Trading Reality

by Michael Ridpath

  I could sense the tension in my voice as I said this. So could Richard. ‘Are you jealous?’

  I shrugged. ‘Perhaps. She saw him last night at a party. It shook her up. I think I had hoped that by now he wouldn’t have that much of an effect on her.’

  I was jealous, of course. But it was something I had done my best to deny over the last year, and I didn’t want to admit it out loud to myself, or to anyone else. I hoped that Karen’s love for me would one day match her passion for him. But even as our relationship improved, I feared that it would not.

  ‘Sorry, I shouldn’t have asked that,’ he said.

  ‘Don’t worry, I don’t mind.’ And I didn’t. One of the reasons that I liked talking with my brother was that we often touched on things that were important to both of us, things that were difficult to say to other people.

  We arrived home to be met by the smell of spices.

  ‘Hi Richard,’ said Karen, offering her cheek. Despite wearing faded jeans and one of my old white shirts, she still managed to look elegant. ‘Oh, Mark. Brian’s just leaving. He wants to have a word. I think he wants to be paid,’ she whispered. ‘Would you excuse me, things are bubbling. There’s a bottle of Sancerre open, Richard.’

  Richard poured out a couple of glasses, and refilled Karen’s, while I sought out Brian.

  He was packing up his brushes in the guest room. He was a small man, but wiry and capable-looking, and he had indeed proved able to organise the band of thugs who worked for him into an efficient team. He had fallen for Karen’s charm, and had been happy to redo bits that she thought were not quite right. She had discovered that he was an ex-con gone straight. I some-how doubted the second part of the statement, but he had done a great job quickly.

  ‘I’ve left my bill on the kitchen table,’ he said. ‘I’ll pick it up the following evening, if you don’t mind. And, er, it will be cash, eh, Mark?’

  ‘Fine,’ I said, wondering vaguely about how I was going to get two thousand pounds in cash by the following evening. ‘Thanks, Brian. You’ve done a great job. Good night.’

  Back in the kitchen, supper was ready. We sat down to a delicate lamb curry.

  ‘The house looks good,’ said Richard. ‘A hell of a lot better than the other holes you’ve inhabited.’

  I smiled. He was right. It was a definite step up. ‘Of course. Curtains in every room.’ Actually, this was a little luxury that Karen had insisted on as she had spent more time in the home. Most of the light bulbs now had shades too.

  ‘What was all that fuss about this afternoon?’ I asked Karen.

  ‘I told you everyone’s jumpy about a reorganisation. Well, Jack’s giving Sally a rough time. I think he wants to fire her, to show that he’s cutting costs and headcount. It really annoys me. She hasn’t got much experience, but I’m sure she’s going to be good in time.’

  ‘She was on Ed’s training programme,’ I said. ‘He says she did very well.’

  ‘Well, I hope she gets a chance to show it,’ Karen said. ‘Ugh!’ she shuddered. ‘I can’t bear that man. It’s all right for you, Richard. If you run your own company you don’t have to put up with this kind of stuff.’

  Richard laughed. ‘Oh, I don’t know. There’s politics in small companies, too. I can assure you of that.’

  ‘And how is our little company doing?’ Karen asked. She called FairSystems ‘our little company’ because it was just that. Or at least she and I owned 7.5 per cent between us.

  ‘Really well,’ said Richard, his face coming alive. ‘It’s been a struggle, but I think we’re nearly there.’

  ‘Uh, nearly where?’

  ‘Remember when you invested a year ago, I said that my goal was to put a virtual reality system on every desk and in every home? Well, I think the technology is almost in place to do that.’

  ‘What, so we’ll throw out the microwave and the toaster, and get a virtual reality machine instead?’

  ‘No,’ he replied, smiling. ‘But in a year’s time it’ll be possible for anyone who owns a personal computer now to buy a VR system. And within five years, they will have.’

  ‘What’s the big breakthrough?’ I asked.

  ‘I’m afraid I can’t say. It’s very confidential. But it will be big.’

  ‘Oh, come on, you can tell me.’

