Madeline Carter - 01 - Mad Money

by Linda L. Richards

  “What was she like? The wife, I mean.”

  “She was beautiful. Perfect. Tall — probably as tall as I am — and blonde.”

  “She looked like you.” It wasn’t a question.

  “Oh no, Mom. She was beautiful. Like, magazine beautiful, you know? But with a Martha’s Vineyard edge.”

  “She looked like you.” Whatever. This was obviously not an argument I was going to win. Not with my — completely unbiased — mother.

  “Well, anyway, I did maybe a bad thing,” I said cheerily. “He’s out here to be the CEO of another company: the Langton Regional Group. They’re based out here in Culver City. Last week he told me they were making the announcement today. And… I feel kind of embarrassed admitting this, but… well… I bought a whack of them today.”

  “A whack of what?”

  “His stock. LRG.”

  “How is that a bad thing?”

  “Well, I acted on knowledge that I didn’t get through conventional sources. Which is insider trading. And, if everything goes the way I think it will, I stand to make a fair amount of money. So I’m feeling, you know, kind of guilty.”

  “Don’t be silly,” which is maybe why I’d told my mother all of this in the first place. If you couldn’t trust your mom to make “pooh-poohing” sounds in a situation like this… “I mean, he was your boyfriend back when. It’s not like he told you so you could make money. Knowing Ernie, he was just bragging. But to make a lot of money, I know that means you had to invest a lot. Will it be all right? This is Ernie we’re talking about.”

  “He was the world’s worst boyfriend, it’s true. But, since then, he’s made a whole career out of turning little struggling companies into little successful companies, so I’m actually pretty excited. And it’s not like I have to talk to him or anything. I’m pretty sure I’ll make a nice chunk on this one.”

  “That’s wonderful Madeline.”

  I love my mom. More, I like her. She’s a super nice person, everyone loves her and she just never has a bad word to say about anyone. But she has only the vaguest idea of what I do for a living, even after all this time. Which is only fair. She’s been working at a golf course for over 20 years, is now the manager and I’m never really sure exactly what it is that she does, either. Except, whenever I’m in town she manages to parade a large number of men around my age in front of me. Predictably, they all play golf.

  After I hung up, I quickly checked LRG: it was really starting to happen now. An hour after the announcement and the stock was trading at $6.25. And trading was brisk. It was a stock that usually had a daily volume of a couple of million max, and they’d already hit that mark and passed it. I looked at the clock. Nine-thirty am. Eleven-thirty NYC time. My gut said the stock would hit at least $6.80 by the East Coast’s one pm. If it happened that way, I could happily sell a big chunk of my early purchase. That would mean a profit of just under $20,000. — less brokerage fees, which would be inconsequential, a few hundred bucks. I grinned. I felt good. Not bad for my first day’s work. Later, of course, I’d wonder at my smugness.

  I put in a sell order for all 24,500 shares at $6.80 with no special instructions attached. That meant that, if LRG reached $6.80 at any time during the trading day, my sell order would be waiting if I was looking or not. If LRG went over $6.80 while I wasn’t looking, I’d beat myself up, but I’d do it with a smile on my face: A quick twenty grand is nothing to get too upset over. But, having watched the intraday trading chart carefully for a while and, as a result, feeling confident I knew how this was going to go, I figured LRG would be peaking out a couple of hours before the end of the trading day. I had plenty of time.

  I found that the constant watching was getting to me. This playing with my own money was costing me more — emotionally — than I’d thought it would. So I took a shower. A shower for crying out loud. Such was my confidence, such was my nervosity. I wanted to return to my computer to see a delicious fait accompli with my stock at its high of the day and at least some of the securities safely sold and the money, so to speak, back in the bank. So I didn’t hurry. In fact, I did the opposite of hurry: I made my mundane tasks drag out beyond the time I usually spent on them.

  I scratched Tycho’s tummy and stroked his glossless gray coat.

  I brushed out my hair — a hundred strokes — and put moisturizer on my face.

