily accurate after that first meeting. Not that he had any real power in helping to determine the firm's portfolios at that point. He was new, and his recommendations were noted, watched, but not acted on in the beginning. The accuracy of his system, however, was not lost on those of us who were watching his recommendations and who were underperforming the market--afterall, as I have said, the firm was in a bit of a downtrend itself.

He and I went to lunch every now and then. He was not exactly a comrade, even with me. He was very private, even as he was friendly. He allowed me to get only so close to him; still, he retained a private place inside himself--something told me this private inner place was huge, incredibly larger than was his approachable, public facade, as if he carried the now-mythical, in my mind at least, Red Desert with him, hidden somewhere below the surface, a huge ocean of dry space into which he might pass at a moment's notice and pass once again from sight.

As honest and forthright and he was, still he was holding something back; there were things he was not saying, faces he was not showing.

At work, Michael Fox's influence began to grow steadily. He kept data on several hundred stocks, indexes, and commodities. It became a natural pattern of movement for brokers and analysts to walk past my desk, in to the tiny cubicle which now served as Michael Fox's office (which had once served as the copy machine closet). They would leave requests for analysis: Michael Fox would provide them with charts, and interpretations of price behaviors through his chief instrument, the Buy-Sell Differential, which measured buyer and seller strength. He also provided a longer-term reading, which he called the High-Low Differential Sum (HLDSUM), which totaled the High-Low Differential (the root of the Buy-Sell Differential) over a 4-year period. For an even longer trend reading, he provided what he called the HLDSUM Average, whereby he averaged the HLDSUM reading over the same 4-year period.

He began to steal influence away from Robert Raines. This was an intolerable situation, in the eyes of the elder Mr. Raines, whose ability to provide valuable technical analysis had diminished over the years, but who was, lest it be forgot, the brother of the CEO, and a family member in the great Raines Dynasty.

I saw his resentment quite clearly, even in its nascent stages--this, because I was looking for it.

Some will find it odd that I am able to put words upon paper in a narrative style, with this humble attempt to tell the story of the Fox and the Hare, the Fox and the Fox Hunt, as I am currently attempting. I have always fancied myself as an artist, a writer, with a writer's eye, much more than a businessman. I came from an upper-middleclass family. The profession of the writer, while as a figure admired, was not, as a genre, an acceptable manifest destiny. I studied literature in undergraduate school--but when I became convinced that this led nowhere really, in any practical sense, and with a desire to have a wife and a family, I attended graduate school to study business. Still, I always kept an eye for narrative converse. And, as I have stated, I saw the devilish professional envy creep into the eyes of Robert Raines quite early in our conversion to the new system of thought, created by our strange visitor.

Michael Fox appeared to be unmoved by the notoriety through which he began to be re-configured. He did not seem to notice it.

It became obvious, over time, to my mind at least, that Michael Fox was both usurping the position of Robert Raines, and, by so doing, was also preparing his assassin a very sharp lance. I believe Michael Fox knew this also. As I came to know him more and more--in fact I knew him better than any other person in the office, although Candace Rivers also came to know him--I realized quite clearly what I had sensed very early, that nothing passed his understanding, that he had a sort of unconscious clairvoyance, a depth of understanding which was 'unconscious'--that is, the more shallow level of his perception was unaware of what the deeper level was acutely aware--and the driver of his machine was this deeper level, the sleeper with his eyes clearly fixed from a distance.

Robert Raines did not appreciate the new-found celebrity of Michael Fox. He had allies also, the most notable and volutional being Bert Camden, the chubby cipher of whom I have already spoken. He was a man of no character, a man unable to keep a secret, a spy, a man incapable of sincerity. Of all the men in our firm, one can no doubt tell, he engendered in me the least respect, the least compassion.

He became Robert Raines' eyes and ears. He attempted to become friends with Michael Fox. There was something sinister in the way he carried himself, in the way he attempted to ingratiate himself with Michael Fox. I wanted to tell him of the true nature of the bloated, unimaginative thief of ideas and secrets--yet I had to remind myself that if Michael Fox was, indeed, a man of vision, that he would read Bert Camden's character as readily as I had when I first met him.

Bert Camden added nothing to the firm really. He remained in the employ of the firm because he was useful to Robert Raines. He was dominated by Robert Raines, in a display which often became quite embarassing. Raines did not respect Camden. He humiliated him often, berating him in front of his fellows. But Camden endured the humiliation; he had no visible sense of pride. Raines generally gave Camden tasks which required very little intelligence, and Camden accepted such tasks as if he had been handed a plum.