  ‘Sorry. It really is confidential. It goes beyond inside information. What I’m talking about will change the whole virtual reality industry and the way technology affects all of us. And I can’t let anyone outside a small circle within the company know about it.’

  I was a little put out by Richard’s discretion. It wasn’t as though I was going to rush out and tell the competition, and he ought to have known that. He ought to have trusted me.

  ‘Oh goodie,’ said Karen rubbing her hands. ‘So that means our shares will go up again.’

  There was a bit of history here. Nearly a year before, Richard had approached me distraught. FairSystems was short of cash, but a flotation on the London Stock Exchange had been planned to raise more money. Suddenly the company’s brokers had pulled the float, saying that market conditions were not quite right. FairSystems was left high and dry. The company’s prospects were excellent, but all the cash it was making from the growing sales of existing products was being eaten up by new developments.

  I did two things. Karen and I between us put in seventy-five thousand pounds to tide the company over for a few months. We invested at a price of fifty pence a share.

  I also suggested that Richard call Wagner Phillips, a San Francisco stockbroker that I had heard specialised in small technology companies. Wagner Phillips did an excellent job, and the company floated in November that year on NASDAQ, the American stock exchange for small companies. The shares were issued at a price of ten dollars, and in the first couple of days of trading, moved smartly up to twelve. Given our investment price of fifty pence, or about seventy-five cents, this represented a huge paper profit of about eight hundred and fifty thousand dollars each. Champagne all round.

  However, at flotation we had been obliged to sign an undertaking not to sell any of our shares for two years. Nothing happened for three months or so, and then the share price had begun to drift down steadily to today’s six dollars. And there were still eighteen months to go before we could sell out.

  Richard hesitated. ‘Yes, they should go up,’ he said, with an attempt at conviction.

  Karen’s face showed she had heard it all before. And, indeed, we both had. Richard had always said that FairSystems would be worth hundreds of millions if we only hung on. Until then, I’d been inclined to believe my brother. Karen hadn’t.

  She’d known what she was doing when she had made the investment. She was, after all, an equity saleswoman. And she still had a very handsome paper profit. But eighteen months is a long time in the computer world, and Karen wasn’t convinced that FairSystems would be around at the end of it. She had seen lots of high-tech companies come and go in her brief career. I knew she felt like this and I felt guilty for having suggested the idea in the first place.

  ‘It was actually FairSystems’ share price that I wanted to talk to you about,’ said Richard.

  Both Karen and I leaned forward. We were intrigued.

  ‘I’ve done some analysis of the price movement since flotation, and compared it with a sample of similar stocks whose prices have also fallen. There’s something strange about Fair-Systems.’

  ‘What?’

  ‘Let me show you.’

  He fetched his briefcase, and produced some printouts of graphs and statistics. They were difficult to decipher, even with Richard’s explanations. It was typical of Richard to do the most thorough statistical analysis of any company’s share price I had ever seen.

  ‘So, what does all this mean?’ asked Karen.

  ‘It looks as though FairSystems’ price has fallen on unusually heavy volume given its shareholding structure.’

  Karen looked at the graphs, tables and Greek letters, and
nodded her head. ‘OK. So what?’

  ‘Well, that’s what I’d be grateful if you could find out. I mean, all I can do is look at the numbers. You can talk to your contacts in the market and see if they know anything.’

  ‘Have you spoken to Wagner Phillips?’ As FairSystems’ broker, they should have been able to explain any strange dealings in the stock.

  ‘Yes. They say it’s just the company’s bad performance.’

  We watched Karen. She was staring at the numbers, thinking. Hard.

  ‘How much cash have you got left?’ she asked.

  ‘Well, um, not much.’

  ‘Not much!’ I broke in. ‘You raised five million dollars six months ago! Has that all gone?’

  ‘Nearly,’ said Richard. ‘But we’re expecting an advance payment from one of our customers, Jenson Computer. That should tide us over for part of the summer.’

  ‘And then what?’ I was exasperated. The bloody company was going to run out of cash again!

  Richard shrugged his shoulders.

  ‘What do Wagner Phillips say?’