  I made myself a little sandwich: sliced Haas avocado and cream cheese on this really beautiful bread I’d bought on the weekend at a bakery in Santa Monica. Soy and buttermilk bread with funny little nuts in it.

  I felt celebratory, so I opened a bottle of San Pelegrino and enjoyed the fizzy way the water settled into the glass.

  I carried my little repast over to my computer, set it down, then — with a delicious feeling of anticipation — brought up my trading screen.

  There was a hugely disconcerting “N/A” where the quote should have been for LRG and the even more disconcerting: “Trading is halted pending announcement.”

  Now, trading halts happen all the time. And, as I used to be obliged to tell my clients, they’re not necessarily something to be concerned about. Yes: it means that the funds you have tied up in the stock stay that way until trading halts being halted. And, true, coming so soon after a happy announcement, it seemed fairly certain that this particular trading halt would mean something less happy. But they really aren’t something to get upset about.

  I didn’t want my sandwich anymore.

  I checked to see what the stock had been trading at before the trading halt: $5.86. Which was entirely the wrong direction. This was not good. This was not good at all.

  I watched the bubbles in my water erupt on the surface and dissipate. It felt like a metaphor. I poured the San Pelegrino into the potted palm next to my desk: Here. You drink it.

  I contemplated the vastness of what I had done. All of my cash. All of my liquid wad. I’d told myself I wouldn’t do that no matter what. It didn’t feel good. I didn’t feel good. In fact, I felt ridiculous, if you can feel ridiculous and queasy at the same time. When had I ever put this much of my own money — or someone else’s, for that matter — into a stock based on little more than a strong hunch? Exactly never, that was when. Hindsight is always 20-20, but now that I had the luxury of having it — because it was behind me — I wondered what I could have been thinking, what point I’d been trying to make, by playing it all on one lousy stock? Which was:

  “Stupid, stupid, stupid!” I said it aloud.

  I had read, prior to this moment, novels where, at some point or another, the hero says something like: “I felt like invisible hands were squeezing my throat, choking off the air and my very life.” Cheesy beyond belief. And yet, right that moment, that was exactly how I felt. The air was coming to me less easily than usual and the pressure around my throat was almost tangible. I knew I wasn’t about to fall down with some type of attack or anything, but I felt… beyond words.

  And it wasn’t simply fear of financial loss — though that could be devastating enough, I’ve always believed that there’s nothing about the stock market that’s a sure thing: every time you make a trade, you have to be willing to take the associated risk — so it wasn’t just that. It was also the feeling that I’d lost some professional edge that I’d believed in my whole career. Is this what happened at 35? Did your senses get dulled by time? Did your eye and your instincts become less sharp? Were your hunches, intuitions and gut feelings less reliable? That was a frightening thought to me. As frightening, in some ways, as an earthquake. You believe in the ground under your feet. You trust it will remain solid, remain steady. And I believed in my abilities — my talents — the ones I’d honed in over a decade as a professional trader. You learn to do things a certain way. You learn what works. You know what you’re supposed to do. That was just it, though, wasn’t it? I hadn’t done what I was supposed to do. That’s the double-edged sword of insider trading. If you make a bundle, it’s indictable: people point fingers. If you lose
your shirt, people snicker into their fists.

  And how can you not act on information that comes from somewhere inside? Especially if, like me, you are somewhere on the farthest edge of the inside? I suddenly remembered something my father had told me when I was 16 and he was teaching me to drive. He told me that, if you’re driving fast and your palms are sweating it means you’re going too fast: you should slow down. I pushed my palms across my desk. They left a glossy trail.

  After a quarter hour of self pity and self loathing — and with no change in LRG’s status — I kicked my somewhat sorry butt into gear. Dashing off an e-mail with the details, then dialing the Merriwether Bailey number felt like action. I’d sent Sal a postcard once I’d rented the guest house, but I hadn’t spoken to him since I left New York. He’d be trading right now, but he’d take my call: he’d know that I’d know when to pipe down and let him do his stuff.

  “Hey, hey,” he said when he heard my voice. “How’s Malibu Barbie?”

