by Green, Carey
“Hello,” Ray said. “And you are?”
“My name is Marbella.”
“Like the city?”
“No, like the cookie.” Dylan laughed loudly while Ray put his head down and tried to conjure a smile. The only wise ass that he admired was himself.
“Of course, like the city,” Marbella said. Dylan was trying to place her accent. It was distinctly European but gave off no regional flair.
Ray put on his toothy smile and strolled over towards her. “Well, Miss Marbella, the sub-tropical climate has me a bit confused.”
“I’m sure we have something for that.”
“I’m Ray Corbin.” He took her hand and kissed it.
“I know who you are. And who is this?” Marbella was suddenly staring at Dylan with the intensity of Medusa. Dylan’s voice suddenly became gravelly.
“I’m sorry. Something in my throat. Dylan.”
“Something-in-my-throat-Dylan. Charming. You two make quite a pair.” She strode several steps towards Dylan and stuck out her hand.
“Aren’t you going to shake my hand?”
When Marbella laughed, every part of her body seemed to shake, from her smile, down to her breasts, down to her shapely ankles and calves. She turned to lead them, and they followed her down the path.
“You didn’t tell me they had this in Antigua.”
“They don’t. She’s not from here. Cause what they have down here don’t look like that.”
When they had reached the patio area, Marbella turned to face both men. Behind her, a butler was wheeling out a tray of drinks.
“Gentlemen, make yourselves at home. Raul will serve you drinks. Jonathan and I will join you momentarily.” Marbella turned and walked off towards the rear of the house. She entered through a pair of sliding glass doors. Then she was gone.
“Why do I feel like I’m on ‘Fantasy Island’?”
“Because you are.”
“Then I guess that explains it.”
On the stone patio, a table had been set up, complete with white linen and candles. The table was set for four. Down a quick flight of stairs sat the pool, and behind it, the tennis courts. In the distance, roughly a hundred meters back, the sea butted up against the rear of the property. A little putting green sat directly in front of it. The grounds were majestic. They strolled down the balcony towards the pool. Huge lanterns off to the side marked their way.
“You look like you like this place,” Ray said.
“Not my style, but I must admit Kay has nice taste in women.” They walked for a few more steps. Neither man said a word. “Do you know the girl?”
“Nope. She’s beautiful. Isn’t she?”
“I take it she’s not one of his traders.”
“No,” Ray said with a laugh. “Jonathan likes to collect two things: beautiful women and Ferraris.”
“Rich men’s toys. And what do you like to collect?”
“Accolades. That and millions.”
“Well said.”
As they strolled towards the tennis courts, a bell began to ring. From a distance, they could see that Marbella and a man had strolled onto the patio. Both men turned and began to walk towards the house.
“I think I should warn you,” Ray said. “Jonathan, well, let’s just say, he’s different. But you’ll see that soon enough.”
They began to walk towards the stairs that led up to the patio.
Dylan’s first impression of Jonathan Kay was probably that of a dandy. He was a tall man, broad of shouldered, standing at least 6’5”. He was wearing a white linen suit with a pink lapel shirt. A walking cane was by his side. Perhaps he was only in his fifties, but a life in the sun had left his face lined and wrinkled. His sun-drenched blonde hair was a bit longer than usual, too short to be hippy, too long to be corporate. He grabbed Ray by the back of the headand pulled him into a bear hug.
“You son of a bitch! You haven’t visited me in almost five years. Did your private jet’s computer forget how to find Antigua?”
“Had to sell the jet. It was a casualty of the credit crisis.”
“No private jet, my ass.” He gave Ray a long look over. “He sure does look good, doesn’t he Marcy?” He accentuated this novel way of saying her name; Marbella smiled broadly as she looked up at him. She was giving him a wry smile, her lip turned down.
“I wouldn’t know. He’s your friend, not mine.”
“And you brought a friend, I see. Times are changing. Normally, your friends wear pretty little skirts.”
