“Okay. Some ways are easier and some are harder. The easiest are index changes. Derivatives are constructed on indexes. Index funds invest according to the indexes. They have to buy a company due to rise on the index and sell off slips being kicked off the index. Simple: buy the companies rising on the index before the index changes.”
“Twice a year, at most four times a year. The rest of the time, just twiddle your thumbs?” said Grundström.
Aalto cleared his throat. “Of course, more advanced ways also exist.”
“Such as?”
“I slaughter the algorithms that are based on technical analysis,” Aalto said. “I watch what they do and once I’ve learned, I do the same thing before them.”
He took as an example the moving average—even an old man would understand that. Users of technical analysis peered at stock trends. When a stock came up from below to break the running average curve calculated from the previous thirty days’ quotes, the technical analysis set raced to buy it. Of course, the thirty-day average did not work anymore. You needed more complex methods to make money, methods that Aalto could illuminate a little, should Grundström express interest.
“I look at appropriate stocks that are close to the curve and I buy them. And one can always help break the curve a bit, if necessary.”
Grundström gave a laugh. “Pump and dump. If that still works, the market really is the same as it was.”
“That’s forbidden,” Aalto said. He allowed his cheeks to twitch.
Pump and dump was the classic method for manipulating rates. The stockbroker would begin buying lots of one specific stock and its rate would rise under the buying pressure. He would pump up the rate by buying more and more, skillfully timing his purchases. Bit by bit the other investors would become interested in the rising stock and start buying. Once the rate rose high enough, the original pumper switched from buyer to seller. He dumped his shares and raked in the profits.
Aalto knew that Grundström had used this method with great success. The giant of the 1970s and ’80s stock exchange had benefited from his reputation. When people in the Helsinki Stock Exchange trading hall noticed that R. Grundström Brokerage was buying stock, those at the desks of other banks and brokerage firms believed that Ransu knew something they didn’t. Sometimes this was true: yield data had reached Grundström or he had heard of some factory fire and was reacting to it.
Sometimes there was no reason for the purchases. But the others did not dare not to follow Ransu’s moves. Grundström was able to make money with and without information.
Aalto moved his glass and placed his phone between the plates. He opened an app and the screen filled immediately with an impressive number of price graphs, which he showed Grundström.
“Here are a few attractive objects on the Helsinki exchange right now,” he said, explaining to the former stock exchange czar the meaning of the abbreviations along the edge of the screen.
“Dull ones,” Grundström remarked. “Doesn’t it work for Fintec?”
“You like Fintec.”
“Fintec is one of the companies I’ve made the most on. It was always a good security. It was traded a lot but not too much. It was easy to bring others along with that one.”
Aalto typed in the Fintec ticker symbol and brought up the company’s price curve. He had forgotten how little Fintec shares cost these days and how little they were traded. It had been a hot item in the IT bubble at the start of the millennium, its market value ten times its current value. One month Aalto had doubled his student loan payment thanks to Fintec’s high rate in the fall of 1999.
The program did not show Fintec shares as particularly strong. Moreover, the share trading was so low that Fintec in no way belonged among the stocks he traded. A professional game required sufficient liquidity, market depth.
But if the old man wanted him to demonstrate his skills on precisely that ticket, the security dear to his heart, Aalto could do so.
“The traditional method won’t work here, but that’s no problem,” Aalto said. “Actually, technically speaking, Fintec shares can turn into extremely desirable objects in a moment. If it just breaks this curve heading down from above, the others will start selling, and then . . .”
Grundström waited. “Does that work?” he finally asked.
“You doubt it?”
“I always doubt.”
“Would you like me to actually do it?”
The waiter set down steaming dishes before them. Meat loaf and mashed potatoes, with brown gravy and colorful vegetables.
“Yes. In fact, I would,” Grundström said. He bent toward Aalto. “As you see, I am already an old man.”
And then Grundström said exactly what Aalto had wanted to hear.
III
The fierce October wind whistled from the north, from the university area, and bit his ankles through his thin socks. Wind collected in the narrow Fabianinkatu passage, whipping candy wrappers, receipts, and leaves into the air.
Jarkko Aalto pushed his hands into the front pockets of his coat. Gloves did not suit his style.
He was about to make the trade of his life. On the sacrifice side, he would cause the rates for Fintec stock to drop, and along the way earn several grand. The reward would be becoming the chief shareholder of R. Grundström Brokerage.
Moreover, under astoundingly good terms.
He almost felt as if he were swindling the old man, who must still be a little disoriented. Evidently the morning mugging had shaken Grundström and caused him to think about life’s impermanence, and that was probably why the man wanted a successor for his company, fast. Without bothering about the terms.
It was a situation where the seller wanted to sell. An exceptionally good time to buy.
Aalto had learned not to feel empathy. He did his job and nothing more: maximized his investments’ yield. If he had to choose, first came personal benefit, then employer’s and clients’ benefit. He had no need to think about anyone else’s benefit. He did not need to care what happened to the others or how they felt. He represented his bosses. Other interest groups had their own representatives. It was important to choose good advocates if one wanted to survive in this game.
