“So you bought the Hill Country play. The week Momma died, as I remember.”
“That’s right.”
“How much?”
Bill looked down at the bar. “A hundred million.”
“What! We were only valued at sixty-five million, and that’s with obligations of our own!” I noticed Friesen had become “our” company again in my speech. So much for Antoinette Beauchamp, lone wolf consultant.
“Work it out, Toni. He had started ten more wells. If seven of them hit, even at only a hundred barrels a day, we would make the money back plenty fast enough.”
“If,” I said. Bill looked away. “Okay. Tell me about the financing.”
“The hundred million for the company I borrowed at the bank.”
“Sixty-five of that secured? Eight percent interest?” I dug my calculator out of my purse.
“Seventy secured, eight percent, and simple interest, not compound.”
“Good deal. You did that part right, anyhow.”
“The banker was a friend of Dad’s.”
“Ah. Go on.”
The other thirty million dollars of the bank loan had been unsecured at eleven percent, but against the company, meaning that, should things go sour, Friesen Investments would be the only party liable; Bill Jr. could walk away untouched.
“So much for buying the company. How about completing the new wells?”
Bill didn’t answer at once. Our entrees arrived in a cloud of scented steam. I tried a mouthful of the mahi-mahi and closed my eyes in bliss. After three months of noodle soup, hamburger, and red beans and rice, the taste of restaurant food was overwhelming.
Bill still hadn’t answered. I opened my eyes and looked at him. Then I stared. Then I squinted. “Oh. Oh, Bill. You put out a junk bond issue, didn’t you?”
“We were nearly in the clear, Toni. All I needed was another thirty-five million to finish the wells.”
“What did you offer?”
“Thirteen percent.”
I asked a passing bartender for an extra napkin and started making notes on it. “Okay. But where did you get the money to back the bonds?”
“Borrowed it from a private investor. Five million at seventeen percent. The bond offering went well. Sold fifty million worth.”
“Seventeen percent! What were you using as collateral?” I wrote the figure on my napkin. “Oh. At that percentage, you must have put it against yourself.”
Bill nodded unhappily.
“Uh-oh. Okay, what are your repayment schedules?”
The news was ugly. I got busy with my calculator between bites and tried to organize my scribbles on the other side of the napkin.
Friesen Inc. owes
70 M to Bank @ 8% (30 year term) = $515,451.72 per month
30 M to Bank @ 11% (30 year term) = $287,049.49 per month
802,501.21 per month to Bank
Plus
50 M, bonds @ 13% = 3.25M every 6 months to bondholders
Bill Jr. owes
5 M, self @ 17% over 5 years = $125,106 per month
“Bill, how much oil are you pumping?”
“Seven hundred and forty barrels a day.”
I worked my calculator. I checked the result twice. “Wow. I meant to laugh in your face, after you fired me and all. But this…You’re going to lose your dad’s company.” I looked up. “Now I see why spending four hundred dollars on me is no big deal. What about the hundred and twenty-five thousand a month against yourself, how are you covering that?”
“When my father was my age, he owned eight producing wells. Starting from nothing.”
“Gave yourself a hell of a raise out of company funds, I guess.” I ate some more of my entree. Now I was sorry I had ordered the most expensive thing on the menu. Bill sat hunched on the stool beside me, big and fleshy, defeat in the soft droop of his shoulders. “Oh Bill. Cash is cold, you know? You can’t make decisions to impress your dad.”
“I didn’t want to impress the old bastard.”
I ate.
“You know, after we bought stock in that hair tonic company, I picked up a bottle of the stuff.” Bill rubbed his big knuckles on the forehead his receding hairline had left bare. “Didn’t work worth a damn. The whole fiasco has my distinctive signature on it, doesn’t it?” I bit my lip. Bill shook his head, sheepish and amused, and for the first time in months I remembered why he had been okay to work for, most of the time. “Toni, I was a fool. My dad was Bill Friesen. And I’m just…Junior. So all right, I get the message.” He caught my eye and held it. “I know what you’re going to say, you’re going to say that even Bill Friesen wasn’t Bill Friesen—he was Elena Beauchamp, in any way that mattered. He was just another salesman, like your dad. Only with a richer class of client. Maybe you’re right. I was wrong, I apologize. I’m eating my crow.”