  “Skating, Sal. Until today. D’you get my e-mail?”

  “Naw. Lemme see,” I could hear computerish clacking over the line. “LRG. What are you peeking at a stinky little stock like that for?”

  “You know me, Sal,” I said by way of an answer.

  Sal had always liked playing with the big, solid stuff. Blue chip and related cousins. He’d teased that he’d leave the flyers for “cowboys” like me. He’d always said it with a smile and you could tell he liked this cowboy joke, but, underlying his jest was the fact that he knew what he knew and believed what he believed. If there were happier surprises to be had from the sometimes risky securities I tended to like, so be it: The risk attached to those stocks was always greater, as well. I was thankful that, today anyway, there would be no lecture. His voice told me that he still believed all that he’d ever believed, but I could tell he was too busy with his own trades to worry much about my style today.

  “Give me a sec’ and let me run it.” A pause. More computerish clicking. And then a not very encouraging, “Ouch. You buy?”

  “Yeah.” My voice was quiet. I would have paid money to be able to deny it. If I’d had any left.

  “Not today though, right?”

  “Yeah. Today.”

  “When?”

  “Maybe 9:45.” When talking with New York traders, you always use their time. During the trading day, New York time is everyone’s time.

  “Like I said: Ouch. What were you thinking?”

  Fortunately, I was spared answering by a spate of activity on Sal’s end: activity that didn’t involve me or LRG. I stayed on the line, listening to the familiar hubbub without even the faintest twinge of longing or nostalgia. Funny.

  Sal was off the line a long time — maybe 10 minutes — but when he came back, he had some news. “I asked a guy, who asked a guy. You know?”

  I did.

  “He says the dude is missing. The Billings dude. And not missing friendly.”

  “No way.”

  “Way.”

  “What do you think that means: missing?”

  “Dunno. That’s all I’ve got.”

  I knew better than to ask how he knew or from whom he’d heard. In fact, Sal had only told me this much because he knew I wouldn’t ask. I wanted to, but I saved it.

  “Well thanks, Sal. I guess that explains the halt.”

  “Yeah, but there’s more on your scummy security. You looked at the intradays? Looks to me like LRG had some serious short action this morning.”

  I suddenly felt, if possible, even stupider than I had before. And with my stomach plummeting to the region of my knees, I felt sicker, as well.

  “You can’t know it was short action, Sal,” I said while I brought the charts up on my own screen. “Not from the intradays.”

  “Of course not, Carter. I can’t know. But look at them. Study them. And tell me what you see.”

  And, of course, he was right. It wasn’t, at this point, verifiable. But the large blocks of stock that had traded together, and the prices they’d traded at, indicated pretty clearly that’s what it was. To anyone who was looking carefully enough and who knew what they were looking at.

  How had I missed this? Or rather, why hadn’t I checked? After Sal and I had said a quick good-bye — he was working and I felt the need to indulge in some serious self-flagellation along with the self-pity and self-loathing anyway — I looked carefully at the intraday chart. As I had suspected: the possible short action Sal was talking about had come at ten am Eastern time. So, in Madeline time, I’d probably been someplace between a shampoo and a condition when the first big whack of stocks hit the market and started a gentle plummet. By the time I was slicing my Haas, the plummet had gone as far as it could go because the trading halt had been called. And, who knows? If there had been no halt, LRG might have ridden the hump and continued the upward trend I’d spotted this morning. But, seeing what I was seeing, I doubted it. A lot.

  The invisible hands tightened their grasp on my throat. And I felt like an idiot.

  Shortselling is an odd phenomenon, something exclusively the domain of the stock market. I’ve tried to come up with real world parallels and I can’t. It’s completely counterintuitive: it goes against everything you’ve ever been taught about how monetary interaction works… outside of the stock market.

  A shortsell is when someone sells stocks they don’t own in anticipation of the stock price going down. When that happens, the seller can then cover their position by buying the stock they’ve already sold at a much lower price than they bought at, pocketing the difference. There’s the potential to make a lot of money in between. Sell at two dollars. Stocks you don’t own. Buy later at one dollar to replace the stocks you already sold. You keep the buck in the middle. The hitch is, in order for this to work — in order for you to make money — the stock has to go down. It simply must.