One night, after having left the office, I realized that I had left an important file behind. When I returned there was only one man still working. It was Bert Camden. He was sitting at my desk, a small desk lamp lit, taking notes from the same file I had left on my desk. He was writing wildly. There was really nothing much of value in the file. Some recommendations I had made to one of my regular clients, notes of our meeting, with charts I had used in the meeting. I wanted to write up the minutes of the meeting at home that night. But Camden was stealing information from the file. When I appeared, standing beside him (he was so involved in his theft that he had not heard me approach him), he stammered something about having been looking for a file folder, noticing the one of my desk, checking it to see if it was new, then being interested in what he read.

I told him that he new that he was trying to steal information.

He denied it. "I don't know what you're talking about! If you have some problem with me, then bring it before Mr. Raines! I'll have no accusations against my character! I have told you what I've done here, and that's it! I stand by it...!"

I did not take the matter to Mr. Raines. Raines would have shown a disgust for the man, would have called him in to his office. Nothing more would have happened. Robert Raines despised Bert Camden, but he found him useful. He would not have mentioned the matter further. And that would have been a sign to myself that it was not a matter for discussion.

I did inform Michael Fox, however, and a few of my other associates. Something subtle was occurring. Lines were being drawn. A polarization was occurring in the office, an old line against a new line. Armed camps were beginning to assemble. Of course, this was subtle, hardly recognizable except to an eye which was looking for it.

I warned my other associates that Bert Camden was involved in espionage in the office. I didn't, at the time, connect it directly to Robert Raines--that is, I did not suspect that Camden was spying as the consequence of an order from Robert Raines, who also sensed a coming change in the office, one in which he lost power, a change which he was preparing to oppose. At the time I saw it only as an attempt by an unimaginative man to profit from research being conducted by an associate. (Our research was not private; we shared our research throughout the office. But authorship and subsequent recognition for services rendered was something that could be appropriated by a wandering eye.)

Had I thought more clearly at the time I would have realized that a deep sense of insecurity had already entered the mind of Robert Raines, that he had ordered Bert Camden to remain behind that evening, to inspect the desks of the analysts to try to determine the extent of influence Michael Fox was attaining. It must be remembered that the company, at the time, was making a miserable showing in the race to manage the wealth of the region. There was acute pressure on the Raines family, severe pressure being exerted upon Robert Raines by his brother, Harold, who tended to belittle his brother by making snide comments which were often overheard by Robert Raines' colleagues.

Robert Raines was also under significant pressure to retire, to turn the reins (I apologize for this) over to a younger heart. To this purpose, no real challenger to the old man's position had emerged from the stable of business school graduates who had infiltrated the firm over the past number of years, playing for the most part the role of good junior analysts, good followers, careful politicians.

Now, however -- and it had happened suddenly – things had changed. Something magical was happening. There was a man of light in the office. And Robert Raines felt threatened by this change, this man from Wyoming.

During our weekly meeting of analysts, the dynamics began to change. Bert Camden now began to regularly challenge the views of Michael Fox. Michael Fox rarely voiced an opinion, usually taking a very circumspect position at the conference table, choosing a back seat in a sense. Everyone was encouraged to talk. Most people did talk. It was a social experience, as well as a chance to share ideas.

But Michael Fox rarely did talk; when he was asked a question he would usually make a note of the question and promise to analyze his database to try to discover a momentum trend on the issue being discussed-

Bert Camden, however – and we all understood this was from orders on high, became more aggressive in drawing Michael Fox into the discussion, usually in an attempt to challenge Michael Fox on fundamental financial issues. Michael Fox was not a fundamentalist. When he did offer opinions, usually on the trend of the general markets, equities, bonds, gold, the US Dollar, Camden would ask him questions on the fundamentals of the issue he was discussing. He would argue that gold should not be in a downtrend, as Michael Fox claimed, because gold production was down for the quarter by 17% over the previous year; demand did not seem to be lessening.

Of course, gold had fallen $3O/ounce, and would fall another $40 before recovering, supported by its fundamentals, which tended to provide a bottom (and a ceiling for that matter) in its trading range, but the fundamentals did not forecast the trading range itself: Camden became more and more the mouthpiece of the old man of the firm, the grand old man, who felt himself unfairly attacked by this stranger, a man without credentials, a man without a past, a shadow of a man, a man who also seemed invulnerable to attack.

When Camden tried to attack, his words slid off Michael Fox without piercing his body. Fox moved quickly; disarmed him with humor. Robert Raines would squirm; Camden would blurt out something inappropriate or awkward, making Michael Fox’s small victory even more obvious to everyone.