“Are you offering me a job, Bill?”
“No. I can’t afford to. I just laid off Kennedy yesterday. There are only three of us in the office now. But I will give you a job, your old job back, as soon as the company gets on its feet again.” He put down his fork. “Take off the curse, Toni. I’m begging you.”
“Bill! Bill, there is no curse. There was never a curse. That was Momma’s kind of thing. I can’t do that.”
“I remember you putting a curse on my company,” he said quietly, blushing. “I remember every word, Toni, and it all came true. The currency thing. The wells running dry.”
“Wasn’t there something about carpet stains, too?”
“Oh, yeah. I forgot to check.”
“Bill! Get a grip. I solemnly swear there was no curse.” But inside, I was remembering the feel of the Preacher in my head, his smell of old books in the Spindletop as I pronounced my malediction. “Even if Momma’s ghost put one on, I wouldn’t have the faintest idea how to take it off.”
“This is sorry news,” Bill said.
I needed a moment by myself to think over the situation. Was it possible I had actually managed to ruin Friesen Investments? I felt a guilty thrill of power at the thought. There would be a certain irony if I had destroyed the only thing my mother ever built. “Excuse me,” I said, slipping off my stool. “I’ll be right back.”
I needed a moment to think. Also, to be truthful, I needed to pee. One thing I was quickly learning about the second half of pregnancy is that you pee a lot. With a kind of grim glee my books told me that as the baby got larger it would press ever more inexorably on my bladder, until I could hold about a dropperful of urine at a time.
Bill was frowning as I came back to my place. “You didn’t order a margarita.”
“Is that against the law?”
“You always used to order a margarita when we came here.”
“Didn’t feel like it.”
“You’re pregnant, aren’t you? I just noticed when you got up. I wasn’t paying attention earlier. I wondered if you were just, ah…”
“Getting fat.”
“But then I remembered about the margarita.”
This was unusually observant of Bill. I was surprised. “I’m almost six months,” I said, before he could ask. “Due September twentieth. A girl.”
“Wow. It’s hard to imagine you being a mom. Wow.” Bill blanched. “Were you…did you know, at the Spindletop?”
“Yes.”
“Oh, Lord. Toni, I had no idea. You should have told me! I never would have laid you off if I had known.”
“I did not wish to be beholden to you, Bill Friesen.”
“For God’s sake, Toni, it’s not a matter of charity, it’s simple human kindness.” He shook his head, moodily forking up another mouthful of his mahi-mahi. He had tucked away a good bit of it while I was in the restroom. Bill’s heart might be torn to pieces by the threat of losing his father’s company; his stomach was more reliable. “Your problem is you always look for the worst side of everything. If I gave ten bucks to a beggar on the street, you’d say I was trying to impress you, or buying off my conscience, or doin
g it as a back-hand way to brag.”
“True enough.”
A green bean waggled between his big lips as he shook his head. “That’s where you’re wrong. Maybe all of those slimy things would be true, but wanting to help another guy out would also be true. Probably the truest part. It’s not as simple as you being able to see through pretty illusions, Toni. It’s that you think only ugly things are true.”
“It’s worked for me so far, bucko.”
“Has it?” Bill clasped his daiquiri in one big paw. “Is that what you will teach your daughter? Remember to wear your scarf or you’ll catch pneumonia and die. Look both ways so you can put off the day you are hit and killed by a drunk driver. Don’t talk to strangers; they’re just waiting to—”
“Stop it. Leave my kid out of it.”
Bill finished off his fish and took a slurp of his daiquiri. “Your mother scared the hell out of me.”
“Me too.”
“That’s what I’m saying. You’re frightened, Toni. You’re frightened all the time. Maybe I am trying to impress my dad, but at least I’m not running away from my mother’s ghost.”
