by Sam Polk
• • •
That night I walked alone on the beach. I was feeling my dad’s absence. We hadn’t spoken in two years, ever since I’d told him to fuck off. I missed him every day, but I was also very angry. Memories of things he’d done swooped through my head like battle hawks. My mind was polluted with them, thousands of instances where Dad had not been what I wanted him to be. So much of my life had been a reaction to my father. I was sick of living in the past, tired of being angry.
Linda had been encouraging me to do a shame ceremony, a Native American practice in which people dug holes in the earth, screamed their rage and shame into those holes, and then covered them, praying for the earth to keep their poisonous emotions.
To me, it just sounded corny. But when I returned from my walk on the beach, I was warming to the idea. I knew I needed to do something to get Dad out of my head.
The kitchen was dark. Daniel was standing by the counter, holding a thick peanut-butter sandwich. Not even an hour had passed since dinner. He looked embarrassed.
Daniel weighed over four hundred pounds. Of all the kids in my family, Daniel had taken the most abuse. He wasn’t successful in school like Ben and me, and his failures had infuriated my father. When Daniel was still in elementary school, he’d shown Dad a poor report card in the car. Still driving, Dad clubbed Daniel in the stomach with his fist, and called him an idiot. Dad’s rage had been too much for Daniel’s tiny body. Now his body had swollen to a size that could accommodate the burden he’d been given to carry.
I understood what Daniel was doing, because I had done something similar myself. That’s what my bulimia had been about. I was hungry, not for food, but for love. In college when I’d go to JJ’s Place and gorge, I’d feel disgusting afterward, like I didn’t deserve all that food, didn’t deserve all that love. So I’d eject it from my body.
My brothers and sister had all dealt with our pain differently, but it came from the same place. If you are treated as worthless enough times, you start to believe you deserve it. Then you create an external reality that reflects that.
When I saw that peanut-butter sandwich, I decided, corny or not, we were doing this shame ceremony. I walked over to Daniel and said, “You don’t need to hide that from me. I’m your brother. And we are both going to let go of our shame.”
On our last morning on Fire Island, my brothers, sister, and I woke before dawn and biked to a secluded beach. We sat in a circle. I explained the process.
We each began to dig a hole in the sand with our hands. There was a sense of embarrassment, but as we reached the tight-packed lower layer of sand, we had to really work, and the embarrassment faded. When our holes were finished, we leaned over and began to whisper into the holes everything we’d ever been ashamed of.
I poured everything into that hole—all the humiliations and embarrassments of my life.
When I finished, I looked up. Julia was crying. Daniel looked like he could talk into his hole forever. Then I heard a deep guttural groan emanate from Ben—it looked as if he were vomiting every humiliation, every failure into that hole. Then he, too, started crying.
They were crying. But I wasn’t crying. I’d done enough crying. For me, this ceremony was about saying good-bye. For too long, I had been my father’s son. Now my life was about different things—sobriety, healing, love. I was ready to let go of my anger, my sense of injustice.
I thought about the things I was grateful for from Dad—life, shelter, food, college. Dad had done the best he could, and in so many ways I was lucky. I was done being a victim. I would no longer allow how I’d been treated as a boy to control who I was as a man. I was finally ready to take accountability for my life.
Good-bye, Dad. And for the first time since I could remember, I wished him well. I hoped that he was happy and that we would one day talk again.
The last line of The Great Gatsby is, “And so we beat on, boats against the current, borne ceaselessly into the past.” Well, Jay Gatsby was borne ceaselessly into the past. But I had faced my past. Now I was ready to transcend it. For the first time, I looked at the world not through my father’s eyes, but through my own.
CHAPTER 32
The Mad Max Scenario
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Pateras Capital was founded in 1995 by Eldrick Frost and Peter Conroy, when they were both around my age (twenty-nine). Peter was a distressed trader and Eldrick was a research analyst, and they started Pateras with $4 million. Now, they managed $20 billion. They were both billionaires.
Eldrick and Peter made an unlikely pair. Eldrick had an Ivy League pedigree, and he looked more like a professor than a hedge fund manager. He was bald, save for a few wisps on top, and he wore frumpy sweaters and wrinkled khakis over his soft, pudgy body. He looked like a mole with glasses. But it didn’t matter what he looked like; his brain was all that mattered.
People whispered about Eldrick’s brain as if it were a national treasure. He was one of those guys you could envision having his brain cryogenically frozen, so that he might bring it back online a hundred years in the future, atop a wheeled robot with a microprocessor heart. It was widely believed he could have cured cancer, or fixed the situation in the Middle East, if only he’d focused on it. But he didn’t—he focused on investing, and he was a legend. His job was to know everything about everything, and he did.
Peter was the CEO of the firm and handled the hiring and firing. He was trim and tan, and his hair looked as if it had been clipped that morning, every day. His ties were worth more than I’d paid in monthly rent down in Charlotte.
And then there was Sean. He was ten years younger than the two managing partners, and not yet a billionaire. But with his talent, intensity, and instincts, he would likely ascend to that esteemed rank.