It was not his responsibility to think about secondary things like human suffering. He was not even allowed to do that, if he wanted to fulfill his social obligation. If he started to get sentimental, the markets wouldn’t work efficiently and wouldn’t price the future right; instead, vague human considerations would distort the prices. He was a pureblood, straightforward market fundamentalist who did not care what others thought of him.
No. Actually, he did care what others thought of him. Jarkko Aalto wanted everyone to think he was the market tough, the Ransu Grundström and Gordon Gekko of today.
He had more than enough money. He thirsted for fame. He salivated for immaterial symbolic values.
He had suspected the reason for Grundström’s invitation to meet. Insight derived from intuition based on careful research was his most important capital. Even so, the directness of their conversation had startled him. He had expected the first meeting to involve probing, testing, getting a feel for one another, but Grundström had surprised him by saying that he hoped Aalto would rise to continue his work at R. Grundström Brokerage.
Grundström was selling, he was buying, and both ought to feign reluctance in order to obtain the most propitious terms. But Grundström had not even tried. Once he demonstrated to Grundström that he could carry the market, they’d conclude the deal: he would buy Ransu Grundström’s stake at a remarkably low price and agree not to sell the company or change its name for the next ten years.
It’s true that you have to be realistic: R. Grundström Brokerage no longer gleamed quite as brightly. Nevertheless, it still performed and scattered money to its shareholders. Some of the ownership had moved to the directors whom Grundström had taken on as partners, though he had kept a clear controlling interest for himself. R. Grundström Brokerage
was one of the desirable merge partners when the small agencies and property management companies clustered in the blocks around Aleksanterinkatu Street planned for the sector’s future. There was no doubt that Grundström had received lucrative offers.
But Grundström had chosen him as his successor. Aalto had never in all his career received more flattering praise. Merit awards of a couple million paled in comparison.
Ignoring the icy wind, he dug out his phone and pulled up the Fintec data page. The company’s market value barely exceeded a billion euros. Big investors hadn’t turned on their machines to trade for something so small. He would easily get the rate moving with a small number of shares, and once the market movement was seen, enough investors would join in. He could manipulate small investors into selling by using a few of his aliases and dropping negative hints on the Kauppalehti chat page about Fintec’s big service contract with the Swedish government.
As he walked from Fabianinkatu toward Esplanade, Aalto put some Fintec shares up for sale from his own portfolio. He didn’t have any Fintec, but that wasn’t a problem. Never had been. He would just buy them back at a lower price before the closing bell.
Brokers were of course absolutely forbidden to short-sell their own portfolios. He should have notified the compliance officer of his sale, and he should not have closed his position before three months at the very least.
Those rules were for losers. He had managed his own investments the whole time through a controlling interest company he’d registered in Luxembourg. He had neglected to report it to the internal regulators, and no journalist had the means to untangle the company’s background. It wasn’t wrong. The Luxembourg investment firm merely put him in the same position Ransu Grundström and his colleagues had occupied in the 1980s.
His phone jingled that his e-mail program synchronization was complete. The sale confirmation mails had arrived.
Aalto strode across the street to Esplanade Park and sat down on a bench. There were some empty ones: Helsinki at freezing point and spitting rain did not entice people to linger outdoors. He opened his e-mails. The highest purchase bid was surprisingly strong. He had only gotten it to move three cents with his sales.
Well, the first set of sales had been an unusually small one. He had just used it to test the market traction.
Fintec was a tricky stock in that he could only operate on the Helsinki Stock Exchange. The ticket did not really trade on other markets. Usually, with the bigger companies, Aalto took advantage of simultaneous quotations on the virtual exchanges. Finnish companies’ markets were noticeably thinner on the virtual exchanges than on the Helsinki Stock Exchange, which meant that getting the rates to move there took a lot less capital.
Aalto sold a second batch, twice the size of the first, at the highest bid. The technical sell signal was thirteen cents away, which meant a price shift of over 8 percent for the stock, but he didn’t need to reach that. Just as long as the others joined in. That would be enough to show Ransu Grundström that he was able to steer the market just as Grundström had done thirty years ago.
Fintec’s price still moved only a cent. He checked the completed sales: he was the only seller; Nordea, Evli, and Nordnet were the buyers.
Usually with a stock like this, the sale of several hundred thousand shares would spur more movement. Aalto was puzzled, but maybe old orders had piled up, since Fintec’s rate had stayed unusually stable. Moreover, 1.5 euros was a comfortably exact sum per order. That’s why there was more demand than was in any way warranted.
His phone had buzzed a meeting reminder ten minutes ago, but he had muted it. He could go late and enter without apology. That was his custom.
He wanted to concentrate on Fintec, because after this, the rules of his old job would matter little.
Aalto put the next batch up for sale. By now the cold had started to numb his fingers and the strength of the stock price caused some unease, but he brushed away both the physical and psychological discomforts.