  In a shortsell the risk is huge. There’s only a certain amount a stock can drop: if you’ve bought in the traditional way, once you get to zero, you’ve lost it all and you can just write it off. But there’s really no top on how high a stock can go: in a shortsell that backfires you can lose an infinite amount of money, because the stock could just keep rising forever.

  There had been times in the past when I’d been so confident a stock was going to tank that I’d seriously considered shortselling it. But, in the end, I couldn’t make myself do it. There’s nothing actually wrong with shortselling: from a legal perspective or otherwise. I just can’t get my head around the part where you have to wish for a stock to go down instead of up. Like I said, it’s counterintuitive and intuition plays a larger part in my schtick than I tend to admit in public.

  But now, obviously, someone without my particular hang-ups was playing it large with LRG. From my perspective, the timing pretty much sucked. And then there was the whole “missing” thing. What the hell did that mean, exactly? Sal had said Ernie was “not missing friendly,” which could be taken in a number of ways, but that had to mean Ernie was not missing by choice. Which meant… nothing. And was he missing because of the shortsell? Or was the shortsell due to Ernie being missing? Or were the two completely not connected?

  A sharp knock on the door interrupted my self-flagellation. “It’s open,” I called, figuring I knew who it was. I was right and Tycho’s tail wagged, though he didn’t bother getting up at the approach of his young mistress.

  I swiveled around in my chair, but didn’t get up either. “Hey, Jen.”

  “Madeline do you have a few minutes to talk?” I looked at her more closely: her hair was pulled back in a messy ponytail and she looked a little agitated, but otherwise all right.

  “Listen kiddo: I’m having a helluva day. Can it wait until after one pm? My mind just isn’t here right now.”

  If Jennifer was disappointed, she covered it well. “Sure, Madeline. No problem,” she said as she went for the door. “Later.”

  I forgot about Jennifer the moment the door closed behind her and the realit
y of my situation came back. And it just seemed so flat and bleak: feelings I’d told myself I’d never have again. I didn’t have any Maalox in the house, but my insides were suddenly crying for it. It was like needing a fix.

  Here is what I know after spending practically all of my adult life trading: the market is like an ocean. It can seem unpredictable but, within limits, it isn’t really. At least, that’s how a successful trader feels: just like a successful mariner. That with all the right tools and all the right study, she can get herself around the world. If you followed the curve of the waves rather than fighting them, in the end it would all come right. Sometimes it’s just hard to see the end. That’s how I felt. But here’s the trouble with that analogy: ships sometimes sink, no matter what quality gear the crew has. If captains thought about it like that, they’d never leave the harbor. And brokers would all be herbologists.

  I scanned my newsfeed. Nothing from LRG. I nibbled at my sandwich, but even if I had felt like eating, which I no longer did, the avocado was starting to look distressingly like some sort of extremely ripe, brownish-green cheese.

  When the phone rang again, I jumped. I figured I maybe had one nerve left.

  “Hi sweetheart, just me again.”

  “Hey mom.” She calls me almost every few days, but never twice in the same day. I knew something had to be up.

  “Madeline, I’m going to tell you something, but you have to promise not to be mad at me.”

  Agreement is easiest in these cases. I know this. And your loved one will always forgive you if you renege. It’s just not my nature, though. “How can I promise that, mom? I don’t even know what it is.”

  A sigh. A pause. Another sigh. “I love you, you know that?”

  “Mom!”

  “OK, the thing is, right after I got off the phone with you earlier I called Roddy right away.” Something that was already low in me sank lower. Roddy was my father’s best friend and best golfing chum. Since Roddy is a financial consultant, after my father died it just made sense for him to take over my parent’s — my mom’s — investment portfolio. And Roddy is a good enough guy. He cared about my dad, in some ways loves my mom and so was certainly trustworthy. And I sure didn’t want to do it. Bad enough being responsible for other people’s money, but your mother’s? No thank you.