For the first six months I was there, I loved Pateras. I loved how library-quiet the trading floor was—like a church, but for the worship of money. I loved the freedom I had to focus on any sector, any company. I let my curiosity lead me. Sometimes I’d go into an empty office and read for hours. I couldn’t believe I was paid millions to do that. What I loved most of all was how close I got to sit to two billionaires and Sean, the kind of men I’d been reading about my whole life.
But after I returned from Fire Island, things started to look different to me.
If the market crash in 2007 had been a thunderstorm, the 2008 crash was like an earthquake and then a tsunami. In the first quarter of 2008, Countrywide (the largest US mortgage company), Northern Rock (the largest UK finance company), and Bear Stearns (a major US investment bank) all failed.
It’s difficult to explain how surreal it was when Bear Stearns went down. Bear Stearns was one of the most prestigious, well-respected institutions on Wall Street; it dissolved over a single week. At the same time, a headline announced that Eliot Spitzer, New York’s moralizing governor, was part of a prostitution ring. Is the world going mad?
Things got really crazy when Lehman Brothers went down. Lehman was much bigger than Bear Stearns, as powerful as Goldman Sachs, a derivatives behemoth. Because of Lehman’s massive derivative exposure, the Lehman bankruptcy roiled the CDS market. Every firm with CDS trades with Lehman suddenly lost all those positions overnight. For the first time in history, there was an emergency derivatives trading session on a Sunday. I received a text that morning from Sean asking me to come to the office. Across Wall Street, trading desks were fully staffed. Billions of dollars’ worth of derivatives traded that day.
For the next several months, I worked fourteen-hour days and both days on the weekends. Work was exciting but terrifying. Market dislocations meant opportunity, but now the market wasn’t just dislocating; it was disintegrating. I’d come home from work exhausted and fall asleep immediately, waking six hours later, still exhausted.
I was also exhilarated. Almost everyone on Wall Street got killed, except for us. Pateras was positioned defensively, and so
we were actually making money during the crash. From a safe vantage, I watched the unmasking of Wall Street. What a rising tide conceals, a falling tide reveals.
I knew the name and biography of every major CEO on Wall Street. I knew the investing style and track record of each manager of the top ten hedge funds. To me, these guys were legends. But in 2008, they all lost money. The average hedge fund was down 20 percent, and almost every investment bank had to be saved from bankruptcy.
It wasn’t that I felt superior because I was profitable during the crisis. What bothered me was what the widespread losses said about the nature of the business.
The careers of all these Wall Street legends had spanned one of the greatest bull markets in history. Maybe their returns over that time were less about individual skill and more about the fact that the market had done nothing but go up. Maybe what I’d thought was talent was simply being in the right place at the right time. Wall Street started to look less like a bunch of smartest-guys-in-the-room and more like a group of men who’d secured a seat in a ring of chairs surrounding a huge pile of money, a pile that was growing not because of their skill, but because that’s what money did. The system was structured—through monetary policy, carried interest deductions, corporate tax breaks, and industry lobbyists—to ensure it.
That might not sound like a crushing realization, but for me it was. I knew Wall Street wasn’t about doing something meaningful with your life, but I had seen it as a great coliseum for my young ambitions. Now it looked less like a meritocracy than an oligarchy.
People were referred to not by their accomplishments but by the size of their bank accounts. People would say, “That guy’s worth fifty million dollars,” or “That guy has twenty-five million dollars in the bank,” without referring to what they had done to earn that money. Because it didn’t really matter. Wealth was their only distinguishing feature; guys get rich on Wall Street without doing anything different than the people who came before them.
Near the end of 2008, people started talking about that year’s bonuses. Because of the federal bailouts, there was talk about the government limiting bonuses on Wall Street, and many traders were livid.
I empathized with the frustration of traders who’d been profitable that year. They’d made a ton of money for their firms. On the other hand, given that if the government hadn’t stepped in they’d be bankrupt, it seemed hard to justify a big bonus. But traders were furious. These were guys whose faces would turn purple talking about the sense of entitlement of union workers who demanded pension payments even when their employers were struggling.
But it was when I heard guys who lost money complaining about their bonuses that I started to see the truth about Wall Street. Wall Street wasn’t a talent-based meritocracy; it was more like an addiction. Doing whatever you had to do—rationalizing, lying—to get the money to fill that empty hole inside.
In the spring of 2009 it looked like every financial institution—J.P. Morgan, Citibank, Bank of America—might go down. At Pateras, we often talked about the Mad Max scenario—what life would be like if civilization as we knew it ended. What skill sets would be valued (mechanics, surgeons) and which would be obsolete (derivatives traders). It wasn’t just talk. My trading partner flew to Vermont to take a survivalist course. Sean Mallory bought a gun. And like many other paranoid Wall Street traders, I withdrew a chunk of money from the bank so that if things got bad, I would have cash on hand.
That day I walked down to the nearest Bank of America branch. When I asked the teller for $7,000, she asked me what it was for. I immediately felt guilty. If the world collapsed, I only wanted to save myself.
“Vegas,” I said.