  ‘They’re not much help. They say it’s too soon to go to the stockmarket for more money. But they have a possible purchaser for the company.’

  ‘Who’s that?’

  ‘They won’t say. They say their client insists on anonymity.’

  ‘Well? Are you going to sell?’

  Richard looked down at his hands. The outside two fingers of his left hand were missing above the first joint. He seemed to be checking to see if they had reappeared. ‘No.’

  ‘No? Richard, you’re going to go bust unless you do something!’

  ‘It makes no sense to sell just now, I promise you. Trust me.’

  ‘Yes, well I think you should sell out while you can,’ I said. ‘Bankruptcy is serious. The chances are your ideas will be lost for ever. People will lose their jobs. We’ll lose our money.’ For all Richard’s intelligence, it seemed to me he was lacking a sense of perspective. He was in a losing trade, and he should cut his losses early. I was a trader, I knew about things like that. Richard was an inventor, and he didn’t.

  ‘I know bankruptcy is serious!’ said Richard sharply. ‘And believe me, I care. Especially about my people. Some of them have stuck with me for five years. They’ve worked seven-day weeks, and created miracles to meet deadlines. And I’m not about to throw all that effort away. I’ll look after them. OK, I know it’s going to be difficult, but we’ll make it, you’ll see. And when we do, your shares will be worth a damn sight more than they are at the moment!’

  There was silence. Both Karen and I were taken aback. Richard never lost his temper.

  He took a deep breath, and turned to Karen. ‘Well? Will you ask around?’

  ‘OK, I will,’ said Karen soothingly. ‘But it may turn out that people are just selling because they think you’re going bust. I’ll let you know.’

  I made some coffee, and we drank it quickly before going to bed. I was angry with my brother. He was going to lose us all a lot of money through financial carelessness as much as anything else. I had believed in his stories of virtual reality. I still had confidence in his technical ability to achieve all that he had set out to, although I was beginning to wonder about ‘big breakthroughs’ that he couldn’t even explain to his own brother. If only he had had the common sense to hang on to some cash while he’d got it.

  I was still angry when Richard got up very early the next morning to catch the plane to Edinburgh. What he said at the door only made it worse.

  ‘Karen is very attractive, isn’t she?’

  ‘Yes, she is,’ I said, a touch of pride in my voice.

  ‘Be careful of her, little brother.’ He turned, and walked out into the empty early morning street.

  I was stunned. The patronising git! Karen had put up her life savings to bale him out, and he had squandered them. And it wasn’t even she who had got angry with him last night, it was me! I had every right to be cross with him and he had no right at all to talk to me like that about her.

  Noisily, I clattered the final debris from the previous night’s dinner into the sink and washed it up. But amidst the anger, something nagged, a truth from which I couldn’t hide. It made me more furious.

  You see, ever since I could remember, my brother had always been right.

  4

  Karen and I were both busy. Prices were still sliding, but in a slower, more orderly fashion. We were at the beginning of a bear market. That was fine with me, I would adjust my trades accordingly. I made sure all my positions were hedged. For every bond I bought, I sold short a different one. Selling short means selling a bond you don’t own. You are allowed to do that in the bond markets; it’s very useful. It means that in a falling market, the money you lose on the bonds you own is more than compensated for by the money you gain by buying back the bonds you sold short. That is, if you picked the right bonds in the first place, of course.

  Well, it was beginning to look like Greg, Ed and I had picked the right bonds. My two-year ten-year trade was only just beginning to work, but I was feeling more confident. Greg’s eights of twenty-one were rocketing up, or at least were falling slower than the bonds he had shorted. But we were both still a long way under water. Bob was still frowning, but he gave us more time.

  Karen schmoozed clients. She was out with one on Thursday night, and was due to meet some more on Monday in Paris. She decided to spend the weekend there with a friend with whom she had been on an exchange as a child. The friend had never really learned English successfully, and my French was pathetic, so I wasn’t invited. Our game of tennis was cancelled. Never mind. There was a good race meeting at Newmarket I wanted to go to.