Robert Raines became more withdrawn; he had been an affable man, a man given to humor and optimism. More and more, his demeanor became silent, downcast. He would perk up only as Bert Camden tried to strike Michael Fox with his lance. But, as it became clear to everyone, to Robert Raines also, that Camden had not the personal stature to derail Michael Fox, Robert Raines' silence became even more profound.

Robert Raines obviously had come to envision in Michael Fox as a treacherous usurper, and, in very personal way, as his assassin, as his particle of death, the end pole of his life’s dream. And, largely because of his own brother's acquiescence in this, he felt without allies, with only a plump, unworthy, unimaginative, lackie of all trades willing to do his bidding.

Robert Raines became hopeless, more sullen, appearing more and more under siege.

Harold Raines, about two months after Michael Fox had begun his apprenticeship, agreed to a trial portfolio for Michael Fox. Fox would work with me (Harold Raines understood that we were becoming friends). I would be his sponsor. Harold Raines would track this portfolio personally. He intended nothing slack or radical; he wanted no charge of unprofessionalism leveled at his office. The portfolio would be managed by myself and Harold Raines; Michael Fox would merely be an advisor.

However, we would accept Michael Fox's counsel. And we would judge the effectiveness of Michael Fox's system on the basis of its performance in the real world.

IV.

Candace Rivers was also beginning to make a serious effort to enter the life of Michael Fox. Apparently her marriage was either not a wonderful match or it afforded a conjugal flexibility which was totally 'modern' (enlightened?) in its nature.

She clearly was interested in some form of intimacy with Michael Fox. This was not necessarily a benefit for Michael Fox, at least in terms of office politics. It did increase the legendary quality of his aura - for Candace Rivers was a beautiful, intelligent blonde, from a wealthy family, a striking woman with breeding and wit, which qualities made nearly every man she met view her as a great prize, a great challenge who might not only enrich a man’s savoring of pleasure but also one’s personal treasury and prestige. The fact that she was married only in rare instances deterred men from pursuing her. She was the queen of the firm – possibly the Queen of Eugene. As I have said, nearly every man in our office had tried his hand with her. She encouraged this in some way, for she was very charming with men; she loved to laugh, to show her perfect straight, gleaming teeth; she loved to flirt, for this was a gift she had perfected since childhood as a way of keeping people close enough for her own possible benefit, but far enough away as to not become an obstacle for her.

My description may, in some way, seem to render Ms. Rivers as somewhat duplicitous -- this is not my intent . I, myself, was quite taken with her when we first met (and, if I am to be totally honest in the telling of this tale, am still somewhat smitten by her naked charm and her beauty). Men liked to be near her. She smelled good, and smelled rich, as if her body had been perfumed with gold-dust prior to her birth, as if there had existed a special station in heaven where human souls, prior to birth, gathered there according to their quality, bloodline, perhaps to the color of their hair.

Candace must have awaited her incarnation in the highest of clouds, the clouds of gold; and when the great vacuum of prayer (for real love-making is a kind of prayer) had risen to these highest levels, she had descended, taking with her the clouds and the special perfume of clean, feminine wealth, beauty, intelligence, charm.

Yes, I also care for her. I do not mean to be critical of her when I suggest that she began to swim around the grounds of Michael Fox. A new Candace Rivers began to appear at this time, a woman no longer in control of her position and her power. She began to forget herself, appearing vulnerable, misplacing her superior detachment momentarily.

Where Candace had once controlled absolutely the arenas of lust, other sexual combats (she was not a passive woman), with the men in our business, those who had suggested to her something romantic or indiscrete, either directly or through their behavior, now she no longer controlled this field.

Michael Fox did not pursue Candace Rivers. He did not approach her. He actually withdrew from her, resisted her own advances, understanding in some way that the indiscrete act, at least in this context, was not appropriate, and, hence, unacceptable.

Candace Rivers was changing. Before, she had been eminently professional. She was always the most prepared member of our group of analysts which met each week to discuss trends and strategy. She was a natural. She was a fundamentalist, and had a very good record of picking stocks on the basis of cash flow, debt-to-cash flow ratio, and market valuation.

After Michael Fox arrived, however, (that is, after she became taken with our strange colleague), she became, sequence by sequence, more careless in her professional preparations, even to the point of having no answer when asked to respond to a question by Robert Raines at our weekly gathering.

"What is your projected earnings rate for EMC Corporation?" Robert Raines asked, “year over year.”

"I'm not sure," she replied, looking Mr. Raines in the eye. "I haven't had time to prepare an analysis for EMC."