On the way back to work I stopped to pick up the usual lottery tickets for the guys at Pateras. Whenever the Mega Millions jackpot got above $100 million, we’d buy four tickets, with the potential winnings to be split between us. Sang Kim, a distressed-loan trading specialist (also obsolete in a Mad Max scenario), was about as senior as me. The other two guys were a few years younger and earned less, but their career paths stretched safely in front of them. They, too, would be rich.
We loved buying lottery tickets, because we got to spend the rest of the day talking about what we’d do with the money. The first thing, we all agreed, was quit. While Pateras was a dream job, it was still a job. We all woke up to the screech of an alarm clock, we all spent more time at work than we did with people we loved, and we all resented our bosses.
We talked about what we’d do when we quit, the houses we’d buy in the Bahamas, or Jackson Hole, or Charleston. But it wasn’t the houses we cared about—it was what life would look like when we were living in them, doing whatever we wanted to do. What we were really talking about was freedom.
Each time we bought lottery tickets, one issue would be hotly debated. When would we leave? What if we won the lottery in October? Some of us said we’d leave immediately, but others said that they would wait four months to receive their yearly bonus from Pateras. “Let’s not forget,” I sometimes said, “that even if you are a multimillionaire, one million dollars is a lot of money.” We’d argue back and forth, and then someone would make a joke about high-class problems, and how pissed the rest of the world would be if four hedge fund guys won a $100-million jackpot. We’d laugh and then go back to talking about what we would do with the money.
That afternoon I went into an investment meeting with four people and Eldrick, four lottery tickets and a thick wad of hundreds in my front left pocket. The topic of discussion was the beaten down bonds of a struggling media company. As the meeting wound down, we started discussing the new financial regulations being discussed in Congress, which would be very restrictive to hedge funds. Everyone in the room thought they were a bad idea.
“But don’t you think,” I said, “the regulations make sense for the system as a whole?”
Eldrick shot me a withering glare. In a measured tone he said, “I don’t have the brain capacity to think about the system as a whole, Sam. All I’m concerned with is how it affects us and our business.”
He looked scared. That year, I would undoubtedly make millions—Eldrick would make hundreds of millions. But when I saw the expression on his face, I realized that the only difference between Eldrick and me was twenty years and a billion dollars. We were both afraid and were toiling under the delusion that the next million—or, in his case, hundred million—would make us feel safe. I chuckled as I ran my hand over the Benjamin Franklins in my pocket. I’m pretty sure that this won’t keep me safe if civilization as we know it ends.
CHAPTER 33
Fear, Love, and a Billion Dollars
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The next morning when I walked into the office kitchen to pour myself a cup of coffee, I saw Jake Delancey, a shrewd analyst and one of the more powerful people at the firm, at the counter, making himself a protein shake. He nodded.
“Morning, Sam,” he said.
“Morning, Jake.”
“You look tired,” he said. “You get laid last night?”
I can only imagine what my face looked like. No, I hadn’t been laid. It had, ahem, been a while. And no, I didn’t want to be asked that by a senior guy in the firm. I was sick and tired of what passed for conversation on Wall Street.
“No,” I said.
“Too bad,” he said. “When I was your age, I killed it. Like shooting fish in a barrel.”
I tried to fake a smile—Jake would have a say about the size of my bonus—but I’m sure I betrayed some of my annoyance.
“It’s never been that easy for me,” I said, and walked out with my cup of coffee.
That comment was only the beginning of what would turn out to be a very long day with senior people at Pateras Capital.
Earlier that summer, Peter Conroy, one of the two billionaire founders, had announced a series of staff dinners. Each Wednesday, Peter would take eight a
nalysts and traders out, and over the course of a meal he would share his knowledge of specific industries and his contacts with the team. That night was my dinner. I was dreading it.
Peter Conroy was the apotheosis of a thousand liberal nightmares. He brought his own wine to dinner parties so he wouldn’t have to taste inferior swill. He mentioned the names of his rich and powerful friends two to three times a conversation. He seemed to believe that his vast wealth was the direct result of his innate superiority.
I’d started to see Peter as emblematic of Wall Street’s hypocrisy. But Peter had something I wanted, had always wanted. Peter was as high as it got on Wall Street. When Peter walked into a room, conversation stopped. He became the center of the room. People listened eagerly to his stories, laughed at his jokes, orbited around him. He was The Man.
But being in Peter’s presence could be grueling. He was always asserting his dominance—he was the boss; we were mere underlings. It was like spending time with Napoleon.
That night, Peter sat at the head of the table and opened the discussion with a story about how before everyone arrived, the waiter came in and saw him sitting at the head of the table and had commented that he must be the boss, because he clearly was comfortable in a leadership position. Then Peter started around the table, asking each analyst or trader about their sectors and telling them what he knew about those industries.
I had endured hundreds of business dinners with people I didn’t like—that was just part of the job—but this dinner was different. Peter would focus his attention on one person, and while he was talking, the other traders and analysts would sit quietly and listen. But every few seconds, one of them would glance toward me and almost imperceptibly widen their eyes, as if to say wordlessly, How ridiculous is this?