I told Bill to pay off his personal debt as fast as he could so only the company was liable. Then I told him to finish drilling the Hill Country wells, drill more if he had to, drill until he hit a gusher or the bank foreclosed. “Somehow I thought you’d have some more conservative advice,” he said, half-smiling. “T-bills. Stock options. Restructuring.”
“Conservative advice won’t save you,” I said. “You’re in too deep for that.”
“Is that really your advice?”
“It really is. And to show you how much I think of it, I’m giving it to you absolutely free. Forget the four hundred dollars.”
He laughed. “Can I at least pay for lunch?”
“Mr. Friesen,” I said, “you can even leave the tip.”
If there was one thing I hated, it was debt. This had never made me popular back at Friesen Investments. The same Bill Jr. who was willing to embarrass himself and order a Peachy Keen was always willing to mortgage tomorrow when he wanted something today. To be fair, that’s the way the eighties taught us all to play the game: pick your spot, make your strike with borrowed money, take your profit and move on. As long as everything keeps increasing in value, it’s a good tactic. A bull market favors the bold.
Unfortunately, I had used up most of my short-term savings getting pregnant and settling up Momma’s final account with the IRS. I even had to cash out one of my mutual funds. What savings I had left were tied up in my IRA, money I couldn’t get at until I was sixty-two and a half! What had I been thinking? My daughter would be grown with children of her own by that time. What was I going to do about her doctor, dentist, college?
Let alone a father. That was not so easy. Even Candy, for all her looks and charm, even for Candy it turned out love was not easy. I thought again of her magazines, of Candy a teenager waiting for men on the corner and me too wrapped up in myself to notice. She was the first baby I had meant to take care of, pretty Candy. I prayed I would do a better job with the little girl in my womb.
I had never had Candy’s looks. Knowing what I knew now, I’m not sure I would have wanted the price they had exacted from her. Maybe all our gifts are Riders, in a way. Maybe all our treasures exact a certain price.
For me, it would take more than a negligee to bring a man in and keep him. If I hadn’t known that before, my embarrassing rendezvous with Greg had pretty much proved it. Like Mary Jo said, if a woman wants to find true love, she better have some cash of her own. There’s a reason the girls in all those fairy tales are princesses. Only the independently wealthy can wait around for Prince Charming.
I had to have a source of income.
Going home from my meeting with Bill I told myself I had run out of time waiting for Prince Anybody to rescue me. It was time to rescue myself. Once home I took my calculator out of my purse and opened the notebook where I had been playing my pretend stock market portfolios and futures trades. Up in my room, I turned the TV onto CNBC and started making systematic notes on the commodities prices that scrolled along the bottom of the screen every ten minutes. I was looking for a way that a woman with my training could make money from home without a big initial investment. Stocks you usually have to pay full price for; but with futures, your money is hugely leveraged. If I really really dared to try it, speculating in futures was the best option I had.
Just as the heart of the stock market is in New York, the commodities exchange that matters is in Chicago. Commodities futures originally sprang up as a way to protect farmers and their buyers from wild fluctuations in the market. By using futures, a seller can come to the market and say, “I want to sell wheat that will be delivered in July or October. What can I get?” He sells the wheat before he has grown it. Both the farmer and the buyer can budget accordingly. The farmer knows that even if there’s a glut that year, his price won’t go down; the buyer knows that a drought or flood can’t drive the price up.
Speculators buy and sell contracts for commodities. For instance: here it was the fifteenth of May. Suppose I bought a contract for five thousand bushels of July wheat at $1/bushel. If, tomorrow, the price offered for July wheat was $1.10/bushel, I could sell that contract. I would have made ten cents for every bushel of wheat, for a profit of $500.
That was the idea, anyway.
Now, just a tiny bit more explanation. You may have heard of being “long” or “short” in something. When you’re long in a commodity, it means that you have bought a contract and expect its value to rise. When its value has gone as high as you think it will go (or as high as your nerves can stand), you sell it, and take your profit. When you are short, on the other hand, you sell a contract for a given commodity before you’ve even bought it, with a promise to buy one at a later date. Obviously, you go short when you think something is overvalued and you expect its price to drop. To use the example above, if I sold my five thousand bushels of wheat at $1/bushel, then waited three days and filled the contract by buying the wheat after the price had dropped to $0.90, then once again I would have made my ten-cent profit per bushel equalling $500.