“I might put one on later,” Dylan said. “If you have my size.”
“This is Dylan Cash,” Ray said. “He’s my new head trader. He took over after Luke died.”
“Oh, Oh, I see.” Jonathan extended a hearty handshake, his gleaming white teeth on full display. “It’s a pleasure to meet you Dylan. Any friend of Ray’s is a friend of mine.”
“Thank you.”
“Gentlemen, why don’t we all sit down and eat?”
Raul appeared and escorted each guest to his seat. Conveniently, a name card appeared for each of the guests. Jonathan set across from Marbella, with Ray to his left and Dylan to his right. Before long, several other servants, all in latticed uniforms, were placing plates of food on the table: steak, caviar, and chicken. Soon, a full banquet was before them,and dinner was then served.
Chapter 11
After the evening feast, Jonathan gave them a tour of his mansion. It was much like Dylan expected. The rooms were either too big or too small, bereft of furniture or clutter. It was a doll’s house, elaborately constructed and absent of comfort. Afterwards, Jonathan insisted on showing them his yacht.
They exited through the rear of the house and made their way towards Jonathan’s garage. It held roughly twelve cars. Jonathan had a taste for both the extravagant and the sporty, and his cars ran the gamut from Dylantleys to Ferraris. Jonathan had a story to tell for each car and each woman who had gone with it. His stories were mildly amusing. When the tour was finally over, they jumped into Jonathan’s Range Rover and took a service road down the back perimeter of his property. After several hundred yards, they came to his private dock and exited the car. A gleaming white sailboat waited in the distance.
“Gentleman,” Jonathan said, “This is Calypso.”
Calypso was a sixty-foot sloop, pristine and white as it shimmered in the distance. Jonathan pulled up the gangway and climbed on board. Both men followed him into the boat’s cockpit.”
“Nice boat,” Ray said.
“Thank you. It just arrived the other day. I had a five-year wait for the best shipbuilding that money can buy, and that the Swedes can engineer. Let me show you around.”
Jonathan showed them the interior of the boat: the staterooms, the galley, and the communications equipment. Everything was state of the art. There were enough computers present to power a small country.
“This is beautiful, Jonathan,” Ray said. “But it’s a bit much for the day. Sailing, isn’t it? Where are you planning on going? Tahiti?”
“Nah, Ray. I’m going to circumnavigate the world.”
“What?”
“I’m going to do it. Me, myself, and I.”
“What about Marbella?” Dylan asked. Both men looked at him.
Kay turned and looked at Dylan slyly. “Someone has to hold down the fort,” Kay said. He then continued the tour. “After all, where else is there to go but the open seas. Free of international jurisdiction. I’ll be a pirate for the 21st century.”
“I hope you’re kidding.”
“Mr. Kay?” Dylan asked.
“Please, call me Johno.”
“Johno, I was wondering about something. Ray told me you ran an online Internet casino.”
Jonathan stopped in his tracks and looked at Ray. He then turned towards Dylan and smiled. “Yes, I do. Allegiance Gaming. Have you heard of us?”
“I think so. I don’t play online, but I like to gamble a little bit. I’m also something of a technolog
y buff. I’d love to see your operation.”
Ray and Jonathan looked at each other. Jonathan eased out a hearty laugh. “Why not, my friend. After all, it’s right up the road.”
They returned to the car, and Dylan and Ray seated themselves in Kay’s Range Rover. They drove for ten minutes and arrived at what looked like a cross between an office park and an industrial storage facility. Three large one story buildings had been constructed out of corrugated metal, much like at a construction site. The largest of the buildings was probably ten thousand square feet. Jonathan Kay parked his Range Rover in front of the biggest building, and the three men exited the vehicle.
They entered the building through a secure door that required Jonathan to press his hand to a palm reader. Once through the front door, they also passed a machine that looked like a combination metal detector and X-ray machine. Once Dylan and Ray had passed through the machine, a security guard dressed in black nodded to Jonathan that they were okay.