IV
The umbrella was totally useless. The wind whipped the water at a forty-five-degree angle and would have inverted the umbrella in an instant, so I strode across Tehtaankatu with the closed umbrella in my hand and got wetter with each step. I was wet from the water pouring from the skies, and wet from the splash of a car plowing over a puddle on the uneven cobblestones. Water streamed from my dark all-season coat even before I had walked the short distance from the Kaivopuisto streetcar stop to Itäinen Puistotie. Water sloshed in my shoes.
The late-October rain had continued unbroken for three days now. It would stop on the weekend, if the predicted cold front reached Fennoscandia and changed the stuff falling from the sky from water to snow. A five-month November would commence, in which the slush from efforts to salt away the snow would be interrupted only by a few bright days of frost, which in turn would transform the streets into bad skating rinks.
I couldn’t do anything about the weather. My forefathers had selected this peninsula for their home. I could have moved somewhere and supported myself as a freelancer, but I was trapped by the language. In other countries they spoke noticeably poorer Finnish than in Helsinki, even though Helsinki’s current speech patterns, with the eternal contractions and mangled vowels, were not a pretty thing, either.
And then there was the fact that the people I knew lived here. Among them Ransu Grundström, who had invited me for a visit. I always accepted his invitations with pleasure, because Ransu was a sharp old guy, and even though his unbeatable contact network had thinned and drifted away from the burning issues of the day, he often knew things that were useful to me in my work as a journalist.
Helsinki’s bank circles had been buzzing all that rainy day about the stockbroker considered the most talented—in other words, the greediest—of his generation, Jarkko Aalto, and his surprising resignation. I expected to learn more about it from Ransu.
I asked the servant who opened the door to take my outer clothes to the bathroom to dry. He kindly handed me a soft plush towel, traditional Reino slippers, and dry socks, which I exchanged for my soaking wet ones. My feet got warm right away and I began to feel a little better.
Ransu Grundström was waiting in the living room, where seamark lights sliced at intervals through the grayness outside the full-wall window. A birch fire in the hearth cast a warmth that made the flue hum softly and steadily.
Ransu was clearly in splendid spirits. He asked his servant to bring us both glasses of cognac for a start, “from the bottle that looks like an aftershave bottle.”
I asked if we had something special to celebrate.
Ransu smiled. “Fintec is treating us to these drinks.”
“You were involved in that too?”
IT company Fintec’s share price had soared two days earlier when an American competitor had made an extravagant offer to buy out the company’s shares. The premium had increased almost 70 percent from the previous day’s closing quote.
“It’s good to be part of something like that,” Ransu said, and there was no doubt he had known of the plans before they were made public.
The unspoken agreement between us was that whatever Ransu told me directly—or at least, directly enough—about his own activities would never become public through me. On the other hand, if he hid something from me and I found out some other way, I did not hesitate to hit him full force on the front page. After I had exposed Ransu’s fuzzy Nokia trades, which led to a police investigation, he had not kept secrets from me, he had just been mysterious. I had demonstrated my toughness and he, his.
“I happened to obtain a large number of them a few hours before the buyout offer was announced,” Ransu said.
“Poor seller.”
“He suffered from his own greed.”
“Do you know who was selling? Did you make a block trade?” I probed.
“Perfectly ordinary trading. I submitted purchase instructions through three brokers and let the slips fall into my lap. Someone had a sudden stro
ng urge to sell.”
“You’re not telling the whole story.”
“Correct. I can’t tell the whole thing because if I did it would make someone look ridiculous. That’s not what I want. I don’t embarrass. I don’t humiliate.”
“You take the money.”
“True. That’s my handicap.”
We ate prime rib sandwiches with mineral water and had another round of cognac. We chatted about this and that, politics, finance, music—Ransu had an opening-night ticket to the National Opera where they’d just started performances of Verdi’s La forza del destino. When I thought it was appropriate, I asked if he knew anything about Jarkko Aalto’s unexpected resignation.
“If there’s no new job waiting, it’s a firing dressed up as voluntary,” said Ransu.
I told him I had talked with Aalto by phone a few hours earlier. Aalto said the non-compete clause prevented him from disclosing his plans.
“Not the best time for a gardening holiday,” Ransu snorted.
It was true that in the banking sector people usually resigned in March or April, after the previous year’s bonuses were paid, if the departure was of their own volition.
“You evidently don’t like Aalto.”
“I do, I do! I’ve actually met him only once, but I am grateful to him for a great deal. He’s a man of the present.”
I asked Ransu to elaborate.
“Nowadays profits come fast and losses even faster,” he stated.
More than that I could not extract from Ransu, but he had expressed his opinion with such conviction that there had to be information behind it. This was how I had learned to work with him. Once I had spoken with him, it was always easier to find out more from other sources. I’d make a few calls the next day and be able to write my own scoop about Jarkko Aalto’s firing.
When I left, the servant asked if I wanted a taxi. I declined—it was only a short walk to the streetcar stop, and the rain wasn’t coming down as hard as when I arrived.
I pointed out that Ransu still walked from here to the city center to work.
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