There was dead silence.

Robert Raines was shocked. He was a little bit angered also, for he had noticed the fascination his little goddess had been developing for the interloper. Robert Raines had been grooming Candace Rivers for a series of promotions in the firm. In fact, of all the analysts, Candace. Rivers was the most likely to rise to a position of power in the firm. She was not a technician, so she could not replace Robert Raines directly, unseating him as the master of point-and-figure, Japanese Candlesticks, Fibonacci retracements, linear regressions and Bollinger Bands.

However, there was no reason that a re-thinking of the firm's bias might not make sense at some point—that is, away from the technical bias of Robert Raines toward a more traditional, conservative value

orientation. Afterall, the technical approach of Robert Raines, although tremendously successful for the firm throughout the late 1960's and 1970’s had withered somewhat in the Carter Years and had thoroughly regressed in the 1980's.

In one of the most grievous moments of Robert Raine’s professional life, he had dismissed the technical readings of his associates in the firm in August of 1987, reasoning that his own analysis of the markets indicated a minor pullback would occur in the Fall of 1987. He asserted that the market's fatigue was not a fatal fatigue, but rather a pause in an otherwise bullish trend.

Then, when the market crashed in October of that year, Robert Raines retreated to his office, much as Josef Stalin had retreated to his office when Hitler had sent his panzers across the Russian border in 1941. Robert Raines did not come out for two days.

Finally, in a move borne on two days of panic, Raines sold much of the firm's holdings, envisioning a long decline of about 10 years duration. Of course, he sold at almost precisely the time he should have bought. It was hard to blame the man -- there was so much panic in the air.

However, this entire episode shocked the firm so much, and shook Robert Raines to the point of moral paralysis. He stepped aside as absolute czar of investment policy. Harold Raines had been preoccupied with public relations, and with attracting investors. His brother's investment decisions had been strong for so long -- there seemed to be no need for fraternal oversight.

But the Crash of 1987 changed all that.

Harold Raines became the director of investment policy. Robert Raines became the chief of technical analysis. Randolph Messenger became the chief of research. And new hiring tended to lead the firm away from the technical, mystical side of investment, back toward traditional fundamental research.

Robert Raines had long scoffed at fundamentalism, claiming that price movements in the markets anticipated market fundamentals – that fundamentalists were, so to speak, always behind the curve, looking at a company’s past, while technicians kept the pulse of the living entity that the stock represented.

Price movements, as illustrated in price charts, magically illuminated all the financial data that was hidden in a company's balance sheet, All one had to do was to master the arcane language of the chart patterns and formations to understand a company’s potential for generating earnings growth and contracting debt in the short-, intermediate- and long-term time frame.

As a young man, Robert Raines had read the classic text Technical Analysis of Stock Trends, written by John Magee and Robert Edwards; the book had changed his life. Robert Raines kept a new copy of the book in his office on a pedestal, insisting visitors pay respect to the unique genius of its co-authors, before embarking upon discussions of more mundane but not unconnected intent.

Robert Raines had dominated decision-making at A&E Investments for nearly three decades. But now he had lost his magic. He was hanging by a thread. This was all very clear to him.

The fact that Robert Raines’ personal choice for ascendancy in the firm seemed to be losing her self-discipline was not an encouraging tend in the mind of Robert Raines. He had come to a decision, after having lost his power in the great debacle of 1988, to sacrifice himself one last time for the firm, in a grand fiery display of self-sacrifice, casting himself upon the pyre for the good of the firm and for the good of the family.

He intended to personally groom a highly-qualified successor – the said, beautiful, Ms. Rivers -- to announce his own decision to step down in a more dramatic fashion, at the perfect moment, perhaps at the annual dinner with investors, and recommend, as the future of the firm, the gracious, sophisticated, unimpeachable Candace Rivers. That would be his final act at A&E Investments.

Then Robert Raines would quietly retire to the family estate in Sun River, Oregon, in the Cascade Mountain Range, under the looming presence of the Three Sisters Mountains, to play gold and ride horses and drink bourbon until he died.

I have said that nearly all the men in the firm had made proposals of some kind to Candace Rivers. One who had not was Robert Raines, who treated Ms. Rivers with the utmost respect. He had, from the very beginning, favored Candace Rivers with commissions and promotions, treating her always as a special member of the Raines family. She was the daughter he and his wife had never had.

Now, as he watched Candace Rivers throw herself at Michael Fox -- clearly his personal adversary -- Robert Raines felt several griefs: one, certainly not a selfless one, of seeing his plan of self-dismissal with grandeur manifestly threatened; second, more unselfish in nature, he worried that the young woman, for whom he genuinely cared, was chasing some strange enchantment unbecoming to her position and to the position of her family.