Of course, in the real world, prices hop like a frog on a hot tin roof. Markets that look like they will go up forever dip when you least expect it, while other ones peak, drop just enough to scare you out, and then rocket up again. Even expert speculators lose money seven trades out of ten.
Still, it’s very hard to make a lot of money fast in a mutual fund or other comparatively safe investment. Investing in individual stocks can give you a stratospheric rate of return, if your timing is perfect, but unless you are very lucky, you need more access to inside information than I had. So: commodity futures.
Over the next few days I got very serious about making paper trades. I would watch the ticker scroll by on CNBC, pick something that looked to be on the rise, and then make a pretend purchase. My first paper trade was a contract for Deutsche Mark. I bought in at .6772 at 10:20 in the morning. By eleven the DM was at .6781 and climbing. Finally at 11:40 it began to break and I sold off at .6785. As each contract for Deutsche Mark controls 125,000 DM, I had made an imaginary profit of $162.50. (Had this been a real trade, my net profit would have been less, as I would have had to pay brokers’ fees: $20 for a discount house, or as much as $100 for a full service broker.)
The next time the ticker rolled by, at 11:50, the price for Deutsche Mark had rebounded to .6790. It continued to climb for the rest of the afternoon, levelling off at .6796 twenty minutes before the two o’clock close in Chicago. If I had stayed on for the full ride, I could have made $300.00.
“But if the price really had been going down for good,” Daddy said that night at dinner, “you stood to lose money. When you have a little more cash you can afford to sit tight. Right now, you can’t risk it.”
“No, I blew it,” I said gloomily. “It’s like batting: even the best traders only get a hit three times out of ten. The b
ooks say that to make a living you have to cut your losses off short, but ride your winners as long as you can.”
“Hm,” Daddy said. “Slugging percentage.”
“That’s about the size of it.”
I threw myself into trading. I took Schwager’s A Complete Guide to the Futures Markets out of the library and studied it like Holy Scripture. When I couldn’t absorb one more word about the intricacies of the soybean distribution system, or the role of the Japanese markets in the trading of copper, I reread Edwin Lefevre’s classic, tragic, exhilarating Reminisces of a Stock Operator and hoped it would give me daring. I kept the TV on with the sound off all the time. I pored over the Wall Street Journal until past midnight, and then woke up every couple of hours through the night and stared at it from my pillow. I kept my transaction book by the bed, ready twenty-four hours a day in case an idea should present itself.
I started with a kitty of six thousand dollars of imaginary money. That was Mary Jo’s savings plus all I could cash out of my IRA after paying the early withdrawal penalties. I had originally intended to go with only five thousand, but I began to see there was money to be made in coffee, and I wanted to be able to make a trade in it, should the opportunity present itself. It only cost $3,150.00 to buy a contract in coffee, but I found I was also required to keep a margin of a couple of thousand dollars in my account to cover possible losses. (Generally, the more volatile a commodity, the higher the price of the margin for a single contract.)
I agonized constantly over trades, but in fact I only had enough money to be in one or two contracts at a time, so I was only making five or six pretend trades a day. Still, over the next two weeks I traded an amazing range of things: coffee, copper, soybeans, pork bellies, Swiss Francs, Japanese Yen, Deutsche Mark—I had an affinity for Deutsche Mark—unleaded gasoline, and frozen orange juice products (each contract worth 20,000 lb of frozen orange concentrate, the contents of an entire tanker truck!)
I was a nervous wreck, sleepless and exhausted. I was also incredibly exhilarated. Trading gave me a rush unlike anything I had ever done before. This, I imagined, must be how people felt at the roulette wheel or the racetrack. As an actuary, all I had ever done was assume the worst. An actuary’s bottom line is death and taxes. But playing the market is like jumping into the whirlwind of life itself, a tornado that booms and buzzes as prices rise and fall, goods and money change hands, empires wax and wane. Each hour spun around with its load of panic and bloodlust and greed and fear. It was quite a trip.