“Quite a security force you have.”
“When you’re moving tens of millions a day, you can’t be too careful.”
“I guess not,” Dylan said.
They were walking down a white corridor, with office doors on each side. Kay was silent. At the end of the hall, they came to another door and another security guard.
“Good evening, Mr. Kay.”
“Hello, Richard. These are my guests.”
The guard gave Ray and Dylan a sidelong glance. He then turned and entered a number on a numeric keypad.
Behind the door was a room the size of a football field. In the distance, in the center of the room, sat an office encased in glass. Inside the glass office, six or seven people toiled, sitting at screens and monitoring plasma TV screens. To Dylan, it was a cross between Mission Impossible and a control room at NASA. Kay guided them towards the glass office. They stopped about five feet from the glass. No one behind the glass wall acknowledged their presence.
“So this is it?” Dylan asked.
“Yes,” Jonathan said. “Welcome to Allegiance Gaming.”
They walked towards the glass walls. Dylan could see the people inside. They were surveying the screens and monitors as if their lives depended on it. Ironically, it reminded Dylan of a trading floor. “What are they doing?”
“They are maintaining the site; making sure everything is operating properly. Making sure we are making money.”
Dylan placed his nose to the glass. From what he could tell, all the screens had numbers and spreadsheets up. Dylan counted four men and two women, all in their twenties or thirties. Strangely, all of the workers were as waspy as Jonathan Kay; no one was brown, yellow or beige-skinned, as if the Mayflower had docked in Antigua without telling anyone. Dylan turned towards Kay with a curious expression.
“I take it you don’t hire locally?”
“Nah, problems with the language barrier, etc.”
“Can we go inside?”
Kay turned towards Dylan and flashed his beaming smile. “I’ve shown you how I make my money, now it is time for you to show me how you make yours.”
“Good point,” Dylan said.
Ray looked at his watch. “Let’s head back.”
“Good,” Jonathan said. “I’m ready to hear what your boy Dylan has to say.”
Back at the house, the trio adjourned to Jonathan’s study. It was a wood-paneled affair, just off the living room. The study must have consisted of over ten thousand books, probably only a few of which had been read. They seated themselves around Jonathan’s cherry oak table.
“So what have you come up with, gentlemen? I’m already in the red by fifty million. How are you planning on making me whole?”
“The oil market moved against us unexpectedly. It wasn’t our fault.”
“Then whose fault was it, Ray? OPEC’s? Hugo Chavez’? Chairman Mao’s?”
“The markets have been unpredictable.”
“Yes, but it’s your job to predict the markets. This is why you have a house in Aspen.”
“I understand that. And that is why I brought Dylan with me: to walk you through the new strategies.”
“Gentlemen,” Jonathan said, folding his arms behind his head, “I am all ears.”
“Okay,” Ray said, looking towards Dylan. “Here we go.”
Dylan spent well over the next hour speaking on various types of technical strategies. Arbitrage is the simultaneous buying and selling of the same product at the same time in two distinct marketplaces. Because of pricing inefficiencies, it is sometimes possible to buy at one place in the world and, at the same time, sell it for a higher price on different exchanges. When executed perfectly, little risk is involved, as the transactions occur at the exact same point and time, therefore offsetting each other. Statistical arbitrage, a strategy used by many hedge funds, uses varying mathematical and statistical models to devise trades based on selling certain securities, while buying their statistical matches.
“So, many hedge funds were and are still using various statistical arbitrage strategies. They have a model, the model executes the trades. Well, the problem is, the same guys were making the exact same models, and trading the exact same stocks. So when everyone sold these stocks, the models tanked, and when everyone bought these stocks, the prices rose. In other words, with everyone doing the exact same thing, no one was making money anymore. Well, we use many of these techniques, but we employ a little more technical pizzazz.”