Candace Rivers was an aristocrat, as were the Raines brothers. In fact, nearly everyone the Raines brothers hired was from an upper-middle class family. They sought a sense of class status when hiring, a sense of breeding. Afterall, they were living in the high ethers. Only one accustomed to those ethers could survive there. One undeserving of such a lofty atmosphere would either succumb to the purity of such an environment, and be destroyed by it, or else irrevocably pollute it in some way, destroying it for everyone who had tried so hard to sustain it.

Michael Fox, Robert Raines was certain, would not be destroyed by the purity of power – and by purity of power I do not mean to confuse moral purity with naked, unrestrained will. Robert Raines felt much more powerfully the danger that Michael Fox would, instead, destroy the throne. Michael Fox was a danger to decency, a danger to authority, and a danger to traditional order. In his mind, Robert Raines saw clearly that this perhaps unconscious unholy revolution – for Michael Fox was a kind of demon, there was no question about this -- was beginning to be realized, step by step, a revolution Raines felt increasingly unable to resist.

V.

Another reason Michael Fox was teamed with myself in our new-found trading partnership was that we both were interested, and l was at least nominally experienced, in the trading of stock and index options. Had old Raines and Michael Fox agreed, as did I, that his timing system seemed very well-suited to the trading of options. An option entitles the holder of the said option to buy (if a call option) or to sell (if a put option) a stock or index at a specific price (the strike price) at a certain date (the expiration date). Thatis, if l buy l00 Coca-Cola January 50 call options at 1 ½ points each, I pay $15,000 (100 x $150) for the right to buy10,000 shares of Coca-Cola at $S0/share (each stock option covers 100 shares of the company). If, at expiration, the third Friday of January, Coca-Cola is trading at $58/share, I could buy 10,000 shares at the strike of $50/share. If I wished to take a profit at that point, I could sell those 10,000 shares at $58/share for $80,000.00. This represents a substantial profit over a $15,000 investment. However, there are risks. If, instead of trading at $58/share at expiration, Coca-Cola is trading at 49 1/2, January 50 calls expire worthless. The original $15,000 investment is lost.

One can also sell options bought, during the life of the option, prior to expiration, for whatever price the market will support, based on the price of the company in the market. For example, if Coca-Cola in late December, is trading at $55 but is beginning to show signs of topping out, losing momentum, one could sell the options in the market prior to expiration. January 50 call options in late December, with Coca-Cola trading at $55/share, would probably be selling for about 5 5/8 points per option, the 5 points for their intrinsic value ($55 price minus $50 strike) plus about 5/8 of a point for what is called "time value". Time value signifies "potential movement" with relæion to proimity to expiration: time value shrinks with time, as the expiration date approaches. The profit, if able to sell all 100 call options at 5 5ß, would be 541.,250 ($56250 - $15,000 original investment).

As one can see, there is great leverage in options trading. That is, a relatively small sum of money controls a much larger sum. There is, of course, as I have said, significant risk

Market timing is especially important in options trading, because of the time element. In buying and selling stocks, the time factor is much less crucial – timing is crucial; but the time element less so. If one buys 10,000 shares of Coca-Cola at $5O/share, and the market declines for two months, leaving Coca-Cola trading at $4l./share, there is a significant paper loss of $90,000. But there is no requirement that one sell at the end of two months. Indeed, one can hold a stock for ever to attempt to re-coup initial paper losses. If a company pays a dividend, then it is not lost time, waiting for the stock price to recover (no dividends are paid on stock options). Also, if one is courageous enough, and believes in a company enough, one might, upon the decline of Coca-Cola to $4l/share, buy another 10,000 shares. This essentially lowers the break-even point to $45.50/share, from the original $50/share. If one had the courage to buy 20,000 shares at $4l/share, one would begin to profit when Coca-Cola recovered to 44 1/8.

I am not trying to sell this ‘dollar cost averaging’ as an intelligent investment practice; my point is that time is not a factor in the traditional purchase of shares of a stock. Time is, at least in one sense, always in the favor of the investor. If a stock declines, one might wait 20 years for it to recover its value. That, of course, would be foolish. Better to take the loss and put the money some place with a more positive trend However, one does not feel compelled, while holding stock, to watch the clock. That is not true with options, for the value of options is always diminishing over time. Decaying. Michael Fox said that an option was like a sub-atomic particle – one needed to be aware of its rate of decay.

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