  Karen got a late flight back on Monday. She didn’t arrive home till about ten. I poured her a glass of wine, and we sat on the sofa upstairs.

  ‘Did you have a good trip?’

  ‘Yes, great,’ she said enthusiastically.

  ‘How was Nicole?’

  ‘She’s fine. She thinks Jacques is finally the right one for her.’

  ‘And what do you think?’

  Karen giggled and held her thumb down. ‘Too boring.’

  ‘What, not as boring as me, I hope?’

  ‘Oh no, darling, nowhere near as dull. Don’t worry. How was Newmarket?’

  ‘Not too bad. Only twenty quid down. I’m taking Greg to Ascot next Saturday. Do you want to come?’

  ‘Sorry. I’d love to, but I really ought to see my mother next weekend. She’s being quite insistent. Do you want to come?’ She laughed. We both knew the answer. Karen’s mother was an overbearing, fussy woman, who worried about everything all the time, especially her daughter. She still lived in the detached house on the outskirts of Godalming where Karen had grown up. Karen’s father had walked out on both of them when Karen was twelve, and her mother had not been able to forgive him. Nor for that matter had Karen. It was something over which I could sympathise with both of them, and indeed it was something that drew Karen and me together. I could sympathise with her mother, but I didn’t have to spend the weekend with her.

  ‘But you don’t have to go on Friday night, do you?’

  ‘I’m sure I can put her off. Why? Have you got other plans?’ She smiled. Friday was her birthday.

  ‘I’ve booked a table at the Café du Marché. You remember that place.’

  She nodded, grinning. The last time we had been there, a year and a half before, had marked the transition of our status from friends to lovers. Of course she remembered.

  ‘That’s a brilliant idea,’ she said, and gave me a quick kiss.

  Karen was tired, and we went to bed. She was in good spirits, I could hear her humming in the bathroom. But when we were in bed, and I rolled next to her to stroke her thigh, she kissed me lightly on the nose and said, ‘Not now, Mark. I really am tired.’

  I lay there, watching her fall asleep, a small smile on her face.

  The insistent beep of the telephone woke me. I looked
at my alarm clock. Quarter to twelve. Who would ring me at quarter to twelve?

  I picked up the receiver. It was Richard.

  ‘I’m sorry to disturb you so late,’ he began.

  ‘That’s OK,’ I said, pulling myself up on to my elbow.

  Silence for a moment. I waited to see what he wanted. ‘Richard?’

  ‘Look, Mark, would you mind coming up to Scotland this weekend? There’s something I need to talk to you about.’

  ‘Oh, um,’ I played for time. Scotland was a long way to go just for a chat. ‘Can’t we talk about whatever it is over the phone?’

  ‘No. I’d rather talk face to face. It’s quite difficult. Well, very difficult actually.’

  It must have been for Richard to want to ring me. He had dealt with all kinds of stress in his brief career as an entrepreneur, and apart from the cash-flow problem last year, he had never needed me to help him out.

  I thought about airports and shuttles. Then I remembered the Café du Marché. And Ascot. I could just make it on Saturday night after the last race.

  ‘Will Saturday night do?’

  ‘Can’t you make it Friday?’

  I thought about cancelling my date with Karen. But, after all, it was her birthday. It was important to her, to us. I didn’t want to cancel. And I remembered what Richard had said about her the last time I had seen him.

  ‘No, it’ll have to be Saturday evening.’

  ‘OK, that‘s fine,’ he said, but he sounded disappointed. ‘Get the eight o’clock shuttle, and I’ll meet you at Edinburgh airport.’

  ‘All right. See you then.’ I put the phone down.

  Karen stirred next to me. ‘Who was that?’

  ‘Richard,’ I said. ‘He wants to see me this weekend.’

  Karen sat up, wide awake. ‘What about?’

  ‘I don’t know,’ I said. ‘But he sounded worried.’

  ‘Are you going?’

  ‘Not on Friday,’ I said, touching her cheek. ‘But I will go up on Saturday, after Ascot.’

  ‘Thank you,’ said Karen, giving me a quick kiss. ‘I wonder what it is. Wouldn’t he say over the phone?’