All through the presentation, Ray sat there pensively, alternating private looks between Jonathan and Dylan. Meanwhile, Jonathan sat there smiling with his arms folded, occasionally shaking his head or nodding all the while with a skeptical look on his face.
“So?” Ray asked nervously. “What do you think?”
“I think it’s a start. I think your ideas have a lot of promise.”
“Okay,” Ray said nervously. “Can you expand on that?”
“What can I say, Ray? There is only so much alpha or profit in the marketplace. It seems to me that this technical trading strategy is maxed out.”
Dylan sat back in his chair and took a deep breath. He smiled as he leaned forward and began to explain. “I can assure you there is still room in the marketplace for this type of strategy. Let me explain a more. The kind of trading we do is on a very short time-frame ... maybe fifty to one hundred round trips in a trading day. If you look a random stock in the market, the fundamental data about that stock doesn't change from moment to moment. But its share price does, and that is mostly from imbalances of buying and selling, down to basic selling at the intra-second level. So in theory, the guy who has the best ability to translate this intra-second information has an edge. I like to say that information equals equity, and the cool thing about the market is, well … Imagine this ... I know you like to play poker, so I’ll give it to you in your terms.”
“You sit down at a poker table and everybody has the same data. You can see every action and reaction, your cards and the commons cards. You know how much money each person has on the table. And the winner in the game is usually the guy who can best process that data. He can calculate odds, pot odds and implied odds, and he knows enough game theory to react to his opponents’ bets and raises. Now let me lay out for you a dream poker game: It’s a heads up match between you and me. There are no blinds or antes. I get to see my cards before I see the hand. Once I see my cards, I can bet any amount I want, and always be called. I can always raise and always be called, and you can never bet, raise, or fold. You will always call when I bet. How does that sound?”
“Sounds like a pretty good game.”
“This is the game I play, and it goes on twenty-four hours a day five days a week on big computers around the world. If you have the technology that can process the data into better information, you can win. And the game doesn't get tougher. Whether you're trading one hundred dollars or a million dollars, the game always stays the same. We have spectral analysis tools that stealth fighters use to track smar
t missiles traveling at Mach 2. If it can track that, I think we can have good results on the S&P.”
Jonathan shook his head as if he were impressed. “Cocky, huh? That’s how I like ‘em. So you think you can do the same thing again?”
“In the right types of trending markets, we will make money.”
“What kind of odds are you going to give me?”
“I don’t quote odds. Odds are for gamblers, and I don’t gamble, except when I’m in Vegas.”
“You don’t gamble? Then what the hell do you think you do for a living?”
“It’s not gambling if you have a huge edge. And my edge in the markets is pretty large.”
“You went to Harvard. You know where I went to school. It’s called the school of hard knocks. I couldn’t even get a job trading today, do you know that?”
“You might get an internship,” Ray said.
“Cutting weeds.” Jonathan looked squarely at Dylan. “What I do down here must seem awfully shady to a Harvard boy like yourself.”
“I try not to pass judgment.”
“You want my money. Let’s gamble for it.”
“This is how you’re going to decide whether to invest?”
“You got a better way?”
“Oh, I don’t know. Past earnings? Performance?”
“If I looked at his past performance, he’d never get a dime.”
“You have a valid point,” Ray said.
Jonathan laughed. “Besides, I thought you had some gamble in you?”
“I do.”
“Good. Glad to hear it.”
Jonathan got up and went to a bookshelf. On one of the shelves was a black box. Jonathan removed the box from the shelf, and returned to the table and sat down. After he had removed the cards wrappers, he reached back into the box and removed a tall stack of gold poker chips. With a quick whip of his hand, he divided the poker chips into two neat stacks. He pushed the chips towards Dylan.
Dylan picked up and examined the chips. The chips were not really chips, but gold coins, Krugerrands in fact. Rich men played poker with solid gold chips. Dylan couldn’t help but laugh.